A lot of factors, events and data I've read about recently has led me to the belief that Australia is facing an economic slowdown that could be come quite severe and possibly (most likely in my opinion) lead to recession if we see the commodity boom cool off.
Mike Shedlock (MISH) recently covered some of the data we've seen that could lead one to that conclusion:
Near-Record Corporate Bankruptcies
Employment Drops Unexpectedly
Rise in Bad Home Loans
Record Low Property Transactions
http://globaleconomicanalysis.blogspot.com/2011/05/economic-bust-in-australianear-record.html
A lot of arguments for Australia's continued prosperity (both short term and long term) hinge on our ability to dig up and sell our resources. My fear is that this commodity boom is nearing an end.
I believe the current surge in prices could be a direct result of the Fed increasing it's monetary base through asset purchases. If that is the case then we could face a huge collapse in prices if the Fed were to stop doing so (which one could argue is approaching, at least temporarily, with the end of QE2 in June):
The end of the commodities boom has the potential to devastate the Australian economy in an already weakened state.
That is my personal opinion. I thought we were heading into recession in 2008/2009 as well (so I have been wrong before, could always be wrong again!), but we managed to avoid it by pumping the economy full of government stimulus. We could see the same again, but if that were to happen we would be heading down the same path as the US and look where that got them!
So I'm interested in the thoughts of others.
How severe is the downturn we face (if infact you think we face one at all)?
Will we see recession? Depression? Just slower growth than normal?
Will the government intervene again given their stance now which is to restore fiscal responsibility? Will it be as successful a second time?
Is the commodities boom nearing an end and if so what does that mean for our short term prosperity and economy?
Am I overlooking positive data that is being overshadowed by this negative news of late?
Mike Shedlock (MISH) recently covered some of the data we've seen that could lead one to that conclusion:
Near-Record Corporate Bankruptcies
Employment Drops Unexpectedly
Rise in Bad Home Loans
Record Low Property Transactions
http://globaleconomicanalysis.blogspot.com/2011/05/economic-bust-in-australianear-record.html
A lot of arguments for Australia's continued prosperity (both short term and long term) hinge on our ability to dig up and sell our resources. My fear is that this commodity boom is nearing an end.
I believe the current surge in prices could be a direct result of the Fed increasing it's monetary base through asset purchases. If that is the case then we could face a huge collapse in prices if the Fed were to stop doing so (which one could argue is approaching, at least temporarily, with the end of QE2 in June):
The end of the commodities boom has the potential to devastate the Australian economy in an already weakened state.
That is my personal opinion. I thought we were heading into recession in 2008/2009 as well (so I have been wrong before, could always be wrong again!), but we managed to avoid it by pumping the economy full of government stimulus. We could see the same again, but if that were to happen we would be heading down the same path as the US and look where that got them!
So I'm interested in the thoughts of others.
How severe is the downturn we face (if infact you think we face one at all)?
Will we see recession? Depression? Just slower growth than normal?
Will the government intervene again given their stance now which is to restore fiscal responsibility? Will it be as successful a second time?
Is the commodities boom nearing an end and if so what does that mean for our short term prosperity and economy?
Am I overlooking positive data that is being overshadowed by this negative news of late?