Australian House Prices: The Slow Bleed

Australian House Prices: The Slow Bleed

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House prices are falling, but will the slow bleed become a hemorrhage?

It should not surprise people that Australian house prices dropped last year. What is surprising is how little they fell.

The latest numbers from RP Data show that house prices across Australia’s capital cities fell 0.4 percent in 2012. Melbourne houses lost the most value, with prices down 2.9 percent. Brisbane and Adelaide both lost 0.8 percent. Hobart lost 0.1 percent. Sydney and Perth defied the trend, growing 1.5 and 0.8 percent respectively.

In general, it’s a slow bleed. Nationwide house prices peaked in Australia in 2010 and have slowly shed value since.

The good old days of buying a home and simply watching its price increase year after year are over, says RP Data senior research analyst Cameron Kusher: “We’ve never seen these situations before, and you’d really have to go back to the early 1990s to see similar housing market conditions to what we’ve seen over the last few years, when we had our last recession.”

The big question now is whether or not the slow drip will turn into a gusher.

This is a hugely important question for Australians. Houses are no longer just places to live. For many Australians, it is the single most important investment they have. House prices are the biggest factor influencing household wealth. And for the past two years, home ownership has generally caused families to lose money.

If house prices don’t start rising again, it could destroy the wealth of a whole generation.

And if prices don’t start rising—it will also turn the housing market into something more like a car sales lot. Everyone knows that as soon as you drive off in a new car, it depreciates. After four years, the typical car has lost more than half its value. What happens if houses started acting the same way? Houses age—just like vehicles. Houses break down and need repairs—just like vehicles. Houses get outdated and need updating—just like vehicles.

But will houses continue to deteriorate in value—just like vehicles?

The median-priced house in Australia is $408,000. At approximately 6.5 times household disposable incomes, this is a shockingly high value. Let’s say a typical buyer puts 10 percent down and has a mortgage of $367,000. Now what happens if his house depreciates by 0.4 percent, the same rate house prices fell last year? His investment loses $1,600. That might not sound like a lot, but over the years, it adds up quickly. What happens if house prices fall by a whopping 3 percent, like they did in 2011? All of a sudden, that home owner has lost $11,010.

It won’t take too many years before there are a lot of people trying to get out from underneath what could quickly become debt prisons.

The latest housing market data showed another weak month in December. The Australian Industry Group and the Housing Industry Association reported that housing market activity fell for the 31st month in a row.

Meanwhile, Australia’s builders are doing everything they can to hide falling new house prices and keep people buying.

Property Observer reports that builders and developers are now offering a range of financial incentives and discounts to get people in houses—but in a way so as to not affect comps and thus existing house prices. New home buyers can get backdoor discounts in the tens of thousands of dollars—discounts that are not disclosed in the final sale price.

It is not enough that the builders are giving away new cars, offering large cash-backs, free landscaping, or paying a buyer’s energy bills for three years.

Now developers are offering perks like: $10,000 visa gift cards, land rebates of up to $30,000, and a full year’s worth of paid mortgage payments.

These incentives are a sign that Australians have reached max house price carrying capacity—and that builders are getting desperate.

Like in the United States, surging home prices were fueled by debt. Since 1995, total mortgage loans have risen from A$154 billion to A$1.2 trillion—almost an eightfold increase. Total household debt rose from 68 percent of disposable income to a peak of 153 percent today. At the same time, to afford ever escalating house prices, most families have adopted the two-income strategy. There is no third income available to push family borrowing capacity—and thus house prices—higher. To the contrary, if the economy slows down and unemployment rises, Australians will see just how leveraged house prices are to the economy. All it will take is for one of the debt-inundated income earners to lose his or her job, and the for-sale sign will pop up.

The housing market in Australia is cut. All that remains to be seen is how bad the cut is and whether the slow bleed will turn into a hemorrhage.

Morsi Declares State of Emergency in Egypt

Deadly clashes between protesters and riot police continue to plague Egypt this week. At least 56 people have died. After several days of violence, Egyptian President Mohamed Morsi declared a state of emergency on Sunday. Three cities along the Suez Canal are now under a 30-day curfew: Port Said, Ismailiya and Suez. The state of emergency allows police to investigate, arrest and detain people without a trial.

