Housing subsidy pushes prices up

[Jovial Monk]

I don't work I go broke.

True for any small businessman.

But yeah an 'if' should have gone somewhere in that statement. But never said I was, e'en now, going broke.

[cynik]

Yes, you did. You said "I DON"T WORK I GO BROKE"

Now If I said "I DON"T LIE I TALK SHIT.", what would you make of that statement?

As for your "if", do you mean "I don't work if I go broke"?

Who knows what you mean?

I don't if, work go broke .

[Ethnic]

I don't usually say 'fuck' or 'fucking' alot but the what the fuck is with this fucking fhbg? Why the fuck do we need to fuck up the fucking housing fucking market with middle fucking class fucking welfare for greedy fucks who fuck their own finances up and ask the government for fucking money???? fuck Howard and Rudd for this fucking grants fucking bullshit. You wanna fucking house? Save the fuck up for it you fuck! Fuck fuck fuck fuck fuck fuck!!!!!!!!

[cynik]

Well, think of it like a welfare cheque for the shareholders of the banks.

Or, as a bribe to prevent the banks from pushing up interest rates and thereby massively increasing unemployment. (see keating's folly)

If the value of the property market stays high, the banks do not have to beg for money or call in loans to keep their fractional lending ratio correct.

See, the argument goes as follows:

BANKER: Hey, we need $X in assets to keep our fractional ratio in line with the levels set by law. But we valued all our land assets at $X when the market was really high, because this allowed us to lend more money at the time. Now the market has subsided, our asset value is $X-$Y, and that fucks our fractional ratio. So.... we need to increase our asset value or call in some loans. Which do you prefer we do?"

POLITICIAN: "What?"

ADVISOR: "He wants to know what you want to do."

POLITICIAN: "Yes. But what the fuck did he say?"

BANKER: "The law says we must only lend a certain multiple of the money we actually have."

POLITICIAN: "You can lend more than you have?"

BANKER: "Sure. Fractional lending ratio. Cornerstone of western civilisation."

ADVISOR: "Yes. He can lend more than he has. It is called the frac.."

POLITICIAN: "So what?"

BANKER: "So our assets are going down in value. We valued our assets when the market was sky high, so we could increase how much we could lend. Then we lent that money. But now the sky high values have collapsed, which means our assets are much, much less than we need to meet the ratio of assets to debt."

POLITICIAN: "Bummer."

BANKER: "Indeed. So our fractional ratio is .... not quite there. As such. We need to call in some loans, or get more assets."

POLITICIAN: "What happens if you call in the loans?"

ADVISOR: "The loans will be called in."

BANKER: "The market will collapse."

POLITICIAN: "That's bad."

BANKER: "Well, not all bad. Bad if you work, or something like that. Good if you have lots of cash sitting around! Can pick up a real bargin or two! In the depression of 33 you could buy whole towns, whole industries, for a fraction of the cost to build them. those were the days!"

POLITICIAN: "Who has cash if the market collapses?"

BANKER: "We do. If we call in all these loans, we'll have bags of cash."

POLITICIAN: "Hang on.."

ADVISOR: "If he calls in the loans, he will have.."

POLITICIAN: "Shut up. What was the other option?"

BANKER: "Well, we could increase our asset value. That would fix the fractional ratio."

POLITICIAN: "Great. How?"

BANKER: "Someone could give us a whole lot of money."

POLITICIAN: "Who?"

BANKER: "You?"

ADVISOR: "We could give him a whole lot of ..."

POLITICIAN: "Hang on, we are already taxing the folks to the neck. If we print a bunch of money, the middle class will cop it in the savings. That could get ugly."

BANKER: "Well, you pays your money and you takes your choice."

POLITICIAN: "Haha. I like that. Very droll."

BANKER: "Look at it this way: the middle class are facing a difficult year in any case."

POLITICIAN: "Yes. But passing the debt bomb onto the children..."

BANKER: "Debt bomb is such an ugly term. We prefer "credit cycle"."

ADVISOR: "The preferable term is credit cycle."

POLITICIAN: "How much do you need?"

BANKER: "How much have you got?"

POLITICIAN: "How much have we got?"

ADVISOR: "How much does he need?"

POLITICIAN: "It is only money, I suppose."

BANKER: "Jolly good. Send the cheque to my London Address. I will forward it to our chaps in Zurich. Cherio, then."

POLITICIAN: "Merry Christmas."

ADVISOR: "He will forward the cheque to Zurich if we send it to london."

POLITICIAN: "Fuck. How much am I paying you?"

ADVISOR: "About 10 dollars an hour. Before tax."

So this isn't "middle class welfare". It is socialization of loses and privatization of profits, all at once. It is the "new thing". Used to be called feudalism.

When feudalism was out of fashion, we had the credit cycle. Now we've gone back to feudalism, to save ourselves from the credit crunch.

The brave new world for the emancipated class of participating democrats. Enjoy.

[Ethnic]

Middle class welfare, feudalism, call it what you want. It sucks. Remember once upon a time when people actually had to save money to buy things? Nowadays it's all on credit cards, personal loans and government handouts. It's as if people are losing the ability to use their brains. It couldn't possibly continue on like this, could it?

[TomB]

It couldn't possibly continue on like this, could it?

Sure it could. It's good for the economy when consumers use each others money to buy stuff they don't need.

[mantra.]

I thought Rudd would have brought in some serious means testing by now - although it wouldn't have gone over well with those who have become reliant on the handouts. If this global recession eventually hits Australia with the devastating consequences as experienced in the US - Rudd will no doubt lower the bar. He has reduced income limit to $150,000 for the baby bonus and there hasn't been a peep out of those on higher incomes which is a good sign.

