It's the economy, stupid!

 
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
California is essentially broke, and is raising taxes to get by. The state has a net population loss as tax slaves seek some relief in nearby states.

To paraphrase a much quoted line, eventually Cali will run out of working stiffs to tax. They're a bankruptcy waiting to happen. The state pension fund Calpers might be one of the first entities to roll over.
That's been the case for about 10 years.

It's not as stuffed as Illinois or New Jersey though:
https://www.mercatus.org/statefiscalrankings
Carnot

No question. Though California as a whole represents a much larger fraction of American economic activity.

I reckon they should declare it a write-off and give it back to the Mexicans.

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  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land

Most of these jobs are casual which prevents people taking out loans for houses, cars etcsorry the bolded part is very much untrue and speaking from personal experience.

My first car loan was on a casual job at uni, I needed better car to get to a 16 week 3 day per week casual job at a smelter.

My first mortgage was on the same casual job at uni, 25h a week stuffing catalogues into newspapers in a recession.

No, I did not get parental or any other guarantees.

Banks place little value on full-time vs casual. They know most people work such jobs, ie casual, contract, self employed and hence look at your ongoing income and savings.
RTT_Rules

If the borrower qualifies, the loan won't be at the lowest rate. And guaranteed there'll be a few extra clauses in the fine print.

I've spent time writing these loans up. Nothing is free, especially risk.
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
Reserve Bank governor Phil Lowe gave a speech today to the Australian Industry Group that demonstrated he clearly has no idea about the relationship between government policy and low wages (AFR):

These various factors [under-employment, under-utilisation] go some way to explaining the low wages growth over recent times. When there is spare capacity in the labour market, it is understandable that wages growth is slow.

You dolt, it's deliberate government policy that's depressing wages. They can't rise because they've been engineered not to.
don_dunstan

We've borrowed heavily to maintain consumption and asset bubbles.

We've got one of the highest household debt to income ratios in the developed world.

Everything will be fine ....until it isn't.
  don_dunstan Dr Beeching

Location: Adelaide proud
If the borrower qualifies, the loan won't be at the lowest rate. And guaranteed there'll be a few extra clauses in the fine print.

I've spent time writing these loans up. Nothing is free, especially risk.
locojoe67
You've got to pay for mortgage insurance on top of your interest - which protects the lender in the event of a default (not you!).
We've borrowed heavily to maintain consumption and asset bubbles. We've got one of the highest household debt to income ratios in the developed world.
locojoe67
It keeps see-sawing between us and the Swiss (for some reason) - but yeah, almost the most indebted households in the world. Bad in anyone's language.

All the money printing by the US Fed and the European Central Bank ended up pumping up assets - that's all that money printing program post-GFC accomplished. The ECB is going to stop the flow of free money shortly after nearly ten years of "quantitative easing" - I wonder what will happen?
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
One Nation and Corporate tax cuts. Laughing

If the LNP was John West, it’s obvious where the rejects end up.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
If the borrower qualifies, the loan won't be at the lowest rate. And guaranteed there'll be a few extra clauses in the fine print.

I've spent time writing these loans up. Nothing is free, especially risk.
You've got to pay for mortgage insurance on top of your interest - which protects the lender in the event of a default (not you!).
We've borrowed heavily to maintain consumption and asset bubbles. We've got one of the highest household debt to income ratios in the developed world.
It keeps see-sawing between us and the Swiss (for some reason) - but yeah, almost the most indebted households in the world. Bad in anyone's language.

All the money printing by the US Fed and the European Central Bank ended up pumping up assets - that's all that money printing program post-GFC accomplished. The ECB is going to stop the flow of free money shortly after nearly ten years of "quantitative easing" - I wonder what will happen?
don_dunstan
I borrowed 80% finance to buy my first home on a casual income stuffing catalogues in a newspaper (savings from same), working 25-30h a week on average for 4 years while going through uni in mid 90's. House address 1/100 Alanvale Road, Newman, Tas. Old weatherboard on block that had been subdivided.

I got the interest posted out front.

I did not pay mortgage insurance.

I did not have guarantor.

Not saying this is the same for all, but this is my experience.

