"TcisbOSS, house prices generally lead unemployment which is a lagging indicator, not the other way around, plenty of examples across the world in last 5 years of this. "
Good point. Macrobusiness blog has done a great job pointing this out with a slew of data in the last 6 months. It's fairly obvious though imo, the wealth effect also works in reverse. When asset prices are rising sky high people spend more, when they don't it's the opposite, leading to a reduction in aggregate demand. House prices down 11 of the last 12 months, no coincidence job losses are starting to mount, which ofcourse = negative feedback loop. Just read that Mortein is ditching 200 factory jobs in Sydney.
A high dollar certainly isn't helping manufacturing atm, which is about four to five times larger than mining industry in terms of people employed. A depressed stock market is also hurting investment prop holders. Most boomers who have significant property holdings are also negatively gear into shares, and have seen their super holdings and other retirement nest eggs held in equities shrink.
