Last Friday, I read with interest an article on www.crikey.com.au by John Hewson – economist and former Liberal party leader titled “Hewson : we could see an election this year” where in part he made the following comment “At best, the Rudd Government’s second stimulatory package will just buy some time — simply delay the inevitable. As long as the global recession continues to deepen and, as a consequence, China’s growth continues to stall, the best Rudd can hope for is to hold up consumer spending by the cash handouts sufficient to avoid a technical recession — namely, two consecutive quarters of negative growth. “The plot this week began to thicken.

Ross Gittins from The Sydney Morning Herald www.smh.com.au filed this week an article titled “With best intent, politics intrudes” A great read so here are the first nine paragraphs “Kevin Rudd has long been afraid the downturn in the economy will cost him re-election, making his Government a one – term wonder. Malcolm Turnbull knows the downturn offers the best chance he’ll get to defy history and win the election, thus securing his own leadership.

These never – to – be admitted truths explain the political games both men are playing over last week’s budgetary stimulus package, even as the economy burns.

If you want to understand what’s happening in the economy and the rights and wrongs of economic policy you have to be able to distinguish between the politics and the economics. But that’s not easy because the pollies are always trying to disguise their political motives as economic.

Whatever successful politicians do or say, the political implications of what they do are never far from the front of their minds – even when they’re doing just what they should be doing in the nation’s interests.

As part of his long-running efforts to ensure he doesn’t get blamed for the recession. Rudd has repeatedly emphasised how bleak the news is from overseas and how badly it will affect us. It’s true, of course, but saying it is so often and so forcefully risks adding to the blow to business and consumer confidence.

Rudd hopes he can escape blame for the downturn provided he’s seen to have done his best to respond to it. That’s partly why he keeps popping up every few weeks with another measure to counter it.

Even so, mainstream economic gloom-from the International Monetary Fund to the Australian Treasury and most macro-economists – has been urging the Government to use the budget to stimulate demand, to make the stimulus big to get it happening as soon as possible.

It needs to be big because the global recession is expected to be so severe, it needs to start as soon as possible because getting in before the economy starts unravelling will be more effective.

Of course, the need for haste doesn’t justify Rudd’s attempt to push the legislation through Parliament in just a day or two.”

Back to the thickening plot of Rudd’s early election (alleged) plans. So this investigative agent went off to The Tally Room where he found that the Queensland Labor government must call a state election by September 2009. This is to win a fifth term where a loss would seriously impact what some media outlets are already calling the “Ruddslide”. A clue: infrastructure spending to improve state government perceptions for approval levels, maybe re-election?

Then the clanger in yesterday’s Daily Telegraph with the headline “Protect Rees, Rudd tells Labor MPs” I loved this – “Labor Party bosses have been ordered to protect Premier Nathan Rees from a leadership challenge and “calm down NSW” to allow Kevin Rudd to call a possible early election in the second half of this year.

Oh dear – what extent some individuals will go to, to preserve and stroke their suffering egos. A case of once bitten twice shy? Maybe a case of Sunrise to Sunset!

Next week, we address the amendment to Land Tax legislation where the Premier Nathan Rees introduced his premium rate and investment property owners had the current rate of 1.6 per cent increased to 2.00 per cent for investment properties valued over $2,250,000.

With GST receipts already down by approximately 40 per cent, the elected governments simply increase taxes which results in businesses reducing staff.

Nine years on – it is now revealed that GST has increased taxes NOT reduced them. The platform was fraudulently sold to the voting public.

The GFC did not help – however State governments are just as bad, even worse. They escalate the financial remorse for taxpayers and it will only get worse.

A hard week for all Australians, especially those involved in the tragedy of the bush fires in Victoria. We have placed a link on our homepage for those who wish to contribute.

http://www.rwm.com.au/2009/02/victorian-bushfire-appeal-2009/

Cheers ^__^

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Very few countries globally, enjoy a tax free environment for their principal place of residence. The current market environment presents a leap frog market where losses can, in a few year’s time be capitalised into tax free capital gains. As real estate markets shift so should market sentiment and is was no better example than those who purchased during the last recession (1990 – 1993). They saw entry price double within a few years (tax free with the principal place of residence.)

