By: craigaharwood
4/11/2009
3:02 pm Yahoo! Profile:
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| :) One of those days I should be working instead of day dreaming |
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By: ang101000
4/11/2009
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Hi Lasty, Jay and Craig,
your discussion about currency makes me wonder if you all had magic mushrooms for breakfast? |
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By: craigaharwood
4/11/2009
12:35 pm Yahoo! Profile:
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Lasty I'd fix it to a basket of our top 5 major trading partners weighted by trade amount $.
I'd set it at a level that is about 20% lower than the mean point from last 20years trade history.
That would give us the ability to start to rebuild some manufacturing but not make imports so dear that it held back growth.
You would have to take control of your own monetary policy becuase the speculators would stop the inflow of currency to Australia and we would have to feed the fractional reserve system with real money and I'd fix up the abuse of the fractional reserve system as well.
Then I'd have lunch :) |
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By: jaymarcel
4/11/2009
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| Ha hmmmm be careful what you wish for |
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By: lasty49
4/11/2009
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"I advise you fix it to Chinas yuan"
The Aussie Yuan... I like it hahaha |
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By: lasty49
4/11/2009
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Jay,
The US dont look like holding it for too long.
So yes China looks like the front running candidate.. |
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By: jaymarcel
4/11/2009
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| I advise you fix it to Chinas yuan |
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By: jaymarcel
4/11/2009
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Thanks lasty I was about to do a search online, so that was followed by the end of ww1 then the great depression then the recovery & then the poms lost any chance of reclaiming the title.
So the switch to China could likely be a 100 year change over. |
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By: lasty49
4/11/2009
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"have to agree really not likely, make me dictator of australia for a day and the first thing I'd do is unfloat? our dollar and take control of monetary policy."
Really? What would you fix it to. |
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By: craigaharwood
4/11/2009
11:56 am Yahoo! Profile:
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"It would be interesting now if China decided to free float (not that this is likely as it would be more harmful to their reserves than anyone else)"
have to agree really not likely, make me dictator of australia for a day and the first thing I'd do is unfloat? our dollar and take control of monetary policy. |
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By: lasty49
4/11/2009
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Jay,
Well the poms would never admit the empire is dead but I think things started to go down hill around the time of WW1.
Probably late 1800's the US started to build some economic traction. |
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By: jaymarcel
4/11/2009
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| Just out of interest when did the powerhouse claim change from the UK to USA (which decade?)? |
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By: lasty49
4/11/2009
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When the GFC hit the repatriation for US dollars affected all currencies not just the high yielders.
The stampede for US treasuries was called for from so called experts until the dust settled and sensibility took over.
Why would you take refuge in a building that is collapsing?
Its logical that you would want to get away from it as far as possible.
What you have to ask yourself is one simple question.
What is going to turn the US around to make it into an economic powerhouse it once was?
If you cant think of anything that stands out immediately and are scratching your head for answers then you are like the rest of us. |
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By: jaymarcel
4/11/2009
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| It would be interesting now if China decided to free float (not that this is likely as it would be more harmful to their reserves than anyone else) |
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By: craigaharwood
4/11/2009
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Lasty, I guess this is one of the big calls, why has US Dollar been supported so well to date and and if that decoupling did happen and the dollar went way south how or why would it recover?
I guess that at the moment cheap money out of the USA looking for a home will depress the dollar but at some point if you are a USA hedge fund (also read bank)is there a point at which it makes sense to realise the profits and bring it back into home country dollars.
The last unwinding of the carry trade just a year ago collapsed the AUD Dollar, I'd like to see the figures on how much is in that caryy trade now and what the impact would be if it was unwound at the same reate as last time. |
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By: jaymarcel
4/11/2009
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I think the next twelve months will prove interesting on 'if & by how much' various countries can de-couple from one another (& possible couple up with others).
We have various european countries heading in different directions, we have the UK & USA with the world, we have j@pan/china & asia/pacific (which has kind of already played out over a number of years). |
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By: lasty49
4/11/2009
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Menta,
In the short run, what's happening is that there is a wall of liquidity, not just in the United States but around the world, that is chasing assets. It is equities, commodities, it's credit, it is gold, it is emerging market asset classes".
"We have the mother-of-all carry trades. Everybody is borrowing, shorting the dollar, and investing in assets all over the world."
"Once the dollar reverses, you need to close your shorts, dump assets..."
They are smart people.
Of course there will be profitaking along the way but really who in their right mind will want to invest in the US with all their troubles at the moment.
