Interesting post. In my opinion, this is a very bad sign for...

Interesting post. In my opinion, this is a very bad sign for Australia and the Baltic Dry is spelling very tough times for us ahead.

The boys at the top of Oz know this. That 1% rate cut was a hugely preemptive move. I don't think Stevens would make a move without knowing that there are some pretty serious developments afoot. The Rudd stimulus package is also a very inflationary measure. Rudd knows big time deflation is coming and action needs to be taken now (Personally, I think it is the wrong action, but anyway).

China has started asking us not to send all of our Iron Ore. During the boom, there were reports of massive stockpiling of resources in China due to the inflating nature of the resource prices. Now that we are slowing down, why stockpile - just dwindle your reserves and pay nothing now and less later. This gets reflected very rapidly in the Baltric Dry and points to one hell of an up and coming deflation - credit market problems solved or not.

I think it might be a good time to move some money out of the AUD. With our massively overpriced real estate and enormous debt bubble, we could face a harder landing than the USA. I know many people will ridicule this statement but to think we are immune is silly.