Financial Meltdown (The World)

[Morrolan]

2 things saved our bacon:

1. Australian banks had no or hardly any exposure to repackaged second rate mortgages (there's advantages to not being on the front line of global financial engineering).
2. commodity demand stayed at a relatively strong level thanks to price drops. the low FOB (free on board) cost of the Australian commodities (read: the excessive profit margins when prices were high) meant our big commodity powerhouses did not enter into the negative cash flow zone and demand picked up fairly quickly again.

one thing that brought us close to recession:
1. the overly cautious interest rate policy of the RBA, caused by an irrational (Keynesian) fear of inflation, which created interest rates that were way too high relative to the economic situation. regretfully, it seems the RBA hasn't learned anything as they have started increasing interest rates again way too early and aggressively.

Rudd government policies have had hardly any impact (nor did the Howard government policies create the good economic circumstances before that). it's all about our commodities.

[BoD]

Luck or judgement you think?

[Morrolan]

luck and circumstance.

[baloo]

Did M really use the word "our" when talking about Australia ?

[BoD]

As long as the Chinese need Aussie rocks, all is OK I guess

[Morrolan]

Did M really use the word "our" when talking about Australia ?

twice...

[Dinosaur]

1. the overly cautious interest rate policy of the RBA, caused by an irrational (Keynesian) fear of inflation, which created interest rates that were way too high relative to the economic situation. regretfully, it seems the RBA hasn't learned anything as they have started increasing interest rates again way too early and aggressively.

Well, I like high Aussie interest rates

Now, what about the world food shortage scare, huh? This started up in the media just before the recession and, presumably once the media has got fed up with reporting about the recession, it'll be back on the front pages again. Won't that be a big boost for the food producing countries of the world? I guess that includes Oz though if there's problems with water shortages, I dunno.

[Kooky]

Well, I like high Aussie interest rates

Self self self

Charities in Oz are certainly feeling the effects of the GFC, in more ways than the obvious one.

[Morrolan]

1. the overly cautious interest rate policy of the RBA, caused by an irrational (Keynesian) fear of inflation, which created interest rates that were way too high relative to the economic situation. regretfully, it seems the RBA hasn't learned anything as they have started increasing interest rates again way too early and aggressively.

Well, I like high Aussie interest rates

Now, what about the world food shortage scare, huh? This started up in the media just before the recession and, presumably once the media has got fed up with reporting about the recession, it'll be back on the front pages again. Won't that be a big boost for the food producing countries of the world? I guess that includes Oz though if there's problems with water shortages, I dunno.

there is no food shortage. there is an issue with food crop being used for fuels, which would lead to increased destruction of natural habitat. but that only comes into play if the oil price is above USD 100/barrel. below those levels turning soy or palm oil into fuel just isn't economic.

[Morrolan]

and Dr Doom predicts the next one:

Kaufman warns of commodities bubble

gold has been going nuts lately, much to my surprise. the fundamentals do not support it (they never really do in gold) and major pain is waiting to happen...

[baloo]

I can't work out whether this rapid pull out of the doldrums is

a) Proof that us doom and gloomers were wrong
b) The mother of all dead cat bounces
c) The start of Hyper Inflation.

[Morrolan]

i choose b).

what do i get when i win?

[baloo]

i choose b).

what do i get when i win?

If you're right, and you're clever, you should be able to buy a small developing country.

[Morrolan]

i choose b).

what do i get when i win?

If you're right, and you're clever, you should be able to buy a small developing country.

[Dinosaur]

and Dr Doom predicts the next one:

Kaufman warns of commodities bubble

gold has been going nuts lately, much to my surprise. the fundamentals do not support it (they never really do in gold) and major pain is waiting to happen...

I think Dr Doom sucks.

[Morrolan]

and Dr Doom predicts the next one:

Kaufman warns of commodities bubble

gold has been going nuts lately, much to my surprise. the fundamentals do not support it (they never really do in gold) and major pain is waiting to happen...

I think Dr Doom sucks.

i wouldn't know, i've never met him that intimately.

[Mr Oz]

I can't work out whether this rapid pull out of the doldrums is

a) Proof that us doom and gloomers were wrong
b) The mother of all dead cat bounces
c) The start of Hyper Inflation.

I think it is a combination of b and c. Its been the money printing machines that has created the bounce but in the end without a long term uptick we could be using wheelbarrows of money to buy a loaf of bread. No not really but hyperInflation is a real possiblity if china decides to let go of the currency pegs and stops buying US treasuries. Then the USD will collapse.

[baloo]

hmmm, I think people are hurting more than the media realises.

I was just able to book a private room for Mezza9's Sunday brunch on the Sunday before Christmas. They're normally booked out in early November.....

[Burbage]

there is no food shortage. there is an issue with food crop being used for fuels, which would lead to increased destruction of natural habitat. but that only comes into play if the oil price is above USD 100/barrel. below those levels turning soy or palm oil into fuel just isn't economic.

The problem is that the crop they should be turning into fuel is the one that isn't a food but people are addicted to and it commands too high a price to turn into just ethanol. And instead of driving our cars it's driving the obesity crisis.

[Mr Oz]

The problem is that the crop they should be turning into fuel is the one that isn't a food but people are addicted to and it commands too high a price to turn into just ethanol. And instead of driving our cars it's driving the obesity crisis.

Maybe they should have liposuction transfer stations where exchange you unwanted pounds for high grade ethanol.

[Morrolan]

sjeez, the day Washington was duped into saving the big US carmakers is already one year ago...

[Morrolan]

so, everybody ready for the next round? Greece in default according to S&P.

and Greece has only 360 billion Eur in debt; Italy has EUR 2 trillion...

[Fat Bob]

I thought they were still using lira when I saw the number for Italy!

[baloo]

What joy.

[Morrolan]

I thought they were still using lira when I saw the number for Italy!

no shit... it's 120% of their annual GDP. considering the trouble the EU has to "help" Greece, Italy is going to be impossible.

of course, it is only a side-show to the US, but stil a major risk to the world economy.