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  • Dubious real estate coverage finally questioned : third wave group
    had happened Several of my favourite bloggers and blogs are singled out for attention Leith van Onselen Delusional Economics who are both writers on the group site MacroBusiness and Bubblepedia with Kenneally marvelling over the one sided slant of much mainstream commentary Of course you don t have to be an economist to wonder why the sentiment of most real estate commentary is fundamentally pro property Articles reporting that prices will never fall often include a get in now before it s too late message Yet articles reporting flattened sales typically conclude that the time to buy must be now Buying a house after all is not like trying a new cafe or seeing a movie it is by many orders of magnitude the largest investment most people will make in their lives With some relief bloggers have noted examples of more qualified coverage since March when it became clear that both house sales and prices have recently slumped They discussed one mainstream media article with great enthusiasm on 6 March the Sunday Telegraph revealed that reported clearance rates used to indicate market health in Melbourne and Sydney are often not accurate and are manipulated by realtors a contention that has long been made on the blogs The entire article is well worth your while and reassures that at least someone has noticed Category general posts Tags australia bubblepedia delusional economics leith van onselen macrobusiness real estate the monthly Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks

    Original URL path: http://www.thirdwavegroup.com.au/general/dubious-real-estate-coverage-finally-questioned/ (2013-02-03)
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  • Housing continues to roll over : third wave group
    about the latest developments in housing is the steadily evolving rhetoric seen among the major players It seems to now be universally accepted by property spruikers that prices will remain flat this year a significant change in attitude for a property only ever goes up group Banks are also making some surprisingly uncharacteristic comments The move along no bubble to see here pillars are now starting to make quite negative noises Take for example CommSec s April 9 Economic Insights report There is no doubt that conditions are tough in the housing sector Recent comments from National Australia Bank s finance chief The bull run in house prices is set to run out of steam as investors realise that credit costs are dwarfing anaemic yields according to a senior banker National Australia Bank finance chief Mark Joiner yesterday said the property market was fully valued and likely to languish I don t think property can go up from here he said It s at the top of the range on affordability It s well out of line internationally And ANZ s senior real estate economist Ange Montalti who warns that Further price weakness is expected over 2011 as the prospect of additional rate rises weigh on both affordability and investor sentiment Why this change in rhetoric from the banks We have spoken many times of the level of external debt Australian banks have taken on to fund the housing bubble Are they starting to realise they need to start pushing for further housing assistance from the government Has the softening up process now begun On a lighter note some real estate agents are doing their best to maintain the reputation of their profession Lucky they ve got the government Category general posts Tags australia real estate Comments One Response to

    Original URL path: http://www.thirdwavegroup.com.au/general/housing-continues-to-roll-over/ (2013-02-03)
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  • The lighter side of the Aussie housing market : third wave group
    improve the availability or affordability of rental accommodation Readers can read my analysis on the impacts of negative gearing here and here The Fairfax article by Michael McNamara that has so pleased Unconventional Economist is also a great summary of the main issues Apart from being unfair and useless negative gearing is a license to speculate it deteriorates affordability and makes property markets far more susceptible to bubbles So shouldn t we draw a line through negative gearing and start again In short negative gearing misallocates resources in the economy by ripping funds out of the small business sector and pouring it back into highly geared property speculation Is that really what we want as the focus of our economy Sounds like a one way ticket down sub prime collapse street to me and on the other hand you have the kind of analysis that only a field of study called Boganomics can produce Some laugh out loud weekend reading Boganomics is the study of all things bogan and proponents of this field claim to perform a crucial role in Australian society Apparently bogans may tell you they want to bed you or glass you but are less adept at articulating their many other wants and needs This is where the boganomist comes in they are effectively the unofficial mouthpiece of the bogan Category general posts Tags australia boganomics leith van onselen real estate Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg

