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It’s that simple – Failure in Washington “Sometimes it seems that an American talent for self – congratulation is surpassed only by a talent for self – delusion.” The United States debt is now over $14 trillion and nearly two – thirds is public debt which is owed to the people, businesses and foreign governments. The US debt is the largest in the world and now has so many discussing The U.S. National Debt and how it got so big? Even before the economic crisis, the U.S. debt grew 50 per cent between 2000 – 2007, ballooning from $6 trillion to $9 trillion. The $700 billion bailout helped the debt grow to 10.5 trillion by December 2008.

Even scarier, the debt level is the debt as a per cent of the total country’s production, or Gross Domestic Product (GDP), which was $14.7 trillion in 2010. Makes one wonder what the real figure is today? The debt is 95 per cent of GDP, up from 51 per cent in 1988. Interest on the debt was $414 billion in Fiscal Year 2010 and that was with the AAA credit rating – which was downgraded last week to AA and 10 million jobs short of full employment. The U.S. has enjoyed a AAA credit rating since 1941.

Last Sunday, I was reading the Bangkok Post – Ratings Downgrade prompts attack China blasts US over debt problems “China gave the United States a dressing down over its debt problems yesterday, questioning whether the US dollar should remain the world’s reserve currency and urging the superpower to live within its means.” So we now enter Global Financial Crisis Mark ll and where will the money come from this time? Second GFC has become their debt to society with many asking – The last plan failed. So what’s the plan?

BUY PRINT

The US downgrade resulted in a market bloodbath for the Australian equity markets resulting in the worst three day slump since November 2008. Global debt crisis could last 20 years, warns Future Fund chairman David Murray “We’re a highly indebted nation overall. If you add up all government debt in Australia plus private sector debt, the aggregate is high.” He then went on to say “so in Australia at the moment we need a significant reduction in government debt, we need things that will drive private sector investment and success which generally means in the business sector lower taxes.” BHP Billiton chairman Jac Nasser strongly criticised two of the government’s key policy platforms, warning against spending $36 billion on the National Broadband Network and the aggressive timetable for a carbon tax – BHP’s Jac Nasser gives government productivity warning.

The Australian – Order Bill Leak’s Print

The U.S. financial debacle prompted Fort Fumble to issue a statement: Labor won’t budge on surplus for 2012/13 despite economists tip rocky road for surplus target. In a week full of riveting reading I enjoyed reading an article by Warwick McKibbin Ditch the delusion that stimulus saved us from the GFC a point I have been arguing in Virtual Realty News for years. Although in another back flip Wayne Swan appears to soften budget surplus pledge, calling it an “objective” which stems back to May this year when Wayne Swan can’t say which year Labor achieved its last surplus. It remains odds on, that by the next federal election in Australia, the budget will still be in deficit – the last Labor budget surplus was during the Hawke – Keating governments in 1989 – 1990.

Interesting to note this week the decision by the Commonwealth Bank and Westpac to slash interest rates is the strongest indication yet that investors are strategically abandoning equities in favour of fixed–interest securities – rate moves point to grim future. For the moment, the financial market calamities have clouded real estate confidence although we believe this will be short-lived . Everybody needs to live with a roof over their head. Will Stevens hit the panic button? It is looking that way although (at this point in time) I just can’t see a double rate cut for September, investors bet my tip is that the Reserve Bank of Australia (RBA) will keeps its powder dry.

Unlike many global banks, our banking system remains strong and I agree that CBA’s strength should be rightly seen as a plus, not a minus. Our government could not afford banking bailout, considering that it cost the U.S government $700 billion to bail its banks out in GFC Mark l. Bear in mind we now have worst retail results in 50 years which dates back to the 1961 – 62 recession. The recent equity market capitulations have seen many Mosman vendors delay their market debuts so it appears we will have to wait until late September before we see the full orchestra playing.