NAB said at the time, probably not a good idea, ANZ said yes.

I wish I listened to NAB and dropped the idea then and there as the person I had look at the house (friend), didn't look at it too hard. The rear of the house floor had been rotten and filled with concrete. The front half still timber had at least problem area of rot and there were other issues elsewhere. the bottom boards all the way round were rotten and basically just paint. I made the yard look fantastic (true, everyone said as it was on corner opposite shop), the sold it 5 years later for 2/3 the value I paid after 18mth on market in a real estate slump (remember them). One of life's lessons Sad
  don_dunstan Dr Beeching

Location: Adelaide proud
I'm having a short holiday to Perth early next month; I was on the phone to my friend who lives there the other night. She says people are still leaving for the east coast or overseas; there's always families leaving her kids primary school classes. Also her local corner shopping centre has no actual shops any longer so she has to drive further for a corner shop. The slump in the West still isn't officially over but I'll be able to have a look myself in a few weeks... lots to do there from a tourist perspective anyway, might catch the train to Freo again.
  don_dunstan Dr Beeching

Location: Adelaide proud
Chinese company Landbridge appears to have paid way too much for the Port of Darwin. Not only have they been missing interest payments on their purchase but they've been issuing "I owe you's" from the parent company to local Northern Territory businesses. From the Financial Review today:

Landbridge Infrastructure Australia, the local vehicle which holds the port lease, reported a $31 million loss in the 2017 financial year, according to its latest financial accounts filed with the corporate regulator. While underlying earnings before interest, depreciation and amortisation improved to $10 million, financing costs jumped to almost $26 million...

...The local company said Landbridge had written a letter of support and provided an assurance that in the "unlikely event" of an "unexpected shortfall in cash flows," the parent company would "provide sufficient financial assistance ... as and when it is needed to enable the group to continue its operations and fulfil all of its financial obligations now and in the future."

Looks like the last government who sold the port, the Country Liberal Party, didn't do any diligence on whether or not the company had a capacity to pay their bills?
  don_dunstan Dr Beeching

Location: Adelaide proud
A Tesla belonging to actress Mary McCormack (The West Wing) suddenly exploded into flames while her husband was driving it through Los Angles (News.com.au);

In a tweet, The West Wing star said her husband, director and producer Michael Morris, had been driving along a major route through Los Angeles when the fire was first spotted by other road users... “Thank you to the kind couple who flagged him down and told him to pull over. And thank god my three little girls weren’t in the car with him.”

Onlookers were left fearing an explosion as bright orange flames shot from beneath the battery-powered car made by the environmentally-friendly energy company founded by business magnate Elon Musk.

Police and firefighters were called to the scene and the fire was extinguished without any reports of injuries.

Somewhat surprising that a car could burn so well - it's probably the revolutionary environmentally-friendly design.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
A Tesla belonging to actress Mary McCormack (The West Wing) suddenly exploded into flames while her husband was driving it through Los Angles (News.com.au);

In a tweet, The West Wing star said her husband, director and producer Michael Morris, had been driving along a major route through Los Angeles when the fire was first spotted by other road users... “Thank you to the kind couple who flagged him down and told him to pull over. And thank god my three little girls weren’t in the car with him.”

Onlookers were left fearing an explosion as bright orange flames shot from beneath the battery-powered car made by the environmentally-friendly energy company founded by business magnate Elon Musk.

Police and firefighters were called to the scene and the fire was extinguished without any reports of injuries.

Somewhat surprising that a car could burn so well - it's probably the revolutionary environmentally-friendly design.
don_dunstan
Tesla's are a 100% electrical beast, anyone with the slightest common knowledge of anything electrical, especially industrial knows full well that once you let the black smoke out it stops working. Tesla's black smoke just seems more combustible than normal.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Chinese company Landbridge appears to have paid way too much for the Port of Darwin. Not only have they been missing interest payments on their purchase but they've been issuing "I owe you's" from the parent company to local Northern Territory businesses. From the Financial Review today:

Landbridge Infrastructure Australia, the local vehicle which holds the port lease, reported a $31 million loss in the 2017 financial year, according to its latest financial accounts filed with the corporate regulator. While underlying earnings before interest, depreciation and amortisation improved to $10 million, financing costs jumped to almost $26 million...

