SERIOUS BANKING FINANCE AND INVESTMENT REFERENCES
RESOURCES AND SOURCES
Mind food

Another free to use public interest web site on the

Mosaic Portal Network


Created by

Kevin Beck






MULTI-RESOURCE INFORMATION AND UTILITY SITES


Money Laundering
Banking Day (Australia)
Bloomberg
Yahoo Finance
Google Finance
New York Times Dealbook
Forbes
BizJournals
CNN Money
Wall Street Journal
Financial Times
Market Watch
Money Morning
Fierce Finance
Business Week
CNBC
Banking Times in UK
Banking Business Review
Thompson Financial
American Banker
Finance News Pro
Structured Finance News, Securitization
Leveraged Finance News
The Street
EIN Finance News - Professionals
Euro Money
The Economist
Financial Express
Net Banker
Bank Watch
Bankers Ball







Australia's Melbourne Age




Australia's Sydney Morning Herald




INSURANCE JOURNAL



Ticker not running?
Click here for full journal








BUSINESS, ECONOMY, FINANCE
INVESTMENT RESOURCES AND INFORMATION
Understanding Economics - Comprehensive Portal
Financial and Investment Acronyms Explained
Tutorials and Explanations on Investing
Financial Tips and Safety Checks (Australian government site)
US based site that explains terms
and aspects of investing
How to avoid internet scams and frauds
Worldwide Directory of
Finance and Investment
Carbon Offsets and
Tax Deductability (Australia)
How to trade the share market
Europe Directory of Investment and Finance
Euro Monitor
Commodities Now
United Kingdom Share Market
United States of America Share Market
Market Watch (USA)
USA Personal Finance
Socially Responsible Investing
AUSTRALIA FULL SERVICE BROKERS
Asia Markets, Business and Investment Directory
Middle East Markets, Business and Investment
South Africa Business, Investment and Economy Directory
Real Estate - Worldwide Property Purchase Guide, Advice and Services
Real Estate - Worldwide Extensive Guide Links, Professional Associations and Services
Real Estate - Worldwide Selective Information by Region
Real Estate - America, Europe, Asia, Australia, Canada
Real Estate - Worldwide Agents Directory
Real Estate - North America
Real Estate - Australia Directory by State
Real Estate - Middle East
Charts and Research Indices (predominantly USA)
Carbon Disclosure - Business Implications of Climate Change
Corporate Social Responsibility News
Banktrac - The Role of Private Investment in Sustainability










Agriculture








Textiles


GLOBAL CORPORATIONS










Monitoring multinational corporations
Responding to corporate behaviour


THROUGH THE LOOKING GLASS
2008 and onwards

PREDICTIONS


Within the above web site Kevin Beck predicts
that Australia would experience a progressively, dramatic decline in the value of residential houses, across many sectors of the Australian community.

He also
predicts a global collapse similar to the Great Depression. After that an emerging decline in the value of investment projects in Australian property, mining and resources (commodity price falls will occur from the highs of the mining boom years) commencing around 2010 and continuing.

The value of houses are way over the top in Australia and are at least 40% inflated. The borrowings required to purchase the most mediocre houses cannot be sustained as a percentage of base household income for a single person or cohabitating couple and family. A large number of buyers, first home types, investors and real estate agents are living in a dream. The banks face high exposure and the government is locked into a corner. Yet people continue to take huge risks in a happy go lucky "she'll be right mate" way. Logic would have said that the buyer would back off and not be lulled into a false belief but human behaviour is nevr pre-edictable and is never logical.

" FIRST home buyers are leaping aboard a "sinking ship", with house prices set to fall about 20per cent in the next two years, says an Australian National University economist.

The Age - 1st May 2009 - NATALIE CRAIG, PROPERTY REPORTER FIRST home buyers are leaping aboard a "sinking ship", with house prices set to fall about 20per cent in the next two years, says an Australian National University economist. Professor Quentin Grafton said house prices could not continue to grow at a faster rate than incomes and consumer prices. This "property bubble" was about to deflate, he said, and first-timers who were encouraged through government grants to buy at the top of the market could be overcommitted when hit by job losses and, later, higher interest rates. "First home buyers who don't have much of a deposit and can barely afford their mortgage payments on the current interest rates, they'll be in trouble," Professor Grafton said. "I wouldn't be surprised if overall we get a 20 per cent decline in nominal house prices over about the next two years." This could lead to borrowers owing more than they own, he said. "Ultimately, house prices have to be related to the ordinary prices that we pay for other goods and services and our incomes. In the past decade, house prices have gone up about 50 per cent in terms of that ratio. That is not sustainable, and certainly won't be sustainable as the recession bites." (Source: The Age, House prices to fall as the bubble bursts)

