Tag Archives: bust

And now the CBA has woken up and started to fear a GFC 2

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Ralph Norris of the CBA has now finally caught up to what I’ve been saying for months: GFC 2 is on it’s way and it’s coming fast.

Yesterday a very peculiar thing happened in the debt stricken EU, one of the key economies Germany failed to sell its long term bonds shocking debt markets and sparking fears of a national scale Lehman brothers collapse.

Up until now Germany and France have been holding the plug in place in the currency bathtub, keeping the many weaker European states afloat despite the spreading fears of contagion.

Now France’s AAA rating is being questioned and Germany is suffering as investors are steering clear of the Euro only augmenting fears of the region breaking up in disarray.

Now all of this sounds absolutely atrocious, but at the same time I can’t help but to smell a rat. To quote Gail Kelly of Westpac “The various authorities in Europe actually have the capacity to deal with these issues – I certainly wish they’d get on with it and do it”.

At the end of the day Europe has the assets and power to burst out of this. So where is all this ‘recession’ coming from?

This begs the question – will the GFC 2 be rooted in real economic problems or will it be determined by the fund managers and nervous investors.

Regardless I’ve got a sneaky feeling this time Australia won’t be spared!

Your thoughts?

Tangible Proof of a ‘Two speed economy’

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A grocery survey by the Daily Telegraph of over 1000 people has uncovered some alarming facts about the state of our household finances. According to the survey ONE IN THREE people had gone WITHOUT FOOD in the past 12 months simply to be able to feed their kids.

Overall, 75% of families have had to cut back on some items or even cutting items out of the shopping list just to make ends meet. With many households already feeling the pressure of surging electricity and water bills, we are quickly running out of corners to cut leaving the food bill to bear the brunt.

Although our Supermarkets price wars are helping alleviate the situation a bit, they can’t keep lowering their prices forever. It’s no news that as the price of food goes down quality inevitably follows, and as much as we’d like to at some point the cost of groceries will have to stay put.

Despite what you may think about this survey, I see it as a very disturbing piece of news. Especially that we have so many fellow Australians in desperate need of help. Many of them probably living next door or just around the corner from us.

When you think about it, this survey raises a very big question. Why are we as a nation so hell bent on helping the rest of the world with their financial woes and ‘saving the planet with a Carbon Tax’ when we have an increasing number of working families in desperate need of financial assistance. Maybe, just maybe, we take a breather from being the saviour of the world (didn’t get the USA anywhere did it?) and seek out and help those who need some help. It’s an Australian mateship thing to do.

Perhaps we should think about the little recording that plays in an airplane just before you take off …”please make sure your secure and adjust your own mask before assisting others.”  Perhaps Australians need to focus on our fellow Aussies and lend a hand where we can.

Let’s not be like the US who spent decades helping everyone around except its own people but to only find itself in a depression like economic state.

Your thoughts?

Little bites are causing a big decay

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A perfect storm is brewing inside Australia with the gap between the strongest and weakest industries being greater than ever before.

From a business confidence study conducted by NAB it shows that there are several factors underlying the deterioration of weaker sectors. The biggest concern was that the gap between two speed economy was actually getting wider. Scarily so it was not due to the larger sectors getting stronger but by smaller industries getting even weaker. Small business is hurting and hurting bad. Who cares you say? You should, as the small business community are a massive employer of Australians and the more that sector shrinks the more people that will be put out of a job.

It seems that in a nutshell simply don’t understand how what’s happening around their own day to day world. Sure they may read the news headlines and take in a few micro seconds of what’s happening in countries like Greece and the US but they unfortunately have no mechanism to aggregate all the news stories together to form one big picture.

Unfortunately that big picture is looking bleaker than the politicians would have us believe. We all seem to so well deluded by our ‘mining boom’ and the rhetoric from the government. The little bits of information you are receiving is hiding the massive decay.

This has been a concern for mine for quite some time now. As I said in a post back in September, we’re all just a bunch of lemmings. But as evidenced by the NAB falling business confidence report I fear that the ‘boom times we are bathing in are short numbered.

Every financial event adds up. The bite sized chunks of news in this country are contributing to the decay which is going to surprise many people and unfortunately cost them dearly. Just think about the last time you went to the dentist and they discovered a tooth that needed some work and cost you fair bit.

Your thoughts?

Here comes GFC 2

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I’m going to make a prediction that I can guarantee will raise a few eyebrows.

The Australian economy will slide into a slow motion GFC over the coming 6 months.

A big call I know. But if you read between the lines of all the data and hype put out by the government and the media – Australia is up to it’s eyeballs in debt and hurtling towards an economic train wreck of train wrecks.

Oh, but what about the boom that we are in you say? Well, unless you are in the mining sector, not many other industries are experiencing boom time growth (just ask the retailers).

Leaving the rest of us mere mortals hocked up to the hilt and facing ever increasing day to day cost of living hikes. When it comes to debt, we as a nation over the past 20 odd years  have been partying like there’s no tommorow, consuming things for the now and payng for them using someone else’s money (ie the banks). The amount of debt we have racked as a result up is staggering having grown from $500 billion to just over $1.1 trillion in 5 years!!! All of which on home loans, credit cards and personal loans.

Now if you add this ticking time bomb to the government debt problems of the US and many European Union members it is little wonder why the world is teetering on the brink of a GFC 2. Sooner or later their weak economies will affect us. Not so much directly but indirectly as ultimately China is dragged into this financial mess.

You see China’s major export partners are the US and Europe and with them slowing down the Chinese ecomomy will start to slow. Hence, you guessed it, they will slow down on their need for the massive quantities of raw materials from Australia.

So as you can see in this simple scenario, our lucky country may not be luck for too much longer. Batten down the hatches as slow moving ecomomic storm cell is approaching.

Can’t think it can happen to Australia? Just ask anyone from the US, UK and Ireland.

Am I being too over reactionary? Maybe!

Your thoughts?