MOSMAN – 2088

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• Number of houses on the market July 13 – 80
• Number of houses on the market this week – 88
• Number of apartments on the market July 13 – 92
• Number of apartments on the market this week – 95

CREMORNE – 2090

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• Number of houses on the market July 13 – 16
• Number of houses on the market this week – 15
• Number of apartments on the market July 13 – 31
• Number of apartments on the market this week – 25

NEUTRAL BAY – 2089

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• Number of houses on the market July 13 – 7
• Number of houses on the market this week – 6
• Number of apartments on the market July 13 – 65
• Number of apartments on the market this week – 65

For this week’s sales in Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

Again, no surprises with the polling: PM stalls in Newspoll doldrums as voters stay cool so it was enlightening to read that constant news cycle and rise of bloggers means quality of information at risk: PM obviously I would be surprised if that was a reference to Virtual Realty News. I’m sure if the carbon tax and National Broadband Network were canned, her polling would increase dramatically– that’s the policy with polling.

Great to be back – it will be a most eventful run into Christmas and beyond.

Cheers ^__^

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12.08.11Robert Simeon2 Comments »

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The Australian economy is booming with the good news this week from the Australian Bureau of Statistics (ABS) that our gross domestic product (GDP) grew by 0.6 per cent (seasonally adjusted). There were no downward GDP revisions for the March quarter which remained at 0.4 per cent and I fail to understand why the global financial crisis (GFC) is still being compared to the worst global economic downturn since the Great Depression. The recession of the early nineties plays it off a break, but the early nineties could hardly be described as global either. Unemployment this time didn’t climb to eleven plus per cent (5.8 per cent as at July) and interest rates today remain at 49 year lows.

‘The Punch’ (another great online read) – Clive Mathieson wrote, What Recession? “What a lovely recession we’re having. Or not having”. I do agree however, with the school of thought that we will see some economic tremors along the way and this is inevitable given the sudden impact of the GFC.

Just like the Y2K computer scare – remember that? A global electronic meltdown was predicted when we moved from 31 December 1999 to 1 January 2000, over concerns that (to save computer disk and memory space), computer softwares were using two digits to represent a year (98 instead of 1998). For example the difference between 1 January 2000 and 31 December 1999 could be calculated as -100 years as against one day. On the stroke of midnight on 31 December 1999 it was predicted that this computer bug would see businesses and industry decimated and we would see planes falling from the sky. On the stroke of midnight, planes flew, fireworks went off over Sydney Harbour and computers worked fine.

Tim Mooney Photography

www.timmooneyphotography.com

Alan Kohler wrote another wonderful article “Bulls at the Gate” on his Business Spectator website. “But Australia’s June quarter GDP is important for two reasons: it confirms that Australia has not had a recession at all, and indeed the economy has now expanded for 18 consecutive years; and secondly it will help ensure that business and consumer confidence remains strong.”

As quick as a flash Wayne Swan announced that our economic growth (Australia has been the best performing advanced economy over the past year) was a result of the stimulus. Earlier in the week he said that opposition treasury spokesman, Joe Hockey, must be “deaf, dumb and blind – if he thinks the Government’s economic stimulus is not working.”

I did like this comment “There are tradies all over the country who are working on stimulus projects. It’s adding to confidence in a way that we don’t see anywhere else in the world.” True Wayne – but other countries are actually in recession – we’re not! Then we had some economic speak from the King of Spin, Ruddy Fantastic, who said “The figures (GDP) that have been released today indicate that we’ve got a long way to go when it comes to economic recovery.” Translated, that means we have a long way to go to get his budget into surplus again.

Leo Shanahan penned this beauty in The Punch “Rudd’s secret spending freeze: no soup for you”

Whilst on long roads, spare a thought for the Y2K equivalent of Australian economics Steve Keen who, in my opinion, irresponsibly predicted on nearly every available media outlet, that Australian house prices would fall by 40 per cent and unemployment would shoot through the roof to “depressionary” levels. This prompted Rory Robertson (interest rate strategist) to jump from the factory floor at Macquarie Bank to bet Steve Keen that if his predictions proved correct he would walk from Canberra to Mount Kosciusko. To read about the bet, Business Spectator filed this story by economist Christopher Joye – “Let the Kosciusko march begin” For the record, Rory Robertson was spot – on with his GFC commentaries.