Protesters began rioting in Port Said on Friday after the government sentenced 21 people to death. The defendants were convicted in connection with a soccer riot last February. Seventy-four soccer fans were killed in that incident. However, protesters say that the government is responsible for the deaths, not the 21 people who have been sentenced to die.

Morsi deployed the military in Suez and Port Said on Saturday. He vowed in a televised address on Sunday night that he would not hesitate to take even more action to stem the latest eruption of violence. At the same time, Morsi sought to reassure Egyptians that he would not plunge the country back into authoritarianism.

Turmoil continues to afflict Egypt nearly seven months after Morsi took office. His actions as president reveal that he is not afraid to wield his new power. Watch for President Morsi to continue to strengthen his grip on Egypt. For more information on Egypt’s future, read our article “Egypt: Morsi Sheds His Moderate Cloak.”

Cash-Strapped Zimbabwe Down to $217

Cash-Strapped Zimbabwe Down to $217

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Zimbabwe is down to its last $217. After paying civil servant salaries last week, the cash-strapped government has barely enough to buy a used iPad.

Finance Minister Tendai Biti told reporters on Tuesday that the government’s finances were in a “paralysis state” and that the state was failing to meet its targets. “Last week when we paid civil servants, there was $217 [left] in government coffers,” he said.

The Zimbabwean economy took a nose-dive in 2000 when President Robert Mugabe embarked on his controversial “land grab” in which thousands of white-owned farms were seized by the government and its black supporters. The predominantly agriculture-based economy of the nation then collapsed, exacerbated by eroded investor confidence, and international sanctions. Almost a decade of relentless money-printing and almost unfathomable hyperinflation ensued until the currency collapsed and rival political parties were compelled to coalesce into a power-sharing government in 2009.

With Zimbabwe in such a financial mess again, the government has no choice but to approach “the international community,” said Tendai Biti.

For Zimbabwe, “international community” means China.

In spite of its financial woes, Zimbabwe is rich in mineral resources such as diamonds, platinum and other rare metals—just the commodities that resource-hungry China is happy to snap up. Watch for China’s continued exploitation of Africa’s resources in exchange for financial and political support.

Bible prophecy indicates a global resource war is coming among the world’s major powers. For more detail, read our article “The Battleground” and our free booklet Russia and China in Prophecy.

Israel Prepares for the Fall of Syria

Israel Prepares for the Fall of Syria

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Israel readies for the threat of chemical weapons.

Israel is preparing for the fall of Syria, according to reports published on Sunday. The Jewish nation has deployed two Iron Dome air defense batteries to its north, including one near the city of Haifa. Activity at Israel’s air force bases has also increased, according to local reports.

“If there will be a need, we will take action to prevent chemical weapons from being transferred to Islamic terror organizations,” Israeli Vice Prime Minister Silvan Shalom said on Israel’s Army Radio on Sunday.

Since the Syrian uprisings began in March of 2011, dissident forces have clashed with government troops at hotspots throughout the nation. Even the capital city of Damascus, visible from Israel, is engulfed in bloody fighting. As the violence continues southward, it has led to some artillery fire hitting Israeli territory. Israel fears that Syrians may soon resort to using chemical weapons near Israel’s border.

Under any conditions, a chemical weapons stockpile on your doorstep would be legitimate cause for concern for any nation. But with Syria in chaos, now Israel has to worry about the prospect of the weapons falling into rebel hands. The United States government supports the rebels who fight under the banner of democracy. However, the majority of the rebels don’t have such democratic tendencies. Some of the militia groups are extreme Islamists, dedicated to the destruction of Israel. The possibility of these organizations gaining control of chemical weapons that could reach Israel is sobering for the Jewish nation.

Additionally, there is the threat of Hezbollah in Lebanon gaining access to Syria’s chemical weapons. Such a scenario significantly multiplies the threat to Israel’s northern cities.

Israel can’t afford to lose track of Syria’s weapons stockpiles, which is why it is conducting intense surveillance to its north. If the regime of Syrian President Bashar al Assad falls, the weapons could be very difficult to track down. The Israelis are preparing now to defend themselves in case the worst should happen.