Hopefully a tighter means testing will be introduced slowly if the recession creeps up on us. Howard's Family packages & schemes for the elite were never sustainable. Our children will not be likely to ever receive government bribes and gifts and as mentioned by another poster will have to pay for the excesses of their parents. Australia will be a tough place for future generations.

When feudalism was out of fashion, we had the credit cycle. Now we've gone back to feudalism, to save ourselves from the credit crunch.

The coalition took us back 100 years by creating the conditions we have today. Although they're not totally responsible - they ran with, and enhanced the capitalist policies Keating introduced not giving a damn about potential consequences, although they were warned often enough. Basically that's what we are now - serfs with a few comforts, but our children won't even have that.

[Jovial Monk]

It won't be going on for quite a while as the economy--and so government revenues--dives.

While the crash of 2008 presents a lot of problems for Rudd it also offers huge chances of reform.

Heheheh Deepshit was raving on how the crash of ABC Childcare was the fault of Paul Keating who started subsidising ABC. I posted how the Lieberals had closed all community childcare centres--remember that horrible Jocelyn Newman woman who was the Minister doing the closing? Whinged that old age pensioners were bludgers then it came out she was retiring on THREE pensions!

Also pointed out to Deepshit that Howard & Costello had continued to subsidise the centres not because the subsidies couldn't have been wound back (over 11 years?? BS!!) but because the economy needed so much labor! That is why immigration was running at such high levels under the Lying Rodent. Heh, Deepshit didn't post much more about ABC after that

Has anyone been reading his blog? (http://www.polanimal.com/deepthought/) He is reaching a new depth of shallowness there!

[Ethnic]

Well tougher means testing would be one positive outcome of the financial crsis. I just can't see why two people with high incomes would need $5000 from the government. If you can't plan for parenthood then you can't plan for anything. Likewise if you can't save up for a home deposit then good luck paying off a $500 000 mortgage. But of course Howard just loved bowing down to his retail, housing and mining gods handing out free money to any fluffy bunny who didn't deserve it so they would keep spending, thus, pleasing the gods. Yet Rudd stupidly follows his insane footsteps. I've said it many times, welfare should only be for low income/unemployed people who genuinely need it, not middle class dimwits in search of a new plasma television. Keating, Howard, Rudd, you're right mantra, the next generation are going to hate us for what they will have to go through.

[cynik]

i say again, the 5 grand is to keep the price high so the banks do not call in their loans. Because if the banks call in their loans, the market will collapse. And then the only people with money will be the banks. then they can buy everything (and I mean fucking everything) that has been built in the past twenty years for a small fractional of what it cost to build. They will have the cash because they will have called in their loans.

Any loans that fail will be written off as bad debt, allowing them to lend more money to their own family companies to buy the cheap assets.

This is called the credit cycle.

You lend the money out so people get busy, working and building stuff. Houses, infrastructure, technology and so on. Real stuff. Then, when everyone is starting to build capital that could compete with your operation, you stop lending, increase interest rates and call in the loans. In short, you shut everything down. then everyone has to sell, sell, sell. Then, after everyone is bankrupt and nobody has jobs, you buy, buy, buy.

So what is the net result?

Huh?

What is the net result of this credit cycle?

The only thing that changes is how much stuff has been made and built by the workers. Ownership hasn't changed. At the beginning of the cycle no workers owned a damned thing, and at the end of the cycle no worker owns a damned thing.

NOTHING CHANGES.

That is rather the point. It is called stability in the social structure, or the class system. You might be aware that since the bank of england started trading, England has had the house of lords and a monarch. NOTHING HAS CHANGED.

The point? Well, before the credit cycle, the scumbag class of common people would generally loaf around and not work very hard. It was like with the communist system. Why work if you can't win?

See, that is the utter beauty of the credit system. People, motivated by pure greed, work and work and work. No supervision required! No guards, no secret police, no thought control. Just greed. And the central bank, owned by the ruling class. And "representative democracy", utterly controlled by the ruling class. And the courts, ditto.

So in our (your) system, everyone works and works and works and works to build the infrastructure..... then then are out of work for a few short years. During which time all their dreams collapse like a deck of jokers. Then everything starts again. Like magic.

The great strength of this system is the control of the people. Because the common people have no principles, they are helpless to greed, and to propaganda from their own kind. See, there are NO coherent politics in the credit cycle. Only greed. Only the lust for money, money and more money. That is the beauty of it. Greedy people can be lead by the nose, and they will never ever cause a fuss about human rights or support moral position. They have no principles, only lust. They will support wars, they will turn a blind eye to bombs droppng on children. Everything is OK, because they are blinded by their own greed.

Depending on your taste, the credit cycle is a beautiful construction. It allows the mass to be controlled with the least possible harm to each other. is better than the soviet union was, anyway.

You guys might not know about a guy called Yagoda, Genrikh Yagoda. He was in charge of the purges in the early 30's. Well, in the end he himself was purged in the Moscow show trials, and after he was sent to the gulag, awaiting his eventual execution, the story goes that he was asked by the guards, who mocked him, "Do you believe in God?"

His reply was that he had always served Stalin, with total devotion and loyalty, every day of his life since joining the party.

Then he added that he had turned his back on God, and broken his commandments thousands of times.

Then he said "Look at me now. Look at me now, and you tell me: Who should I believe in?"

Nobody is forced to go into debt. Nobody is forced to work for the big corporations.

People sell themselves for a piece of tin and a ribbon, or the promise of better friends if they tow the popular line.

Principles are not worth a damned thing to most folks. It is any wonder they end up facing the challenge of interest instead?