Comments on: ASB underlying profit falls 10% in Sept qtr; new CEO sees subdued growth ahead

By: steven

steven — Wed, 25 Nov 2009 20:01:17 +0000

“if debt tripled again over the next ten years, $600B, $400,000 in hock per Kiwi household, I can hardly wait.”

The killer part is Debt to GDP…if GDP drops you cant service your debt…..debt is Ok where it generates profit (and not via capital gain)…however more and more it seems our companies have taken on debt in the good times that they are now struggling to pay or will even default on….all the ppl who rushed to buy corporate debt at 8% might find they are handed shares in the junk category that they cant sell for diddly…ie a share might be worth $3 if a limited quantity is sold, flood the market and its suddenly only worth $2 or worse…a classic case to look at that is SCO shares…

I also note that there are comments that the commercial real estate has dropped >40% in the USA, yet there are speculators on the side lines waiting for a “bottom” to snap it up expecting to profit well in the good times ahead…So right now with a drop of >40% considerable paper wealth is being destroyed….round two see’s these guys also get decimated…Now the Q is, where are they getting their money from? is it their own or is it borrowed from banks in typical hedge fund style? its like a croc chasing its tail, someone gets chewed…bet its the likes of us, at about bailout round 3 circa 2012.

regards

By: steven

steven — Wed, 25 Nov 2009 19:46:51 +0000

@David: If you chose to believe the likes of S&P, “our” banks are under the magic 8%, but all above 7%…the US banks are 2%….and that might be based on what is known as opposed to knowing what they have hidden.

regards

By: Wally

Wally — Wed, 25 Nov 2009 19:10:02 +0000

Copper over $7000 and gold near $1190! Goodbye to the USDollar. Hello gold standard my old friend..The corruption of the US$ by the US govt for 40 years is coming home to boot them up the jacksee..It is now becoming obvious GOLD will return as the standard of wealth. Whether there is deflation or inflation..gold will rise. Peasants are starting to see a need to save wealth in gold or something like copper or silver. The USA is set to experience a decline into lower incomes, less influence and eventually the breakup of the Union. I see Alaska as the first to depart the sinking ship.

By: steven

steven — Wed, 25 Nov 2009 18:14:03 +0000

I think ASB et al. could be lucky to see single digit growth to be honest….Gold is $1184 this morning, oil is dropping a bit ($77) or at least stagnant and the inventories are apparantly full. Exxon wont spend time drilling here, now that’s either because the prospects are pathetic (most likely) or they consider they have enough reserves that spending money on getting expensive oil ie >$60~80US a barrel makes no sense. The talk is on that we are heading for a second dip. For me its a confidence thing…I have been watching and listening, as long as speculator and investor confidence held and the talking heads on the likes of CNBC backed that up, we were in positive territory (sentiment) now its swung into negative….personally I think that’s pretty clear we are going into a second dip especially as the US stimulus finishes….the Q is how fast and how bad….

regards

By: Matthew

Matthew — Wed, 25 Nov 2009 14:30:23 +0000

This is interesting – lending growth has stalled, yet the housing market has recovered. This implies that the recent recovery has not been because of credit expansion/ low interest rates, but because of structural issues like an actual shortage.