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Forums > General Discussion   Shooting the breeze...

Perfect Storm (financial)?

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Created by Macroscien 25 days ago, 13 Mar 2020
Macroscien
QLD, 5231 posts
13 Mar 2020 8:24AM
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We experienced today the biggest drop in the stock market since 1987's Black Monday.
On top, we have falling Oil Prices and Corona Virus, Global Travel Ban.
Property prices in Aussie MUST fall dramatically also as nobody could afford those in such circumstances.What we could expect now in the nearest future? If Australia is in a better or worse position to withstand the global financial storm?

holy guacamole
1008 posts
13 Mar 2020 7:25AM
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australiandebtclock.com.au/

Notice how it keeps going up?

You know what they say about things that go up.....

Paddles B'mere
QLD, 3125 posts
13 Mar 2020 9:35AM
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Yep, the storm has arrived unfortunately. Sometimes it only takes a straw to break the camel's back but COVID-19 is a 200x200 hardwood post

Mark _australia
WA, 19711 posts
13 Mar 2020 7:36AM
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Geez I wish I had money to buy shares right now

Paddles B'mere
QLD, 3125 posts
13 Mar 2020 9:44AM
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That's how the rich will be getting richer Mark. I see that the 10 year bond yields have turned so maybe people aren't locking cash up in bonds and I am assuming that the cash is going under the mattress and a spending spree will start shortly.

Pugwash
WA, 6891 posts
13 Mar 2020 7:45AM
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holy guacamole said..
australiandebtclock.com.au/

Notice how it keeps going up?

You know what they say about things that go up.....


Depends which way you view the graph... if you turn the graph from debt to financial position... well, what goes down continues to go down??

Macroscien
QLD, 5231 posts
13 Mar 2020 10:52AM
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Mark _australia said..
Geez I wish I had money to buy shares right now


They calling it : catch the falling knife.

saltiest1
NSW, 2176 posts
13 Mar 2020 11:57AM
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Yeah there's going to be rough times ahead but coming out the other side could be fantastic too if you're relatively debt free and retain an income. Just my opinion and I hope I'm correct, but I don't think it'll last years Interesting times for sure.

Paddles B'mere
QLD, 3125 posts
13 Mar 2020 11:08AM
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I agree Salty ................. it won't last forever ............ with change comes opportunity!

Harrow
NSW, 3234 posts
13 Mar 2020 2:03PM
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saltiest1 said..
Yeah there's going to be rough times ahead but coming out the other side could be fantastic too if you're relatively debt free and retain an income. Just my opinion and I hope I'm correct, but I don't think it'll last years Interesting times for sure.

Just tell me when. I'll give you two beers instead of one.

Time to convert back yet?

Harrow
NSW, 3234 posts
13 Mar 2020 2:04PM
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holy guacamole said..
australiandebtclock.com.au/
Notice how it keeps going up?
You know what they say about things that go up.....

Mixing your metaphors I think.

Main
QLD, 2001 posts
13 Mar 2020 2:59PM
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This will be worse than the GFC.

Like the GFC it will be a long recovery 4+ years.

Dont worry about picking the sharemarket it will be down for a long time - wait till companies start issuing profit warnings. Thats when the carnage will really start. Especially the banks who are houses of cards anyway. I wont be surprised if the banks get nationalised - their wholesale funding is getting cut and they will be paying more for money so they will either cut dividends to pay for it or put up interest rates. Remember the banks have a provision of less than 5% for bad mortgages.
Unemployment is about to spike. Increased unemployment = increase in mortgage defaults...
The best deals will be in the property markets. Downsizers who have contracts on luxury owner occupier apartments currently under construction have been holding their equity in the sharemarket - lawyers are already getting calls from purchasers worried they wont have enough equity to settle - its the GFC all over again !!!
We've seen the nuclear explosion on the horizon but have yet to feel the shockwave.

Bara
WA, 647 posts
13 Mar 2020 1:37PM
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^^^^
peak panic?

have a bex and a good lie down mate - we have the financial resources to dodge one more crisis then on the next one im with ya - armageddon!

japie
NSW, 5759 posts
13 Mar 2020 5:55PM
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Select to expand quote
Main said..
This will be worse than the GFC.

Like the GFC it will be a long recovery 4+ years.