Israel is in a very precarious situation. The weapons pose a threat to Israel regardless of who controls Syria. But with the fighting in Syria and the Assad regime increasingly desperate, the threat is multiplying. The U.S. has already discussed the possibility of a military operation to prevent the weapons from falling into radical Islamists’ hands, and Israel may well take part if such an offensive is waged.

Israel stepped up its countermeasures on Tuesday night when an Israeli airstrike destroyed a convoy crossing the border from Syria into Lebanon. While reports are vague about what the convey contained, the strike shows that Israel is watching the border, and is willing to engage its military to prevent weapons being dispersed to Israel’s neighbors.

Assad’s grip on power appears to be rapidly slipping. Regardless of what happens next, you can know the role Syria will play in the future. Despite the uncertainties of the Arab winter, the struggles of Israel, the role of the U.S., and the ongoing bloodbath in Syria, you can understand what the future holds for this region of the world. A prophecy recorded in Psalm 83 makes Syria’s future role clear. To understand this biblical truth, read Trumpet editor in chief Gerald Flurry’s article “How the Syrian Crisis Will End.”

Why Aren’t More People Marrying Today?

Why Aren’t More People Marrying Today?

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Here’s one reason: At least in the eyes of women, the men aren’t qualified.

For young people, the idea of marriage still holds considerable charm. A 2006 poll showed that more than 80 percent of American high school seniors expect to get married, and 90 percent of those assume they’ll remain wed to the same person for life. A survey of college students in England found 95 percent want to marry. Among adults who have never been married, 61 percent want to be, according to a Pew poll from 2010.

But dreams of marriage are failing to materialize for more and more of these people. In 1960, 72 percent of American adults were married; today, that number has dropped to 51 percent. In 1960, 15 percent had never married; today it’s 28 percent. In 1970, four in five 25-to-29-year-old men were married; now, two in five are.

What’s going on? People want to marry but aren’t. Why?

The reasons are many. But sociologists have identified one that I find of particular interest. It is that today’s men—at least in the eyes of today’s women—aren’t qualified.

Many single men say they would like to be at least equal to if not better than their future spouse in terms of education and earning power. The model of the male breadwinner has a long history, and remnants of it remain ingrained in the minds of many people—both men and women.

The problem is, this ideal is increasingly at odds with reality. As Hanna Rosin writes in her book The End of Men: And the Rise of Women, “The men may cling to traditional ideals about themselves as providers, but they are further than ever from being able to embody those ideals” (emphasis added throughout).

Every year in America, 170,000 more women than men get bachelor’s degrees. And while the average man still earns 10 percent more than the average woman, guess what? Among 20-somethings, women now have the edge in the wage gap. Men who hold the advantage in education and earning power are a dying breed.

The numbers of well-educated, financially self-sufficient women are mushrooming beyond the numbers of men who could be so described. In fact, men are trending in the opposite direction. Today, for example, we see the highest percentage ever recorded of men of prime working age who are not even working: about one in five.One fifth of men. Compare that to 1950, when it was one in 20.

“Recent years have seen an explosion of male joblessness and a steep decline in men’s life prospects that have disrupted the ‘romantic market’ in ways that narrow a marriage-minded woman’s options,” wrote Kate Bolick in the Atlantic. “[I]ncreasingly, her choice is between deadbeats (whose numbers are rising) and playboys (whose power is growing)” (November 2011).

Who will these women marry? The bar for what they want out of marriage is climbing, while the field is regressing.

Unsurprisingly, more and more of them, rather than “marry down,” are resigning themselves to the idea that their best option is just to skip it.

Sure, they’d love to marry if the right man showed up. Yet, in their view—frustrating as it may be that Mr. Right isn’t around—marriage is, ultimately, unnecessary. I can take care of myself—I don’t need a man to support me, the thinking goes. He’d just be another person to take care of—another mouth to feed.