In the current LPS markets you simply have one of three choices: –

1. Engage and entice the market.
2. Rent your property out.
3. Monitor the market with the possibility of re-listing within twelve months time, or beyond.

Our GPS markets are certainly not sugar-coated in 2008 and this resonates through to our LPS property markets. Looking closely at the Mosman real estate market we note that quite a few properties that failed to sell have now been rented out (Option 2) over the past week(s). Markets do recover although I would suggest that the Mosman real estate market will point north faster than other real estate markets based on historical anecdotal sales evidence.

Superannuation is more like a super disappearance where for twelve months to the end of October, median balanced fund returns fell by 17.6 per cent. Then on top of this result we have a bear market – which should in my opinion be called a” bare” market. Whilst on the grizzly bear markets in 2007 – 2008 the recorded performance is much worse than that of the 1987 crash where $800 billion to $900 billion has been wiped off the share value of Australian shares over the past 365 days. The grizzly bear is now circling property markets feeding off a diet of debt.

Fitch Ratings announced this week that more than 840,000 residential mortgages valued at $140 billion remain outstanding as at the close of business September 2008. The top 10 are;-

1. Helensvale (Qld)
2. Nelson Bay (NSW)
3. Raymond Terrace (NSW)
4. Katoomba (NSW)
5. Greenacre (NSW)
6. Guildford (NSW)
7. Vaucluse (NSW)
8. Fairfield (NSW)
9. Cessnock (NSW)
10. St Marys (NSW)

NSW – records ninety per cent of the top 10! A major concern – for Fort Tumble (NSW Government) although such results are testament to their abuse of power. A manifestation of the “lights being on and nobody home”. Fort Tumble is a strong contender for being the most incompetent government ever should the “Guinness Book of Records” record such a category.

So psychedelic here we go – forget the Holy Grail! Our collective attentions are now turned to showing us the money! This starts at home where interest rates are tipped to drop to the lowest levels since the early 1960’s – Flower Power! In January 1960, the cash rate was 2.89 per cent which is a classic example of history repeating itself – albeit nearly 50 years on. For those with cash – at – bank, there will be little to no return on investment.

So the decision is then shares, superannuation, or bricks and mortar as the preferred investment model that allows participants to pin the tail on their dollars. Alas, the beginning of the economic recovery process better known as discretionary spending identifying market choices that deliver profit not losses. Where corporate ambiguities continue to reign supreme it leads me to suggest that the value return of a property is always much more secure than that of a business on the shock market – oops! I meant share market. You can’t short sell the property markets. Hedge funds do not invest in bricks and mortar. Simply put: real estate is much easier to understand for the vast majority than trying to follow the share market as property is much more transparent and the family home is tax free.

No doubting that we are presently in a spy market as against the much preferred buy market. This will change when we enter the psychedelic market where I predict that when the Reserve Bank of Australia meets next month we can expect another 125 basis point reduction. Market rate reductions stimulate the spy markets which will no longer be regarded as shy markets.

Our spy markets are very strong when I do a Google Analytics report for our “Virtual Realty News” and website online activities. Our online traffic goes to;-

• Six continents
• Twenty sub – continent regions
• 93 countries/territories
• 839 cities

Our top 10 cities are;-

1. Sydney
2. Melbourne
3. Brisbane
4. London
5. Austin, Texas
6. Singapore
7. Hong Kong
8. Bucharest
9. Perth
10. New York

Our 839th city is Etterbeek, Brussels, where we had one visitor. At the end of the day it is all about captivating our audiences and this is certainly happening with our fast increasing traffic to our new website.

We are excited to report that our website is the number one individual website visited in Mosman for real estate searches.

For those receiving email alerts, on your email cover page in your inbox under this week’s article, is an easy three step – process to update your buying criteria.

RWM thank for your ongoing support and readership.

Now off to the blog we go – how do you see the markets? How much influence will the psychedelic markets have on property prices? How cheap will the Reserve Bank of Australia have to go with rates?

Cheers ^__^

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