300
23rd December 2007, 12:06 PM
http://www.radioaukiman.com/images/misc/300finance .jpg
Parker - thx, good humour too :p
Just a quick few thoughts on current local action. Not really an update just some weekend thoughts of where we might be headed in the new year. But a quick update on the US for 2008. Current readings inform me that a recession indicator created by run by the chief economist at Merryl Lynch (http://www.ml.com) shows that there is a 100% chance of recession in the US in 2008. There have been positive reports on consumer spending in the States recently - and given the time of year, it isn't really a surprise. What is a surprise is that the figures have dropped significantly in the week ending Dec 15. Typically households are out getting turkeys and ham etc for the feastive season, but this year, the consumer's purse has shut down early and for the size of the US - that is (in my technical terms), uncool!
OK, so local action......
Not that this is a political forum, however, there are actions by our governing political party (whomever it is at the time) that does impact on the financial sector, so the grounds get a little hazy at times and let me re-assure you I have zero interest in politics. On saying that, the Rudd government is busy fullfilling all their election promises so that they can most likely throw up a score card next election run and point to all the promises they have ticked off the to do list. That is cool, anyone would. It is concerning that at a peak in the economic cycle, that they do appear to be spending a lot of money. Why is that a problem??
The government and the Reserve Bank of Australia (RBA) are separate bodies and one does not control the other (unlike China). We are at the end of a 5 or 6 consecutive rate increases which suggests that times are, or at least have been in the recent past, quite good. With times this good, we borrow more so that we can spend more and with high deman comes higher prices, which is inflation. To stop this the RBA ups the cost of money (borrowings) and deters spending while at the same time encourages saving by giving higher interest rates to save under. This stops us becoming like Zimbabwe who has recently released a Z$750,000 note but it won't buy a meat pie and coke at the shop. Anyway, back to the story. The Rudd government appears to be set for a spending spree now that it has entered into Government, with $150 million now set to cull waiting lists in the hospital sector which is a small percentage early of the $2 billion promised (http://www.abc.net.au/news/stories/2007/11/02/207 9988.htm); and a further $3 billion package plan for education and training. With such funds injected into an already hot economy, this will place further upward pressure on inflation forcing the RBA to up the rates again which is already on the cards in Feb, and most likely again after that.
Once again, this isn't a political forum, but actions have consequences and some current actions will have consequences that effect me! I am not going to propose a solution here (although the government can increase the tax rate to slow spending quickly - not politically clever though) just calling it early and we will see how it goes in the new year.
Sorry for the rant. Happy hangovers to all :p and if you are travelling overseas, for goodness sake take that travel insurance - as much as I hate, HATE, insurance companies it is not much to outlay when you are in a foreign country, don't speak the language and have everything you own stolen (not my situation, just an example).
Just my 2 cents
Parker - thx, good humour too :p
Just a quick few thoughts on current local action. Not really an update just some weekend thoughts of where we might be headed in the new year. But a quick update on the US for 2008. Current readings inform me that a recession indicator created by run by the chief economist at Merryl Lynch (http://www.ml.com) shows that there is a 100% chance of recession in the US in 2008. There have been positive reports on consumer spending in the States recently - and given the time of year, it isn't really a surprise. What is a surprise is that the figures have dropped significantly in the week ending Dec 15. Typically households are out getting turkeys and ham etc for the feastive season, but this year, the consumer's purse has shut down early and for the size of the US - that is (in my technical terms), uncool!
OK, so local action......
Not that this is a political forum, however, there are actions by our governing political party (whomever it is at the time) that does impact on the financial sector, so the grounds get a little hazy at times and let me re-assure you I have zero interest in politics. On saying that, the Rudd government is busy fullfilling all their election promises so that they can most likely throw up a score card next election run and point to all the promises they have ticked off the to do list. That is cool, anyone would. It is concerning that at a peak in the economic cycle, that they do appear to be spending a lot of money. Why is that a problem??
The government and the Reserve Bank of Australia (RBA) are separate bodies and one does not control the other (unlike China). We are at the end of a 5 or 6 consecutive rate increases which suggests that times are, or at least have been in the recent past, quite good. With times this good, we borrow more so that we can spend more and with high deman comes higher prices, which is inflation. To stop this the RBA ups the cost of money (borrowings) and deters spending while at the same time encourages saving by giving higher interest rates to save under. This stops us becoming like Zimbabwe who has recently released a Z$750,000 note but it won't buy a meat pie and coke at the shop. Anyway, back to the story. The Rudd government appears to be set for a spending spree now that it has entered into Government, with $150 million now set to cull waiting lists in the hospital sector which is a small percentage early of the $2 billion promised (http://www.abc.net.au/news/stories/2007/11/02/207 9988.htm); and a further $3 billion package plan for education and training. With such funds injected into an already hot economy, this will place further upward pressure on inflation forcing the RBA to up the rates again which is already on the cards in Feb, and most likely again after that.
Once again, this isn't a political forum, but actions have consequences and some current actions will have consequences that effect me! I am not going to propose a solution here (although the government can increase the tax rate to slow spending quickly - not politically clever though) just calling it early and we will see how it goes in the new year.
Sorry for the rant. Happy hangovers to all :p and if you are travelling overseas, for goodness sake take that travel insurance - as much as I hate, HATE, insurance companies it is not much to outlay when you are in a foreign country, don't speak the language and have everything you own stolen (not my situation, just an example).
Just my 2 cents