...The local company said Landbridge had written a letter of support and provided an assurance that in the "unlikely event" of an "unexpected shortfall in cash flows," the parent company would "provide sufficient financial assistance ... as and when it is needed to enable the group to continue its operations and fulfil all of its financial obligations now and in the future."

Looks like the last government who sold the port, the Country Liberal Party, didn't do any diligence on whether or not the company had a capacity to pay their bills?
don_dunstan
Don't think anyone actually checks to see if the buyer can pay their bills.

Anyway, if it goes bankrupt the govt can buy it back for a fraction of the sales price. Good move by the NT govt.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
I'm having a short holiday to Perth early next month; I was on the phone to my friend who lives there the other night. She says people are still leaving for the east coast or overseas; there's always families leaving her kids primary school classes. Also her local corner shopping centre has no actual shops any longer so she has to drive further for a corner shop. The slump in the West still isn't officially over but I'll be able to have a look myself in a few weeks... lots to do there from a tourist perspective anyway, might catch the train to Freo again.
don_dunstan
Enjoy Perth.

I didn't see much doom and gloom in Freo two years ago, but I'm sure there are a few rust bucket suburbs somewhere to provide feedback on.

Perth's population growth is supposed to be a slow ~1%, obviously people will be coming and going all the time.
  don_dunstan Dr Beeching

Location: Adelaide proud
Don't think anyone actually checks to see if the buyer can pay their bills.

Anyway, if it goes bankrupt the govt can buy it back for a fraction of the sales price. Good move by the NT govt.
RTT_Rules
If not they SHOULD have, the NT's only container port and they don't care who buys it as long as the cheque clears? Apparently that's how the CLP handled it.

The NT government is broke with a capital "B" - even if it was offered back to them (which it won't be) they probably couldn't buy it back. Net state government debt is projected to hit over $20,000 per resident soon, that's way more than any other state. The entire privatisation program the last government embarked on was rushed and they locked future governments into terrible contracts - then again, what else could you expect from a Country Liberal Party government? Those people were so damn stupid that they granted a consortium of millionaires $10 million to run a business that wasn't even licensed to do what it was doing - (ABC).

IN the event of Landbridge defaulting the lease will revert to the creditors anyway - and they'll have to auction it off. The NT government has already spent the proceeds of the privatisation, they probably won't have a say in the event something like that happens - it doesn't belong to them any longer.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Don't think anyone actually checks to see if the buyer can pay their bills.

Anyway, if it goes bankrupt the govt can buy it back for a fraction of the sales price. Good move by the NT govt.
If not they SHOULD have, the NT's only container port and they don't care who buys it as long as the cheque clears? Apparently that's how the CLP handled it.

The NT government is broke with a capital "B" - even if it was offered back to them (which it won't be) they probably couldn't buy it back. Net state government debt is projected to hit over $20,000 per resident soon, that's way more than any other state. The entire privatisation program the last government embarked on was rushed and they locked future governments into terrible contracts - then again, what else could you expect from a Country Liberal Party government? Those people were so damn stupid that they granted a consortium of millionaires $10 million to run a business that wasn't even licensed to do what it was doing - (ABC).

IN the event of Landbridge defaulting the lease will revert to the creditors anyway - and they'll have to auction it off. The NT government has already spent the proceeds of the privatisation, they probably won't have a say in the event something like that happens - it doesn't belong to them any longer.
don_dunstan
Normally most sellers only care about the sale cheque, but who knows what they should or should not have done. Last I recall the main concern was over links to the Chinese govt and potential for spying. So assuming this to be true then the Chinese govt would be the underwriter and prevent it from being declared bankrupt and assets taken. Remember the govt only has control over the first sale, not future so it would be unusual to take such interest into the first buyer.

Anyway, if it goes bankrupt and then to an auction, the govt has the option to buy it back for chicken feed. Noting that at the auction the govt has zero control over who buys it and can they also pay the rent?

