Comments on: Game-changing Alternative Energy Technology that Causes Incumbent Firms to Go Bust

By: puntpal

puntpal — Thu, 22 Apr 2010 15:20:45 +0000

GB agree that hoarding of land is something that must be stopped.

cb – I take your point on Neg Gear and think maybe it is an unneccessafry distortion.

must sleep, been a big day for an NRL fan and someone interested in housing, a lot of info to digest!

By: cb

cb — Thu, 22 Apr 2010 10:35:35 +0000

That would have been K, I think, just one thread back.

By: cb

cb — Thu, 22 Apr 2010 07:13:24 +0000

And this one:
http://www.youtube.com/watch?v=yx8Wpuu8-Dw&feature=player_embedded

By: cb

cb — Thu, 22 Apr 2010 07:12:41 +0000

For anyone holding their breath over the Goldman saga, you might want to watch this report:
http://www.youtube.com/watch?v=WfT1uQlq0-c&feature=player_embedded

By: GB

GB — Thu, 22 Apr 2010 06:58:29 +0000

PuntPal
I agree and I think it was Nick? that posted that a financial advisor would be in deep trouble if he could spruik like the RE industry does

I also like the idea of use it or lose. This will stop developers hoarding land

By: GB

GB — Thu, 22 Apr 2010 06:53:55 +0000

cb I agree with what you said but just to point out what you said is called stagflation – rising inputs. This pushes up costs which pushes up wages which pushes up costs and so on. They had this in the 70′s which funnily enough was just after Japan’s industrialisation finished – i think their industrialisation finished in 74?

Hyperinflation is when that process occurs at 50%+ a month or year – cant remember which. That is pretty fast and in this case, where high inflation is being caused by stagflation, you would asume that commodity prices also rise at the same speed-ish?? While I am a firm believer in never saying never it is hard to fathom that happening.

It would require the excess money leaving Asia when it pops and having nowhere to go finds a home in commodities – go gold!!! However at that point people will probably consider US property cheap or maybe South America or Africa is the place to be.

Hopefully, if Asia pops then the market will have done its job well enough to have destroyed the excess cash and the road to recovery can begin.

By: cb

cb — Thu, 22 Apr 2010 06:47:56 +0000

PuntPal – Yes, sure. I obviously gave your comment a stronger reading than I could have, but, at some risk of sounding a little precious, I wanted to make sure that my considered position on such an emotive question was clear. I am with you with all those suggestions, actually, but would probably want to throw negative gearing into the sin bin, because of my understanding that a lot of people who otherwise would be paying higher taxes decide to take on loss making investment properties, instead, and subsidise their tenants, instead of paying that money directly to the tax man.

The psychology behind this is understandable, because any tax paid from the individual’s perspective is dead money, and hence any rational indidual seeking to maximise their financial interest will automatically seek to put that money, if they can, to some more promising and prductive use. And, in the current instance, one of those uses is to use the tax money instead to subsidise the tenant and pay the bank, while hoping to make some money on capital gains down the road, on which they will only pay half the tax.

Anyhow, the long and short of it is that hitting negative gearing rules which currently allow losses on an investment property to be offset against current taxable income from other sources would facilitate the exodus of investors from the residential property market, which would be even further magnified if a land tax was also introduced down the track on all rents collected in this sector.

By: PuntPal

PuntPal — Thu, 22 Apr 2010 05:57:52 +0000

cb – sorry, I didnt mean you are scaremongering, I meant that the argument that rents will go up because of negative gearing beign changed or because of this or that is usually just scare mongering. I didnt mean to suggest you were doing this in that thread, but you were mentioning the risk.

I dont know what happened last time they removed negative gearing as I was only a toddler. But I am just trying to think it through.

Personally, I dont think Negative Gearing is a massive issue and even if is, some form of capping approach would be good (as suggested by Wolf).

To me, the main thing is to:
1) End the FHBG (this is coming from someone elgible – that shows how bad a policy it was).
2) Crack down on dodgy propertyganda
3) Increase the supply of land for residential development
4) Reduce taxes paid (stamp duty etc…)

None of this will cause carnage. Prices will decrease and some people will be forced to sell and get out – others will have to declare bankruptce…but this cannot and should not be avoided.

By: cb

cb — Thu, 22 Apr 2010 05:57:27 +0000

Talking of James Turk this is an inverview with him on Keiser’s On The Edge. He discusses the very question we have in the current context:
http://maxkeiser.com/2009/11/13/ote27-on-the-edge-with-max-keiser-and-james-turk/

By: Peter Fraser

Peter Fraser — Thu, 22 Apr 2010 05:43:24 +0000

PuntPal – but the RBA has managed a trillion dollar economy exceptionally well. They did drop rates quickly in late 2008 and that prevented a house price crash, it was not NG or the FHOG, that is just peripheral stuff that bears use to balme when they don’t comprehend the real issues.

We are on a glide path now.

Cheers I’ve already moved onto the next posting.