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The Government has got what it wanted - found someone elase to blame for the coming BUST

Written on the 11 June 2017 by James Cagney

(a 3 minute read)

This is what is happening to the Australian economy and Malcolm Turnbull and the Coalition are about to blame everyone else for this and will leave dead bodies in their wake:

  • Sydney house prices fell 1.3% and Melbourne fell 1.7% in May 2017 (Corelogic)
  • Sales of detached houses fell by 3.3% in April (HIA)
  • Banks have increased interest rates on home mortgages particularly for 'Interest Only" loans.
  • APRA has again introduced additional restrictions on lending to property investors
  • Consumer confidence down 1.4% over the year.
  • Economic growth will slow from 2.7% in 2016 to around 2% in 2017 (Capital Economics)
  • Dwelling approvals are down 20% from April 2016 (ABS)
  • Ore imports slumped 13% in April to their lowest level in 6 months (Custom Bureau)
  • Retail sales have fallen - the worst performance since July to Nov 2012 (Citigroup)
  • Wage growth has been below inflation for months (ABS)
  • Underemployment across most sectors of the economy is on the increase (ABS)
  • Unemployment is about to rise once again and watch for the Coalitions' sleight-of-hand as it shifts the blame for the problems above to APRA, the RBA and the Banks.

How the Coalition will blame APRA

The government caved into all the whinging about the high price of housing in Australia. This is a fallacy because the only place where prices are escalating is in Sydney and the inner and middle suburbs of Melbourne. Perth, Northern territory, Queensland regional have declined and South Australia, South East Queensland (SEQ) and Hobart house prices have risen marginally.

So they gave  to bureaucrats The Australia Prudential Regulation Authority (APRA) the power to flex their muscles and they have placed draconic restrictions on borrowing for property investors. They are simply doing their job because that is what the 'misguided' government told them to do.If you would like to know how APRA has restricted your ability to build a property portfolio so you can provide for your own income in retirement click >>> RESTRICTED .

So let's use common sense to try and understand what they are doing by restricting investors:

  1. Fewer houses will be built - therefore construction workers will be out of a job and will have to go on the dole.  That means their lives will be worse off as they struggle with their debt.
  2. Fewer houses will be built  - therefore less supply and increasing demand because renters' simply do not have the deposit to buy a property and rents will rise exponentially.  Besides many Gen X's and Gen Y's prefer to rent and this will put more pressure on rents with the limited supply. For more information about the spending trends of the Millennials, which will prevent them from owning property click >>> MLNSPEND.
  3. To provide for an adequate amount to retire through investing in property only works in multiple properties. Ownership of one or two properties is not enough to provide sufficient passive income. Therefore more people will have to claim the government pension and Medicare in retirement so tax payers will have to carry the load of higher taxes.

How the Coalition will blame the RBA:

With the economy in dire straits the Coalition will blame the Reserve Bank Australia (RBA) for not decreasing the cash rate soon enough to stimulate the economy. The RBA is trying desperately to hold onto the country's triple A credit rating, as well as maintain a reasonable exchange rate to our trading partners and desperately trying to reel-in inflation.

In fairness the RBA looks towards long term solutions whereas the Coalition has a short term goal - winning the next election. I do not hold out much hope for that with the property market about to go BUST, growing unemployment and the coming economic recession. And then they hand over to Labour who always spend what they don't have.

How the Coalition will blame the Banks:

The banks have clearly shown over the years they care more about their shareholders than their mortgage holders. To protect their profits and keep the shareholders happy they have consistently raised interest rates even though the RBA has left them static for many months. In the May 2017 Budget the Coalition placed another tax on the banks and weakly said they don't think the banks should pass it on. Pipe dream of course they were going to pass it on - it's in their greedy nature. Leopards do not change their spots.

In early May 2017 shares in the big four bank lost $14 billion. Not good for shareholders and more importantly the Superannuation Funds that the big four banks control. The fact  are the big four banks and AMP control over 40% of all Super Funds in Australia and thereby take their excessive slice of the $31 Billion in Super fees paid by hard working Australians last year. 

Once again the big four banks have proved to be a law unto themselves and the Coalition will use this to place the blame on them. The Labour will shout that their should have been a Royal Commission into the banks and the Coalition will agree.

In Summary

Politicians all over the world are game players and Australian politicians are the best of the best. I wrote an expose on the tactics they use to manipulate the public in an article I wrote called "Send in the clowns". To see how skillful they are click >>> CLOWNS.

I hope being forewarned is to be forearmed for my readers. Take action NOW so you are not left high and dry in the coming BUST in Australia For more information about the BUST click >>> FOREARMED. If you would like to know how to protect your assets and take advantage of the BUST that will happen in the next 18 months call James Cagney on +61 416 137 645 or click >>> HERE

DISCLAIMER

This is not financial advice. You should not act solely on the basis of the material contained in this article for your investment strategies. Changes in government and legislation occur frequently and without prior notice and financial markets are unpredictable.
Please note that the information herein is of a general nature only and is not intended as specific advice for any particular person or entity.

This information was written and compiled by James Cagney.  The opinions expressed herein do not necessarily represent the views and opinions of his associates including
Asset Finance Pty Ltd.

ACKNOWLEDGMENTS:

Thank you to the resources of Terry Ryder, Property Observer, The ABS, BIS Shrapnel, Michael Matusik, Property Monitors, Colliers, On the House, Corelogic, RP Data, Residex, SQM, Herron Todd White, NAB Residential Property Survey, Australian Bureau of Statistics, Peter Wargent, Port Phillip Publishing, Economy & Markets, Harry S. Dent and the many others for the material discussed above.

 


Author: James Cagney
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