Now that’s an intense headline. However, if you take the skeptic hat off and rationalise the massive drops in interest rates on both sides of the Tasman, a rather deep and meaningful issue will reveal itself.
Both Australia and New Zealand have been tossing themselves between a socialist structure and a capitalist democracy – neither has been able to create that balance between the two “ism”s – frankly, it can’t be done.
Capitalism by its very definition has a massive internal issue which no one can escape from for too long because that issue is built into the SYSTEM. It is this issue that causes market cycles. The caterpillar of boom and bust – its part of its nature. Capitalism was and always is a short term fix to a long term problem.
You see… Capitalism by its very definition seeks to continue increasing profits. There are only two ways to do that: You either increase revenue/sales or reduce cost of production. So for the last several decades, you’ve seen most corporations going with the latter, taking production off-shore (in a bid to reduce costs) but at the expense of stagnating wages on-shore.
The dilemma this creates is now that you’ve got lower production costs, you can build more for less but the buying power of those you sell to has diminished – so the question needs to be asked – “Did you really increase your profitability?” – this is a fundamental problem with the capitalist doctrine that isn’t anything new. Trust me, I’m not that smart that I’ve figured out something no one else has thought of.
This problem, which, Mr. Marx called “Internal Contradiction” is what created the need to find a way to keep patching the capitalist problem with “Queen Elsa” print plasters – through the system of credit.
“While we have done a great job”, says the CEO to the Board, “of reducing our costs, we need to make it easier for our current clientele to be able to afford it”. The banker came along and said… “I know…, lets give them all free credit…”.
This is how, every time the capitalist agenda exposes a bigger socio-demographic problem, which should be seen as a “systemic” problem, free credit is the only thing that can keep the fire burning and the wheels turning.
This is EXACTLY what is happening on both sides of the Tasman. The capitalist agenda is dying… the idiots at the helm have no way of fixing this… besides the fact that its an unfixable problem, yet, far be it from the limited intelligence of these politicians, they can’t even find a way to control the crash landing.
This… ladies and gentlemen, is what I have been going on about for several months now… the new crash landing will be much harder than the one in 2007/8/9.
So what do you do? Mike asks a very apt question in his short video posted here…
WHAT do you actually do? Do you go out there and borrow…given that money is cheaper now? Do you expand…? Do you branch out…? What…what is it that you, the Jane and Joe are going to do about this building that’s on fire?
I’m in no position to put any words in your mouth but if you have a concern about surviving this impending bust, as you should, I’d be looking at ways of creating cashflow assets – not capital gains assets. Because capital gains is a gone-burger if you ask me, for at least the foreseeable future. Focus on cashflow.
Cashflow was, is and will always be the only King that will remain standing once all the dust from the crash of various “ism”s settles.
Use smart strategies to generate cash in the current climate that is absolutely ripe for the harvest using the tools of Property Options. Pump that cash into picking up discounted, troubled and distressed rental properties. Watch rental demand outstrip ownership aspirations over the coming years (because during this period, the poor will get poorer, the middle class will fall further below their standard and only the rich will get richer) and just create that cashflow income for you starting NOW instead of waiting for when the proverbial truly hits the fan.
Yes, I’m making you a sales pitch for our SMART Property Education courses… and yes, what I’m offering is way better than anything else out there. HANDS DOWN. Go ahead and do something or don’t… its up to you.
Oh… and there’s absolutely ZERO benefit in going to that seminar this weekend in that convention centre close to you – because all you’re going to get is a 2 hour extended lecture on what I’ve said above (minus the economic insights because most educators out there don’t have a clue how to read macro-economic trends and execute micro-economic strategy on the ground), with a sales pitch to buy into some more bull manure at the end of the day.
As my friend Richie from Boston says… Do something… or don’t. I’m out.
The madness continues as there are no signs of economic improvement on the horizon. Now many of you will read this sentence and immediately say “he doesn’t know what he’s talking about”, because the share market is heading north like there’s an endless supply of rocket fuel and the housing market too is showing no imminent signs of slowing down. That’s all doom and gloom… we’re going well. Recovery is happening.
Regardless of which industry you extract your earnings from. Regardless of what you do for a living. Regardless of whether you are an active investor or one that’s waiting to become one. Regardless of whether you’re rich or poor. You have to pivot and pivot NOW. I’ll explain why.
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