I agree to a point, and that point is my lack of knowledge around economics.
Socialising losses and privatising gains is obviously not a great dynamic, but it's one that we see the farming community enjoy whenever we have a drought or similar calamity (that's a huge simplification, but I think you get the point). That's not because we all love a farmer but because if large swathes of the farming capacity in Australia goes through shock and/or collapses, food security for the nation becomes a thing. So we'd essentially cut our noses off to spite our face if we didn't suck it up and help them out when they need it, or so the theory goes.
Would this be the same with the property market? I am a very conservative investor because I don't invest for a living but for my retirement/future/family. What about those cats who do invest as their livelihood, and there are a lot of them. What about the self-funded retirees and the folks that manage their own super with investments like these. Would the shock to the nation be greater and harder to manage than the shit sandwich of bailing out those who took risks and failed?
Genuine question as I don't know the answer. The skeptic in me assumes that it's more to do with voting behaviour but I really don't know.
There is a big difference from the examples you gave, agriculture/farming is a productive sector and property investment isn’t. They really aren’t comparable when talking propping up/bailing out and you mentioned the points why.
When it comes to bailing out the investment property side, I reckon this will be determined by the loan books the big banks hold. At one point 40% of all westpac’s loans were interest only home loans.. Most banks have 50-70% of all loans in housing.. That’s a huge chunk of speculative leverage they are holding. If the market collapses then the banks will need to be bailed. The gov/rba/apra had already thrown the kitchen sink at the property market trying to keep prices up via interest rate cuts, loan servicability changes, interest only loan changes and the first home owner gov backed loans.. They have used their ammo and now we have this shitshow going on..
I don’t think the gov and banks can realistically protect the homeowner as well as the investor.. Working/unemployed homeowners are figuring out how they can keep their mortgaged roof over their heads for the next 6+ months and I reckon that will be the gov’s first priority. Bailed out/propped banks and gov can always take ownership of failed investment/rental properties if need to be and the service they provide continued..
So to your question, imo, I don’t think the speculative investors can physically be bailed out medium to long term.. Look to the banks and their actions for any propping up. And so far they giving a 6month break that you still have to pay back with added interest and loan term..
