NSW has actually been in a state of recession for at least ten years.

NSW has actually been in a state of recession for at least ten years.

It would be simply impossible for anyone to win a spirited debate in defence of the NSW Labor government’s competency over the last decade. If you thought “underbelly” was riveting viewing, imagine a screening of “undergovernment” where honest tax payer monies simply disappeared, just like elected politicians (on pensions). Yet despite NSW record tax receipts, the state government actually went backwards financially and this resulted in the collapse of infrastructure.

The elected government at “Fort Crumble” (NSW government) is now faced with liquidation asset sales – this only happens when you are stone motherless broke. A government initiative to sell when weak and not at the peak is self explanatory. Soon to appear on eBay:-

NSW Government – sales spin to likely buyers.

  • NSW State Lotteries – Price reduced from $800 million to $500 million (still a gamble) where we remain at odds with this asset. Sensational cash flow especially in a recession.
  • Prisons – a very popular asset with excellent occupancy rates and return clients.
  • Transport – our ferries already have overseas interest.
  • Electricity retail – excellent buying and currently in the black. Torches offered to interested parties.
  • Waste management – government assistance offered on wastage as it is so important to get it right.This explains why this asset is up for sale. We wrote the book on waste!
  • Schools – who needs land when you have a computer (thanks Ruddy) the new cyberspace?

    Fort Crumble revealed this week yet another new initiative – a rain tax! Farmers will be slugged an additional $60.00 per annum for (wait for it) “unregulated river system management costs” which will be rolled out throughout all farms in the Premier State. Those city slickers can soon expect an “unregulated oxygen management cost” tax with the catch cry – “in NSW we squeeze the life out of you.”

    This is evidenced by the brutal statistic that unemployment in NSW stands at 6.9 per cent – equivalent to that in Britain today. Simply put, the NSW state government is a global embarrassment to this once successful and very proud state but hey, Australia is now in recession (as if we didn’t already know).

    Ruddy Fantastic announced this week that Australia would be dragged into a recession for the first time since the 1990’s. Our esteemed leader Kevin Rudd said, “the worst global recession in 75 years means it’s inevitable that Australia will be dragged into recession.”

    So let’s look at the big picture – on 22 October 2008 Ruddy Fantastic’s officials met to discuss bank deposit guarantees – approved. The triple A rating is maintained with absolutely no conditions applied for the banks to toe the line by assisting struggling Australians. This monumental mistake by our Prime Minister defies rationality. An amazing and historical moment was lost – better known as an incompetent moment of confusion (also known as panic).

    When the Rudd government guaranteed banks why did they not screw them on credit card rates? Why did they not protect the unemployed from credit card 18 – 22 per cent rates when our cash rate is just 3.00 per cent? Holiday announcements for property mortgage holders, but no respite for those struggling with credit card debt – a monumental blunder.

    Therefore, one can only assume that housing values have bottomed, given that our Rudd “guaranteed banks” only passed on 10 basis point reductions when the Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points this month.

    You may ask which part you have missed? In the very same week that Ruddy Fantastic announced that Australia “had been dragged into a recession” his government’s bank guarantees identified Westpac and NAB actually increasing fixed home loan rates. On the one hand, we have a stimulus package and on the other hand we now have a banking frustration package

    Just as absurd was this week’s announcement by Ruddy Fantastic’s government that it is considering banning bank “exit fees” to help borrowers frustrated by the failure of banks to pass on interest – rate cuts. Hello – banks are now increasing interest rates. Forget the horse – the banks have bolted. My point: the Rudd government held the cards – and folded.

    Over to the Real Estate Institute of Australia (REIA) President, David Airey, who said it was surprising that two of the largest lenders in the home mortgage market had suddenly decided to raise rates.

    Airey said “I ask the CBA and Westpac to justify the reasons for increasing fixed mortgage rates when it is clear that the RBA are doing their best to stimulate the economy and decrease official interest rates.” Nice to see that somebody finally asked this question. Just a shame it was overlooked by our politicians (on both sides).