    Original URL path: http://www.thirdwavegroup.com.au/general/the-lighter-side-of-the-aussie-housing-market/ (2013-02-03)
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  • China’s Ghost Cities : third wave group
    The following links provide additional insight into the sheer scale of the Chinese ghost construction taking place Daily Mail The ghost towns of China BBC Work stops on Chinese ghost town Time Ordos China A Modern Ghost Town Al Jazeera China s empty city A number of high profile analysts and investors view this superfluous construction with concern some considering it the modern equivalent of the building of the pyramids Mike Shedlock is particularly forthright in his assessment All this talk about how undervalued the Yuan is how China will rule the world and why the Yuan will be the next global reserve currency is pure silliness China s growth is nothing more than a credit bubble on steroids Cities are vacant yet China keeps building and building and building The true state of affairs is China s banks are insolvent China is building units for which there is little demand and few can afford China will have to print money to pay for all of this malinvestment The idea the Yuan is undervalued fails to take into consideration any of this Play the video Dateline and decide for yourself Category general posts Tags china dateline mike shedlock real estate Comments 2 Responses to China s Ghost Cities wake up says April 6 2011 at 4 22 am or maybe the are waiting for all the americans who will be brought here to work slave labor after the chinese russian american war gets going Reply Jason Buckland says March 28 2011 at 6 05 pm I wonder if they are haunted Reply Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells

    Original URL path: http://www.thirdwavegroup.com.au/general/chinas-ghost-cities/ (2013-02-03)
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  • Aussie housing data not looking so hot : third wave group
    household balance sheet According to the RBA household debt that is the aggregate of owner occupied and investment property loans plus personal debt continues to grow but at ever slower rates If house prices are to fall over the coming quarters then the chances are that pretty soon the Australian consumer will join those of the US in outright deleveraging All in all not a great outlook from the engine of the economy the housing sector Category general posts Tags australia datadiary real estate Comments One Response to Aussie housing data not looking so hot The Mainlander says March 26 2011 at 6 35 pm Ouch Reply Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben

    Original URL path: http://www.thirdwavegroup.com.au/general/aussie-housing-data-not-looking-so-hot/ (2013-02-03)
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  • Extreme consensus : third wave group
    that says Wake Up You Schmuck and all they think about 20 gains in a month and two stock splits a year In other words it s purely unobtainable mania brought about by something proverbially spiking the punchbowl Blow Off Phase aka Bailout Phase Usually accompanied by a it will come back mentality and a general lack of comprehension that you ve just been screwed but haven t gotten the morning after thank you call The big institutional investors and fast money traders will have predetermined stop loss orders in place and when those are tripped in mass quantity the bottom completely falls out and panic selling begins The best traders will also begin to pile on the shorts accelerating the sell off IN the end the value will be pushed below the historical trendline since we re just as likely to overreact on the downside just as much as we ll overreact on the upside History provides many examples of bubbles There are the famous ones such as the South Sea Bubble the Tulip Mania and more recently the tech boom A chart of any of these manias will look remarkably like the bubble psychology graph above There are however less famous manias that are also textbook examples of the power of the crowd to be wrong In the March issue of The Elliott Wave Theorist Robert Prechter gives one such example Figure 1 is a long term chart of U S interest rates showing where this intense consensus took place You can see that economists conviction in June 1984 that interest rates would rise and bond prices would fall derived from the persistent trend that had been in force since the 1940s That trend had already ended in 1981 but their memory for the old trend was so strong that when rates tested their highs in 1984 the only direction that felt right to them was up A consensus pretty much requires exogenous cause thinking and then agreement on the fundamental factors that will drive prices higher or lower The more convincing the arguments seem the surer one can be that a consensus is signalling a turn in the other direction It seems unnecessary to take space to argue in this case why economists thinking was in fact rationalization of a powerful herding impulse The chart says it must have been as their reasoning and logic were strikingly erroneous Just look at the crash in interest rates over precisely the twelve month period that they predicted they would rise Herding is a good explanation a respectful one for an error that large and perfectly timed The title of Robert Prechter s latest newsletter is The Awesome Power of Consensus Thinking a sentiment with which we wholeheartedly agree We also agree with his belief that today there is a convergence of opinion that exists on nearly every front and that this consensus should have the same implications now as in the past One of those fronts is the stock

