Shifting of our economic centre to Asia

This is not new, but it reflects a long term trend that more and more people have started to notice.

http://www.smh.com.au/business/australia-exits-americas-orbit-after-crisis-20091227-lg7x.html

For decades, we have been looking to the US & Wall St as the centre of our economic universe.

The centre is shifting towards Asia, where 2.5 billions live and are currently driving most of the world economic growth.

Maybe we need to pay a bit more attention to what is hapenning in China & India. This is where the action is, especially for Australia's trade.

Cheers,
 
s'good to see the "US-centrics" are finally waking up and realising that the "world" doesn't end on their east and west coasts.....
 
was having this discussion with friends the other day and the the verdict was fairly divided between the euro and asia being the "new" world dollar.

will be interesting to see how it falls.
 
euro too unstable and changing in value - they're still yet to define "europe".

yuan too easily manipulated by a communist govt with no-one to answer to - not even itself.

Singaporean Dollar?
 
There's no clear alternative to the US dollar yet.

So the US can be keep printing money happily in the meantime.

How long will this last is everybody's guess.

Cheers,
 
A lot of the UK press is extremely hostile to the EU, and the line has been that the Euro will break up as soon as any sort of crisis hit...

... Ironically it's ridden out the GFC far better than apparently better established currencies.

I think that there are still issues to correct, and there are some serious problems (e.g. Greece) in the Eurozone, but it's probably the closest thing that there is as an alternative to the Dollar right now.

The Renminbi isn't that convertible, and pegged to the Dollar, so probably is further away. There has been talk of an independent reserve currency administered by someone like the IMF, which the Chinese are keen on, and both the Indians and Chinese have been buying up gold too.
 
a trans Asian currency would be the answer, which I think they are working towards?

eventually we will need a global currency but am not sure how interest rates will operate with this... refer to the problems they have had in europe with this.

personally i wouldnt sign a long term contract in USD.
 
Hi Guys,

I was going to post this in a new thread, but thought I'd pop it in here instead. This is a brilliant article by Alan Kohler out today which is an absolute must read:

China – America's terrible enemy

Alan Kohler said:
When thinking about 2010, you should keep in mind two things:

1. Reflation on the scale attempted by the United States has only been tried once before, by Japan, and didn’t work; and

2. China is kicking sand in America’s face.

Notwithstanding the current dollar rally, the US is in deep trouble and China is ascendant. This generally gradual process had one of its periodic lurches last week when China sabotaged the Copenhagen talks to advance its own interest.

But on the whole it’s as much about America’s self-destruction as China’s relentless and ruthless progress.

In my view this will be the key theme of the next decade.

The only asset bubble likely to crack next year is in US government bonds, although the rise in US bond yields is more likely to be gradual than sharp because America is now the dairy cow of its largest creditor, China, to be milked and eventually slaughtered.

Gold, commodities and stocks all have further to go, and are not anywhere near bubble extremes, although stocks will likely correct savagely at some point.

A couple of key points that I extracted from the article:

1. The US economy is stuffed and there is no miracle, low interest rate, cure.

2. China is gaming the US at every opportunity and milking that cash cow until its time to slaughter it.

3. Commodities have a heap of upside yet and are no way in a bubble.

Those are the key messages I got out of that article. Its a very articulate piece on where the world is at today.

Cheers,
Michael
 
Thanks for the link Michael. Quite interesting article.

I do believe that many people here & in the US underestimate China.

While the US is wasting its funds & focus in Iraq & Afghanistan, China is quietly securing access to natural resources throughout Africa. Its economy & financial health is the envy of the western countries. China holds so many US treasury bonds that it can almost tell the US what to do. That is leverage!

Sometimes I wonder why we still look up to the US. Besides being the top dog in the military, they are no longer the dominant superpower they were last century.

Cheers,
 
Chinese economy has been threatening to "stall" for 3 years now.....

i love reading idiots try to wrap their head around the Chinese market.

1) China is not a capitalist country. It has done a great job mixing capitalist practise to make money, which funds a communist regime.

2) therefore, EVERYTHING is state owned, unless your family owned something before the communist govt and was able to bribe officials to allow your family lineage to keep it.

3) if everything is state owned, and the govt can print money into a market that is NOT a free market, then that is not stimulus - it's called communism.

4) these scare tactis by the media with journo's on the RBA board's payroll are to keep fear in the market and assist in avoiding another bubble HERE in Australia, without the bad "hike the cash rate" publicity. Every man and his dog are gearing up to buy this year - me included - and stories like this make the feeble think twice.

5) i'm not fooled. buying strategically will see solid 5+% pa growth over the next 10 years, compounded. worried about resi or not, it's going to move again this year, 2011 and 2012 will be the panic buying of the decade and there'll be nothing the RBA can do to stop it - 10% IRs or not.

the RBA have dug themself a hole, there's no way out and it's starting to rain.
 
5) i'm not fooled. buying strategically will see solid 5+% pa growth over the next 10 years, compounded. worried about resi or not, it's going to move again this year, 2011 and 2012 will be the panic buying of the decade and there'll be nothing the RBA can do to stop it - 10% IRs or not.

this seems at odds to your general tenor it seems - apologies if I misinterpret.