    Such an absolute debacle and the banks’ reason for the increase was the wholesale market swap rates. Back to the REIA “the London Interbank offered rate (libor) which is the rate banks charge for lending unsecured funds to one another, is lower than it was one month ago and less than it was one year ago.”

    The three month libor rate is now 1.12 per cent versus 1.30 per cent a month ago – which makes the Rudd Bank (our banking Folding Fortress) complete, with Court Jester too!

    We are in recession so how much of the hook, line and economic sinker should constituents be forced to swallow? Australia is the only country that I am aware of where the banks are raising rates.

    Authority lost – you can bank on that!

    Oh dear – what a monumental stuff – up! The much awaited rhetoric when the federal government announce its budget in just over two week’s time, will be riveting.

    With ANZAC Day now upon us – our banks and governments should share the spirit of what made this country great and what it stands for today.

    With our unemployment rate now predicted to climb to 10 per cent plus – one does not have to be a genius to work out who and what is out of control. Banking institutions simply outsmarting our federal government (Fort Fumble)? This is a great concern in my humble opinion. You may think differently?

    Cheers ^__^

    For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales http://www.rwm.com.au/news/

    15 Responses to “NSW has actually been in a state of recession for at least ten years.”

    • Peter says:

      I agree the only thing is they have been re-elected 3 times in that period. Its sell good longterm cashflow business for 3 or 4 years worth of returns and then have nothing to fall back on. They get rid of consistent revenue for a oneoff bonus, its a short term cure to a longterm problem, in health terms a bandaid when you stictches.

    • John says:

      Hi Robert. All very good points well made, but maybe it’s time to stop the whinging and either get in to politics to change things yourself (I would vote for you) or do what I’ve done and move to another country. In Singapore we pay a very low flat tax rate, no capital gains tax, no interest tax, no dividend tax, no land tax, no payroll tax and best of all everything works perfectly due mainly to something sadly lacking in Australian governments..competence and foresight. I’ll return when Prime Minister Simeon is in power.

    • Michael says:

      John,

      I also vote for Prime Minister Simeon, but I feel that wont happen. Too many skeletons, like the rest of us.

    • James Mendosal says:

      That’s all great and there is a lot of talk here but whats your point?

      The fact is I know with a very strong conviction that the Mosman property I am looking at today, I can probably get my hands on for another 20% cheaper over the coming 12 months. Why do I say that? because I think if we look with a little more objectivity at what has happened, and what it means going forward, this market is going only one way. Down. The IMF has re-assessed Australia and it aint pretty. Dont kid yourself that we have hit the bottom when we really haven’t actually started in Australia, to feel the full effects.

      No need to get all emotional. It’s just another numbers game.

    • Lucy Johnson says:

      There are over 300 properties in Clifton gardens alone for sale and they cannot all be released on the market at once, for obvious reasons. I agree with James and reality is reality. It also makes sense given the current state of world affairs. It appears the agents are the ones trying to hide from reality and I guess that makes sense as they are also trying to survive

    • That breaks me up – there are not even 300 houses on the market currently in Mosman (Domain.com.au – 160 approx) in total. So I have no idea where you get the 300 in Clifton Gardens as that would equate to every home in Clifton Gardens being on the market!

      The clear message that we are seeing is that vendors simply don’t want to engage in the current market – simply because they don’t have to. This further explains why house stock levels are currently at their lowest number since 1995.