    Original URL path: http://www.thirdwavegroup.com.au/general/extreme-consensus/ (2013-02-03)
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  • Another bubble warning : third wave group
    CBA in the late 1990s he ignited a price war amongst the banks by slashing CBA s variable mortgage rate remember equity mate Let s also not forget that the CBA is the second largest issuer of offshore wholesale debt as well as Australia s second largest mortgage lender behind Westpac Nevertheless Mr Murray is right to be concerned Australia s over dependence on China and rising housing values are its key vulnerability Besides leaving the Australian economy vulnerable to any shock whether it be internal or external the real tragedy is the supreme unaffordability of housing for new entrants and the debt trap many find themselves suckered into Delusional Economics who now writes for the Macrobusiness superblog gives some colour to this unaffordability I looked back through some records last week to check a few figures In 1998 I purchased a house that cost me 3 times my gross salary at the time Today if I was still in that job I would be earning 140 of that salary I know this because I am still in contact with the company I worked for then and I asked then recently what they are paying people in that position The house however has increased in value by 230 I know this because it recently sold for that amount A house I purchased in 2001 sold for 300 of the purchase price in 2007 Let me know if you are aware of a job that kept up I get the feeling from some comments I have read in regards to this topic that people confuse their own career income growth with wage growth For instance I now earn 300 of what I did when I first started working as a fresh faced university graduate Therefore the fact that houses have gone up by 300 in the meantime isn t a huge issue for me especially since I purchased a couple of them along the way However that is not the measurement that matters What matters is how expensive houses would seem if I was a fresh face graduate today and in that case they are hugely expensive As many of the bloggers on this site have talked about government policy in support of housing is no longer providing equitable outcomes It is quite clear policies such as negative gearing and first home buyers schemes are simply pushing prices ever higher and further out of reach of the younger generations This may not have been the case when these schemes where first introduced but after a decade long credit binge that has now pushed housing into the stratosphere the last thing younger generations need is government policy keeping them there It may keep the older generations content but it is now at the expense of the young So now we have a situation where young Australians are being pressured into purchasing property that they realistically cannot afford at the same time the government continually introduces new policies to make the issue worse

    Original URL path: http://www.thirdwavegroup.com.au/general/another-bubble-warning/ (2013-02-03)
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  • PIMCO: exit stage right : third wave group
    of the liquidity crisis Why is this significant Having worked at PIMCO for 4 5 years I can tell you that this kind of a major allocation decision was not reached overnight nor was it reached without considerable debate by every senior member of the firm In other words the decision to lower total US Treasuries to 0 was discussed by senior portfolio managers senior account managers and many prominent outside consultants for days and perhaps even weeks before it was finally implemented They never do anything over there without vigorous debate and discussion By this move PIMCO is clearly indicating almost by putting their reputation on the line because imagine the underperformance they face if they are wrong that bond yields in the US will be rising soon US Treasury prices falling and liquidity drying up to some degree Bill Gross PIMCO s founder and managing director has famously remarked that if the US were a corporation no one in their right mind would lend us money and that for the last decade we ve been relying on the kindness of strangers to help cover our debts That sentiment has not stopped PIMCO from holding large quantities of US treasuries in the past so what has him so spooked that his fund dumps it s entire government holdings in one month The danger it seems lies in the looming termination date of the US Federal Reserve s latest quantitative easing program when these programs are almost certainly going to be exposed as monumental failures In his latest Investment Outlook newsletter Gross argues that the US central bank s decision to engage in two rounds of quantitative easing the first beginning in December 2008 and the second commencing last November appear to have been successful The US central bank s plan has been to pump money into the financial system in order to reduce long term interest rates thereby forcing investors into riskier assets such as shares in the hope that this will create a wealth effect that will encourage consumers to spend more And indeed the US share market has almost doubled since Ben Bernanke announced the first round of quantitative easing dubbed QE1 in late 2008 But Gross questioned whether quantitative easing actually healed as opposed to merely covering up the symptoms of a sick economy The real test of whether the US central bank s policies had been successful would come when the current round of bond buying dubbed QE2 came to an end If on June 30 2011 the assumed termination date of QE2 the private sector cannot stand on its own two legs issuing debt at low yields and narrow credit spreads creating the jobs necessary to reduce unemployment and instilling global confidence in the sanctity and stability of the US dollar then the QEs will have been a colossal flop In the following interview Bill Gross discusses his no doubt sanitised reasons for the massive sell down in government debt As one market commentator

    Original URL path: http://www.thirdwavegroup.com.au/general/pimco-exit-stage-right/ (2013-02-03)
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