Do other countries have the equivalent of Australia's Negative Gearing?
"I would say similar rules apply in the US.  If you have a net loss from rental property, you certainly can claim that loss against your personal income. There are various rules around this though that make it a bit less clear cut.  If you are a ""real estate professional"", which basicly means you spend at least 750 hours per year working on your rental properties (or related activities), then all losses are deductible against any other ordinary income you have. If you aren't a ""real estate professional"", then your rental income is considered a ""passive activity"" and losses you can count against regular income are limited to $25,000 per year (with a carry-forward provision) and begin to phase out entirely if your income is between $100,000 and $150,000. So, the law here is structured to allow most small-time investors to take rental real estate losses against their ordinary income, but the income phase-out provision is designed to prevent the wealthy from using rental property losses to avoid taxation." In India, where I live, you can: In addition, housing loans are given priority status as well - bank capital requirements on housing loans is lower than for, say, a corporate loan or a loan against other kinds of collateral. That makes housing loans cheaper as well - you get a home loan at around 10% in India versus 15% against most other assets, and since you can deduct it against tax, the effective interest rate is even lower.  Housing in India is unaffordable too, if you're wondering. In a suburb 40 Km away from Delhi, a 2000 sq. foot apartment, about 1500 sq. ft. of carpet area, with no appliances costs about USD 250,000.
The solution is spending restraint during the growth periods and prudent application of counter-cyclical fiscal policy, especially during the slow periods. The USA embarked on a strange experiment lead be Greenspan of excessively low interest rates for a prolonged period of time. Periods of strong economic growth should feature high interest rates, periods of reduced economic growth can then be countered somewhat through monetary policy. The government should also endeavour to run surplus budgets during the good times and not be afraid of turning those into deficit budgets in the downturns. If you run a deficit budget during a period of strong economic growth, together with low cash rates you have nowhere to move when the cycle reverses.  The solution now? That is difficult. I would say that the solution now would be to raise revenues through corporate taxes and similarly increase government spending on investments aimed at stimulating the economy. Use this time to invest in the much needed infrastructure maintenance and upgrades that the USA needs. These need to be fast-tracked into action and I would therefore consider fixing infrastructure as more important than installing new infrastructure.   There are probably long-term structural adjustments that need to be looked at too, but I am not intimately familiar with the USA as I am Australian. It is clear however that Austerity during economic downturns does not help end the recession (or benign growth). It is clear to me as an observer however that employment appears to be the big issue in the USA right now, so cutting jobs is not a smart move.  Edit: I'll point out that my opinion comes from the Australian experience, our government ran surplus budgets during our period of recent growth and our reserve bank kept interest rates high. When the GFC hit us in 2008 the government almost instantly reversed its fiscal policy, going so far as mailing $900 cheques to every Australian just to get cash flowing in the economy, they then embarked upon infrastructure spending programs. Similarly the reserve bank were able to quickly and dramatically reduce interest rates. The result was that we saw 1 quarter of mildly negative growth, and positive growth ever since (hence no recession). We ran a textbook example of counter-cyclical fiscal and monetary policy which is today lauded by economists over. We now have 5% unemployment, low government debt (relative to the OECD) and high economic growth (relative to the OECD). Don't you need ironclad sovereign debt that will never default type of trust to be a global currency? US is the closest we have at this point? If Europe wasn't on the Euro maybe you can say Germany but who else? No.   The US manufactures more goods than any other country, and only China is close. However, instead of making clothes, the US makes higher value items, like medical equipment. The impression that manufacturing is dead in the US is because of this, and because manufacturing has become highly automated, so there are far fewer manufacturing jobs than there were in the past. "This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-05-31/australia-home-prices-fall-in-may-as-lending-curbs-start-to-bite) reduced by 70%. (I'm a bot) ***** &gt; The monthly decline comes after regulators tightened lending curbs amid fears of a housing bubble, and the nation&amp;#039;s banks raised interest rates - especially for interest-only loans which are popular with property investors seeking to take advantage of tax breaks.  &gt; The monthly drop was led by declines of 1.3 percent in Sydney and 1.7 percent in Melbourne, the two cities where prices have risen the fastest.  &gt; In Sydney, prices have gained 75 percent in the past five years, ranking it behind only Hong Kong as the world&amp;#039;s least affordable housing market.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ele2v/australian_house_prices_fell_in_may_for_the_first/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~133825 tl;drs so far."") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **housing**^#1 **percent**^#2 **prices**^#3 **demand**^#4 **property**^#5" Australia has a massive housing bubble (one of the last in the world to pop), no productivity growth (lots of investment in mining which hasn't yet payed off, though we'll do well if commodities pick up), and relies on China and India buying lots of coal and steel at historically high prices. Losing the manufacturing jobs is a necessary evil of any developed nation. Yes Germany is an exception but that is only because they specialise in expensive high quality items. This transition has happened before in every developed nation when manufacturing replaced agriculture as the main sector of income and the same is happening again.  The key is that we have to adapt and accept that rather than fight it. Fighting this transition will simply slow progress. People simply have to retrain and adapt to a knew skill set. Yes it isn't easy but trying to artificially stop low paid jobs moving to places with a cheaper labour force is impossible. Companies have to remain globally competitive.   