Is Australia facing an economic downturn/recession?

[Ocean Architect]

You have been listening to alex jones to much or other NWO people

Actually, I was listening to a random guy heading an organisation that no one has ever heard of. I think it's called, uh, what was it again...the International Monetary Fund, and the guys name is Dominique Strauss Khan. He's just the head of the organisation, probably sweeps floors or something.

Anyway he said "A new global currency to replace the US dollar would be useful".

Then you have people like Peter Schiff, Max Keiser, Jim Rogers etc all saying the same thing.

And besides, use some common sense and look at recent history - the US is doing almost precisely what the Weimar Republic did, which triggered hyperinflation.

The US is printing money like mad to pay interest on its debt. Interest ONLY. Everyone knows that once you're borrowing money to pay just the interest, it's just a matter of time until you declare bankruptsy. Just common sense really

 

[Aaron Sice]

i choose not to participate in this discussion.

someone wil take whatever i say out of context, get offended, ask for proof, blow it out of proportion then not respond to my questions.

so i'll pass.

cheers.

 

[Aaron Sice]

Actually, I was listening to a random guy heading an organisation that no one has ever heard of. I think it's called, uh, what was it again...the International Monetary Fund, and the guys name is Dominique Strauss Khan. He's just the head of the organisation, probably sweeps floors or something.

Anyway he said "A new global currency to replace the US dollar would be useful".

Then you have people like Peter Schiff, Max Keiser, Jim Rogers etc all saying the same thing.

And besides, use some common sense and look at recent history - the US is doing almost precisely what the Weimar Republic did, which triggered hyperinflation.

The US is printing money like mad to pay interest on its debt. Interest ONLY. Everyone knows that once you're borrowing money to pay just the interest, it's just a matter of time until you declare bankruptsy. Just common sense really

no, really?

a currency to replace the USD? that would explain why he AUD is so high against the USD - because the USD will be phased out, it's an obsolete currency....

gee....if only someone had told us this would happen....probably would have called them a tinfoil crackpot but if only.....!

 

[Ausprop]

the basket of currencies sort of did that and the euro was suppose to be a strong currency but that is a bit of a flop. how about that metal gold stuff

 

[bene313]

The trillion dollar question is whether the Chinese central government can "engineer" a soft slow down. Given their peanut actions taken to cool things down, and with rampage inflation, I don't have a lot of confidence that they will be able to do it. A hard landing is almost inevitable sooner or later. There is no country EVER in the history of mankind go through a structural boom with no cyclic bust along the way.

No doubt that big booms are almost always followed by big busts. China's bust will inevitably arrive, but the question is when? 2 years, 10 years, 20 years?

 

[Ocean Architect]

No doubt that big booms are almost always followed by big busts. China's bust will inevitably arrive, but the question is when? 2 years, 10 years, 20 years?

Perhaps, but China is a little unusual in that it is a directed capitalistic communist country, and so usual market rules don't apply so much. China has the capacity to produce enough goods for every single person on the planet, and there are those who believe that they suffer from overcapacity. The only thing actually making that true is that they have a 2 tier class system - the mega ultra rich, and the guys who ride to work on their bicycle and live in poverty. They have a very small middle class by international standards.

Anyway a logical person would assume that the Chinese rulers would direct some of their extra capacity towards domestic consumption and improve the standard of living for their population, but that isn't really happening. The ruling class have the population under the thumb and are sacrificing entire generations worth of happiness in order to position themselves on the world stage as a major power (and enrich themselves of course).

That's one of the reason that they're buying and stockpiling commodities - it is simultanously preserving their wealth (what are they going to do, buy more US treasuries? They already have $2.65 Trillion worth. They have to do something with their $250 billion pa current account surplus) and securing their nation so that they have everything they need to keep production up for domestic consumption or even fight a war if need be.

Same applies to their purchase of gold - they have openly stated that they are "concerned" (translation: freaking out) about the US dollar, and that they wish to convert at least a third of their US treasury holdings (about $900 billion) into gold - they're storing wealth, because they know that the fiat currency system is a ponzi scheme.

So in that vein, I disagree that China will see a bust the way that other countries do - all they have to do in order to avert a bust is to start using those stockpiles to manufacture goods for domestic consumption. There are, after all, 1.3 billion potential domestic customers right there good to go and everything they need to do it should they want to. Plus it'll solve a lot of their civil unrest problems - people with food to eat and pretty toys are generally happier than those with empty stomachs living in poverty, manufacturing goods for foreigners that they can't afford themselves. And on top of that, they have mountains of gold - the ultimate wealth preserver, particularly if whatever new currency they try to impose upon the world is gold backed.

The quicker the day comes when the Yuan is unpegged from the US dollar, the better for all of us imo - which is inevitable anyway, since the US dollar is going the way of the dodo. Then we might see new factories in this country instead of new McDonalds.

 

[Ocean Architect]

No doubt everybody almost expect China will continue to require our resource in their goal to become a world super power.

