Comments on: Economic mixed signals, the ASX All Ords and gold prices.

By: Greg Atkinson

Greg Atkinson — Wed, 06 Jan 2010 11:53:20 +0000

Ned I have no doubt that China will face some major hurdles over the next decade. There is only so far you can get by relying on cheap labour and turning a blind eye to copyrights before you wish you moved up the value chain.

As I have said a few times, the rise of China reminds me of the Asian “Tiger” economies of the 1990’s. They too were supposedly on an unstoppable path upwards.

By: Ned S

Ned S — Sun, 03 Jan 2010 01:20:45 +0000

I’m all at sea regarding just about everything at the moment Greg. This article by Satyajit Das is interesting (as always) though:
http://www.smh.com.au/business/foreign-treasure-is-not-all-its-cracked-up-to-be-20100101-llqc.html

By: Greg Atkinson

Greg Atkinson — Sat, 02 Jan 2010 01:01:52 +0000

Nothing wrong with a big spoon Ned! As for China I am starting to get a touch nervous. I wonder how sure anyone is that they are actually achieving the growth they say there? Is China’s economy growing too fast too soon? Could the Chinese economy be the next bubble?

By: Ned S

Ned S — Fri, 01 Jan 2010 12:39:08 +0000

G’day mate – I’ll bear your warning in mind re “up north” – Much appreciated!
As to the other site; Yes the thought crossed my mind many, many months ago that me mate has a big spoon!
Course I’m not sinless in that regard either –
Life has to have its odd care free and naughty moments surely?
Ta and cheers … Ned.

By: Greg Atkinson

Greg Atkinson — Fri, 01 Jan 2010 11:20:34 +0000

Ned I would guess anything is possible if you keep artificially keeping a bubble inflated.

When I look at the growth of China I recall all the hype about the “Asian Tiger” economies in the 1990’s. One day they were on an seemingly unstoppable path to world economic dominate and the next they hit a wall. I sense China will also hit a wall soon, there is only so far you can go building stuff and sucking in foreign investment. If and when that happens, Australia’s economic bubble may finally pop.

As for the other site, well I have no choice but to stay clear for now. The discussion does tend to get heated over there for some reason, some people don’t seem to be able to detect when others are just stirring the pot as they say

By: Ned S

Ned S — Fri, 01 Jan 2010 03:54:39 +0000

G’day Greg – I guess the question is what does “worse” translate into? A big bust? Or high inflation?? Or both???
Although it would seem the general feeling in Oz is one of If happy days aren’t actually here again, they are right over the next hill and stretch on until maybe 2050 minimum! (Things can change quickly though of course.)
Australia’s long term saving grace would definitely seem to be Asia though – Even if Asia should experience a few blips along the way. So let’s hope your lot and the Chinese know what they are doing.
If I was smart (and I’m not) I’d steer clear of the other site for a while – A rabid PI hater has turned up there just as I’m in the process of putting together some PI plans. But good luck getting your post through and have a top year!

By: Greg Atkinson

Greg Atkinson — Fri, 01 Jan 2010 02:14:45 +0000

Ned I think George Soros has a pretty good view about market bubbles and economic cycles etc. He reckons bubbles are a part of an economic cycle and I agree with him. The scary part is he reckons if you don’t allow bubbles to deflate when they should, then it just makes things worse further down the track. I wonder what that says about the Australian economy?

By the way, I can’t get a post published over at the other site..seems I have been black listed

By: Ned S

Ned S — Sat, 21 Nov 2009 20:23:23 +0000

The business cycle seems to be a fairly widely accepted concept in economics Greg? But our smarty economists reckoned they could defeat it. Got away with it after the dot com thing. Might get away with it again. But the cost of doing so has increased. A pessimist might be tempted to suspect they are creating an increasingly unstable system?

By: Greg Atkinson

Greg Atkinson — Sat, 21 Nov 2009 09:46:14 +0000

Ned I wonder if economists will look back at the GFC and reflect on what part they played in creating this mess? Many of them seem focused on achieving GDP growth and fighting inflation at almost any cost. Maybe time for central banks and governments to have some broader economic objectives?

By: Ned S

Ned S — Fri, 20 Nov 2009 00:52:23 +0000

RBA not quite sure if they’ll pop interests rates up next month. Maybe they read Roubini’s thoughts on the carry trade and suspect there could be something in it too – I can just imagine Glenn Stevens sitting there saying Damn, outsmarted by the Yank banks again!?

By: Ned S

Ned S — Wed, 18 Nov 2009 07:33:46 +0000

There are just so many issues Greg. And at the end of the day it is about finding a relatively peaceful life – To me anyway.
How can economists come up with answers in a world where government and central banks see themselves as the enemies of the business cycle – Leastways when it ain’t in growth? Yet what they do causes it to crash harder in the future. Or wipes out savers who they reckon they want. (Might be time to come clean on that one – Do they want us in debt or saving – Or how much of each and when and why???)
The problems are political – Which means they are people problems – people who want to live above their means. With politicians wanting to pander to that.
It’s all gotten pretty weird.
Yeh Buffett has a good handle on the big picture. As well as lots of the detail. And will do real well. Providing his premise that the US remains top dog hangs together – Which I’d expect to be good for 20 to 30 years?

