by Kris Sayce on April 24, 2009
We’ve been banging on the property bubble drum for some time. As the old movies will tell you, you’re safe until the drums stop beating. Well, we’re going to beat them for a bit longer because the bubble is still expanding, but I’ll get back to that in a moment.
First I want to explain the secondary reason why we’ve focused so much attention on the property bubble. Sure, when house prices fall and the unemployment rate rises even further, things are going to get pretty bad, but…
It will be nothing compared to what the property market is showing us about the effects of inflation.
In recent months many commentators, economists and analysts have scoffed at the idea of government stimulus programmes being inflationary. They’ve trotted out some fairly typical reasons why it couldn’t possibly lead to inflation.
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by Kris Sayce on April 15, 2009
Your editor isn’t immune from making the odd error. Yesterday we made a corker. We’d like to blame it on the editor. So we will. But that means we have to blame our self.
As several on-the-ball Money Morning readers pointed out via the Money Morning mailbag (moneymorning@moneymorning.com.au), yesterday we tried to explain that a big wad of cash thrown at the private sector didn’t necessarily equal a big pay-day for private sector companies.
And it also didn’t mean a sustainable boost to the share price either. Your editor drew on the example of CSR, which had risen by 10% immediately following the announcement of the $42 billion government stimulus package in February. However, since then the share price had fallen by nearly 50% before a modest recovery.
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by Kris Sayce on April 7, 2009
On the agenda today of course is the Reserve Bank of Australia decision on interest rates. Everyone seems to be offering their opinion on what the bank will do, so why should we be any different.
In our opinion the RBA will cut/raise/hold (delete as appropriate) interest rates at today’s meeting.
In other words, we’ve got no idea. And neither do most of the talking-head economists you’ll watch on the news today leading up to it. But one thing is certain, they’ll turn “I don’t know” into about five minutes of dross.
And the market isn’t completely certain either…
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by Kris Sayce on April 2, 2009
Despite the doom and gloom in the mainstream media about the lower than expected retail sales numbers, it is actually a good sign. In the short term anyway, but…
In the long term it could be disastrous. I’ll get to the reasons for that in a moment, but first a look at the numbers.
Whichever way you look at it, it was a big fall. Seasonally adjusted retail sales in February 2009, were 6% lower than the same period last year. And that’s a big difference.
As for the comparison between February and January this year, the drop was even more significant. Seasonally adjusted, retail sales declined by 2% in February against January, but in real dollar terms, the fall was a whopping 12.9%.
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