WTF is going on with THE BLOCK - Prime time TV

I couldn't resist posting this. it's a must Read!

Last Sunday night’s finale of Channel Nine’s The Block was a prime-time portrayal of a property crash. Talk about reality television – three of the four properties didn’t reach their reserve.

The only thing that saved the show was the young bloke proposing to his girlfriend, whose tears of joy transformed into a tantrum not ten minutes later when their property was passed in. (Mark that down as your first lesson, son.)

‘What a bloody waste of time’, said one of the deflated contestants. But it could have been worse. It could have been their money. If they’d put their heads on the block, they’d probably be bankrupt:

Average purchase price including stamp duty: $950,000

Major renovations: stumping, plumbing, rewiring: $300,000

Cosmetic renovations: $100,000

Average total cost per house: $1,350,000

Leading independent property valuer Louis Christopher claims that the couples would each have lost up to $500,000 – and that figure doesn’t include their three months of labour.

It couldn’t have been a worse advertisement for the property pushers who continually talk up the most overvalued property market in the world in the mass media.

After all, they had a pretty good marketing campaign – the agents had 30,000 people through their open for inspection, and 3.4 million people turned up for the auction (okay so there were a few sticky beaks), and they still couldn’t snag a decent price.

So what happened?

Well, while the contestants learned how to build a bathroom, they failed to show them the tricks and tools that developers use every day to push their dud properties on to poor old punters. Hang on a minute – that sounds like a rolled gold, follow-up series: The Block, Dodgy Developers Special.

By Scott Pape August 26th 2011

WTF is going on with the Stock Market? and how does it affect interest rates?

Basically, when the Stock Market crashes (because of people pulling out their money that they had invested) big companies that people buy shares in lose a lot of face value. A lot of these companies invest in other companies and so on and so on. So there is a domino effect that happens.

The banks also invest in companies.

Think of it like the craziest, most tangled up spider web you could possibly imagine, then tangle it up some more and that's kind of what the stock market looks like.

The picture above also shows what the stock market looks like when it's crashing. I think it's a very accurate depiction.

When the banks are investing and being invested in they are just as caught up in it all as everyone else. So when a share market crash comes along, like dominoes, everyone involved falls down for a while, until they figure out how to scavenge their way back up.

Why/how does this impact the interest rates?

look at it this way - If you have invested in shares of a big Bank, and the value of them went down, you’re not going to be impressed, and if they keep going down you will want to sell those shares before they are worth even less and you may even be losing money (see how the domino affect works?), so to keep you on board and happy, the banks have to get money from somewhere. They have money borrowed from them, and the use of that money costs money (what's an interest rate - the fee for the use of money), so the easiest way is to raise the cost of money- the money that’s being used- therefore creating an interest rate rise.

Although the stock market is on a speedy downward trend in America, it dose not seem to be that noticeable here in Australia, so our interest rates will stay pretty where they are for a while. The country we need to worry about is China.

This is how it occurs to me, feel free to post your thoughts!