The Rocky Road Ahead Will be Bumps and Humps!

The Rocky Road Ahead Will be Bumps and Humps!

Just don’t rely on your global satellite – its accuracy can easily get you lost! We are now travelling at two speeds and there is no turning back. After all, we are most fortunate to live in the world’s fastest growing economy and should note that house prices merely treading water and unlikely to dive.

This week, the International Monetary Fund (IMF) issues global recession warning that the US and the eurozone are at increased risk of falling back into recession, a move which it says could threaten other economies worldwide. IMF chief Christine Lagarde, said the economic crisis in developed economies had entered a “dangerous new phase” worsened by “feeble political leadership”. No she was not referring to Australia’s very own Fort Fumble!

I then went to Business Spectator to get an Australian interpretation of what the IMF was telling us where immediately, I found fools rush in by Alan Kohler. “Reading the IMF’s latest World Economic Outlook this morning, it’s hard to escape the conclusion that the challenges facing global economic policymakers are simply too much for their brains to manage. The need for massive budget cuts while supporting economic growth, as well as simultaneous loose and tight monetary policy to support the banking system while controlling inflation would be difficult enough if the world had a crop of high quality leaders working together for the global good. As it is we have a bunch of maniacs and fools operating in largely dysfunctional political and administrative structures. As the IMF says: “The risks are clearly to the downside.”

Now keep your eyes on that Rocky Road. There is a beaming light at the end of the tunnel.


That light? Wayne Swan named world’s best Treasurer by Euromoney magazine or as John Symond put it – “it must have been a pretty weak field”. Charlie Aitken wrote on his “Ringing The Bell” blog “if Wayne Swan’s the best in the world, it does partly explain the mess we find ourselves in.” Probably the most accurate analogy was that this is the Steven Bradbury Award of Finance Ministers.

Let’s also congratulate some of the past Euromoney Award Winners.

  • Euromoney 2006 Best Investment Bank – Lehman Brothers (Gone 2008)
  • Euromoney 2006 Best Equity House – Morgan Stanley (Bailed out 2008)
  • Euromoney 2006 Best at Risk Management – Bear Sterns (Gone 2008)
  • Euromoney 2006 Best at Investor Services – Citigroup (Bailed out 2008)

Honoured as the world’s best treasurer, Wayne Swan is set to give advice to G20 leaders which is like me being selected at five eighth to replace Darren Lockyer for the Broncos sudden death play -off against Manly tonight. Wayne Swan is now speeding down Rocky Road to accept his award although his Howard/Costello budget inheritance may well be lost in the fanfare.

Another week of financial market fear factor: our dollar dives in black day due entirely to the bleak assessment of the US economy as shares plunge below 4000 points. The US Federal Reserve unveiled a $US400 billion stimulus plan which in itself is controversial, with many believing that the troubled US economy needs to self – correct without stimulus. What is happening resonates through our markets as home buyer confidence declining more rapidly: Glenworth. It is much easier to address confidence as against a dysfunctional economy which is not the case in Australia.

To the Australian home front, where I see the biggest problem facing our property markets is centric to confidence as against economic woes. The Global Financial Crisis (GFC) taught us the need to concentrate on balance sheets over easy credit and carrying far too much debt. Australian households have shifted to a much stronger savings regime – demand shifting to services: RBA.

Rich watching their pennies after almost losing their assets and income which clearly demonstrates the levels Australian households will go to so that they can protect their castle. Sydney housing market will weather economic storm: John Symond which was backed up by we can handle this crisis, Commonwealth Bank. At the end of the day the markets too pessimistic on Australia: RBA.

I love this graph – Macquarie Economics Research noted:

  • Consumer sentiment was stronger than expected in September, bouncing 8.1%, following sharp declines in confidence in both July and August. All components of the index improved with expectations of economic conditions over the next 12 months rising by 16.6%. More important, were the 11.2% improvement in households’ perception of their current finances and the 9.5% improvement in expectations for the state of their own finances in 12 months time. This is significant, given that consumption generally follows households’ expectations of their own finances rather than expectations of activity levels in the economy as a whole. Nonetheless, it is worth noting that both of these indices remain 12% below the long – term trend.

Absent a total meltdown, sharp rate cuts unlikely: Christopher Joye which was later reinforced by RBA deputy governor Ric Battellino – Reserve Bank kills rate – cut hope. Predictions of rates dropping to 3.25 per cent in twelve months time, won’t come to fruition and I see this as good news. Why? Simply because Australia’s predicament does not in the least resemble the financial woes that have infected the US and European economies. What we are lacking is that ‘ring of confidence’.

If it does get ugly, our RBA has plenty of room to move on the cash rate – much like March 2008 when it dropped the cash rate from 7.25 per cent down to 3.00 per cent in April 2009. This time around we have the cash rate sitting at 4.75 per cent (since November 2010). If the RBA was slashing the rate, it would be clear that our economy was in serious trouble.

And don’t forget, we have the world’s greatest Treasurer!

    MOSMAN – 2088


    • Number of houses on the market last week – 111
    • Number of houses on the market this week – 116
    • Number of apartments on the market last week – 93
    • Number of apartments on the market this week – 86

    CREMORNE – 2090

    • Number of houses on the market last week – 14
    • Number of houses on the market this week – 16
    • Number of apartments on the market last week – 26
    • Number of apartments on the market this week – 33

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 12
    • Number of houses on the market this week – 13
    • Number of apartments on the market last week – 80
    • Number of apartments on the market this week – 78

For this week’s sales in Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

Cheers ^__^

7 Responses to “The Rocky Road Ahead Will be Bumps and Humps!”

  • Ann says:

    I wonder if all this uncertainly will force the Government to delay the Carbon Tax?