As far most in-debited state/territory govt's per capita are concerned, I think you are forgetting the Qld and WA basket cases with the Qld govt not satisfied at at risk of loosing to WA net year has decided to borrow even more. SA??
  nswtrains Chief Commissioner

Don't think anyone actually checks to see if the buyer can pay their bills.

Anyway, if it goes bankrupt the govt can buy it back for a fraction of the sales price. Good move by the NT govt.
If not they SHOULD have, the NT's only container port and they don't care who buys it as long as the cheque clears? Apparently that's how the CLP handled it.

The NT government is broke with a capital "B" - even if it was offered back to them (which it won't be) they probably couldn't buy it back. Net state government debt is projected to hit over $20,000 per resident soon, that's way more than any other state. The entire privatisation program the last government embarked on was rushed and they locked future governments into terrible contracts - then again, what else could you expect from a Country Liberal Party government? Those people were so damn stupid that they granted a consortium of millionaires $10 million to run a business that wasn't even licensed to do what it was doing - (ABC).

IN the event of Landbridge defaulting the lease will revert to the creditors anyway - and they'll have to auction it off. The NT government has already spent the proceeds of the privatisation, they probably won't have a say in the event something like that happens - it doesn't belong to them any longer.
Normally most sellers only care about the sale cheque, but who knows what they should or should not have done. Last I recall the main concern was over links to the Chinese govt and potential for spying. So assuming this to be true then the Chinese govt would be the underwriter and prevent it from being declared bankrupt and assets taken. Remember the govt only has control over the first sale, not future so it would be unusual to take such interest into the first buyer.

Anyway, if it goes bankrupt and then to an auction, the govt has the option to buy it back for chicken feed. Noting that at the auction the govt has zero control over who buys it and can they also pay the rent?

As far most in-debited state/territory govt's per capita are concerned, I think you are forgetting the Qld and WA basket cases with the Qld govt not satisfied at at risk of loosing to WA net year has decided to borrow even more. SA??
RTT_Rules
I think the Chinese are quite capable of spying on whatever they think they need to in Darwin without forking out large amounts of cash for a port. More likely a dodgy Chinese mates deal. I wonder how long before a few of the mates end up before a firing squad. It seems to me that you can get away with anything in China if there are some bucks in it but if you stuff up watch out.
  Carnot Minister for Railways

This might cause some problems. The housing market bubble + interest only loans = trouble:
Fears of housing 'fire sale' as interest-only loans roll into principal plus interest
http://www.abc.net.au/news/2018-06-19/fears-as-interest-only-loans-roll-into-principal-plus-interest/9886430
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
California is essentially broke, and is raising taxes to get by. The state has a net population loss as tax slaves seek some relief in nearby states.

To paraphrase a much quoted line, eventually Cali will run out of working stiffs to tax. They're a bankruptcy waiting to happen. The state pension fund Calpers might be one of the first entities to roll over.
That's been the case for about 10 years.
Carnot


California still has a positive population growth (although slowed to 0.5% and projected to have $9B surplus next year.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
I think the Chinese are quite capable of spying on whatever they think they need to in Darwin without forking out large amounts of cash for a port. More likely a dodgy Chinese mates deal. I wonder how long before a few of the mates end up before a firing squad. It seems to me that you can get away with anything in China if there are some bucks in it but if you stuff up watch out.
nswtrains
Agree, it was a pile of crap about spying on Australia by buying the port. If you want to monitor the Australian Navy (god knows why they need too?), you can just watch from the port, get a house in view of the port with a camera or simply use satellites.

Can you get away with what you like in China? Having just come back from 2.5 week business trip to 5 cities, 8 factories, I will say not anymore. This is why Xi got an indefinite extension of his Leadership, Mr Anti-Corruption.
  don_dunstan Dr Beeching

Location: Adelaide proud
Agree, it was a pile of crap about spying on Australia by buying the port.
RTT_Rules
ASIO didn't seem to agree; they weren't happy that the fire sale of the port went through so quickly without running it by them.

The Chinese were ultimately blocked from buying the NSW power grid because of concerns about price gouging and industrial espionage.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Agree, it was a pile of crap about spying on Australia by buying the port.
ASIO didn't seem to agree; they weren't happy that the fire sale of the port went through so quickly without running it by them.

