neddy;851191 1 The Anglo-Saxon uses the Cheap Debt model said:
Ah the good old capitalist boom bust cycle. Add to that the fiat currency argument. Add to that cheap credit/money. We see Europe, US in one camp. Too much debt. Looking at Government Debt AND the critical household debt, the US and Europe are tapped out. We are expecting slow growth there for many years to come as shades of Japan's zombie bank crisis 20 years ago are appearing in Europe. European Banking System is basically insolvent. Banks worldwide hold Greek, Italian, Spanish debt. In USA Consumers are paying down their household debt from 2007's 300% of GDP to 260% today. The Americans are saving again. A few more years of deflation to go, the rich will take a big hit. Meantime the developing world is catching up to the developed world. Don't you just love globalization? And to those who cried when China was admitted to the WTO....
A standout among this sorry state of affairs is, as you stated, Australia. With a Government Debt of 25% to GDP, who can boast such fiscal health in the Western World? Canada is at 72%, the USA is worrying at 90%, as is Germany, but nowhere near as bad as Japan's 220% or Greece's 160%. In Singapore we have more debt at 98%. The other worrying debt - household - is at records in all countries including Australia, but at least the Australian government is far from broke, and you have balanced a budget in recent years. In Singapore we are "rich" because of our budget surplus! We have alot of public and private debt.
The developing world is catching up to the slow growing developed.The entire China growth model is considered the way to go, producer based to service/consumer based, but with consumerism accounting for 30% of GDP the switch to consumerism in the next 5 year plan means letting the Yuan appreciate, wiping out is exporters, spiking unemployment and increasing the riots there. How will they transition? Inflation is high there. We see it much higher than the government reported 6.1%. We see Government infrastructure investment there @50% of GDP unsustainable. We wonder what this means for commodities should the Chinese system unravel and sink us all, despite the Chinese stating they will build 20 cities a year. There are too many economic, political, social and environmental issues that cant be ignored - but if not for China - where else can we put our money today? We are kept awake at night when the Chinese tell us debt to GDP is 20% when Dragonomics tells us its closer to 80%! So how can the Chinese save the world when they seem to have their own problems? Can we trust the Chinese stats/figures? That's the question today For the record - I dont listen too much to what Marc Faber and Roubini have to say, but I do respect Jim Chanos - he's usually right and that wily Andy Xie is spot on.
I wonder what you think of all this living there in the middle of the mining centre there in Perth? What happens when the resource boom ends?
$130,000 a year to live in Perth is alot in my view - $170,000 SGD!!! What's the median income there? Oh well at least in Perth you can get out and see places. I have fond memories of the Margaret River, so you are lucky there
