Times are tough all over

[Trilby]

Originally Posted by Undertoad

The recruiters are filling my mailbox and voicemail with inappropriate offers. And none of them are sexual in nature!

What? You think you can just announce that you're out of work and start a sex company right away? Nooooo, my friend. It takes days and days to build up your clientele! There's filthy mags you've got to advertize in, 900 numbers to establish, etc. Takes a good few hours to get yourself firmly ensconced in the sex biz.

[Cicero]

I'm going to go back into advertising. I'm going to have beer logos etc. temporarily tattooed to strippers butts and take a cut.....Once I figure out how to write this proposal to budweiser about the "installation"....heh. Or I just have too much time on my hands now.

[ZenGum]

Here's how many Yen it costs to buy one Australian Dollar, over the last 12 months:



Just to help you see that cliff at the right hand end, here is the last 30 days:



I doubt this affects any of you very much, but it is pretty damn spectacular. There is some serious stuff going on out there.

[tw]

Originally Posted by ZenGum

Here's how many Yen it costs to buy one Australian Dollar, over the last 12 months

What has been ongoing in the Australian economy to cause such a dollar drop? Have commodity exports dropped off sharply? Was the government running massive deficits? What was ongoing four and more years ago to cause that dollar drop?

[Elspode]

America's economy drives everyone else's. We are the largest consumer of *everything* there is, and when we cut back our consumption, everyone else takes the hit, too.

[HungLikeJesus]

Originally Posted by Elspode

America's economy drives everyone else's. We are the largest consumer of *everything* there is, and when we cut back our consumption, everyone else takes the hit, too.

Except whale meat.

[Pie]

Originally Posted by Elspode

When we cut back our consumption, everyone else takes the hit, too.

Dude, it's time we stopped bogarting the bong!

[classicman]

My cousin just received notice that all state employees are being forced to take a 6 day furlough. The state needs to save $48 million by the end of the year. It is unclear whether they have to take them all at once or can spread out the loss of income. The latter is the most likely option at this point.

Amazing that not only are we all paying for this bailout, but some people, State/Fed employees, are now losing income too.

[Pie]

A wise old gentleman retired and purchased a modest home near a junior high school. He spent the first few weeks of his retirement in peace and contentment. Then a new school year began. The very next afternoon three young boys, full of youthful, after-school enthusiasm, came down his street, beating merrily on every trash can they encountered. The crashing percussion continued day after day, until finally the wise old man decided it was time to take some action.
The next afternoon, he walked out to meet the young percussionists as they banged their way down the street. Stopping them, he said, "You kids are a lot of fun. I like to see you express your exuberance like that. In fact, I used to do the same thing when I was your age. Will you do me a favor? I'll give you each a dollar if you'll promise to come around every day and do your thing."
The kids were elated and continued to do a bang-up job on the trashcans.
After a few days, the old-timer greeted the kids again, but this time he had a sad smile on his face. "This recession's really putting a big dent in my income," he told them. "From now on, I'll only be able to pay you 50 cents to beat on the cans."
The noisemakers were obviously displeased, but they accepted his offer and continued their afternoon ruckus. A few days later, the wily retiree approached them again as they drummed their way down the street.
"Look," he said, "I haven't received my Social Security check yet, so I'm not going to be able to give you more than 25 cents. Will that be okay?"
"A freakin' quarter?" the drum leader exclaimed. "If you think we're going to waste our time, beating these cans around for a quarter, you're nuts! No way, dude. We quit!" And the old man enjoyed peace and serenity for the rest of his days.

[tw]

Originally Posted by classicman

My cousin just received notice that all state employees are being forced to take a 6 day furlough.

Which state?

[Aliantha]

Originally Posted by tw

What has been ongoing in the Australian economy to cause such a dollar drop? Have commodity exports dropped off sharply? Was the government running massive deficits? What was ongoing four and more years ago to cause that dollar drop?

Similar things that were happening in the US economy. Citizens had enjoyed lower interest rates for a considerable period of time. The gov was running a surplus and giving out money all over the place. Our dollar was up around 98 cents US for almost 12 months shortly prior to this recent meltdown.