“[A]s women have climbed ever higher, men have been falling behind,” laments Bolick. “We’ve arrived at the top of the staircase, finally ready to start our lives, only to discover a cavernous room at the tail end of a party, most of the men gone already, some having never shown up—and those who remain are leering by the cheese table, or are, you know, the ones you don’t want to go out with.”

The question is on the lips of women everywhere: What’s wrong with all these guys?

Most people can agree there is a problem, but far fewer recognize its full scope. When you talk to the women and meet the men, when you read the stories and look at the data, you begin to realize: Bolick is not describing a minor irritant, or a disappointment that a few women share. She is chronicling the collapse of a social order.

Social historian Stephanie Coontz says we’re experiencing nothing less than “a historical revolution every bit as wrenching, far-reaching, and irreversible as the Industrial Revolution.” As she told the Atlantic, “When it comes to what people actually want and expect from marriage and relationships, and how they organize their sexual and romantic lives, all the old ways have broken down.”

If you examine it, this breakdown in “all the old ways” virtually all traces back to the trashing of the traditional roles of men and of women, particularly that of breadwinner and homemaker. Historically, what largely drove men’s march through the milestones to adulthood was the expectation that they would fulfill the role of provider. For generations, this commonly recognized duty propelled men into the workforce; it often served as a prod to men’s ambition and did much to shape society. Even today, it remains a strong motivation to any young man who accepts it. And women recognized their responsibility to make the home an inviting, nurturing environment for children to be reared toward adulthood.

For two generations now, esteem for these roles has been fading—to the point where today they are ignored, if not treated with contempt.

In dismantling the traditional ways of relating to one another as men and women, society lost more than just human traditions: We arrogantly, foolishly trashed God’s design in creating men and women.

The failings that have resulted vividly illustrate the wisdom in God’s original design—for anyone willing to cast aside the blinders of political correctness and look at the situation honestly.

For the sake of order and harmony, God created men to fulfill one role within the family and within society, and He created women to fill a different and beautifully complementary role. This is the reality that God created and revealed to humankind. It is a vital key to individual, family and societal success.

The reason for marriage is far greater than most people realize. Marriage has an awesome purpose. Doesn’t it make sense to understand its purpose if you plan to marry someday? To learn this purpose, request our free booklet Why Marriage! Soon Obsolete? Not only will it help you understand marriage’s purpose—it will show you why “the old ways” will never die.

Besieged in Thy Gates

Besieged in Thy Gates

Juan Jose RODRIGUEZ/AFP/Getty Images

From the March 2013 Trumpet Print Edition

It is one of the most astonishing success stories in history. At one time, the English-speaking peoples of Britain and America controlled two thirds of the world’s agriculturally productive land. And, impressive as their landholdings were, their maritime reach was even more astounding.

These two powers controlled virtually every important oceanic choke point and sea gate on the planet. Oceanic trade and sea communication only existed to the extent that Britain and America allowed it. This domination of global trade turned these two peoples into economic superpowers.

Massive port cities like Hong Kong, Port Said, Quebec City and Calcutta—river gateways to entire countries and continents—all flew the Union Jack. New Orleans flew the other red, white and blue. From these cities and many others, goods from almost a quarter of the world’s population traveled to markets around the world. It was British and American ships carrying those goods too.

Control of these ports meant mastery of the world’s shipping lanes. British and American guns commanded both ends of the Mediterranean Sea, as well as the Panama Canal, the Strait of Malacca, Cape Horn and the Cape of Good Hope, in addition to the best natural and strategically placed naval harbors in the world.

Never have so few people controlled the destiny of so many.

How did these two nations grow to dominate global trade to such an astounding extent? The book The United States and Britain in Prophecy explains why America and Britain rocketed from insignificant nations to global superpowers. As Herbert W. Armstrong explained in his book, it all began with a promise made to the ancient patriarch Abraham in which God promised to give his descendants control of the “gates” of their enemies (Genesis 22:17). God gave Britain and America these commercial gates, virtually ensuring that they would become economic and military superpowers.

But God also warned that if America and Britain did not obey Him, then not only would those sea gates be taken away, but they would be used against these nations (Deuteronomy 28:52).

The maps on the following pages depict the amazing extent of British and American power at one time—and then show how much of it has been lost. The fulfillment of this latter prophecy is a telling indicator of where the U.S. and Britain are heading.