But the recession did not bite hard because the Rudd government threw billions at it to stave it off. They bought time and in doing so created a false impression and a false economy. " House price rise led by top end, CHRIS ZAPPONE, July 30, 2009,

National house prices have risen further in the June quarter, with a recovery at the higher end of the market matching strength at the bottom end. House prices gained 3.3 per cent in the June quarter, the strongest quarterly growth since the global financial crisis began withering asset values, Australian Property Monitors said overnight. ''While low interest rates, flat prices and first-home owner grants supported the affordable end of the market through the end of 2008 and early 2009, it's been the upper end of the market that's driven the strong growth in the major capitals in the June quarter,'' said Australian Property Monitors economist Matthew Bell, in a press release. The weighted average median house price in the most expensive capital city suburbs was $785,559 in the June quarter, up from $764,936 in the March quarter, APM said. In the less affluent suburbs the weighted average median house price rose to $405,872 up from $393,541 over the same period. "For Sydney, Melbourne and Brisbane, median prices in the top 50 per cent of suburbs grew by nearly double the rate of those of the bottom 50 per cent in the June quarter,'' Mr Bell said." Professor Grafton's comments coincide with house-price data showing small but steady gains in the first three months of this year. RP Data-Rismark, which is used by the Australian Stock Exchange, reported that Melbourne values grew 2.4 per cent as national values grew 1.6 per cent. Rival group Australian Property Monitors said median prices were up 0.1 per cent nationally. " (Source: The Sydney Morning Herald, Melbourne house prices on the rise The Age, OCTOBER 24, 2009,

Melbourne house prices on the rise The Age The Real Estate Institute of Victoria (REIV) has released its September quarter property update, which shows an increase of 6.7 per cent in the latest … Gain, not pain, as house prices defy downturn."
(Source:http://www.australianhousehunters.com.au/

So why is it illogical?

"Australian house prices are rising faster than Donald Trump's hairline. But can this boom in house prices continue?

Yes, it can. Because we simply don't have enough houses to cater for our growing population. Property values grew at an astronomical rate of 4.2% in the quarter to June 2009, which forces us to admit it's more property boom than property doom. ... all that bluster about house prices falling 40%. Pah! It's as though Australians believe in house prices the same way that naked emperor believed in his non-existent new clothes. The Housing Industry Association and Residex are warning that some parts of Australia are in a property price bubble, particularly Sydney and Melbourne. "Sydney has grown more than 6 per cent to July and Melbourne is in this high 5s - if you annualise those rates of growth, it's something like 28 per cent -- a boom," says Residex's John Edwards. "It's just dangerous. If the average mortgage is $354,000 then a 2 per cent rise in rates will make things very stressful for most families." Even the International Monetary Fund says our house prices are too high relative to rents and local incomes. But the majority of property commentators are pleasantly surprised by how well Australian housing keeps its knickers on and continues to grow. RP Data analyst Cameron Kusher says it's better for house prices to grow than to create a shock to the more than $3 trillion of household wealth tied up in housing. Australian Property Monitors economist Matthew Bell says there is no evidence of a price bubble. "The IMF and the property doomsayers fail to understand the supply problems the Australian market has," says Bell. That word 'supply' always sounds like someone's drug stash, but is the real reason the prices of our houses keep growing (while the rest of the world suffers price falls). While property developers can't get their hands on finance to build more apartments and townhouses, Australia's housing supply will remain restricted and theoretically prices will keep going up or at least maintain their position. ABS stats show our population growth is stronger than any time since 1851, thanks to a mini baby boom and strong overseas migration." (Source: Why are Australians fuelling their own property boom?
http://blogs.domain.com.au/)

The claim is that there is a housing shortage. So what? Where do borrowers get the money in an ever rising market and how does a couple service a debt of hundreds of thousands of dollars on a finite income?

Interest rate: 6 percent

Term: 30 years

Annual rates for the area: $3500

Annual homeowners insurance for your area: $500

Your gross annual income: $100,000

Your monthly debt obligations: $1000

Your estimated highest monthly mortgage payment: $1667

Your estimated highest loan amount that you can borrow: $263,700

So how do the people with an income of $A100,000 borrow $A400,000? What happens when the interest rates go up? There are defaults. Australia is not yet clear of nasty surprises and the Australian government has no stimulus package left. What will happen in 2010? Watch the Gold Coast Queensland to see the first effects.




Below I posted an article regarding the impending financial crisis


So what came to pass? We now know that it was, and will still be, quite horrendous. So what are the predictions, and analysis, from Kevin R Beck?

Climate Change and the Australian ETS A study of political spin and sheep.


SO WHAT WILL THE CENTRAL BANKS AND GOVERNMENTS ULTIMATELY DO?