Thats the problem.There has to be a valid reason why the US dollar will turn around. |
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By: jaymarcel
4/11/2009
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Hi Craig, I do think he should have done his article in two parts, one argueing that deflation is not as big a concern as assumed (which I agree with if short term) & two that deflation is not likely (depends if there is a difference between short term negative inflation & deflation), as you say unfortunatley he confuses the reader by mixing the two storys together, I kind of read into the article he was saying we should not mix deflation with short term negative inflation which will always be the case after a GFC.
I am sure I will be corrected by trying to separate negative inflation & deflation but I think we should be careful on calling a situation deflation if the price of something goes down for a very short period of time. |
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By: craigaharwood
4/11/2009
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Jay, That was an intersting article the writer seemed to be having a bet each way.
1. deflation is good
2. we don't need to print money to guard against inflation
3.we did print money to stave off deflations
4.Even though we printed money we still got some deflation anyway
5. deflation didn't hurt us at all infact it was good for us.
All in all a rather confusing attempt to fill colum space when he didn't have a real story to write.
I'm not sure how that supports your argument of no deflation though as the writer is saying that deflation was / is a significant issue and that quanative easing has in the short term at least been able to re inflate the bubble (or create new bubble formations)sufficent to ease the deflationary crisis.
The question posed is deflation really been avoided or is this attempt to reinflate going to lead to a worse crisis.
I guess only time will tell |
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By: jaymarcel
4/11/2009
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I disagree, I just don't see deflation hitting the world.
http://wealth.bloomberg.com/apps/news?pid=20601039 &sid=a_IZywsbozWg |
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By: mentawaisurf
3/11/2009
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That's a key point Craig. We are very near that crucial tipping point when the money flow rapidly reverses.
Since asset prices are being inflated by a weak dollar right now, a dollar reversal could smash this rally, says Nouriel Roubini. The perfectly correlated bubble across all global asset classes gets bigger by the day.
"In the short run, what's happening is that there is a wall of liquidity, not just in the United States but around the world, that is chasing assets. It is equities, commodities, it's credit, it is gold, it is emerging market asset classes".
"We have the mother-of-all carry trades. Everybody is borrowing, shorting the dollar, and investing in assets all over the world."
"Once the dollar reverses, you need to close your shorts, dump assets..."
This unwinding will hit hard and fast and lead to a surge in the USD and a collapse in asset prices around the world. |
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By: craigaharwood
2/11/2009
12:55 pm Yahoo! Profile:
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'Debt Spiral Financial Holocaust Fiat Currencies Zero Bound, the Next Down Leg'
http://www.marketoracle.co.uk/Article14313.html
Ang
Ang,
Thanks for that link directed to Menta, I'm sure a few of us have taken the opportunity to read it.
This put more weight behind my concern that that our pissy little eceonomy here is falling victim to hedge fund mentality profit grab being driven by no cost money out of USA and UK.
While they have cheap money and we have higher interest rates our assets will rise in price as cash flows into Australia ( much of it as you pointed out in response to an earlier post goes into banks as it is gauranteed by you and me.)
The other issue is that it continues to drive up the AUD which will kill of many of our import competing businesses and exporters alike ( remember just a couple of months ago holden selling cop cars to the usa was going to save them - I bet it won't happen at current usd / aud rates).
With a continuing inflow of no cost money our asset prices prices could continue to inflate for a day, a month or a year but as I see it at some point the money flow must reverse.
If my thinking is correct that will be the trigger for a collapse of the australian markets. |
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By: mentawaisurf
2/11/2009
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| Hi Ang, yes the banking racket he's talking about is based upon leveraging into the bear market rally which when it ends so too will their huge speculative profits. In fact a resumption of the underlying bear market trend will see them tumble again while they'll also be finally forced to write-down the bad loans they're still carrying. And they won't get another tax payer bailout next time. I'll write more on the Greed blog because it's more relevant there. |
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By: jaymarcel
2/11/2009
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| Menta I think pete was just hoping for some answers or your opinion rather than a link or copy & paste of a seriously bias set of websites |
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By: jaymarcel
2/11/2009
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I just wanted to add my two cents worth, last I checked the figures there is no significant increase in australian mortgage defaults (if any increase at all), when calculating affordability it should be done on the lower end market as this is what is available to those struggling with affordability (you don't buy a $650,000 house if your earning $40,000 a year).
Finally people don't seem to want to accept the possibility that house prices can continue to go up until rent becomes unaffordable, as we are seeing now & have in the past prices can continue to rise without FHB as in the right conditions investors replace them & have the benefit of writing off alot of their losses (but without them even fewer new properties are built).
It is all about capitalism |
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