Tuesday, 1 May 2012

The RBA Have Hit The Button

Wow. Fear and Panic. Smell it.

RBA's 50-point rate cut shot in arm for non-mining economy

Non-mining economy? That other bit that measures 85% of Australia's GDP (the non-mining sector)?  The 98.2% of Australian workers not employed in mining? I thought it was a mining boom and Australian's benefited?

You have to laugh. No one saw this coming did they (Smells Like?)

David Collyer picked up on an interesting wee morsel last month that the media chose to ignore and bury (so they don't spook the herd), What a party; what a hangover!

The RBA said yesterday assets have fallen by $40,000 per household in the last year. 

What about the mining boom? The Ponzi scheme starts to unravel. $40K south in one year? Grab the popcorn.

No wonder everyone is now saving over ten percent of their incomes and slashing mortgage balances with grim determination.

The economy, which usually steers like an oil tanker, has turned on a dime.

We were spending about 103 per cent of incomes, pinching off some of the strong rises in home prices and balancing this with borrowings.

What happened? Falling land prices.

103% of incomes? What could possibly go wrong in an economy that relies on a property bubble and more debt for growth?

The ABS says house prices are down nationwide by a mere 4.8 per cent (ABS). This is the result.

ABS horseshit. The fact is you can drop your 2009 peak valuation by 15% and you won't get a buyer.

ABS stats from MacroBusiness

The magic number is 1.15% . Drop house prices by 1.15% per month and in 5 years they have halved in value, not allowing for inflation. The beauty of 1.15% is that the herd is by and large so stupid and sans a mathematical clue it appears to be an insignificant number to be ignored. That own goal is scored a lot sooner if we take the stagflation pill.

Now lets see what interest rate the banks pass on? My bet is very little as they need my deposit capital more than ever.

However, my bet shorting the AUD yesterday is off to the races. Fallen now 1.2% in 32 hours or 120% return on margin. Thanks Glenn.

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