In the past few years the finance world went mad ! There was simply too much money offering in a fast expanding home sector and so the standards for loans for housing dropped to zero.
Lenders ignored the old formulae of at least a twenty percent deposit, repayments no more than twenty-five percent of income - and the total loan over no more than twenty-five years.
One hundred percent loans became the norm - and ability to pay was totally ignored.
We are now paying the price for that madness. The sub-prime fiasco in America has the ability to create huge losses - and we are not immune here in Australia because exactly the same procedure was followed by a fast expanding plethora of mortgage brokers.
Unfortunately the fall-out will not be quarantined to the home lending area - and that is already becoming apparent in the general financing market.
One of the first casualties has been Cosco - a developer of shopping centres and malls. This firm is highly leveraged and needs to continually re-finance to fund it's increasing expansion.
This week the money market shut it's purse. We can expect a similar fate to overtake any company that has a similar structure - and any new company looking to establish in the market will face an intense scrutiny before money starts to flow.
A lot of this is simply money market nerves. There is no real reason for a panic, but a little bit of bad news seems to generate a tsatsumi of fear and the reaction is to slap the lid of the money bin shut - and stop spending.
Like all such downturns - there will be rich opportunities for the canny investor who is cashed up and has the nerve to jump in when prices of quality investments are low.
2008 may be the year of dread for many companies with a volatile money market - but those opportunities will see many people turn disaster into a huge personal advantage.
It offers better odds than betting on race horses !
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