AUD goes past 90

[wavelandscott (Scott)]

While not an expert at all I would say that there are some short term advantages to a weak USD$...among them that it makes US made goods "look" cheaper overseas. This increases sales at manufacturing companies like Caterpillar and John Deere, GE etc. which leads to more jobs created which in turn helps drag the US out of the "cycle"...

It also encourages overseas companies to make investments in the US which further stimulates the US economy...

While long term a weak USD$ may not be helpful, it is not necessarily a thing to get too worked up about.

A key factor in the AUD$ gaining is the much higher interest rates you have in Australia...

For what it is worth, one of the "best" investments I've got going at the moment is in the AUD$ sitting in an ANZ account that I haven't converted yet...most of that money went to Australia at an exchange rate of 0.48/0.49...in USD$ terms that ain't a bad gain!

[erick (Eric)]

Who bought a batch of filters recently @0.82 thinking "Get in fast before it drops!"



Now the main question - that pile of super I threw 100% into shares earlier in the year while they were still dropping but have since gone gang-busters - when do I pull it back into a more balanced portfolio

[casstony]

Originally Posted by erick

Now the main question - that pile of super I threw 100% into shares earlier in the year while they were still dropping but have since gone gang-busters - when do I pull it back into a more balanced portfolio

My guess is sooner rather than later. Nothing has been fixed in the major world economies. The main change is that excessive private debt is now accompanied by excessive government debt, the purpose of which is to give the illusion of an improving economy.

Banking that large profit now is good risk management IMHO.

p.s. I'm probably wrong so don't take any notice of me .

[Kal (Andrew)]

Originally Posted by DavidU

How much are they in debt?

Going by wiki gross debt is close to 10 trillion link

The total has to be taken in context of the GDP though, so debt as a % of GDP is probably a better indicator, there are links to that in the wiki article.

[renormalised (Carl)]

Originally Posted by Omaroo

Don't buy telescopes - buy gold! There are plenty of people predicting a second market crash soon... and even bigger than before. It's called a C-wave (the C's the biggest drop in A-F sawtooth, long story), anyway it's imminent and it's across the whole market - just like last year. So this could be "it". Not so much Armageddon but maybe damn close. After the 1929/30 kaboom, the next crash happened in 1932 - and the economies didn't return to the same level until 1954. I think this is that 1932 crash coming now ... makes sense because we've sped everything up through stimulation.

This last 6 months of growth have just been mass-psychology at work. It's just been a sort of bounce-back because everyone believes politicians and media when they say things are on the up and up - problem is they really haven't got a clue. Weird how people just want to hear good news and then don't think any more about it. Sigh. Actually, it did look pretty good there for a while... just a fancy delusion sadly.

How to survive - well here's the problem, with inflation (I know it seems impossible but bear with me) comes devaluation of dollars - not an Aussie dollar problem perse but the absolute death of the US$. And believe it or not we're all connected really tightly (just look at last October). Still, at least, there is that: the A$ will rule unless the govt screws up by doing what the US tells them to do (that'd never happen!). Give me a gold or silver coin over paper money any day!

So - the only stocks/shares to own are: gold, rare earths, precious metal, uranium, natural gas and not oil. That's it.

Fun, eh?

These things, and only these things, will go up over the next 12 months, probably longer. Buy these things asap: $1 in a gold stock today will be triple this time next year, the rare-earths will quadruple as they're essential for batteries, generators, mostly DC-power stuff which, for some reason, everyone's betting the farm will save the planet. Gold's safer.

OK, granted all my predictions in this area are probably on the early-side ... but this is really looking bad ... way worse than it did this time last year and irreversible. At least the Aussie dollar will exceed the US$ probably before the year's out, but that's not really the good news it sounds like.

Hmm... maybe a nice PME before I can't afford one?