This takes me to the cash rate which remained on hold when the Reserve Bank of Australia (RBA), met this week and decided to leave it at 3.00 per cent. The cash rate has remained at 3.00 per cent for five consecutive months and next month, I predict it will move to 3.25 per cent – the cost of bank funding is going up not down.

Rory Robertson has also predicted a 25bp increase on October 6 based on the latest data identifying a strong rise in house prices. He wrote “With the RBA reportedly keen to start tightening its loosest – ever policy stance at the earliest – available opportunity, the combination of (a) rising GDP (b) a brighter investment picture and, now (c) stronger growth in house prices, might well prove irresistible. The “economic emergency” clearly is over, “nipped in the bud” by early timely and forceful monetary – and fiscal – policy action.”

I believe he may have been referring to the July RP Data – Rismark Hedonic Index results that revealed Australian home values are now 1.8 per cent above their previous peak in February 2008. The intrigue is building for our Mosman markets given we have record high rents and record low levels of stock – better known as a heated market. Stay tuned.

Quite amazing that should the RBA increase the cash rate next month, it would be moving in a totally different direction to Fort Fumble – Ruddy Fantastic’s empire! That’s it! Ruddy Fantastic is out and now he will be called The Emperor – given his ‘sweet and sour’ patterns of behaviour.

Spare a thought for ‘big’ Johnny Della Bonka at Fort Crumble, where we saw the battered draw bridge rise (figuratively speaking). This prompted a vote of no confidence by the opposition in parliament this week – which failed. Our elected NSW government failed to produce yet another leadership challenge by the Bonka. Watch Frank “cranky” Sartor exercise his recently acquired power- play: the funnier side of politics where the patients challenge the asylum. The Emperor is far from impressed.

This week, Richardson & Wrench Mosman & Neutral Bay (RWM) released another great online application for our clients – ‘Mohbe’ – mobile phone real estate. Mohbe allows real estate agencies to have their own agency branded mobile phone website for their property listings. The mobile phone websites are viewable through any mobile phone which has an Internet browser and access to the Internet. RWM is Mohbe’s first client in NSW to offer this application. Take a test drive www.mohbe.com/124232

Cheers ^__^

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

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4.09.09Robert SimeonNo Comments »

For many, the new economic lingo has become rather disheartening. GD2 means Great Depression 2 and this week technical recession raced to number one spot on the economic chart with a bullet. It can’t be dodged nor can we hide from it and no need to look for the “smoking gun”. All eyes will now be taking aim at Fort Fumble (Federal government). After all Kevin Rudd and Wayne Swan keep telling us that they will lead Australia out of ‘technical recession’.

Australia’s gross domestic product (GDP) fell 0.5 per cent in the December quarter so the term, technical recession, comes as no great surprise. We are already in “Club Recession” with record memberships. Australia’s first negative quarter in eight years so now we have to wait another three months to confirm what we already know – we are in a recession – technically speaking.

First, Fort Fumble delivered its December “cash splash” which most believe was designed to buy votes for an early election. The ugly side of all recessions is unemployment where again all eyes will be on Fort Fumble to see what business splash initiatives they employ (no pun intended). It is well documented that I believe Pay Roll tax consistently kills both business and employment growth.

Over to Fort Crumble (NSW government) where NSW opposition leader Barry O’Farrell called on a NSW business stimulus package where Pay Roll Tax should be cut by 15 per cent (it needs to be much greater than that Bazza.) Premier of Fort Fumble Nathan Rees responded “We’ll do it in a fiscally responsible way, not a lazy way, not in an ill-disciplined way.” WOW – Australia’s most incompetent government quotes the words “responsible”, “lazy” and “ill-disciplined” in the one sentence! Moral dilemma? Absolutely not – Fort Fumble has its finger prints all over this week’s GDP figures and although they dominate, they are not alone.