So you're saying despite internatonal economic circumstances Australia's housing market will continue to rise? Overall, or just specific stocks and general locations?

Actually friends are saying the same thing to me all the time, but I'm mindful of the old saying to beware of being in the market when the shoeshine boy is recommending stocks.
 
Chinese economy has been threatening to "stall" for 3 years now.....

i love reading idiots try to wrap their head around the Chinese market.

the RBA have dug themself a hole, there's no way out and it's starting to rain.

Hmmm glad I've been set straight :rolleyes:

So a communist society is incapable of bubbles?? Particularly when recent government fiscal/monetary policy has been particularly generous?
 
Chinese economy has been threatening to "stall" for 3 years now.....

i love reading idiots try to wrap their head around the Chinese market.

I kind of agree with that.

A lot of the economic commentator don't seem to understand the Chinese economy. Not so long ago they were predicting it would be badly affected by the US slump.

Many people assume the Chinese economy acts like ours. It is a capitalist system, but it seems quite different from our system. We don't seem to understand it very well.
 
google Deng Xiaoping

So a communist society is incapable of bubbles?? Particularly when recent government fiscal/monetary policy has been particularly generous?

i never said that.

i was impying that a communist regime doesn't answer to capitalist markets - it answers to itself. it may use capitalist techniques to raise money, provide funds and allow overseas investors to help build private and public infrastructure, but that's where the line is drawn. any market that allows outside investment is open to speculation - the difference is here is that if there's not a market NOW for the speculative investment, there will be in another 3 months. why? because China say there is. You can't PROVE otherwise because all reports are govt supervised. There's no data that isn't doctored - it's like trying to invest in CBA.

JulieW - i'm very torn at present with what the Australian market will do.

I think i've come to the conclusion that IRs are going up and so are prices. The RBA trying to curtail inflation by inflating prices is just insane.
 
It's hard to find common sense in any market manipulation attempts by central government imho. I'm also totally confused at what the markets will do. I'm inherently suspicious and conservative, so the 'faint noise' of the GFC heard here in Australia and the total return to business as usual and overful credit cards makes me very contrarian at the moment. Meaning sell everything and hit the bunkers BUT with US dollar apparently improving, perhaps we'll be OK overall but I stlll have an uneasy feeling about things for the next few years.

The thing is the speed at which things occur - witness the last AUD plunge and the impact on RE after barely a month of news from Wall Street. I'm not sure if I've the nerves for gambling on economies at this stage of the cycle.

Prices are 'back' to 2007 levels, the ever onward upward march to wealth and abundance only had a tiny misstep and so we can expect another 10 years of economic bliss OR we hit doubly hard times next crisis and the next crisis could arrive within 6 months or a year, or two, or three.

Impossible to call so I'm just betting small and hedging those bets as well.
 
A well informed and very well written prescient piece outlining the risk to US global power supremacy:

Beijing set to fill void as US power fades

Simon Tisdall said:
The end of the American empire has long been foretold. But it is not hubris or hostile action that brings it low. It is a lack of readies, meaning unpaid, high-interest, foreign-owned debt, and an unaffordable lifestyle. And unlike the postwar period, when a Europe with common interests, a broadly similar political outlook, and shared values passed the security baton to the US, America has no like-minded, amicable successor to turn to as its own power fades. Quite the opposite, in fact.

The power transition will have significant global ramifications for all nations. China is already exerting its will over Australian interests in such areas as ore price negotiations and sovereign debt funded ASX commodity acquisitions. They want what we've got. If we don't give it to them nicely, then more and more, they will be allowed the freedom of action to take it forceably. It may not be as confrontational as an all out armed assault on our sovereignty, but those with the power set the rules. Current public international law is only as good as the power of the nations supporting the institution. The US flaunting of established international human rights with Guantanamo Bay is proof in point that those with the power set the rules regardless of established law. How do you think China as the singular global superpower might act in its own self interest?

We are at a major crossroads in human history. My son will grow up in a very different world to the one I have enjoyed. Be aware and prepare as best you can.

Cheers,
Michael
 
Well China is certainly buying up big in Aus. You name it, coal, steel, uranium, properties. At what point to we say enough, or do we not bother? In 50 years will we look back and will we regret it?

Your words echo in my thoughts, Michael. How much of Australia is still ours and how much of it will we have in the future?
 
We are at a major crossroads in human history. My son will grow up in a very different world to the one I have enjoyed. Be aware and prepare as best you can.

agree with that.....but am unsure on timing it accurately.

China's communist leadership is ultimately interfering with more efficient market economics. Their loose credit policy for the last 15 months caused massive inefficient capital expenditure, much of which drove GDP growth and created asset bubbles.

Jim Chanos does a solid job of highlighting China's fragilities (asset bubbles and overcapacity). The presentation is long and the sound quality poor but it is well worth the listen.

OTOH, the US is certainly in denial about its right to continue the consumerist lifestyle. They have to de-leverage credit, and they are in denial about whether that is happening now, which it isn't.





When Obama winds back QE, the private sector won't be there to lend the dollars to the same extent. And there's nothing a feel good guy like Obama can do to change the balance sheet.

 
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