The Biggest Greed, The Biggest Squeeze!

Soon we will go into why APRA has been good for property investors by reducing supply, forcing up prices and prolonging the Sydney boom for an extra eighteen months.

First I would like to comment on the budgets 5% grab of the majors near $35 billion annual profit.

This profit is only there because they alone benefited from Kevin Rudd's short sighted largess in pouring RBA cash at them when there was a North American Financial Crisis. The world refers to this as the Great Financial Crisis. Australia took none of this toxic debt!

This flow of RBA funds was not given to their competition! The majors gave an undertaking that they would "keep the economy going by continuing to lend". The economy crashed as the banks forced margin calls on extremely viable businesses simply suffering a short term sharemarket fall. The big four did not keep their bargain of “keeping the economy going”. Did you suffer? Give me your story!

This ricocheted through the economy that never recovered from the low 4.3% unemployment (was low then) to now sitting at double that with unemployment and underemployment.

In short, since Rudd, the banks have forced a credit squeeze on consumers. How? The chart shows the profit levels with competition prior to Rudd in 2007. We call this "A". We have long been talking about this for many years, but look at the huge profit margins after Rudd.

This becomes more alarming when you compare this profit margin to the RBA cash rate. We are now at the biggest percentage increase in Australia's lending history. The biggest greed. The biggest squeeze on your spending.

Put simply, the banking monopoly has been stealing your money and preventing you to spend and create real jobs in the community. The solution?

Learn from history and this time around give the small banking competition, banks, building society's and credit unions, a special government guarantee that enables them to borrow cheaper than the majors! Simple!

As for Mr. APRA. Now is not the time to squeeze more funds out of the community to make the four majors "unquestionably strong". Wait until we get employment back to 4.3% and wages are rising above inflation. It's a matter of timing Mr. APRA and you've got it wrong.

APRA Boom.

I'll get to the main point of this week's Insights, and that is why Mr. APRA's short sighted attack on investor funding is great news for us people that have property and Club members that we have been able to find funding for. Isn't it great that we have got a nationwide network of hardworking, dedicated "fund finders"?

They are getting great deals for our members despite this credit squeeze of APRA, RBA and the banks. Below are some charts that will show that from mid 2015 there has been a restriction of supply coming into the market.

Our wise members know that with less supply of any product in the market, but with a rise in demand, the prices must rise.

Mr. APRA doesn't understand this of course.

Kevin Young Property Club Founder