Shareswatch Australia

Foolishly during Kevin Rudd’s Australia 2020 Summit a few years ago I thought that the political circus in Canberra couldn’t get any more ridiculous.  Sadly I was wrong. The Gillard led government is now doing its very best to destroy what little respect the public have left for politicians and Wayne Swan is sure to produce another work of economic & finance fiction – the 2012 Federal Budget.

This week the Australian stock market slid into what I would call a bear market although some would argue that it has avoided such fate by a whisker. The reality is however that the ASX All Ordinaries did close below 4000 recently and that represents a drop of just over 20% from levels seen in April. If it looks and feels like a bear market, then for me it is a bear market.

A sure sign that an economic trend has been established is when the OECD finally jumps on the trend bandwagon and recently the OECD has joined the group of recently converted economic pessimists. Gone are the days when big borrowing, big spending governments would save the day – the theme of the day now is hang onto your hats because we might be in for a bumpy ride.

Last year when I dared to suggest that the Australian economy was unbalanced and that 2011-2012 could be a period of economic contraction the mainstream financial reporters were churning out “miracle” economy stories. Back then they were obsessed with telling their readers how the mining boom would shower riches across the Great Southern Land, but today many of them have started to sound a lot more cautious.

On budget night Wayne Swan could have saved us all a lot of time by simply standing up and saying that his plan for the Australian economy was to simply sit back and hope the mining boom continued. As I have said for over a year now, Australian policy makers have set the economy up for a severe downturn if commodities prices slump and there is no Plan B.

For a while I have resisted writing about the political situation in Australia simply because it is too depressing.  Of all the possible political outcomes after the election last year it looks like the Australian people have ended up with the worst case scenario – a leaderless dysfunctional government adrift at a time when major ecomic challenges loom.

The devastating floods across much of Australia should remind people that Australia has been for a long time, a land of drought and flooding rains. The floods have tragically not only taken lives, but will also have a lasting negative impact on the economy and sadly the Government seems intent on using the floods as an excuse for it’s own poor management of the economy.

As another year starts it’s time for me to make another stock market forecast, one which I will probably regret making in just a few months time. Generally speaking, I expect that 2011 is not going to be particularly kind to the Australian economy and therefore my Australian stock market forecast is not going to make market bulls very happy.

Well after a few weeks of uncertainty following the federal election in Australia, the Australian Labor Party (ALP) has managed to pull together a ragged alliance and hold onto power. Some people say that a minority government will be a refreshing change and can work well, but I believe that the coalition that Julia Gillard has put together will result in few tough decisions being made and could end up damaging the Australian economy.

If you are confused about the conflicting  reports regarding the Australian economy and outlook for the stock market you are not alone.  Much of this confusion is caused by financial journalists who one day are talking about a double dip recession and then suddenly switch to chirping about a robust Australian economy once some positive economic data appears.

Strange things happen to Australian prime ministers. One (Harold Holt, 1966-67) disappeared while swimming near a Melbourne beach; speculation says he may have been eaten by a shark.

As readers of this blog will know, I believe that the G20 leaders meetings are generally a waste of time and fossil fuels. After each meeting all we ever get is some vague declaration that basically says all the G20 leaders are wonderful with the mainstream media simply rehashing press releases and happy to go along for the ride. The latest G20 gathering in Toronto, Canada, was no different except that more police cars were set alight.

Quite clearly the debate regarding the Resources Super Profits Tax (RSPT) in Australia and abroad has not died down. Despite what the Government would like people to believe, it is not just the foreign mining companies that are opposed to this new tax, but also small Australian mining companies, business owners and the public in general.

For more than a week investors have been watching stock markets across the globe drop sharply as concerns over debt in Europe have raised doubts in people’s minds that a global economy recovery is really taking shape. But is the current correction really that bad, and is there a chance that stocks have fallen too far, too quickly?

Well the Government’s response to the Henry Tax Review has been released and even Ruddites like David Koch from Kev07′s public relations program “Sunrise”, seem annoyed by the way the report is basically being shelved. Suddenly the business media has woken up to the fact that Rudd and Swan are economic dills, but as reader’s of this blog will be aware I have been warning about what these two would do to the economy for years.

All hail to the G20 Finance Ministers and Central Bank Governors, for according to the communiqué from G20 meeting in Washington, they have saved the world from a financial crisis and will now lead us into a new era of growing global trade. Of course if the G20 actually functioned properly in the first place we would not be in the mess we are in now, but I guess they don’t talk about that much at the meeting.