how would we hold up?, page-3

Alan Kohler agrees with me (or me with him)

from the Eureka repoprt

Dear xxxxx,
Im convinced that these are extraordinary times for investors. It is vitally important that each and every person involved in the Australian stock market understands the issues that are affecting investing today and investments in the future.

The outlook overseas is grim but Australia occupies a very unique place in the global economy and in my opinion, is a six-star investment.

Lets take a quick whip-around the world. Europe and the United States are facing the prospect of 10-year recessions because of intractable fiscal imbalances. Japan has the highest government debt in the world, but seems to be trying to recover (good luck with that!). The other emerging markets look fine, but you cant safely invest in them directly particularly in the biggest and most rapidly emerging market of all, which is China.

Australia, on the other hand, is travelling beautifully. Its exposed to the new growth engines of the world, like China and India, but also providing a hedge against a breakdown of the emerging market miracle because, unlike China, our economy is mostly based on domestic consumption and investment. We are in a virtuous cycle of low unemployment, high investment, improving fiscal balance, low inflation, and strong terms of trade.

Im not saying things are perfect or entirely without risk, but Australia does seem to provide a unique combination of blue sky in the emerging world and insurance against the risks in the developed world."