Unless the want economies going bankrupt then world governments will have to buy the debt of a large section of the world population with regard to home ownership, perhaps credit, and other core items which are bankrupting economies. The governments should not buy 100% but they can buy the differential between what the house is actually worth and the unsustainable value they paid less any funds/convertible assets they may hold.

The basis of the decison as to how cuh should be the economic evaluation of the multiplier of what a house is worth in the average suburb. It is worth 5 - 9 times the annual average income. Thus a person who earns $50,000 should be able to buy a house valued at $250.000 to $450,000 maximum. One house, not two and not houses for investment. Those who bought for investment and not for living should not have their excess debt proportion paid. This is not a concept this is what the governments of the world will have to do.

As for shares and other instrumenst they were all overpriced. They will not return to where they were and will be probably 50% of the values we have seen during the boom years.




The Fallacy of Endless Growth


Snapshot 2009: Economists, politicians and investors keep talking of teurning to econpomic growth when the current (2009)depression ends. The proposition (theory) of endless growth has been ingrained since 1851 invented by the Americans and driven by their self belief and massive engines.

"The American people have been told by no less an authority than the President's Council of Economic Advisors that, "If it is agreed that economic output is a good thing it follows by definition that there is not enough of it" (Economic Report of the President, 1851, p. 92). It is evidently impossible to have too much of a good thing. If rain is a good thing, a torrential downpour is, by definition, better! Has the learned council forgotten about diminishing marginal benefit and increasing marginal costs?" (source: STEADY-STATE ECONOMICS By Herman Daly, Chapter 5: A Catechism of Growth Fallacies
"The part played by orthodox economists, whose common sense has been insufficient to check their faulty logic, has been disastrous to the latest act." (J. M. Keynes, 1936).

Consumerism became the centre of the theory and this requitred a focus on monetary policy. The consumer is required to spend forever, rather than save, so the theory attacked the savings and superannuation basics. Some countries such as Australia had politiical leaders who could take a helicopter view, Paul Keating, Australia's Treasurer, for example. The labor government of Hawke Keating brought in mandatory contributions to super. However Keating knew the level of 9% was not enough. John Howard, and Peter Costello, by comparison did not and so spending has outsripped savings.

Governments (run by rating agencies who scare them with bogus AAA ratings and whose predictions and assessments were, and are still, spurious) babbled on about surplus. This was preferable to investment in public assets. Privatisation cannibalised the asset base of countries in search of never ending profits. Governments embraced the privatisation and "public private partnerships" voodoo put about by the masters of the financial universe - consulting firms and investment banks. They too cast the bones, and spoke voodoo.

Underneath all of this sat the theory of developing economies and consumer aspirant demand. Places like India and China with huge populations clamouring to reach the American consumer dream and have the feckless technologies of the Ipod, MP3 players, the latest phone, the talking rock and the ever better devices, cars and symbols of wealth. The poor, well they could get credit and aspire. The second plank was productivity. There could be no wage rises threatening profirs unless there was a countering productivity trade off. Voodoo theorists love this. Public servants, human resource managers and con artists at the management level created measuring systems and did what good staticians do, they created the result that management, politicians, the ratings agencies and the markets wanted. The third foundation was to create new financial instruments because finance, services and trinkets would be the new economic growth machines, not manufacturing. At one instance, in the late nineties fools prophecied that the "www - internet" would reshape us all, replace reality, bricks and mortar. There was the tech wreck, in the late nineties, which might have warned the average but in the convoluted and mosaical structure of the new paradigm the warning was lost. The finance sector grew hundreds of times faster than any other. The world casinos of the stock exchanges were pumping. We were driving our economic machines in the red zone day after day. Then they invented the risk reduction platform. This took very bad debts, investments and the poor credit stuff and sliced each into slivers. These slivers were put with mediocre, and some better performing slivers. The aggregate would thus spread the risk to minimal proportions. The theory was that the risk could never be realised in catastrophic terms. If any failure occurred then only a sliver to two would be affected.

massive capital amounts were hoarded (hedge funds) and used to manage and play the stock casinos. Short selling to make a profit was rampant. Justification was that short selling exposed flaws in the value of enterprise and that it exposed porr performers. This was all nice and good if everyone playing the market knew this. Many investors were self appointed personal game players enthralled by their new electronic access to the stock exchanges. Trading became a challenge and a pass time enhancing socila position, conversation and sometimes wealth.

Huge bonuses, and the demands of poorly educated, and greedy, investors turned management to the short trem. CEO's and Borads that challenged market theory, the voodoo economics, the mantra of surplus and the driving at high speed and revving were dispensed with. The demographics of stupidity, that is the population is a pyramid, with the brightest and smallest sector at the top, had sway. One could be both rich and stupid on a scale that would ultimatley bring the whole lot down.