However, very few truly understand and are aware of their massive level of mal-investments funded by huge level of debt to bring all these amazing growth rate. There are quite a number of articles out there detailing the myth that China has plenty of $$$ tied up in their foreign reserves and that their economy is not that heavily leveraged and should not, and will never, undergo a credit bust just like the rest of the developed world has seen.

There are already tons of roads and bridges built there that leads to nowhere. Then we have these so called empty cities, almost vacant shopping malls and commercial office buildings with police preventing any foreigners, or anyone, that attempt to take photos.

The trillion dollar question is whether the Chinese central government can "engineer" a soft slow down. Given their peanut actions taken to cool things down, and with rampage inflation, I don't have a lot of confidence that they will be able to do it. A hard landing is almost inevitable sooner or later. There is no country EVER in the history of mankind go through a structural boom with no cyclic bust along the way.

Beside, what they are going to do with all these resources they are buying from us when they already have over-capacity infrastructures? Like storing copper and tin in pig farm houses for speculation? (yes, they are doing that)

With how leveraged the Australian economy is tied to China, any significant slow down will hurts us massively. But I wouldn't give a timing on this just yet.

Production for domestic consumption. The trillion dollar question behind the trillion dollar question is whether those in power will allow their middle class to grow, because the middle class have a funny way of not liking dictators and stirring up all sorts of problems for the oligarchs

 

[hobo-jo]

Hey hobo what did you think about the differences i've posted on the US home lending and Aus home lending, i've posted them into two of your threads and neither gets a response... i must be on ignore or something

Not on ignore, it's just not on topic and likely to spiral into another 5+ page discussion that ends nowhere.

But just to keep you happy:

He says "Except for my economist friend Steve Keen, I have to ask: Has anyone down under learned anything from the property bust in the US?"

Yeah we have
* Lend responsibly
* no 130% LVR loans
* recourse lending
* Employ other safe guards (LMI loans over 80%)

I have seen Australian products lending up to 120% using personal loans or where a guarantors property is used as security. Non-recourse loans were only available in half of US states. Is allowing FHBs that haven't been able to save for a deposit responsible lending (e.g. where they can use rent as proof of savings and grants are thrown at them for deposits)? Is the recent FHB surge (2009) our very own subprime just waiting to crack?

Yes Australia's defaults are coming from a low base (under 1%), but that was the case for most countries before they soared:
http://www.rba.gov.au/speeches/2009/images/sp-ag-181109-graph4.gif

 

[Intrinsic_Value]

Demand for USD increases as speculators deleverage and pay down loans?

Yes because US$ is shorted as part of the speculation process. Wind down the speculation, recover on the short.

 

[Intrinsic_Value]

To be the dominant global military force, the country in question needs to project power. The US leads by a mile, just look at the number of aircraft carriers.

Empire America will remain for as long as the US can borrow in US$.

 

[zed_kid]

I’m sorry but the good ‘ol US of A is still THE military power of the world.

 

[Sunfish]

The US spends more on it's military than the rest of the world put together. (or at least it did) So of course it is the dominant power but they took 10 years to find Bin Ladin, got their butt kicked in 'Nam, can't beat the Afghani tribesmen, are hopelessly bogged down in Iraq and their friends in Israel demand too much of them. No one blows a whistle to end a period of politics and Russia is itching to settle some old scores too. Did the Cold War end? Not for the Russians I bet.

They will not be able to maintain this spend for long and I think their military machine is in danger of "rusting". Politically, I see an enormous temptation "use it" BEFORE they "lose it".

A "multi-theatre" war is not out of the question.

 

[Temjin]

Production for domestic consumption. The trillion dollar question behind the trillion dollar question is whether those in power will allow their middle class to grow, because the middle class have a funny way of not liking dictators and stirring up all sorts of problems for the oligarchs

The issue on whether China is trying to drive growth via increasing domestic consumption is quite very complex.

I would divert those interested to gain more insight on this genre to Michael Pettis's blog at http://mpettis.com/ (note: site seem to be down atm)

Anyway, the common thinking is that China has been actively rebalancing their economy by providing incentives and/or policies to increase domestic consumption. Unfortunately, none of this has been achieved at all and in fact, things got worse.

So the "production" you are seeing are still heavily export orientated and is for internal infrastructure building, which tend to result in again, empty cities and bridges.

 

[Ocean Architect]

To be the dominant global military force, the country in question needs to project power. The US leads by a mile, just look at the number of aircraft carriers.

Empire America will remain for as long as the US can borrow in US$.

That might work in the case of defenseless little countries like Afghanistan/Iraq, but it isn't going to work on the Chinese or Russians, or anyone who has a nuclear arsenal for that matter. Even the Pakistanis got hold of a few cruise missiles that didn't go off back in 1992, reverse engineered them, and now have nuclear ICBMs. In the case of a non conventional war, no one wins, and so it wont go that way. In the case of a conventional war, you need tanks, ships, planes, and boots on the ground, and the US just doesn't have them since Clinton changed the way the military works in the 90s.