    • A Smith says:

      I dont think so. You have this wrong, so wrong. Have you seen what the IMF has to say about Australia? Here we are in the worstfinancial crisis since the 1930’s depression, and this rel estate agent is telling us he thinks the market has bottomed. AND, the recession has hardly even started here. YOU break ME up my friend. What a load of garbage, mate

    • Andrew W says:

      Robert, I have to say I agree with Lucy. It is registered interests with an agent, obviously not you guys. It doesn’t have to be actually with a sign outside the place for there to be a definitive interest to sell. I am absolutely convinced, watever the number is, that this market will fall and continue to fall hard. We simpy are nowhere near the bottom

    • Patricia says:

      The poor (and similar) sentence structure, misspelt words, incorrect (and missing) punctuation, and missed spaces suggests there is one poster writing under the pseudonyms ‘Lucy Johnson’, ‘A Smith’, and ‘Andrew W’ this week!

    • Whilst very interesting to read all the opinions I should point our that the comments made by A Smith, Andrew W and Lucy Johnson were all posted from the same computer (identical ISP’s).

      Well picked up Patricia as I was waiting to see if anyone else picked up on these similarities. The 300 comment did give more than a few a laugh as it is a complete nonsense. 🙂

    • JB says:

      Whoever it is, it seems as though they may have panicked after listening to media hype concerning the Mosman market and sold their property at the bottom. Perhaps now they are trying to talk it down to provide some self comfort or a chance to get back in. I was hearing very similar doomsday comments in regards to equities in early March before we had a 20 percent plus bounce. You could well be right Robert, as the more negativity there is about any market, history will tell you, the greater the chance of a meaningful recovery.

    • JB,

      Nice to hear from you – you certainly sold at the peak (smart call).

      Personally, I don’t blame them as different stories arrive on a daily basis. For some strange reason there is a Mosman myth that so many properties are quietly on the market – which is not the case as if anyones business model is suited to this form of marketing it is RWM who best serve this market.

      We have done just one mortgagee – in – possession valuation in 2009 so it would appear that the vast majority of households are well bedded down and not on respective banks radars. Which I happen to believe is a fantastic result.

      Our markets are determined by supply and demand – where supply is in reduction mode at present and it would be fair to say that some are not that happy with the mathematical equations that are on offer.

      But still the conspiracy theories are enlightening to say the least just that upon deeper investigation the DNA identifies a different culprit. Having said that house prices have come down and I believe that we in all probability have experienced the worst. But there again it depends if you are a vendor or a purchaser as to which side one sits.

      Everyone has a different opinion which is why I love blogs – freedom of speech where everyone has an opportunity to expressed respective opinions. Cheers

    • JB says:

      Agreed. Another final point I would make is that most Mosman property owners I know working in the financial markets, either paid cash for their houses, or paid off/down their mortgages after several good years worth of bonuses. This could go some way to explain why there are virtually no mortgagee in possession sales as you point out. For whatever reason some in the media like to portray anyone working in finance, and residing in Mosman, as young, irresponsible and totally incompetent managers of their own finances leaving most of them facing certain financial ruin. Fortunately, and much to the disappointment of many, this is simply not the case. I would suggest rather, that there are some or even a lot who are now reassessing their priorities in life, and would sell only given the right price, no matter how long it takes, in order to “rebalance” their overall asset holding. Given this, I certainly don’t believe there are many in a “forced to sell” situation that many believe, and perhaps are hoping to be the case. Cheers.

    • Ed says:

      One must take anything the IMF says with a healthy dose of skepticism.

      In 1997, they prescribed the absolutely wrong medicine for Thailand. Drawing on their Mexican bailout experience, they completely misread the situation. They demanded that Thailand cut government spending and increase taxes. They failed to understand that government debt wasn’t the problem, it was private sector debt which was mainly US dollar denominated and ballooned as the Thai Baht fell. The IMF’s remedies caused greater grief.

      While I think they have learned from this experience, the IMF have a habit of trying to make countries fit into their model and fail to recognise that all countries are different.

    • Ed – I agree totally with that. Personally, I am a fan of Chris Richardson from Access Economics and Saul Eslake from the ANZ who always have intelligent perspectives on matters of economics. There is no doubting our home grown economists see and hear it first and so they should as they are positioned at the very coal face.

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