Archive for February, 2010

Where to from here?

February 9, 2010 Leave a comment

It’s a confusing picture right now. 

First, the easy calls.  Stocks are out.  Economic growth set to decline, access to capital restricted, interest rates due to spike up – all bad for stocks. 

Housing is very difficult.  Normally I’d say go for it.  But Keen says housing could decline 40% over 10 years, leverage cannot go any higher and housing has only two ways to go right now – sideways or down.  If I had money in stocks I’d get out in favour of housing but even then I wouldn’t be happy with either.  Perhaps find the right house in the right street and forget the market.

Oz govt bonds look good to me.  Low govt debt levels right now, and increased demand from banks because of the APRA liquidity rules.  What’s not to like?  Well if interest rates spike worldwide either the $A could go down or interest rates could rise here.

Alternatively, keep it in cash and have a forex account.  Move into Euros now, then back into $A when the $A falls. Stay away from the US$.  It can’t go any higher.

Physical gold is always good, but it’s being battered right now on a deflation (debt) trade. 

Money supply is on the debtor’s string.  If the debtor doesn’t pull on the string the money supply doesn’t spike up.

Categories: Predictions 2010

Oz housing to blow up sooner rather than later

February 5, 2010 Leave a comment

MISH has good reason to think the Oz govt is stuck in a Misesean crack up housing boom that cannot be sustained.