The US military is so overstretched that they are imposing a back door draft on service personnel by stop lossing them (which means that they just extend your deployment contract for as long as they like), sending national guardsmen (their version of the Army Reserve) to front line combat, and hiring as many mercenaries (ahem. "private contractors") as possible and they're still losing, and losing badly.

The only way the US has even the slightest chance is to impose an involuntary draft, which, looking at the mood of the population, will end in revolution before it gets started. Even if they did manage to get it going and the population didn't go berzerk, they're still up against two major military powers alongside the people they're already at war with, and will get annihilated.

Oh and as you said "empire america will remain so long as they can borrow $US" - what do you think will be the impact of the Chinese selling $2.65 Trillion in US dollars overnight? How many people do you think are going to be buying US debt then? And who precisely has a spare $2.65 trillion anyway? No one. One flick of a switch and US gonads will be in a Chinese jar within the week.

 

[joeExpat]

Actually, I was listening to a random guy heading an organisation that no one has ever heard of. I think it's called, uh, what was it again...the International Monetary Fund, and the guys name is Dominique Strauss Khan. He's just the head of the organisation, probably sweeps floors or something.

Anyway he said "A new global currency to replace the US dollar would be useful".

& now he's been thrown in jail in New York... coincidence ?

 

[Intrinsic_Value]

That might work in the case of defenseless little countries like Afghanistan/Iraq, but it isn't going to work on the Chinese or Russians, or anyone who has a nuclear arsenal for that matter. Even the Pakistanis got hold of a few cruise missiles that didn't go off back in 1992, reverse engineered them, and now have nuclear ICBMs. In the case of a non conventional war, no one wins, and so it wont go that way. In the case of a conventional war, you need tanks, ships, planes, and boots on the ground, and the US just doesn't have them since Clinton changed the way the military works in the 90s.



Oh and as you said "empire america will remain so long as they can borrow $US" - what do you think will be the impact of the Chinese selling $2.65 Trillion in US dollars overnight? How many people do you think are going to be buying US debt then? And who precisely has a spare $2.65 trillion anyway? No one. One flick of a switch and US gonads will be in a Chinese jar within the week.

i cant be bothered going down this road. Its like talking to Non-recourse during the GFC.
Enjoy your reading.

 

[Ridin-High]

Actually, I was listening to a random guy heading an organisation that no one has ever heard of. I think it's called, uh, what was it again...the International Monetary Fund, and the guys name is Dominique Strauss Khan. He's just the head of the organisation, probably sweeps floors or something.

Anyway he said "A new global currency to replace the US dollar would be useful".

Then you have people like Peter Schiff, Max Keiser, Jim Rogers etc all saying the same thing.

And besides, use some common sense and look at recent history - the US is doing almost precisely what the Weimar Republic did, which triggered hyperinflation.

The US is printing money like mad to pay interest on its debt. Interest ONLY. Everyone knows that once you're borrowing money to pay just the interest, it's just a matter of time until you declare bankruptsy. Just common sense really

Max Keiser is regularly on the alex jones show. These dudes bang on about the end of the world and how the lizard overlords are going to enslave us, the US dollar collapse, the amerio currency, buy silver crash JP morgan blah blah blah.

Alex jones is entertaining but if you take the stuff he says to seriously u will go insane.

 

[Intrinsic_Value]

Max Keiser is regularly on the alex jones show. These dudes bang on about the end of the world and how the lizard overlords are going to enslave us, the US dollar collapse, the amerio currency, buy silver crash JP morgan blah blah blah.

Alex jones is entertaining but if you take the stuff he says to seriously u will go insane.

If you want a real laugh go to:
http://www.discountgoldandsilvertrading.net/Radio_Show.htm

and listen to the regular appearance by Robert Chapman. It's a real cack.
And the joke is even better because he has a reasonable following.

And here is the best part:
because these commodities have been on a strong upwards trend, people listen to these guys and say 'cheeze they must be right'. They equate 'trend confirmation pricing' with correctness in the persons logic.

I spent several hours listening to Bernanke's live Q&A interview which can be seen here:
http://www.youtube.com/watch?v=c1YLPYix0kM

Its long (roughly one hour) but well worth the time for those that are serious on trying to get a balance between the hype and reality. Especially the Q&A session that occurs part way through.

 

[Intrinsic_Value]

And further more when people talk about Jim Rogers, Soros etc.

They take their comments as an excuse to scream 'run to the hills the end is comming'.

What they fail to understand is that these guys are speculators. And they are best of breed.

They are looking at all available asset classes and creating positions whereby they can acheive the highest returns.

They are not running to the hills, they take positions and then as far as possible they hedge that risk. They engage in multiple simultaneous strategies involving both long and short positions, the net effect of which tends to be a good total return.

 

[Aaron Sice]

& now he's been thrown in jail in New York... coincidence ?

Smacks of Bill Clinton, actually.

Hardly a co-incidence.