Let's face it! You and I have been affected by the crisis in financial markets one way or the other. Volatility is imminent! Commodities have seen an upcycle to levels unheard of and on the way down now due to the slowing down in growth of economies as they suffer from these huge runs which brought about inflation. The 'flight to quality' is definitely on by the recent runs in Gold prices and bonds as investors cash out of equities and move to these instruments. 'Cash is King' will be reverberated throughout these times, but where will they park their money once they liquidate? Will they continue putting in banks? The recent crisis has seen many banks under liquidation. Banks that you would never imagine going down.!Too big to go down in fact! Here's a list:
* A I G -Then: $178.8 billion... Now: $5.46 billion. Down 96.95%
* Bank of America -Then: $236.5 billion... Now: $123.4 billion. Down: 47.82%
* Citigroup -Then: $236.7 billion... Now: $76.34 billion. Down 67.75%
* Merrill Lynch - Then: $63.9 billion... Now: $30.2 billion. Down 52.74%
* Fannie Mae - Then: $64.8 billion... Now: $0.45 billion. Down 99.3%
* Morgan Stanley - Then: $73.1 billion... Now: $41.1 billion. Down 43.78%
* Wachovia - Then: $98.3 billion... Now: $19.44 billion. Down 80.22%
* JP Morgan Chase - Then: $161 billion... Now: $130.2 billion. Down 19.13%
* Capital One Financial - Then: $29.9 billion... Now: $16.9 billion. Down 43.48%
* Washington Mutual - Then: $31.1 billion... Now: $3.64 billion. Down 88.3%
* Lehman Bros. - Then: $34.4 billion... Now: $0.80 billion. Down 97.6%
* Goldman Sachs - Then: 97.7 billion... Now: $40.6 billion. Down 58.7%
* Wells Fargo - Then: $124.1 billion... Now: $111.25 billion. Down 10.35%
* National City - Then: $16.4 billion... Now: $2.8 billion. Down 83%
* Fifth Third Bancorp - Then: $18.8 billion... Now: $7.9 billion. Down 57.6%
* American Express - Then: $74.8 billion... Now: $37.5 billion. Down 49.87%
* Freddie Mac - Then: $41.5 billion... Now: $0.16 billion. Down 58.7%
* Suntrust Banks - Then: $27 billion... Now: $16.07 billion. Down 58.7%
* BB&T - Then: $23.2 billion... Now: $18.4 billion. Down 20.69%
* Marshall & Ilsley - Then: $11.6 billion... Now: $4.48 billion. Down 61.3%
* Keycorp - Then: $13.2 billion... Now: $5.68 billion. Down 56.97%
* Legg Mason- Then: $11.4 billion...Now: $4.96 billion. Down 56.49%
* Comerica- Then: $8.3 billion...Now: $4.74 billion. Down 42.89%
* Countrywide Financial: Then: $11.1 billion...Now: $0.00 billion. Down 100%
* Bear Stearns- Then: $14.8 billion...Now: $ 0.00 billion. Down 100%
taken from malaysia-finance.blogspot.com.
These are only banks in the US but what about UK and Europe and even financial institutions in Australia? There will be more to come!
People are putting money in Properties
Following the World Stock market crash of October 1987, when the Dow Jones fell some 23%, and the Australian all ordinaries fell some 42%, WHY did Melbourne apartments prices rise by nearly 40%, and Sydney apartments by 54% in the 24 months immediately following the crash? (source: Residex October 1987-October 1989)
Firstly, though the crisis has a trickling down effect to Australia, the overall economy remains resilient. Reasonably strong and stable because of its rich resource in commodities and not so much technology or manufacturing intensive.
Secondly, there is a chronic shortage of construction and new houses being built around Australia. There is an oversupply of houses in the US and Australia is the opposite.
Thirdly, there is a huge amount of new migrants entering Australia every year. People like me and over 400,000 more in 2008.
Secondly, there is a chronic shortage of construction and new houses being built around Australia. There is an oversupply of houses in the US and Australia is the opposite.
Thirdly, there is a huge amount of new migrants entering Australia every year. People like me and over 400,000 more in 2008.
Where will they live?
Property prices have been on the rise for a while now. Even Perth has overtaken Sydney and Melbourne in terms of median prices because of the mining boom! One thing for sure is that if prices do come off, it won't be for long.
Economic forecaster BIS Shrapnel is predicting good economic conditions for Australia for most of the next 15 years. Infrastructure and housing development in Australia, together with the growth of China and India will keep investment and growth at healthy levels they said in their latest report.
They are also predicting (as reported on September 21 in the Age Newspaper) rent increases of 32 per cent in certain areas. Won't it be nice to own an Australian property today? Problem is when we convert MYR to AUD, we 'd have to divide it by 2.8 and that sux bigtime!
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