WE’RE BANKING ON MODERN TIMES !

WE’RE BANKING ON MODERN TIMES !

They say that “money makes the world go around” although this week the resonating message was that “money is the route of all evil” and more than a few business journalists are of the opinion that world economies are fast tracking pay – back time. The recently launched online business E-zine www.businessspectator.com.au (a brilliant website) filed some amazing commentaries by Messrs. Kohler and Gottliebsen that identified more than a few issues of concern (both here and overseas) that demand strong consideration.

Robert Gottliebsen wrote an article “Voting in dangerous times” and two points grabbed my attention.

1. “When the world is about to move from a boom to a significant slowdown, with the risk of a US recession, at the same time as Australian interest rates are rising because inflation is breaking out after a long boom.

2. When the US/global banking system has lost at least $US300 billion (some say total losses will be $US2 trillion) in stupid bad loans, but has only written off about $50 billion, and Wall Street keeps falling every time more bad news comes out.”

When one looks at $US2 trillion potential losses, what makes this figure scary is that the Australian economy is $AUD1.100 trillion. Global inflation is spiking, thanks to India and China and this is a major concern for our Reserve Bank of Australia. In www.crikey.com.au Glenn Dyer wrote “Doom and gloom takes risk aversion to a new level. The head of the Man Group, Peter Clarke, said overnight that one in 10 hedge funds around the world could fail. Naturally, as the largest manager of hedge funds, he was exempting his own stable, but he is in a position to know something about the health of this still edgy form of investment.” Again,the focus was on housing- related losses that continue to hammer away at financial stocks. This week the Commonwealth Bank joined its rival, National Australia Bank, with another warning that the current global liquidity crisis will further increase the cost of mortgages. Whilst both banks refrained from saying when the increases would be implemented, they suggested weeks not months. The cost of borrowing money from international credit markets is going up not down.

If we look at the Mosman house market, the 2007 market has produced and taken property prices to their highest ever recorded levels.

2002 – 481 sales. Average price $1,716,000 Total turnover $783,831,000
2003 – 373 sales. Average price $1,937,000 Total turnover $670,058,000
2004 – 305 sales. Average price $1,876,000 Total turnover $568,476,000
2005 – 323 sales. Average price $2,143,000 Total turnover $679,403,000
2006 – 375 sales. Average price $2,262,000 Total turnover $841,463,000
2007 – Figures compiled to 22 November 2007
2007 – 408 sales. Average price $2,507,000 Total turnover $995,148,000

Source: Home Price Guide

The Dyson Austen top 10 prestige residential survey for July-September 2007 CLICK HERE

For the first time ever Mosman house sales are now well over $1 billion for the year January to November and we believe that by 31 December 2007, this figure will be closer to $1.250 billion. Our investigations have identified that never before has a single postcode broken the $1 billion mark in a calendar year.

2008 will be a very interesting year indeed, especially as most are of the opinion that this Saturday, we will see a change in government. On top of this, the word recession will play a dominant role in public perceptions. What we did not have in the “recession we had to have” was a thing called the Internet. Back then, the word “Google” was hardly a household name and should markets tighten, online facilities (from a cost perspective) will become the order of the day.

Previously, the greatest problem with a recession was the lack of ability to communicate with markets. Today, online technology has removed this fear (at least for those who embraced it). Simply put, businesses are better prepared today.

The greatest concern with tightening markets, is when investors cash-in to realise assets, otherwise known as the safety zone. The problem with Australian property markets is that populations increase while rentals decrease which explains why rents and inflation continue to increase. A taxing problem that continues to escape the minds of politicians and the rental crisis has never been mentioned during the entire election campaign.

Over to the constituents where incumbents would now be aware that “election parties” are back in vogue. Thank goodness we have the Internet, where today, we have more information. A shame that politicians don’t go online as often as they should.

Kevin Rudd may speak Mandarin, but will he choke on the pips?

Or maybe you may be headed for this inspection? When this appeared on the Domain website yesterday it had 30,000 hits in just a few hours. Click Here Cheers ^__^

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