I appreciate if everyone globally gets paid a descent salary this wouldn't be an issue. However, this is not the case and will not be any time soon. The reality is manufacturing of non luxury goods will hardly exist in  developed nations and will be solely down by the likes of china and india. However give it another 20 years china will be in exactly the same boat losing their manufacturing jobs to a less developed nations or maybe robots by then. I've had a small forex investment in the AUDUSD since Oct of 2010 at 50:1 leverage, and have more than doubled my investment on the swap alone.  Granted this is high risk with virtually every guarantee that it will fail *eventually*, but the AUD hasn't dropped at anytime during this trade enough to stop me out so far.  With a higher interest rate, there's a natural scarcity in the AUD, especially when compared to the USD.  Unless there's another crash like 2008, Asian trading with Aus significantly weakens, or the RBA screws the pooch, the AUD doesn't have many factors with a high probability for devastating impact on the currency. Stock market Tends to follow the DJIA and FTSE, so unlikely to see an Australia-only crash, especially while resources are doing so well. If China's growth slows before other ailing sectors improve, a downturn becomes more likely and the potential severity of the downturn increases. Economy A huge question to which I would refer you to Steve Keen: http://www.debtdeflation.com/blogs/ See A Fork in the Road. Housing Market It's a bubble, stupid! Seriously, it's as though the Aussies waited for the US to get done and then simply borrowed the copy book. There are a multitude of articles out there about likely outcomes from where the housing market is and where it's going. See this for a sample of what's out there: http://blogs.forbes.com/greatspeculations/2010/07/26/aussie-housing-bubble-gets-popped-with-chinese-credit-crash/ Note: All three of the areas you raise - economy, stock mkt, housing - are so intertwined that it's tricky separating them out. A lot of reading on Steve Keen's site can help. I imagine most of the design work will go on back in Sweden, other than maybe with respect to the electric powertrain.  Same with the assembly, although it will likely use more parts from affiliates of the investors (which, likely won't be a major difference considering the % of auto parts which are already manufactured in China). It isn't about the US. Most GM sales are already outside its home country and that will only increase. China is already its second-largest market, and China has already announced that it will soon ban gasoline and diesel cars. Britain and France have said the same, and it appears that India and the Netherlands may be next. (disclaimer: I don't answer specifically about Australia) As long as people don't question car usage and urban sprawl, and thus are willing to pay a premium for being stuck in traffic jams every working day, I don't see any reason why fuel producers wouldn't increase their prices. Given increasing demand from China and other rapidly growing countries, given state of remaining world resources, I think that fuel is a bargain nowadays. When someone charges, it means that person fix the price you pay. Australia is part of the Indonesian continent. It is an island in the South Pacific ocean. In the price of an item, you include the shipping cost. It is more expensive by plane because the cost of the kerozen is higher than the cost of diesel for ships. Accident can happen, so you have to include in price the cost of the insurance. Yes.  When the currency of a country appreciates, it benefits some groups and disadvantages others.  In particular, exporters suffer when a currency increases in value relative to other countries.  In a country like the US, where exporters are small relative to the economy, this isn't a big deal.  In germany, where exporters make up a big part of the economy, a currency increasing in value leads to large numbers of layoffs and other negative net effects to the economy. We face the same issue here in Switzerland. My background: Institutional investment management, currency risk management. My thoughs are: Home Bias is the core concept of your quesiton. You will find many research papers on this topic. The main problems with a high home bias is that the investment universe in your small local investment market is usually geared toward your coutries large corporations. Lack of diversification: In your case: the ASX top 4 are all financials, actually banks, making up almost 25% of the index. I would expect the bond market to be similarly concentrated but I dont know. In a portfolio context, this is certainly a negative. Liquidity: A smaller economy obviously has less large corporations when compared globally (check wikipedia / List_of_public_corporations_by_market_capitalization) thereby offering lower liquidity and a smaller investment universe. Currency Risk: I like your point on not taking a stance on FX. This simplifies the task to find a hedge ratio that minimises portfolio volatility when investing internationally and dealing with currencies. For equities, you would usually find that a hedge ratio anywhere from 0-30% is effective and for bonds one that ranges from 80-100%. The reason is that in an equity portfolio, currency risk contributes less to overall volatility than in a bond portfolio. Therefore you will need to hedge less to achieve the lowest possible risk. Interestingly, from a global perspective, we find, that the AUD is a special case whereby, if you hedge the AUD you actually increase total portfolio risk. Maybe it has to do with the AUD being used in carry trades a lot, but that is a wild guess. Hedged share classes: You could buy the currency hedged shared classes of investment funds to invest globally without taking currency risks. Be careful to read exactly what and how the share class implements its currency hedging though. &gt;Pyramid schemes are illegal in many countries or regions including Albania, Australia,[20][21] Austria,[22] Belgium,[23] Brazil, Canada, China,[24] Colombia,[25] Denmark, the Dominican Republic,[26] Estonia,[27] Finland,[28] France, Germany, Hong Kong,[29] Hungary, Iceland, Iran,[30] the Republic of Ireland,[31] Italy,[32] Japan,[33] Malaysia, Maldives, Mexico, Nepal, the Netherlands,[34] New Zealand,[35] Norway,[36] Peru, Philippines,[37] Poland, Portugal, Romania,[38] Russian Federation, Serbia,[39] South Africa,[40] Spain, Sri Lanka,[41] Sweden,[42] Switzerland, Taiwan, Thailand,[43] Turkey,[44] Ukraine,[45] the United Kingdom,[46] and the United States.[7]  https://en.wikipedia.org/wiki/Pyramid_scheme