Why we're not in a bubble
- Thread starter see_change
- Start date
Another thought .
One of the biggest booms I've seen ( late 80's ) occured while rates were going up .
Seriously . At that stage people were concerned that rates would go up further so they wanted to buy and lock in the rates .
I rememeber queuing up at the bank to make an appt to talk to a loans officer , but the queue was too long .....
Cliff
Gee's! That's a bit dramatic isn't it?
I'd have thought that if China blows up, obviously our mineral and energy exports would be cactus, but I'd see say a 45 cent aussie dollar? That would be real good for a lot of small business, including me. We'd be highly competitive again in a lot of industries, imports would double in price which would help improve the current account balance, the world would want our manufactured and rural exports again.
See ya's.
TC
It's just the latest mantra from the doom and gloomers.
When I started here , it was the japanese debt that was going to cause their banks to default and cause the world economy to tank.
Interstingly , in china , people are only able to buy one IP so that provides a cushion as people can't buy a whole series of IP's . They have to come here to do that .....
Cliff
It's just the latest mantra from the doom and gloomers.
When I started here , it was the japanese debt that was going to cause their banks to default and cause the world economy to tank.
Interstingly , in china , people are only able to buy one IP so that provides a cushion as people can't buy a whole series of IP's . They have to come here to do that .....
Cliff
Hi Cherry
Busy suburb you've selected there to invest in- how's it going? How many props have you seen so far?
At 45c, will Australia replace China/Indonesia/Vietnam/Africa and become the new manufacturing hub and cheap holiday destination for those who can't afford the US?
By then we'll have already bought places in cairns and Airley beach ahead of that crowd ...
Off course before then Gerry Harvey will be talking up the dollar in an effort to lower his cost base , which is what happened when it hit 60 c not that long ago ....
Cliff
At 45c, interest rates would be back to well over 10%
Just look at South African Rand or Turkish Lira recently.
That assumes the AUD crashes because of capital flight.
Deutsche Bank's forecast of the AUD at 66c, for example, assumes no rate rises.
The AUD was at 50c back in 2001 while RBA rates were in the 5s with mortgages in the 6s and 7s, if I rembember correctly. Rates were then cut.
Typically reserve banks crank up rates to counter an exchange rate crisis, as 45c would be. A rate that low would be detrimental to the economy, not beneficial. 2001 rates were a temporary risk off aberration following stock market downturns.
I don't believe the rate could get near DBs forecast without rate rises kicking in.
I think that is too simplistic. They will take into account all the economic factors in that decision. If the economy tanks and the dollar falls then they would probably wait until the economy impoved before raising rates again. Otherwise the rising rates would further depress the economy. The RBA would most likely be buying Aud to stabilise the dollar and later profit from the rising dollar. They have a history of ths type of intervention.
Cheers
Shane