I agree with you , Chris. The best things to be in now are gold and such. Anyone who invested in gold a year or two ago will be making a killing now, and in the near to medium term it'll get even better for them. Looking at the way things have been going, and the behaviour of the money institutions of late, nothing has changed. It's only a matter of time before the stimuli that these governments have been using to prop up their economies (and those banking entities) starts to come back to bite them on the backside and/or runs out of steam. Once that happens, the economies are going to start to freefall and God knows where they'll stop. By then, it'll be best to steer well clear of paper monies and such. Government bonds won't be so great as they'll have nothing to back them up unless they use the gold standard again to underpin their currencies. Which in any case they're not going to do. They may be able to avoid it with a lot of sleight of hand and a lot of luck, but if the crash comes, be prepared for another 1929 crash. Best to get a little stash together now, then if and when it does happen, take advantage of the situation by investing in those things that will eventually recover well from the crisis. Generate your own chances for making do whilst the crisis continues.

[Rod66 (Rod)]

The economy is like fashion, trends come and go and peaks and troughs will always occur. Confidence is the only thing that we have to be wary of, lack of it causes nasty things to happen and if its fashionable to lack confidence, guess what...
Debts have always been here and always will be, its what fuels the economy. What I fear is the lenders becoming risk adverse, ie they don't lend money resulting in companies unable to invest in growth, causing another slowdown. Profit by the way is a silly by-product of accounting and doesn't mean a great deal. (just ask Alan Bond). Debt is the key - if the tap gets turned off or squeezed too tight, the economy starts slowing.
Of course if the lender is an idiot and lends to people that can't pay or for something that is way overvalued... well the lender should be caught, drawn and hung.. This is the reason we're still in the game folks, our banks and government did something right after the 1987 crash. Pity the USA didn't... now start lending you @!%$&%... or we really will have to go buy gold bars because they'll be the only thing worth a brass razoo.

PS I believe the worst is over and I want to see Omaroo cluck like a turkey.

[Robh (Rob)]

The biggest problem with the share (financial) markets are the unseen factors the "experts" didn't see coming. Whichever way the Dow swings, the rest of the world follows. Investors, including fund managers, tend to be swept up in the euphoria of the investment herds. The smart ones make money when markets are going down. Most of the current problems were caused by greed, ignorance and poor investment decisions.

The share market indices were at their highest around October-November 2007; Dow was 14164 and All Ords was 6873. In March 2009, the indices dropped to Dow 6547 and All Ords 3111. The Dow was 46% and the All Ords 45% of their maximum highs. The current values are Dow 9786 and All Ords 4756; 69% and 69% of their max highs (funny that!). If anyone says the share market has overheated, on what are you comparing the figures?

Truth be told, any investment is a gamble and pretty much every sector is cyclical in its fortunes. Gold fever is on and the herds are on the move!

Regards, Rob.

[Nesti (Mark)]

Originally Posted by picklesrules

1.4 trillion i believe on latest figures

US$12 Trillion in immediate debt, US$56 Trillion over the next 1-2 decades (all aspects of the US economy).

US$2 Trillion P/A cash increase and slowly being pulled back.

[Nesti (Mark)]

Originally Posted by Omaroo

I really hope that I "gobble gobble" all the way home because I'm wrong Matt. I really do.

I don't think China will allow your Armagedon to happen. And since every country is trying their best to avoid recession, were in for a long haul inflatory period (Japan's only now climbing out of a 20 year recession). Give inflation 2-3 years to build up.

I believe what we're seeing is related to China backing off on bonds and greenback buying now, as well as another surge of wealth into the Aisan markets. This trend of China gobbling up as much primary assets that come available has the markets, as always, focusing on the money trail. They are most definately at the helm.

The US, on the other hand, are scrambling to create yet another bubble...carbon trading...and are applying the screws.

As there doesn't seem to be a safe, sure bet in sight to place your money. Prescious metals should climb progressively.

And for those who don't believe China's at the helm, well, this is the first time I have EVER seen Chinese diplomats shaking hands and smiling. What does that say?!

[renormalised (Carl)]

this is the first time I have EVER seen Chinese diplomats shaking hands and smiling. What does that say?!

They got a pay rise off the chairman

[Nesti (Mark)]

Originally Posted by Omaroo

To answer your question I reckon interest rares will have to rise substantially. Only my opinion, and a guess at best.