Dont worry about picking the sharemarket it will be down for a long time - wait till companies start issuing profit warnings. Thats when the carnage will really start. Especially the banks who are houses of cards anyway. I wont be surprised if the banks get nationalised - their wholesale funding is getting cut and they will be paying more for money so they will either cut dividends to pay for it or put up interest rates. Remember the banks have a provision of less than 5% for bad mortgages.
Unemployment is about to spike. Increased unemployment = increase in mortgage defaults...
The best deals will be in the property markets. Downsizers who have contracts on luxury owner occupier apartments currently under construction have been holding their equity in the sharemarket - lawyers are already getting calls from purchasers worried they wont have enough equity to settle - its the GFC all over again !!!
We've seen the nuclear explosion on the horizon but have yet to feel the shockwave.



I've said on here before. I actually hope it happens and I hope it is so bad that the general public wakes up to the farcical thing which is our economy,

As Eppo stated. Read you history. The general public have been smitten by financial collapses on a frighteningly regular basis for the past two hundred years. Always through speculation and always through bank shenannigans. The only people who make any money out of it are the rich and the general public have to bear the pain and the consequences.

It is way past time that we look seriously at monetary reform.

Main
QLD, 2001 posts
15 Mar 2020 8:25AM
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Select to expand quote
japie said..

Main said..
This will be worse than the GFC.

Like the GFC it will be a long recovery 4+ years.

Dont worry about picking the sharemarket it will be down for a long time - wait till companies start issuing profit warnings. Thats when the carnage will really start. Especially the banks who are houses of cards anyway. I wont be surprised if the banks get nationalised - their wholesale funding is getting cut and they will be paying more for money so they will either cut dividends to pay for it or put up interest rates. Remember the banks have a provision of less than 5% for bad mortgages.
Unemployment is about to spike. Increased unemployment = increase in mortgage defaults...
The best deals will be in the property markets. Downsizers who have contracts on luxury owner occupier apartments currently under construction have been holding their equity in the sharemarket - lawyers are already getting calls from purchasers worried they wont have enough equity to settle - its the GFC all over again !!!
We've seen the nuclear explosion on the horizon but have yet to feel the shockwave.




I've said on here before. I actually hope it happens and I hope it is so bad that the general public wakes up to the farcical thing which is our economy,

As Eppo stated. Read you history. The general public have been smitten by financial collapses on a frighteningly regular basis for the past two hundred years. Always through speculation and always through bank shenannigans. The only people who make any money out of it are the rich and the general public have to bear the pain and the consequences.

It is way past time that we look seriously at monetary reform.



How many times have you heard the narrative of 'the banks are unquestionably strong' from both sides of government!!
Most analysts can tell you they have had every last bit of profit financially engineered out of them and paid it out as dividends. Their only assets are their loan books. How strong are they ?

AndyShwartz
WA, 56 posts
15 Mar 2020 6:47AM
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People with money in the bank, time to take it out?

Paddles B'mere
QLD, 3125 posts
15 Mar 2020 10:09AM
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If you're silly enough to do that, you should invest it in toilet paper

Main
QLD, 2001 posts
15 Mar 2020 10:49AM
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Select to expand quote
AndyShwartz said..
People with money in the bank, time to take it out?



No the govt says it will guarantee deposits. but if you own bank shares and youre still in the black I'd be looking to sell down. They are very vulnerable from a share price/ profitably collapse. Which is different a Bear Sterns position where there was no govt guarantee of bailout commitment and in place.
Your deposits are safe - your shares in banks are not.

Paddles B'mere
QLD, 3125 posts
15 Mar 2020 11:43AM
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The government guarantee up to $250k with eligible institutions.

Bank shareholders were always going to get punished after the banking inquiry anyway, now they may be exposed to a little more risk of bad debt but I reckon the banks will help people trade through, they don't want houses to sell or to kill their cash cows. Our bank has already emailed to let us know that financial relief is available if we need it.

Bananabender
QLD, 1036 posts
15 Mar 2020 12:23PM
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Select to expand quote
Main said..
This will be worse than the GFC.

Like the GFC it will be a long recovery 4+ years.

Dont worry about picking the sharemarket it will be down for a long time - wait till companies start issuing profit warnings. Thats when the carnage will really start. Especially the banks who are houses of cards anyway. I wont be surprised if the banks get nationalised - their wholesale funding is getting cut and they will be paying more for money so they will either cut dividends to pay for it or put up interest rates. Remember the banks have a provision of less than 5% for bad mortgages.
Unemployment is about to spike. Increased unemployment = increase in mortgage defaults...
The best deals will be in the property markets. Downsizers who have contracts on luxury owner occupier apartments currently under construction have been holding their equity in the sharemarket - lawyers are already getting calls from purchasers worried they wont have enough equity to settle - its the GFC all over again !!!
We've seen the nuclear explosion on the horizon but have yet to feel the shockwave.


