When the music stops

I've went out for a few hours yesterday but really did not end up going very far and am fast beginning to loathe shopping though I am due to do some more soon.  Who knows, if I can put it off for a few days, I can do an online shop instead probably.  Given I only need a few things, that's a whole lot of money for little benefit.

The last few days, I have been on walks and when driving have come across some really nasty people.  There's been lovely people too, but the few who abuse me, and are dangerous put me off going out in public to the shops.  In the space of 500m I nearly ran over two people who appeared inebriated and drug dependant.  I was looking at a unit a few days ago and was gobsmacked at the lack of care of nearby properties that the owners no doubt value at 300k AUD.  I valued the area as a total dump in need of explosives (as an improvement!).

Honestly, I can not get over what people are willing to pay for houses and land that's got little to recommend it.  I keep on thinking that the insanity that is real estate might calm down, then another person pays 450k for a weatherboard house last renovated in the 1960s and I am amazed yet again and the flagrant stupidity driving the market.  At 450k they are essentially valuing the land at 400k because the house is barely worth 50k in it's current state.  Then again, there are blocks for sale in Lenah Valley which while lovely, should take the prize as one of the coldest places to live in the state, for 350k you can buy a block to freeze on.

Buying a house at the moment really does require the risk taking of a roulette player because I am sure that the music will stop at some point.  When the music stops, what then?

I would love to think that people would learn from history but most never will.  It was suggested yesterday that was "negative" when it comes to businesses (retail is contracting in my opinion, China is economically up the creek without a paddle) and housing (development blocks are selling, bank sales are being held), to which I replied, I look at patterns and I can predict the likely future.  The one thing I can not predict is the government's response and the impact that overseas markets may have on us.  The thing is, I looked for work at a time when unemployment was at 25 percent for people my age.  I never forgot that things can get bad really fast and it pays to enter a market cautiously.  There's not point espousing positive views when all around us things are less than that.

The few and the brave spoke out about the debt bubble that fuelled the US GFC and would have led to a down turn in Australia at the time had our leaders had the courage to embrace it. I can only hope that we do not continue the insanity this time, though I fear that our leaders have no room to move, except down with our PM Malcolm Turnbull ominously warning people against excessive debt.

This piece by the WSJ talks about lessons to be learnt from the GFC, though it may be too late for most:

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