All is not well in the land down under. Australia appears to be ready to join the US and UK in recession. The Herald Sun is reporting Melbourne recession fear as property hit.
PROPERTY values in Melbourne and every state have slumped, with more than 50 per cent of Australian homes losing value last month. New figures obtained by the Sunday Herald Sun from property analyst Residex prompted recession warnings.
The last time all the states fell at the same time was just before the Great Depression and Residex chief executive John Edwards warned of tough times ahead.
“It looks as if we’re moving into a one-in-100-year event,” Mr Edwards said. “To see an adjustment on a wholesale basis across the whole of the nation is incredibly unusual. Never in my life have I seen so many converging negative events.”
“There is no Australian family that isn’t hurting,” Mr Edwards said. “If you have a mortgage, you’re hurting. If you’re renting, you’re also hurting.” The Federal Government and the Reserve Bank had “dismally failed” Australians by focusing on inflation while failing to control credit.
“I think they need to let inflation run a little. That means adjusting interest rates down and they need to control credit,” Mr Edwards said. “It’s too late to control it by interest rates. “You control it by interest rates and you’ll send us into depression.”
Edwards Wants Cake And Eat It Too
Edwards is calling on the central bank to control credit while lowering interest rates? How does he propose to do that?
The problem is fractional reserve lending that feeds on itself with ever increasing amounts of leverage before it finally blows up. The US and UK have already reached Peak Credit. Perhaps Australia has joined the club. If so, credit will take care of itself. At any rate, it is far too late to do anything about this except sit back and watch the inevitable credit implosion.
In the US, the Fed could cut rates, raise rates, or do nothing and it simply will not matter much credit wise although it will affect the US dollar. Consumers are tapped out and banks do not have enough money to lend.
Private Pupils Flood Public Schools
Here is another interesting development down under: Private pupils to flood system.
A wave of private-school students is expected to flood the public education system in Queensland as families fall face increasing financial pressure. Fee-paying schools are already advertising heavily for enrolments while offering concessions and payment plans for struggling families.
One north Queensland boarding school has lost 10 per cent of its pupil base in a year. The trend could reverse a five-year move in Queensland toward private school education, which has seen enrolments rise nearly 30 per cent since 2001. About 219,000 students – or 32.4 per cent of the market – are enrolled in private schools, which charge $3000 to $20,000 a year.
Lutheran and Anglican schools confirmed they had already lost families for financial reasons and were expecting an exodus of many more in the next two years. Brisbane Catholic Education said it was also dealing with increasing numbers of parents unable to pay fees as mortgage, fuel and living costs hit home.
Cutbacks in discretionary spending are taking place in many way in many countries.
Mike “Mish” Shedlock
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