Welcome to Netrider ... Connecting Riders!

Interested in talking motorbikes with a terrific community of riders?
Signup (it's quick and free) to join the discussions and access the full suite of tools and information that Netrider has to offer.

Market 'correction'

Discussion in 'The Pub' started by hornet, Jan 30, 2009.

  1. While I feel for people who are losing or in danger of losing their jobs in the current financial climate, I can't help thinking that it ought to have been expected. We had 11 years of 'growth' under the Howard government, with dropping unemployment, and bright prospects. But during that time, encouraged by those bright prospects, hundreds of businesses and thousands of individuals funded their comfort and expansion on debt, hoping (but never daring to say, or being advised to consider) that the good times would stay forever. They didn't. Consider this.

    Mittagong is a town of just over 7,000 people in the southern highlands of NSW. In the last three years it has gained a D i c k Smith, a Big W, a huge Woolworths, and a Bunnings with its own postcode. Now, next to the Big W they are building an Aldi. Can anyone see the problem here?

    Just next to where I live there is a Woolworths, Stocklands Mall, a huge Bunnings, and less than a kilometre away there is a Magnet Mart (hardware) and a Mitre Ten (hardware) right beside each other. Magnet Mart is closing; surprise, surprise.

    Strathfield Car Radio, famous as discounters, has gone to the wall. Someone forgot to tell the management that you have to make a profit, eventually, or you go bust. You can't fund a business on debt when credit gets tight. ABC Learning Centres, anyone???

    And don't get me started on the shell-game of the noughties 'you need your own investment property to look after you in your retirement'.

  2. In summary big business got greedy - right hornet?
  3. And individuals, James. There's never been a time when more Australians have been trooping off to Bali and all points north than the last decade. How many of those holidays were paid for in cash, saved up cash, I mean?????
  4. Yeah, fair call Paul. Most people I know have a pretty serious credit (card or loan) bill. We try to keep all our debts below $1k. But I must say it was very hard to not get into major debt again when I found out I could get a brand new cbr600 for $13k ride away... *droool*. I guess the must-have mentality that modern society has makes credit almost mandatory.
  5. The monetary system doesn't work to well without rapid consumerism.

    That’s why the fix to the downturn involves banks/institutions lending again and people spending up.

    I’m not really knowledgeable with this stuff, but after the 'financial crisis' hit i thought i might learn more about the monetary system as i knew nothing before. Not really a fan of what i learned.

    The two concepts that i thought most ludicrous were that of privately owned central banks controlling money supply and fractional reserve banking.

    Can't see a non-resource based greedy monetary system like our current one not causing more problems in the future.
  6. Hmm, Storm Finance has gone to the wall, with hundreds of investors not only losing their investment, but probably their houses as well. Why? Because they were using significant amounts of geared loans to finance their investments, and with the downturn the Commonwealth bank made margin calls, which is their right and duty to their share holders.

    I find it very strange that people take such risks with their future, even if the rewards can be considerable, if successful.

    BTW, an economy that relies on growth solely to remain viable is a fundamentally flawed economy. But that is what the whole western world system does. What happened to being profitable while simply maintaining the size of your business and the economy? Growth simply exponentially increases the demand on resoources.
  7. I suspect that the "growth must continue indefinitely" approach stems from the fact that the economic model we're saddled with was developed in the 17th and 18th Centuries. Three hundred years ago, from a wealthy European nation, it would have looked as if there would always be another forest to cut down, another continent to discover and exploit, another ancient civilisation to loot of a millenium of treasures, because, at the time, there was.

    Of course, here we now are in the early 21st Century and we've got a pretty good idea of where everything that's likely to be useful is, building empires, establishing colonies and exterminating or enslaving the existing inhabitants on too large a scale is considered rather impolite and we've got a shitload more people, a smaller proportion of whom are prepared to support their rulers with a life of backbreaking drudgery for the occasional boiled rat and the promise of a good time after they die. There simply aren't that many untapped sources of untold wealth any more.

    So why should it be surprising that, every so often, continuous growth fails to happen?
  8. SPACE!! The final frontier :)

    Out there, nobody can hear you scream :LOL:
  9. It's interesting to watch the cycles.
    I've spoken recently with people who lived during the Great Depression and it is fascinating to hear about their frugality and methods for dealing with those times.
    Perhaps, in time, savings will become the new black once again...
    As my accountant says, "you have to realise that we a living through a moment in history" or what Confucious might call "interesting times".
  10. Nothing wrong with investment properties if you bought in the right bracket. only blue chip kind of properties are loosing value big time. Cheapies are adjusting but still are way ahead of the paid price.

