The totally off-topic thread

[Pushka]

Currency markets have just opened and have reacted to the Greek vote - Euro (naturally) is down but more relevant to us is that the AUD has fallen over 2% to its lowest level in over 6 years. Thanks Greece!!

What is it against the Euro though?
Luckily not going to USA this trip.

 

[vetrade]

What is it against the Euro though?
Luckily not going to USA this trip.

Against the $USD Euro is down .9% and Aussie down 2.1% so it's lose/lose for us, Pushka

 

[Pushka]

Against the $USD Euro is down .9% and Aussie down 2.1% so it's lose/lose for us, Pushka

The world currency market sucks then! Nonsensical.

 

[vetrade]

The world currency market sucks then! Nonsensical.

If you think that is nonsensical "hold your hat" because those shares of yours are about to take another hit today as well.

Edit: S&P500 futures down 1.5% and DAX (Germany) down 3%

 

[SeatBackForward]

If you think that is nonsensical "hold your hat" because those shares of yours are about to take another hit today as well.

Edit: S&P500 futures down 1.5% and DAX (Germany) down 3%

Its ridiculous. A whole lot, well actually not that much, of money isn't going to be repaid, to people who are making do without it anyhow..whats that expression about not loaning money you can't afford to not have repaid? Clearly I'm not fit enough to either be a part of or understand, how finance works.

 

[Princess Fiona]

I heard or read a reference to a David Noble over the past few days. No idea what it was about, but it jogged my memory to ask - whatever happened to AFF's Dave Noble?

He's alive and well on FT

 

[vetrade]

Its ridiculous. A whole lot, well actually not that much, of money isn't going to be repaid, to people who are making do without it anyhow..whats that expression about not loaning money you can't afford to not have repaid? Clearly I'm not fit enough to either be a part of or understand, how finance works.

Several countries (predominantly Germany) are guarantors for Greece's debt so the debt is not owed directly to them; but if (when) Greece defaults they will have to stump up the cash to the IMF etc. That's why the Euro countries have been cutting so much slack to Greece - none of their leaders want the debts to materialise on their watch and for them to have to wear the blame.

 

[amaroo]

Lifted from TFF ... makes perfect sense.

The Greek Bail Out

It is a slow day in a little Greek village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this day a rich German tourist is driving through the village, stops at the local hotel and lays a E100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night in. The owner gives him some keys and as soon as the visitor has walked upstairs, the hotelier grabs the E100 note and runs next door to pay the butcher, who takes the E100 note and runs down the street to repay his debt to the pig farmer.

The pig farmer takes the E100 note and heads off to pay his drinks bill at the taverna. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the E100 note.The hotel proprietor then places the E100 note on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the E100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However the whole village is now out of debt and looking to the future with a lot more optimism. And that Ladies and Gentlemen, is how the bail out package works.

 

[Pushka]

If you think that is nonsensical "hold your hat" because those shares of yours are about to take another hit today as well.

Edit: S&P500 futures down 1.5% and DAX (Germany) down 3%

Not looking at them anymore. Past the eofy! Not worth the pain.

 

[anat0l]

Greece knows they hold the cards and everyone knows it reluctantly so. Surprising enough, the Greek population seems to support it too; maybe they are really just sick of the austerity and couldn't care less - as long as the options says, "no more austerity", they'll vote for it regardless of the consequences.

If the EU cuts off Greece, whilst it may be less pressure on the community and Eurozone as a whole, it will certainly be remarked in history as a failure of humanitarianism. The right might not care - begone, get out, you dug your grave now lie in it you lazy Greeks - but not everyone in Europe is politically right and many of the fundamental tenets that the European Union - whether you believe the community is a stronghold or a farce - are based mainly on politically central (or even slightly left) ideals.

Greece is not doing favours for itself. It's like the irresponsible son who doesn't have a job, but he is your son - you can hardly disown him or leave him to be condemned to waste away.

Switzerland is a bit like an island amongst all this chaos. The Franc's value is going gangbusters against the crossrates; the SNB big wigs will be ordering an extra set of Depends trying to control the situation.

 

[coriander]

Strong Contender for Platinum Darwin Award for 2015. Accidentally set off a mortar tube on top of his head - alcohol may have played a part (no, really?)

