Australian Spending like its stuck in 2006

Here is a link from SMH this morning for those interested.

BT sees $A 'base case' at US40¢


The Australian economy's external position is worsening and the currency will fall below US50¢ once foreign investors realise the nation is spending like it is "stuck in 2006" and rates decline, a top bond fund manager argues.

Vimal Gor, who is head of income and fixed interest at BT Investment Management and one of the market's more bearish thinkers, says he has been too optimistic on the Australian currency at US50¢ and "US40¢ is now our base case". The Australian dollar is around US74¢.

Australia has become the little weedy kid no one wants on their team.

Mr Gor correctly predicted that the Reserve Bank of Australia would cut interest rates, which it did in May, and he sees the cycle finishing at 1 per cent "if not lower", and the Australian economy regarded as an emerging market.


Forecasts of US50c for the Aussie were too optimistic, Gor reckons.

"Low rates in an economy like Australia will genuinely be a test of the stability of an economy that has a very specific relationship with the rest of the world," he said in his latest monthly update to clients.

 

What does a "specific relationship to the rest of the world" mean? Curiosity

 

I guess how we are perceived, like he said... the weedy kid no one wants on their team, weak economy

 

yes, spending and living like we are all millionaires like back in the good ol days...
Now...let me take a 1/2 hr coffee break, 6 dollar cuppacino...shoot the **** with the barista, etc...

 

I'll give you 6 dollars for a coffee if I never have to deal with a barista.

 

Come to Perth where you can have both

 

Me no likey.
Or gusta.

 

= mining and minerals producer?

 

The full newsletter post can be found here: BT: Australian dollar going to 40 cents - MacroBusiness
Bulls do not read this !

 

Poppycock.
Unless they say when it will happen, it's just nonsense.

 

Is this the child in the crowd commenting on the emperor's new clothes?
FWIW I think he's bang on the mark re future interest rate movements. Exchange rate predictions - well that's a different story. Its never that simple to rationalise - as its usually more a story about the USD IMO - the aussie battler's just the other side of the equation. Expect the unexpected I say.

 

We (the politicians) definitely have an inferiority complex with regards to our perception by the rest of the world.

A lot of Joe Av public do too...

Can't understand it.

 

I use a similar analogy to explain how John Howard ended up getting elected. Just kept hanging around, last kid picked...

 

If China implodes like most Chinese expect it to, I wouldn't be surprised. And most of our banks hold US dollar debt, which means most of us are actually borrowing in US$.

My view would be to go debt free in the next 18 months, and potentially even liquidate half the remaining debt free properties.

 

Do most Chinese expect China to implode?

 

A lot of business people are quite pessimistic. Not sure about the populace though. That could be a safe sign though, when people are fearful be greedy?

 

Really? Im not sure i agree. Ive lived in 6 countries and find joe public having a superiority complex if anything...unjustified too, i might add.

 

The behaviour of the general globe-trotting public would give that impression; I agree.

A lot of that mentality depends on which group you are in, and/or where you travel to...for eg; the average Bintang swilling footy trip/tradie types in Kuta (or anywhere else) couldn't care less what others think about Aus.

The tertiary educated, greeny/scenic and cultural experience traveller probably would care.

Most media commentators fall into this camp, so this mindset is pushed forward all the time...I cannot ever remember any commentator (or Pollie) saying; "Who cares what XYZ Country thinks about Aus?"

There is a strong PC to all of that.

Could we (as a Country) be doing more in various areas? Always. But we do a bloody hell of a lot already for a very small population, a long way from everywhere else.

But this is not the esteem situation we see here at home from the media and the Pollies.

They are constantly worried by how the world will think of them if the do/don't do XYZ.

We are a terrific Nation, extremely multi-cultural, prosperous, great lifestyle, and social programs, amenities, generous (foreign aid), and so on and so on.

We do not need to prove to anyone how good or kind, or Green, or committed to GW etc we are, yet the Gubb and the media who follow the Gubb actions constantly are.

They carry on like the little kid who feels they can never satisfy the cold and distant parent, constantly looking for recognition and acceptance.

 

That guy is an absolute fool.. never in our lifetime have we seen our dollar at that level. Last it was Goldman Sachs predicting the dollar at 50c mark .. right before it reversed right back towards the 70c+ mark.. I can see plenty of downside, but sub 60c no.

Glad I don't invest with those guys!

 

Well look there's a lot of truth to that too. If these guys were so smart they wouldn't be in their Goldmans or BT job, they'd be running their $200m family wealth.

The last time I read a Goldmans prediction was a few months ago and it was something like US$20/bbl oil price. Obviously $28 was actually the bottom. Now they're predicting $60-70, so it'll probably stay at $50.