With all respect the current economic woe is Coronavirus driven whereas the GFC was driven by the collapse of the financial industry largely as a result of the shonky US mortgage loans. The effect may the the same somewhat in the short term however as we see China has already turned the corner and will no doubt begin ramping up production. A lot different to countries going broke like in the GFC. In regard to nationalising the banks . Not a hope in the world.
cast your mind back to the State Bank of Victoria for example. Run by the Gov't or should I say run down by the Gov't to where it was broke and given to the Comm Bank who were then gov't owned and since privatised. BTW I have a few shares in the big four and am actually contemplating buying a few more if the market continues to fall.

Bara
WA, 647 posts
15 Mar 2020 10:49AM
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Select to expand quote
Main said..

AndyShwartz said..
People with money in the bank, time to take it out?




No the govt says it will guarantee deposits. but if you own bank shares and youre still in the black I'd be looking to sell down. They are very vulnerable from a share price/ profitably collapse. Which is different a Bear Sterns position where there was no govt guarantee of bailout commitment and in place.
Your deposits are safe - your shares in banks are not.


If there were a banking collapse in Australia it would coincide with a property collapse in the order of 50% plus. In a year. And then it would stay there. For a decade.

If you really believe it's gonna happen your best move would be to sell your house and go rent.

The aud would also collapse so don't keep it under the mattress either.

Yep sell your house and buy some gold bricks don't stop with some bank shares.

Or consider this- faced with that scenario what would be the response? Neg interest rates, massive quantitative easing, huge fiscal stimulus. More than enough to offset a temporary contraction from a virus.

It's actually a recipe for banks to clean up if there is demand - get paid to take money off the rba and then lend it out at a margin.

Out the other side we would have nothing left for the next crisis just like Italy is staring down in this one. All eyes on the EU there.

Personally once the vix subsides its time to buy not sell bank shares imho

Main
QLD, 2001 posts
15 Mar 2020 1:27PM
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I think we have a debt problem and the CV is the catalyst that comes along from left field and pricks the bubble. The RBA is out of sugar so there's no quick fix available like last GFC. The government has no surplus so will have to increase debt. CEO's have been increasing corporate debt to record high levels doing share buybacks to push share prices higher. Personal debt is ridiculously high. People are sitting on inflated and overvalued assets with the help of cheap debt. I don't know for sure but I have been listening to the analysts warnings for a long time....
At a micro level watch what happens with apartment settlement numbers going forward and bank mortgage defaults.

Harrow
NSW, 3234 posts
15 Mar 2020 3:16PM
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So what this really boils down to is to make sure you have a homebrew going, with plenty of malt, hops and yeast on hand.

Harrow
NSW, 3234 posts
16 Mar 2020 5:32PM
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Mark _australia said..
Geez I wish I had money to buy shares right now

You would have just lost another 10% today.

saltiest1
NSW, 2176 posts
16 Mar 2020 5:41PM
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Harrow said..

Mark _australia said..
Geez I wish I had money to buy shares right now


You would have just lost another 10% today.


Yeah the dead cat bounce is a bad time to consider buying in my experience

bazz61
QLD, 2833 posts
16 Mar 2020 4:43PM
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What if they find a cure for t h e virus ...back to normal,..?

Paddles B'mere
QLD, 3125 posts
16 Mar 2020 4:49PM
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Yep, not even a cure for the virus Bazz, just a cure for the panic.

Gboots
NSW, 841 posts
16 Mar 2020 6:48PM
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Paddles B'mere said..
The government guarantee up to $250k with eligible institutions.

Bank shareholders were always going to get punished after the banking inquiry anyway, now they may be exposed to a little more risk of bad debt but I reckon the banks will help people trade through, they don't want houses to sell or to kill their cash cows. Our bank has already emailed to let us know that financial relief is available if we need it.


Will the government honour the $250K? Have they actually got the capital ?

Harrow
NSW, 3234 posts
16 Mar 2020 7:43PM
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^^ They can print it for next to nothing. Nothing comes for free, it's just a dilution of the dollar.

Paddles B'mere
QLD, 3125 posts
16 Mar 2020 7:04PM
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Bloody hell Gboots, how would I know? That's a how long is a piece of string question

They're talking about buying back government bonds Harrow, no dilution just yet



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Forums > General Discussion   Shooting the breeze...


"Perfect Storm (financial)?" started by Macroscien