The Chinese were ultimately blocked from buying the NSW power grid because of concerns about price gouging and industrial espionage.
don_dunstan
Not happy their jobs were not supported more likely.

So we are worried about what the Chinese would do from a distance? Industrial Espionage, on what, lights going off to their million mansions in Sydney?  Pft, look at the F-wits running the bloody thing now, AGL anyone? NSW still has the highest wholesale price on the east coast! Look at the CEO of AEMO, the woman from US who ran this highest power prices in the USA and now doing same to Australia and the sooner the coal fired powered station are closed the better as far as she is concerned.

Sorry, give me the Chinese any day, at least you know where they coming from.

Maybe is about time we stopped focusing on what we think the Chinese might or might not do and worrying about the idiots (especially the imported ones) are doing now!
  michaelgm Chief Commissioner

So Mal and co have created 1 000 000 jobs in the last 12 months, Telstra is shedding 8000, all I hear is deafening silence.  Can't claim one without being responsible for the other.
  don_dunstan Dr Beeching

Location: Adelaide proud
So we are worried about what the Chinese would do from a distance? Industrial Espionage, on what, lights going off to their million mansions in Sydney?  Pft, look at the F-wits running the bloody thing now, AGL anyone? NSW still has the highest wholesale price on the east coast! Look at the CEO of AEMO, the woman from US who ran this highest power prices in the USA and now doing same to Australia and the sooner the coal fired powered station are closed the better as far as she is concerned.
RTT_Rules
Wow, you should have a job doing national security assessments - clearly you're better at this sort of thing than ASIO is.
Sorry, give me the Chinese any day, at least you know where they coming from.
RTT_Rules
Imperial conquest by stealth. No rights, no rule of law, no democracy, mass surveillance, people regularly sent to jail for having a different opinion.

Yeah, I know where they're coming from all right.
  speedemon08 Mary

Location: I think by now you should have figured it out
A Tesla belonging to actress Mary McCormack (The West Wing) suddenly exploded into flames while her husband was driving it through Los Angles (News.com.au);

In a tweet, The West Wing star said her husband, director and producer Michael Morris, had been driving along a major route through Los Angeles when the fire was first spotted by other road users... “Thank you to the kind couple who flagged him down and told him to pull over. And thank god my three little girls weren’t in the car with him.”

Onlookers were left fearing an explosion as bright orange flames shot from beneath the battery-powered car made by the environmentally-friendly energy company founded by business magnate Elon Musk.

Police and firefighters were called to the scene and the fire was extinguished without any reports of injuries.

Somewhat surprising that a car could burn so well - it's probably the revolutionary environmentally-friendly design.
Tesla's are a 100% electrical beast, anyone with the slightest common knowledge of anything electrical, especially industrial knows full well that once you let the black smoke out it stops working. Tesla's black smoke just seems more combustible than normal.
RTT_Rules
Just look at how lithium batteries react to being punctured..... not well at all.
  don_dunstan Dr Beeching

Location: Adelaide proud
So Mal and co have created 1 000 000 jobs in the last 12 months, Telstra is shedding 8000, all I hear is deafening silence.  Can't claim one without being responsible for the other.
michaelgm
Wages are still falling - that's despite the fact that Scott Morrison said it last year's budget that they would have already increased by 4-5% by now - very much off target. We supposedly have low unemployment @ around 5.5% nationally - but the fact that this low rate isn't creating any demand for labour at all shows how perversely disconnected from real economy the government is. They engineered a system deliberately keeping wages growth below inflation and then complain that they got exactly that outcome. Huh?

The system is irretrievably broken; unless they do something to actually increase demand for labour (ie cut immigration) then wages are going to continue falling.
  Carnot Minister for Railways

Telstra cutbacks and rationalisation is no surprise to me. They are consistently the most expensive.

Then again, Optus aren't really much chop given the World Cup streaming debacle...

As for power companies - poor management is crippling more than just AGL.  Bean counters, big egos, dodgy marketing ethics, and not enough engineers are going to see more chickens come home to roost soon.  Sound familiar?

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