    Or will Windsor and Oakeshott or Wilkie make the move?

  • Robert, Wayne Swan is giving advice to G20 leaders, you’ll be a great replacement at five eighth tonight! She’ll be right, just get out there son and wing it like Wayne.

  • Hotly Spiced says:

    Could one of the independents PLEASE cross the floor so we can be put out of our misery?

  • Ann says:

    Hi Hotly Spiced

    Difficult situation.

    The Independents don’t want an election, cause that means they are looking for a job two years before they need to. You have your income, pension and perk to consider.

    They won’t cross the floor to side with Abbott, as they detest him, also Windsor and Oakeshott hate The Nationals. The only way it could happen is if someone else raises their hand to challenge Abbott and they support that person. I have no idea who that person is. I suspect it is someone on the fringe and possibly not even on the front bench.

    On the Labor side, Rudd is ‘peoples favourite’ but his colleagues don’t like him. Shorten and Combet have never had a real job or experience outside Unions or ALP workers / politicians (scary), so that leaves Smith.

    However, when you look at the front bench of BOTH sides, we don’t have any stars. Why would you be a politician with all the scrutiny and flack that follows.

    We are certainly in a mess.

  • Fair assessment Ann,

    I totally agree although what will bring the Gillard government unstuck will be the poker machine taxes. The Australian Hotels Association (AHA) and Clubs Australia have commenced a ferocious attack on their local Labor and Independent constituents and they don’t like it one bit – it’s very up close and personal.

    Whilst watching the Mighty Sea Eagles dispose of the Broncos last night Gus Gould on live television mounted a stinging criticism of the tax on how it could close down the local leagues clubs – a great free advertisement!

    So it is actually Wilkie who is Gillard’s – “Achilles Heel” given the AHA and CA have the numbers by a clear majority otherwise known as the people. A vast majority of Labor MP’s and Independents will find themselves at Centrelink.

  • Snow White says:

    Threat to Australia ‘s Financial Security

    Quoted from Ross Greenwood of Money News.
    What is a Billion?
    How many zeros in a billion???
    This is too true to be funny…
    The next time you hear a politician use the word ‘billion’ in a casual
    manner, think about whether you want the ‘politicians’ spending YOUR tax

    A billion is a difficult number to comprehend, but one advertising agency
    did a good job of putting that figure into some perspective in one of its

    A. A billion seconds ago it was 1959.
    B. A billion minutes ago Jesus was alive.
    C. A billion hours ago our ancestors were living in the Stone Age.
    D. A billion days ago no-one walked on the earth on two feet.
    E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our
    government is spending it.


    Quoted by: Ross Greenwood of Money News..

    Right now the Federal Government is at pains to tell everyone – including us
    the mug-punters and the International Monetary Fund, that it will not exceed
    its own, self-imposed, borrowing limits.

    How much? $200 billion. And here’s a worry.
    If you work in a bank’s money market operation; or if you are a politician;
    the millions turn into billions and it rolls off the tip of the tongue a bit
    too easily. but every dollar that is borrowed, some time, has to be repaid.
    By you, by me and by the rest of the country.

    Just after 5 o’clock tonight I did a bit of math for Jason Morrison ( Sydney
    radio presenter). But it’s so staggering its worth repeating now.
    First though; here’s what Ex-P.M. Rudd has been saying about – what he calls
    – these temporary borrowings

    Remember Those Words : Temporary Deficit.

    The total Government debt could end up around $200 billion.
    So here’s a very basic calculation … I used a home loan calculator to work
    it out….. it’s that simple..
    $200 billion is $200,000 million.

    The current 10 year Government bond rate is 4.67 per cent. I worked the loan
    out over a period of 20 years. Now here’s where it gets scary ….. really

    The repayments on $200 billion, come to more than one and a quarter billion
    dollars – every month – for 20 years. It works out we – as taxpayers – will
    be repaying $15.4 billion in interest and principal every year .. $733 for
    every man woman and child – every year.

    The total interest bill over the 20 years is – get this – $108 billion.
    Remember, this is a Government, that just 18 months ago, had NO debt. NO

    In fact it had enough money to create the Future Fund, to pay the future
    liabilities of public servants’ superannuation, and it had enough to stick
    $20 billion into the Building Australia Fund last year …..

    Alan Jones Comment…… this is frightening: Hmmmmm??

    He continues… a note that was sent to me which explains that the six
    leading members of the Government, from Mr Rudd down, the top six have a
    collective work experience of 181 years, but only 13 in the private sector.

    If you take out of those 13 years the number that were spent as trade union
    lawyers, that total 11, of the 181 years, only two years were spent in the
    private sector.

    So out of those 181 years:

    – no years spent running their own business
    – no years spent starting their own business
    – no years spent as a director of a family business or a company
    – no years as a director of a public company
    – no years in a senior position in a public company
    – no years in a senior position in a private company
    – no years working in corporate finance
    – no years in corporate or business restructuring
    – no years working in or with a bank
    – no years of experience in the capital markets
    – no years in a stock-broking firm
    – no years in negotiating debt facilities with banks
    – no years running a small business
    – no years at the World Bank or IMF or OECD
    – no years in Treasury or Finance.

    But these people have plunged Australia into unprecedented debt, and now
    threaten to torpedo employee share schemes, which they plainly don’t

    Well, in a way you can’t blame them.
    It’s clear the electorate did not do their homework, because the Gov’t is
    there by right.

    If you have read this you may like to pass it on to your friends to help
    educate a you, them and I, will be repaying the above.

  • Ann says:

    Hi Robert,

    I think Wilkie will modify his demands before he ultimately brings down the Government. Some compromise that will be a win for him and a win for Government….

Leave a Reply

Your email address will not be published. Required fields are marked *