By: Greg Atkinson

Greg Atkinson — Wed, 18 Nov 2009 02:48:46 +0000

Ned it is scary isn’t it? As I have mentioned before, it must be good to be an economist because you can be wrong most of them time and still hold down your job. The problem with the “media” economists is they have to say something dramatic to get coverage but the media does not appear yo hold them to account for past calls.

I don’t give much credit to people who make predictions about the market and never disclose any trades etc. I prefer watching people like Buffet who are businessman and investors, rather than people who simply sit on the sidelines.

By: Ned S

Ned S — Wed, 18 Nov 2009 01:29:31 +0000

I found the following entitled “Nouriel Roubini’s 2009 Stock Market Calls Track Record” interesting :

http://www.marketoracle.co.uk/Article14751.html

And Roubini might just be one of the better economists out there?

By: Greg Atkinson

Greg Atkinson — Tue, 17 Nov 2009 22:21:16 +0000

Goodness me, the RBA has finally realised that the strong Australian dollar might be an issue for exporters…welcome to the world Glenn. This sounds like 2008 all over again, back then they were fighting inflation and raising rates at the wrong time and it seems they have done it again!

Of course our economy will slip back when the stimulus is removed, because we did little to position our economy for life after the GFC. Let’s see how those school halls help the economy if commodities exports are weak next year.

By: Senator13

Senator13 — Tue, 17 Nov 2009 21:32:46 +0000

Looks like more reports of mixed signals coming out from the RBA:

http://www.theaustralian.com.au/business/markets/rba-fearsfor-growthif-stimulusslackens/story-e6frg926-1225799064465

First they saw us rocketing along and them boosting interest rates now they seem to be back peddling just a little bit. Maybe they are trying to hedge their bets.

Wonder if Ken Henery still thinks that him and Glen are of “one voice”..?

By: Ned S

Ned S — Tue, 17 Nov 2009 10:14:44 +0000

It’ll take them a good while to rebuild I guess Greg? (Bernanke has even said if it is too quick it won’t be sustainable.)
Obama – There is still lots of stimulus to be rolled out I gather – 38% of “it” (the 787 odd billion ???) comes in 2010 and another 22% in 2011 then winding down in 2012 I’ve read – Which is an important year for him. So it just could look pretty good – The full effects being felt at the same time as he puts on his fiscal conservative face? I wouldn’t write him off.

By: Greg Atkinson

Greg Atkinson — Tue, 17 Nov 2009 09:35:42 +0000

Ned I have sort of written off the U.S economy as a dead weight for a few years. I just hope the U.S. doesn’t implode and take us with it Perhaps if the U.S. economy does not pick up soon maybe President Obama might get only one term?

By: Ned S

Ned S — Sat, 14 Nov 2009 03:48:18 +0000

March 2010 is when the Fed is supposed to be finished buying 1.25 t in MBS. They are over 80% done I read. And Roubini says “its $1,800bn purchase plan will be over by next spring.”
I suppose they could decide to stimulate some more? But either way, Roubini makes a heck of a convincing argument for expecting it to be ugly for asset prices when it blows up.

By: Ned S

Ned S — Sat, 14 Nov 2009 00:31:59 +0000

This mob reckons “Since the inception of the program in January 2009, the Fed has spent $1.006 trillion in the agency MBS market, or 80.53 percent of the allocated $1.25 trillion, which is scheduled to run out in March 2010.” – That’s the “next spring” Roubini mentions I guess?
Source: http://www.mortgagenewsdaily.com/11122009_fed_agency_mbs_purchases.asp
From Roubini’s article it sounds like there was 1.8 t being poured in altogether. (With the difference being made up of Treasuries and agency debt?) But who knows; Is there any reason that can’t be increased? I seem to recall Bernanke having the attitude We’ll stimulate until it works.
But Yes, I’m finding it pretty hard to see it not all resulting in another crash in asset prices when the party does stop. As it will as Roubini explains.

By: Greg Atkinson

Greg Atkinson — Fri, 13 Nov 2009 23:18:11 +0000

Ned I reckon Nouriel Roubini might be onto something The USD will find a bottom eventually and it looks like it might even be in a bottoming phase now. When it does bottom out and then creep back up there will be a rush for the exists. All those investors who have been riding the dollar down will then rush for the exits and some will not get out in time.

This is why I have been ranting on about gold because the price has mainly been going up in USD primarily due to the US dollar losing value. The supply and demand fundamentals behind gold are not the major reason prices in USD have headed up. If you don’t get that point and invest in gold in AUD then I reckon you are asking for trouble.

By the way the gold bulls won’t tell you this, but gold demand for jewellery is way down because of the GFC and also because prices are getting too high. Believe it or not, people can live without gold rings!