Man killed trying to launch firework off head during Fourth of July celebration

 

[JessicaTam]

I am not sure if this belongs in the Quotable Quotes, or Humour thread. So I will put it here instead.

I overheard a chap on the chairlift at Falls Creek this week say:

"Thank God for man-made snow".

:shock:

 

[JohnK]

Lifted from TFF ... makes perfect sense.

It does make perfect sense. Is that how the world works?

I wish someone can explain to me where all the money goes when billions are wiped off the share market.

 

[vetrade]

I wish someone can explain to me where all the money goes when billions are wiped off the share market.

You need to appreciate that those billions are predominantly only "paper losses", JohnK. In most cases the shares will regain their value over a variable period of time so anyone who does not sell when the price falls will recover the value in time. If there are a million shares for company ABC in the market and 10,000 of them change hands on a particular day at an average price $1 less than they closed the day before then the actual losses for all practical purposes are $10,000 but if you extrapolate that to say that the value of company ABC dropped by $1,000,000 today (1M shares x $1) you can see how those "billions wiped off the share market" can give a distorted view of what has occurred.

News Corp and Fairfax wouldn't sell as many papers if they reported that there were $10,000 of losses today! Nearly everything the media puts out has an agenda which frequently has little to do with accuracy or the whole truth.

 

[amaroo]

<snip>

News Corp and Fairfax wouldn't sell as many papers if they reported that there were $10,000 of losses today! Nearly everything the media puts out has an agenda which frequently has little to do with accuracy or the whole truth.

If it bleeds, it leads...

 

[penegal]

I am not sure if this belongs in the Quotable Quotes, or Humour thread. So I will put it here instead.

I overheard a chap on the chairlift at Falls Creek this week say:

"Thank God for man-made snow".

:shock:

I cancelled my trip that was meant to be this week and went to work instead...

 

[whatmeworry]

Greek debt crisis summed up in ten seconds.

[video=youtube;Aa1Megzxf8g]https://www.youtube.com/watch?v=Aa1Megzxf8g[/video]

 

[RAM]

You need to appreciate that those billions are predominantly only "paper losses", JohnK. In most cases the shares will regain their value over a variable period of time so anyone who does not sell when the price falls will recover the value in time. If there are a million shares for company ABC in the market and 10,000 of them change hands on a particular day at an average price $1 less than they closed the day before then the actual losses for all practical purposes are $10,000 but if you extrapolate that to say that the value of company ABC dropped by $1,000,000 today (1M shares x $1) you can see how those "billions wiped off the share market" can give a distorted view of what has occurred.

News Corp and Fairfax wouldn't sell as many papers if they reported that there were $10,000 of losses today! Nearly everything the media puts out has an agenda which frequently has little to do with accuracy or the whole truth.

As the saying goes; "Up to a point Lord Copper!"

Every day in every country in the world there are people who have finished working and are retiring. It is something like say 1 million people a week day. For those 1 million people only around 300,000 have some kind of work-related retirement funds (pension, 401K, super, personal benefits etc). So for them it is like they have bet everything on what they hoped was the winner of the Melbourne Cup (just as predictable).

Takes some great examples. Someone who retired on 30 Sept 1987 vs 31 October 1987 - in an Australian super fund. For the median fund in Australia - the 31 October retirees got 30% less (if they cashed out as most were doing in the late 80s and going into cash/bonds around 10-12%).

Fast forward to today and with the 'greed factor' for the average person significantly higher coupled with the amount of leverage through hedge funds, investment banks, trading banks and countries like Greece, Japan (YES Japan but too big to fail so nobody really in the know in finance ever mentions it - cue Basil Fawlty, "Don't mention the war"), Spain, Italy as well as another 3 European countries, 4 South American - you get the picture.

Search "Australian personal debt leverage" to get an idea of how exposed the typical Australian is.

The number of people who have margin loans for shares is huge. So a shift of a few percent in a company's price can be fatal. It is just that with property the bank's can choose whether or not to act on the leverage impact. There was the story of a Melb Financial Planner who had leveraged into 5 regional mining residential properties close to the peak. Four in one city and one in a neighbouring city. Prices down 30-40% subsequently and she's underwater in the 6 figures but has to keep paying off the loans otherwise she will be bankrupt and can't work as a Financial Planner anymore.