I read this week “Wall Street Banking Explained”.

“Young Chuck moved to Texas and bought a donkey from a farmer for $100.00 and the farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said, ‘Sorry Chuck, but I have some bad news, the donkey died.’

Chuck replied, “Well, then give me my money back.” The farmer said, ‘Can’t do that. I went and spent it already.’ Chuck said, ‘OK then just bring me the dead donkey.’ The farmer asked, ‘What ya gonna do with a dead donkey? Chuck said, ‘I’m going to raffle him off.’ The farmer said, ‘You can’t raffle a dead donkey!’

Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody that he’s dead.’
A month later, the farmer met up with Chuck and asked. ‘What happened with the dead donkey?’ Chuck said, ‘I raffled him off. I sold 500 tickets at $2.00 each and made a profit of $898.00.’ The farmer said, ‘Didn’t anyone complain?’

Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’

Michael West wrote this week on www.smh.com.au an article titled “Vultures go hungry” (think of the donkey).

“Pacific Brands is a classic of the golden era of private equity.

Bought out of the floundering conglomerate Pacific Dunlop for $730 million in 2001, its new private equity owner ripped out $100 million in cash, geared it up with mountains of debt and sold it back to the stock market in early 2004. They banked $1 billion from the public float.

It was a slick operation all round. The privateers from CVC Asia Pacific and Catalyst Investment Managers, and their investment bankers from Macquarie Bank, who teed – up the float, slapped together an impressive board of directors. Fat with other peoples’ money to spend, the big super funds bought it with ears pinned back, even though it was loaded with debt to the tune of 3.5 times its earnings (before interest, tax and so on).

The success of the deal was not down to paper shuffling alone. The privateers had turned the manufacturer around. They fixed the supply side. They breathed new life into the brands. Blue collar marquees such as Chesty Bonds and King Gee turned bogan to chic.” The article goes on and well worth reading on the SMH website so search Vultures go hungry www.smh.com.au

To the Mosman real estate market where we are happy to report that over the last five (very difficult) months Richardson & Wrench Mosman & Neutral Bay (RWM) has successfully sold just over $80,000,000 worth of houses (that’s one house sold every seven days). A clue is that our subscriber sales to ‘Virtual Realty News’ have jumped to $827,158,019. According to Domain Property Data this is the highest recorded volume of sales recorded by any Mosman agency.

Congratulations to Mosman’s most popular property portal www.domain.com.au that this week released a very savvy new look with a much more advanced search criteria. A brilliant new interface – combined with excellent search functionality. Great to see an online business actually investing in and developing greater client online experiences for property market voyeurs. This week we acquired from Fairfax Digital the property gallery for Balmoral so we now exclusively own Mosman and Balmoral property galleries – for the benefit of our vendors.

Today, websites are graded. Go to http://website.grader.com to see how they are graded on marketing effectiveness. The score incorporates website traffic, search engine optimisation, social popularity and other technical factors. Compare websites – I have and the only website that beat us was www.domain.com.au (that being in the real estate category).

Judge yourself – RWM scored 87/100 which has a lot to do with our recession sales results.

Oops – I’m being technical again! However we are in a technical recession! A technicality that will identify Kevin Rudd, Wayne Swan and Julia Gillard as fake or famous. Now they will have to ‘walk the walk’ not talk the talk’. At the last Federal election they boasted best practice abilities so after this week’s announcements they now have to prove it – Australia is now in recession!

Yesterday’s release from the Australian Bureau of Statistics identified that in January, new building approvals fell 3.7 per cent – the Rudd/Swan cash stimulus (cash splash) failed.

Over to you Kevin – you told us that you are the man to lead this great country. History will now judge you and your elected government as being either fake or famous.

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/

Cheers ^__^

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6.03.09Robert SimeonNo Comments »