Malta, Mediterranean Sea

History

Britain annexed Malta in 1814 as part of the Treaty of Paris, ending the Napoleonic Wars. After annexation, Malta served as the headquarters of Britain’s Mediterranean fleet. The island was vital to British success in the Mediterranean during World War II—King George VI even awarded the George Cross to the Maltese people collectively. Britain granted Malta political independence in 1964.The last remaining British troops withdrew in 1979.

Status: [lost]

Malta is now a member of the European Union and the eurozone. Germany is dominating the EU, and Malta is swiftly becoming a German vassal state.

Gibraltar, Spain

History

After the Rock of Gibraltar was ceded to Britain in 1713 as part of the peace terms ending the War of the Spanish Succession, Britain erected a formidable military garrison for the strait’s defense. The garrison played a strategic role in the Napoleonic Wars, the Crimean War, World War I and World War II. Spain has tried to claim Gibraltar more than once, but the people of the province voted to remain under British rule in 1967 and 2002.

Status

Since the Spanish government is still pushing for full control of this sea gate, it seems unlikely Britain will be able to keep it much longer.

10 percent of global trade passing through Gibraltar each year

106,000 ships passing through the strait annually, including 5,000 oil tankers

Gulf of Guinea, Nigeria

History

British influence in the Niger region increased over the course of the 19th century until Nigeria became an official British colony in 1900. The colony in Nigeria allowed Britain to suppress radical Islamist movements in West Africa and to keep the Gulf of Guinea free from pirates. After Nigerian independence in 1960, however, Britain’s global power began to decline, and the United States had to start taking on more maritime policing responsibilities.

Status

The U.S. Navy’s failure to keep the waterways safe has allowed pirates to threaten the region, a fact not lost on the leaders of China or Germany, which are developing military ties with Nigeria.

2 million barrels of petroleum exported from Nigeria through the gulf every day

Cape of Good Hope, South Africa

History

The Union of South Africa brought the cape under the executive power of a governor-general representing the British Crown in 1909. The Cape Town Naval Base became significant during World War II, when South African Prime Minister Jan Smuts went about fortifying South Africa against a possible German invasion.

Status: [lost]

The surrender of South Africa to the Communist influenced African National Congress ended much of Britain’s control over the Cape of Good Hope in 1994.

32 percent of West African oil that transits past Cape town to Western markets

24 percent of Middle Eastern oil that passes the cape on the way to Western markets

3,400 ships that come into the Port of Cape Town each year, laden with 4 million tons of cargo

Strait of Hormuz. Iran

History

Although this strait has never been under direct British or American control, the British Empire was able to project naval power into this area when Pakistan was part of British India. After Pakistani independence in 1947, Britain and America had to rely solely on their relationship with Arabic states to secure this sea lane.

Status

Now that Iran is rising as a dominant power in the Middle East, the security of Hormuz is being called ever more into question.

35 percent of global seaborne-traded oil passing through Hormuz

26 number of crude oil tankers that pass eastbound through the strait each day, moving 17 million barrels of oil

Bab El-Mandeb, Somalia

History

From 1888 to 1960, this strategic sea gate, along with the entire Gulf of Aden, was protected by the British Navy operating for the British Somaliland protectorate. Control of this gate was vital to Britain’s struggle against the radical Islamist leader Sayyid Mohammed Abdullah Hassan in 1913. British Somaliland was granted independence in 1960. Since then, British Somaliland has joined the Somali Republic and become an Islamic state.

Status

For the past decade, the coast of Somalia has been plagued by pirates while the mainland struggles against the Iranian backed al-Shabaab terrorist militia. Iran’s military strategy includes gaining control over this gate.

30 percent of hydrocarbon trade that passes through the strait

18 miles separating Yemen from Djbouti at the strait’s narrowest point

8 percent of overall seaborne trade that passes through the strait

Suez Canal, Egypt

History

The Canal Zone was declared a neutral zone under the protection of the British at the Convention of Constantinople in 1888. British control of the Suez Canal gave the Allied powers a strategic advantage in World Wars I and II. British troops guarded the Canal Zone up until 1956, when Egyptian strongman Gamul Abdul Nasser nationalized the area.