The banks that loaned the money know this but they don't want to issue default as then they have to take the hit to their balance sheet and write down the loan as a negative equity instrument. Those loans and the thousands of similar ones btw. Funnily enough none of the banks are doing this.

With the shares though there is no choice as the negative equity is required to be made good with cash or other acceptable securities. So if you don't front up with the cash or security the shares get sold with no say from you.

The dominoes can start to topple.

Why Australian shares fell?

BAD FOR WORLD GROWTH = terrible for Australia.

EU is China's largest export market, China is Australia's largest export market...

And just happened to come a few days after Aust trade account DEFICIT (despite once in a lifetime mining boom and volumes exported being multiples of 5 years ago) came in at around $3 to 4bn a month for the last three months of releases.

The image shows the total quarterly current account which includes the trade deficit plus



Add in the interest on Australia's foreign debt, deduct what we earn from tourists and hey presto, we're a Banana republic.'

So despite the biggest export boom in Australia's history we did NOT EARN ENOUGH TO PAY OFF ONE DOLLAR OF FOREIGN DEBT.

Surely not?

Well, we're not as far down the road as some but what good the Fed Govt had done many years back has been totally unwound, personal and corporate debt is looking bad.

And this is the case without Australia having had a recession since 1990. Imagine what things would look like once the next recession occurs.

Also while Australia has been selling off the farm, the mines, the office buildings, warehouses and houses to overseas.

Some fun facts

Australia can be self-sufficient in every known element so far discovered - they all exist within our borders. While we don't have as much oil we have more than enough gas.

So much so we signed 30 year supply contracts with Japan and China (with NO escalation clauses) at prices below that it was being sold in Australia at major wholesale rates at the time. But the corporate finance gurus found a positive IRR based on cost of production + 12% so it was all good. Remember the photo ops with Howard? That's how long ago and how cheap the gas was - and that's partly why domestic gas is getting so expensive but only partly.

Similar with the takeover of MIM and all its Australian assets in the early 2000s by Xstrata (How much tax have they been paying...). Local fund managers got a one month performance boost and Australia lost an estimated $31bn in value subsequently (detailed post-mortem study done 5 yrs later).

theage.com.au - The Age And he was not bullish on China/Commodities at the time but having done the numbers he knew a bad deal.

He also campaigned against the signing of the 30 yr gas contracts.

So...

Leverage and dominoes combine to make life more difficult for the people living on your street.

Just as people said what happened to Bear Stearns would not impact the price of a house in Oregon - the leverage & dominoes came into play and you could buy a 5 yr old 3brm brick & tile house with 3 car garage on 812 sqm of land in a good school district, bottom decile crime zone - for $32,000 in 2009. Last sold for $190,000 in 2006.

OR look at Hurricane Katrina - increased the price of school shoes in Australia by 15% within 6 weeks (due to hit on US Gulf oil & gas production saw oil & gas prices surge putting up cost of feedstock for plastic soled shoes which was passed on almost instantly in Australia plus a margin of course!)

 

[TheRealTMA]

Greek debt crisis summed up in ten seconds.

All explained here

A hilarious Monty Python sketch helps explain why Greece is in a huge crisis

btw: I should have held to my beliefs about doom and gloom on the markets and bought QAN on Friday. Up around 5.6% today.

 

[JohnK]

You need to appreciate that those billions are predominantly only "paper losses", JohnK.

So our whole economy survives on a lie?

A company floats today and 1,000,000 shares are issued at $1/share. I buy 10,000 shares.

Tomorrow 10,000 shares are sold at $2/share so now the company is valued at $2,000,000 without doing anything? Can anyone cash out at this point and where is the money coming from?

The next day 20,000 shares are sold at $3/share so now the company is valued at $3,000,000 again without doing anything?

The day after 30,000 shares are sold at $5/share so now the company is valued at $5,000,000 again without doing anything?

So this goes on and on and no one knows how much the company is actually worth. I think I have $50,000 worth of shares but I don't.

Then the Greek crisis hits and 50,000 shares are sold at 50c/share.

Now I have only $5,000 value in shares. Where has my $45,000 gone?

I know this is a simplistic approach but I cannot believe this is what makes the world go around. People placing their future retirement income on imaginary money. Stupidity.