Today, in 2009, we have all of the above in play intertwined with theories and practices, that are reasonable, or bunkum in part or whole.

  1. The consumer is king and that if we give the consumer money they will spend and we will return to normal, they way it was
  2. Business needs endless supplies of credit and living within the means of income and expenditure is not a worthy objective because that stifles growth
  3. All governments must have surplus
  4. saving stifles growth and mandatory superannuation at 15% is by inference bad because it increases costs of employers
  5. It is better to have a buisness operating to employ people on some wort of wage rather than not operating at all
  6. Corporations are real persons with real rights and the corporation muts be protectdd at all costs
  7. Monetary theory and fiddling interest rates trumps fiscal (Keynesian) theory and practice
  8. ratings agencies are the fount of all knowledge and governments should dance to their tune
  9. Politicians should be paid less than people in the private sector because the latter are worth more as a public benefit
  10. banks are pivotal and the bankers are, as above, experts, worth more and generally right
  11. Privatisation trumps public ownership
  12. Institutions, acdemics and the chattering classes, should be marginalised particularly by governments.
  13. Training in shallow competencies, short skills, and business demanded scope, prepares a nation for growth and challenges


So we need to examine all of the above and any I have missed that are pertinent. While doing this we need to challenge the foundations, theories and practices and beliefs that underpin the way we work in society and the mosaic.

"To ascertain the state of an economy most analysts rely on a statistic called GDP (Gross Domestic Product). This statistic is constructed in accordance with the view that what drives an economy is not the production of wealth but rather its consumption. In short, what matters here is demand for final goods and services. Since consumer outlays are the largest part of overall demand, it is consumer demand that sets in motion economic growth — so it is held. ... By focusing exclusively on final goods and services the GDP framework lapses into a world of fantasy where goods emerge because of people's desires. This is in total disregard to the facts of reality i.e., the issue of whether such desires can be accommodated. All that matters on this view is the demand for goods, which in turn will give rise almost immediately to their supply. Because the supply of goods is taken for granted this framework completely ignores the whole issue of the various stages of production that precede the emergence of the final good.... However, it must be realised that at no stage does the so-called “economy” have a life of its own independent of individuals. The so-called “economy” is a metaphor — it doesn't exist. Through lumping the values of final goods and services together government statisticians concretise the fiction of an economy by means of the GDP statistic. Furthermore, by regarding the “economy” as something which exists in the real world mainstream economists reach a bizarre conclusion that what is good for individuals might not be good for the “economy” and vice versa. Since the “economy” cannot have a life of its own without individuals obviously what is good for individuals cannot be bad for the economy. The GDP framework cannot tell us whether final goods and services that were produced during a particular period of time are a reflection of real wealth expansion, or on account of capital consumption....

We can thus conclude that the GDP framework is an empty abstraction devoid of any link to the real world. Notwithstanding this, the GDP framework is in big demand by governments and central bank officials since it provides justification for their interference with businesses. It also provides an illusory frame of reference to assess the performance of government officials. " (source: Is GDP an economic fallacy? Dr Frank Shostak, BrookesNews.Com, Monday 3 September 2007).

FALLACY 1, U.S. Goods Cannot Compete Effectively with Those Produced by Cheap Labor in Countries Such as China

FALLACY 2, Immigrant Labor Confers Economic Benefits on the Host Country

FALLACY 3, Globalization Acts to Raise Living Standards in the West

FALLACY 4, Countries Forming a Common Market Reap Economic Benefits

FALLACY 5, Rent Controls are Necessary during a Housing Shortage

FALLACY 6, The Fact That Womens Earnings are Significantly Below Those of Men Is Evidence of Discrimination

FALLACY 7, A Reduction in Building Costs Will Reduce House Prices

FALLACY 8, Jobs Are Lost When a Factory or Business Closes Down, and Vice Versa

FALLACY 9, A Competitive Private Enterprise Economy Tends to Produce Economic Efficiency

FALLACY 10, A Subsidy to University Education is Justified Since it Promotes Equality of Opportunity and Confers Benefits on Society as a Whole

FALLACY 11, The National Debt Is a Burden on Future Generations

FALLACY 12, Inflation Is Caused by an Excessive Increase in the Supply of Money

FALLACY 13, The Rate of Economic Growth Over Time Is a Good Index of the Growth of Peoples Satisfaction

(Source of the fallacies above: Thirteen Persistent Economic Fallacies, E. J. Mishan ISBN: 0-313-36605-5, ISBN-13: 858-0-313-36605-5, DOI: 10.1336/0313366055, Praeger Publishers