Basically everyone was spending money like it was going out of style (which ironically it has) which injected more and more money into the economy so of course it kept growing. Housing prices inflated as more and more people decided to get into the market, so the construction industry boomed about 10 yrs ago. Then all of a sudden, someone realized that inflation was getting out of control (this was about 3 yrs ago), so the reserve bank started putting up interest rates. They went up really only about 4% in the end over that period...maybe 5%, but it took the average mortgage rate up to nearly 9%. More in some cases. This of course put a huge amount of financial pressure on mortgagees who had in many cases taken out 100% loans in the last few years. So, people started trying to sell their big expensive houses.

At the begining of this year during the months of January and early February, people were selling within 2 days of putting their house on the market, and often getting more than the list price, but that was the last gasp as our economy reached the top of the hill. After that, there were too many houses on the market, and not enough buyers. People who had been thinking about buying started getting picky. They didn't want to pay the inflated prices created by our inflated economy so they started making crazy low offers, and mortgage holders in trouble had no recourse but to accept those offers.

Lower the median house price and your economy starts to slow.

Basically, the interest rate rises brought down inflation to a managable level, but they hurt the citizens who had high mortgages.

Anyone with half a brain to watch what was happening should have seen this coming. Some didn't though, so our dollar continues to fall as people continue to keep their wallets closed in order to try and hang onto what they have now.

Increased fuel costs during this period have also contributed. Not only to household budgets at the fuel pump, but the cost of groceries and most other utilities has risen considerably also.

That's a very simple explanation. Obviously government policy contributed to the problem also along with world markets and a healthy trading market for Australia.

[tw]

Originally Posted by Elspode

America's economy drives everyone else's.

That's not the reason for problems in Iceland. Apparently Iceland's three biggest banks invested heavily in American mortgaged backed securities - helping to fuel an America that was spending massively (like all Republican administrations do) and using the incoming investments to deny how large the deficit had ballooned.

In another post, described was how China (in trying to be a close American friend) was inadvertently making Americans ignore the costs of “Mission Accomplished”. China’s massive investments also contributed to the ponzi scheme of tax cuts and spending increases.

Eventually economics takes revenge – including revenge on those who invested in America NINJA style.

But again, why has the Australian dollar dropped so far and so fast (Brianna xxxxx Aliantha answered after this was asked)?

[Aliantha]

Brianna? You didn't like my answer tw?

[tw]

Originally Posted by Aliantha

Then all of a sudden, someone realized that inflation was getting out of control (this was about 3 yrs ago), so the reserve bank started putting up interest rates. They went up really only about 4% in the end over that period...maybe 5%, but it took the average mortgage rate up to nearly 9%. ... This of course put a huge amount of financial pressure on mortgagees who had in many cases taken out 100% loans in the last few years.

Increased central bank interest rates should have no affect on a mortgage even if the mortgage is 100%. However, with bean counter mentality, something new was created - rate adjustable mortgages. Nobody with basic financial knowledge would take out an ARM.

For your reasoning to be valid, ARMs must have been widespread in Australia. Otherwise higher central bank interest rates would have left mortgage payments low. One reason to own a house: inflation and the necessary higher central bank interest rates make life easier for the holder of a fixed mortgage. His mortgage payments remain unchanged and the house value increases. Just another reason why no informed home owner should even take out an ARM.

[Aliantha]

We call them variable rate mortgages, and in Australia, a variable rate is the most common mortgage you'll get and pretty much always has been.

I note tw, that having fixed rate mortgages hasn't saved the US economy, or any other country's economy.

Also, regardless of whether mortgages are fixed or variable, you surely must realize that as interest rates go up, more people are locked into higher mortgage repayments for the same thing their neighbour has at a lower price. And of course with an inflated economy which Australia has had for many years now, housing prices are inflated which of course means that people have been paying even more on the capital aside from the interest at whatever rate it's at.

As I said, it's not just housing interest rates which have contributed to this issue. It's fuel costs also. Every household in Australia has much higher expenses than it did 3 or 4 years ago. Do you think fixed rate mortgagees should have realized that was going to happen?

You asked for an explanation and I've given you one. Personally we have a fixed rate mortgage which is now lower than it would have been if we'd taken a fixed rate mortgage out six months ago when we bought this house. The recent interest rate drops means we're saving over $250/month which goes a long way towards paying our utilities.

It doesn't matter what sort of mortgage you have if you haven't allowed yourself some breathing space for fluctuations in the market.