mining boom collapse = house prices plummet, page-60

Kingy if you don't think you are being aggressive you need a reality check.

This is a sure sign of a new stage in the property down turn. I feel sorry for Keene he has been telling the truth and has been attacked badly. He was right and instead of listening the property bulls just couldn't.

There is still a chance to get out but the liquidity is steadily drying up. A sound investor is happy to listen to alternate views but baiting - fair enough I don't blame you for not liking that. I was just pointing out the anger and think it was an accurate observation. Speaking of views - from that Variant report, which is being passed around the global Funds industry (The Unlucky Country):

"AUSTRALIA’S EXTERNAL FINANCES RESEMBLE A COUNTRY IN THE EUROPEAN PERIPHERY
The Australian banking system is highly reliant on external funding and will likely become dependent on the RBA for liquidity in the near future. Our view is that the RBA will have to become much more activist in supporting its major banks as the structural slowdown in China and the housing market continues.

We believe the RBA will ultimately be forced to take similar action to developed market central banks either by aggressively cutting interest rates or propping up banks through domestic open market operations akin to the liquidity injections seen by the ECB. Quantitative easing is also a possibility if the RBA is forced to buy bank debt to try to stave off a financial crisis. Under such a scenario, the AUD would fall considerably.

The crisis-stricken economies along the eurozone periphery share one key characteristic: their external debt is too high and their net international investment position (NIIP) - measuring the difference in stock value between assets held abroad and asset held domestically by foreigners - is deeply negative.

Yet, a closer look and you will find Australia and its neighbour New Zealand in the same company, with negative NIIP well above countries such as Turkey and Brazil."

and...

"Both Australian banks and Australian corporates are highly dependent on international funding for their financing operations with funding costs proxied by the basis swap.

However, based on the latest data from the RBA, the funding profile has improved in the past two years with deposits now accounting for a larger share of the total funding profile. Furthermore, the maturity of external wholesale debt has been extended significantly."

and something I have been warning about...

"A total funding need from external sources at 40% of total funding is extraordinarily high. Moreover, about half of this external debt is short term. This increases risk yet further should Australia face a funding shock, driven either by events at home (a severely slowing economy), or abroad (eg a euro-driven credit event)."

Comment: Funding shock = drying liquidity for housing = less buyers and more distress sales. Then they state this opinion:

"Ultimately, our view is that the Australian economy is very similar to the UK economy in several respects (overvalued property market, excessive household debt, etc). In part, as a result of the mining boom and as a result of low global interest rates in the past decade, Australia has also had a severe housing bubble. This bubble is now in the process of deflating."

"The Reserve Bank of Australia (the RBA) has openly stated that it is not worried about a slowdown in the Australian housing market, but as the slowdown grinds on it will be difficult for the RBA not to take notice. A final note from GMO, the investment management firm. They did a study on bubbles and identified – using their definition for what a bubble is – 34 bubbles over the years. 32 of these are back to the trend from before the bubble began. The only two outstanding are the UK housing market and the Australian housing market."

Very interesting they do not mention gold as a bubble - was not in their opinion anyway. Now take this any way you like it is offered as an alternate view to the bulls in here and you can ignore it or use it as input for your model as a possibility.

Kind regards,
CW