Status

Today, the Suez Canal is under the power of a Muslim- Brotherhood-dominated Egyptian coalition. This coalition’s growing alliance with Iran means that the canal could soon be closed in an attack on the West.

35 thousands of ships that transit the canal each year, including 3,500 oil tankers

8 percent of overall seaborne trade that transits the canal annually

6 thousands of extra miles needed to go around Africa’s southern tip

Victoria Harbor, Hong Kong

History

Under the terms of the Convention for the Extension of Hong Kong Territory, Britain obtained a 99-year lease of Lantau Island and the adjacent northern lands from mainland China in 1898. Even though the government of China was displaced in a Communist coup in 1949, Britain still gifted this South China Sea prize to the People’s Republic of China in 1997.

Status: [lost]

Beijing now fully controls the $380 million Hong Kong naval base built by the British.

456,000 vessels that moor in the harbor every year

243 million tons of cargo the Port of Hong Kong handles annually

Port of Trincomalee, Sri Lanka

History

Great Britain seized control of Trincomalee from the Netherlands in 1795, fearing that its alliance with France would give the French Empire control of Indian Ocean trade routes. During World War II, the port harbored the British Seventh Fleet and proved to be an invaluable asset after London lost the Singapore Naval Base to Japan in 1942. This strategic gateway was completely lost to Britain after London relinquished control of the Port of Trincomalee to a newly independent Sri Lanka in 1957.

Status: [lost]

The Sri Lankan government is now being courted by Chinese leaders who would like to see the island as a strategic asset in their “String of Pearls” strategy to control the Indian Ocean.

80 percent of seaborne hydrocarbon trade that transmits through Indian Ocean choke points

Strait of Malacca, Singapore

History

Thomas Raffles signed a treaty with Sultan Hussein Shah on behalf of the East India Company in 1819, which allowed Singapore to be developed as a British trading post. The British voluntarily gave up this most strategic sea gate in 1965 when Singapore withdrew from the British-backed Malaysian Federation to declare independence.

Status: [lost]

China is now reaching out to Singapore in an effort to cement control of the Strait. Singapore now maintains first position among asean countries as a Chinese trade partner.

35 percent of all seaborne goods that pass through the strait

50 percent of the world’s merchant fleet (60,000 ships) that sails through Malacca

50 percent of all petroleum goods that pass through Malacca

Subic Bay, Philippines

History

Along with Clark Air Base, Subic Bay Naval Base once represented the largest overseas military installation of the United States Armed Forces. It fulfilled a vital role in World War II and the Vietnam War. The Filipino government ordered the U.S. to withdraw from the area in 1992. The withdrawal ended a vast American military presence in the Philippines that began when the U.S. captured the islands from Spain during the Spanish-American War in 1898.

Status

Now that U.S. military presence in the area has been drastically reduced, China is claiming the entire South China Sea for its own.

Panama Canal, Panama

History

The 10-mile-wide Panama Canal Zone has been called the “birth canal” of American greatness. Its construction in 1914 allowed the United States to become a global power. Control of the Panama Canal Zone gave the Allies an advantage in World War II when Nazi Germany sent U-boats to the Caribbean to cut off American oil supplies. When U.S. President Bill Clinton surrendered the canal back to the government of Panama, an era of American greatness came to an end.

Status: [lost]

A Chinese company now runs both ports on each end of the Panama Canal Zone. Germany is courting Panama itself as a potential user of the euro currency.

5 percent of global seaborne trade that passes through the canal

15,000 ships that use the canal each year, taking an 8,000-mile shortcut

Strait of Magellan, Falkland Islands

History

British Captain John Byron explored and claimed Saunders Island in 1765. The British Empire did not establish a permanent naval presence in the Falklands until 1834. This naval base proved vital to British interests in World War I when the Royal Navy fought to keep Germany’s East Asia Squadron from passing Cape Horn.

Status

Argentina is ramping up pressure on Britain to relinquish the islands and recently passed a law that prohibits British ships from docking in any ports located in the Buenos Aires province.