    And the rents are going up.

  11. Exactly.
  12. Well, yeah, but getting there to exploit it is a bit beyond the resources of the average Dundee pirate with a six pounder in his bows and a pistol on his hip :LOL: .

    With due acknowledgement to Flashman
  13. http://www.news.com.au/business/story/0,27753,24985683-462,00.html

    Gerry Harvey will close ten of his underperforming (and competing with himself) stores. Now there's 'greed in the good times' perfectly illustrated. Booms don't last forever, and while it's fun to screw the wholesaler down to the last cent, and then sell everything for RRP, bad times hurt like hell.
  14. I'm not sure i see the point here. Like the title suggests we're facing a market correction. Periods of boom and bust. Failed business' is all part of survival of the fittest.

    Correct me if i'm wrong but we've still got over 90% employment?

    Blame the system when the whole thing collapses. So far the economy's just not as good as it was.
  15. Yet directly underneath that article we get this:
    More related coverage
        * Harvey surprises with rise The Australian, 31 Jan 2009
        * Harvey Norman sales up despite gloom Adelaide Now, 30 Jan 2009
        * Harvey Norman sales up 3.5pc Australian IT, 30 Jan 2009
        * Harvey Norman sales defy gloom Courier Mail, 30 Jan 2009 
        * Harvey Norman sales defy gloom Herald Sun, 30 Jan 2009 
  16. Gerry will always do better than his peers because he has massive buying power (I have had to deal with his organisation as a wholesaler, and with a major IT manufacturer) and he gouges for every last cent of buy price, then sells for RRP most of the time. People buy from him because of the name, but almost always pay more than if they went elsewhere, everyone knows that. The idea of competing with your own store with two other brands has always baffled me about his approach, and I guess it's now coming back to bite him.

    Dr. Livingstone, I'm not talking things down, and I agree that we are better off than most other countries in this current situation. My post is sorta philosophical, I guess......
  17. Its tough when the largest resellers gouge the consumers, and the smallest resellers get gouged by the wholesalers.

    I always try to buy my IT/computer parts from cheap small stores. But when there is only distributer importing said product, they can charge what they like and the small stores still only make 3-10% profit. And us consumers complain about local prices compared to the rest of the free world market.

    It sucks, the only solution to this 'Australia-Tax' is grey-imports from the states/europe/asia. But then you've got warranty issues.
  18. When you find a warranty anywhere that's worth the paper it's written on, let me know will you :evil: .

    Seriously though, considering the savings to be had, having to pay to replace the occasional dud isn't so unreasonable.
  19. First point about growth - if the population is increasing, and the standard of living isn't declining, then growth will occur naturally. Why, because more people require more goods and if there is no growth in the sector that provides those goods then prices go up as demand outstrips supply. That opens up opportunities for new vendors to enter the market and make a profit. Growth isn't a bad thing. What is a bad thing is people living beyond their means. And that is driven by expectations of living standards and the willingness of those with money(or think they have money to lend) to lend it to questionable borrowers.

    50 years ago owning a simple house was a f^&*ing huge deal. That is why it became the great Australian dream. But now it is the normal Australian expectation to have a big and/or really nice house. And when you do get that over-priced house that you can't afford, the expectation is that you have to fill it full of plasmas and leather sofas and every appliance on the market. But many people simply can't afford this because the banks have allowed them to over-debt themselves. This is a big part of what caused this shitfight in America - low-doc loans. People who shouldn't have been borrowing big were allowed to. When the market became vulnerable to them, a slight hiccup caused it all to come tumbling down. As soon as a trickle couldn't make repayments the banks started foreclosing and selling up houses on mass. This led to a drop in house prices due to lots of houses being on the market. Which made more loans untenable as the amount owed became more than the house was worth. This turned the trickle into a flood and the end result was a shockwave through the entire banking sector as the ass fell out of bank assets. If people had had a buffer against rises in the amount they had to repay, the system wouldn't have been so vulnerable.

    I had laugh though when Russia and China took a swing at the US for allowing all this to happen. I'd hate to think what we'd be living like if their financial systems had become the dominant system 100 years ago. That would be like offering your mate a lift home because his car is stuffed and then have him complain about the colour of the upholstery.
  20. the shopping centre at mittagong services a lot more than just the mittagong population, before it was made there was the option of overpriced bowral for anything non woolworths or coles related or a trip to campbelltown, i miss the older smaller woollies where i knew where everything was, so you can rip the new 1 down if you want, just leave me the kawasaki shop standing and i'm sweet