Quote:
Originally Posted by casstony
It's always hard to see a bubble from within and justifications abound for why it's different this time, but historically every market bubble has ended the same way (whether it's real estate, commodities or tulips).
Over the last few decades bubbles have been blown in various markets around the world propelled by cheap money (low interest rates, easy loan terms, government stimulus) effectively stealing from future generations who will have to pay for our excessive spending.
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This is exactly the truth of it.
Here in Spain the bubble blew in 2007 in a huge way and the market is at rock bottom still. Worse still it was the underlying cause of what they call "The Crisis" here which when the housing market went everything else in the economy did as it was reliant almost entirely on this perceived wealth and the construction industry to prop it up.
Some of the similarities are striking to the Aussie bubble, terms like foreign investors, 2nd or 3rd investment properties, negative gearing, subprime mortgages, huge levels of household debt etc....
Maybe because I am not on the inside I can see this clearer but it is hard to miss really.
Do I think the Aussie bubble will burst as hard as Spain's?
Probably not, or at least you would want to hope not.
For example I know what losses the previous owners of our house made as we have all the receipts from them building and they took a 150,000 euro hit, nearly 50% and they got off lightly.
I have no idea what is in store for the Australian market but this statement is bang on the money.....
"but historically every market bubble has ended the same way (whether it's real estate, commodities or tulips). "