If interest rates climb substantially, it will cause hyperinflation and another great depression, but not in the US, it can happen right here.

Back in the 80's interest rates hit what? 19-20%. If interest rates today hit even 13%, you can strike out most of the middle class. There will be a huge fire sale on properties and loan defaults alone will kill us and all but the biggest banks too. We have too much debt and not enough income to go back to the 80's.

The lessons learned (and forgotten) are almost not applicable. We have never seen this situation before.

Also, don’t expect this to be a short sharp deleveraging period, where people will pay off their debt in a few years and move on, this is gonna go on for decades. If we hit 6% inflation, and it lasts 10 years, say goodbye to 50% of your net worth. If Boom Bust cycles are tidal waves, then inflation is a Tsunami, longer and much more destructive. Ergo Keating’s words “the recession we HAVE to have”.

Money talks and BS walks. I just offloaded 1.6M of debt simply because the risk is so present now. I feel it is better to make a poor decision in a buoyant period, than to be frozen in fear of doing anything and hitting the wall in the fire sale period.

I only know that now is the time to play ultra safe, and I’ve absolutely no idea where to put money safely, not a clue.

[Nesti (Mark)]

Originally Posted by renormalised

They got a pay rise off the chairman

LOL, nothing like a bit of that Mao-Money!!!

[Dennis79 (Keith)]

Try to cover a few posts in this one.

Remember investing in gold also adds in the exchange rate risk. Lately the gold pice has gone up but as it is priced in US dollars and the AUD/US rate has gone up even further, the gold price has barely risen at all in OZ.

I would be looking to convert to cash when the ASX 200 is close to 5,000.

Confidence is great but it doesn't achieve much, reality is still king.
e.g. I can be super confident that I could play cricket for Australia next year but it will never happen.

As for interest rates, I think the RBA will raise them a couple more times until the next crash when it will have to lower them again, maybe even lower than 3%.

US government debt is about 12 trillion, go to usdebtclock.org

Energy and food stocks are my bet.

[renormalised (Carl)]

Look at things like this....if we're heading for a catastrophic downturn at some stage, we go into depression for awhile, a world war starts and (providing there's no major nuclear exchange) then we get spectacular recovery and major technical advances

[Nesti (Mark)]

Originally Posted by Dennis79

Try to cover a few posts in this one.


US government debt is about 12 trillion, go to usdebtclock.org

Energy and food stocks are my bet.

Agreed. 12 trillion as it stands, but US gov forecasts 56 trillion in the long run. Of course that includes healthcare, social security issues, baby boomer retirement benefits etc etc.

I have been advised on energy and food before, but they only seem to pay off nearing the end of...whatever happens...not during the period.

Hell, just buy a farm!

[Nesti (Mark)]

Originally Posted by renormalised

Look at things like this....if we're heading for a catastrophic downturn at some stage, we go into depression for awhile, a world war starts and (providing there's no major nuclear exchange) then we get spectacular recovery and major technical advances

LOL, yeah, and to finance the war the US gov borrows money from the wall street banks...the same banks and the same money from the bailout. Our gov just takes it from our super...if there is any left that is.

To recover the economy, interest rates are lowered, we borrow big, have another party, buy more TVs and go bust again.

Sounds like a plan to me.

[renormalised (Carl)]

Originally Posted by Nesti

LOL, yeah, and to finance the war the US gov borrows money from the wall street banks...the same banks and the same money from the bailout. Our gov just takes it from our super...if there is any left that is.

To recover the economy, interest rates are lowered, we borrow big, have another party, buy more TVs and go bust again.

Sounds like a plan to me.

Which means we go through the same shebang over and over again... unless we decide to change our entire system.

[multiweb (Marc)]

Some tough and scary times ahead I reckon.

[mick pinner]

the reserve bank raises interest rates with more to come in the short term, now we are told that unemployment is expected to rise by a min of 150,000 in the short term, does anyone really believe that the people that control the monetary issues in this country know what they are doing.

[Nesti (Mark)]

Originally Posted by mick pinner

the people that control the monetary issues in this country

Of course, the banks know EXACTLY what they are doing.