Yes we do care alright guys great responses. I thought I might share some material from a file I provided for Members in December last year:
So How Does it Play Out Now?
Now we have established that we are in a liquidity trap and that the authorities have changed the definition or are in denial, or have an alternative motive to ignore the fact then we can see how this plays out. This is a slow motion train wreck, as I have said before a debt collapse is a slow collapse.
Authorities will keep pumping with stimulus and whatever they can until we go past the point on the money supply / demand chart on the previous page. This is where they create too much money.
This has to feed its way into another bubble because we have established that it will not feed into growth – not GDP growth because we are in a liquidity trap. So what bubble could be next? We have seen a massive property bubble now collapsed in the USA, Spain, the UK and most parts of the world.
The Australian property boom has come off in line with my warnings and I see the Channel 7 News last night telling us that real estate agents say “buy”, now is a great time to buy – huh is all I can say to that with conditions worsening in debt markets.
Property requires debt to feed any boom, with a surplus of new buyers and at this stage of the bank lending cycle they are tightening loan qualification standards. You have to be an A class client with a good deposit to qualify for a loan, the no doc loans and no deposit loans are drying up and fading away as risk is factored once again with some sense of rational assessment. I think a property bubble could be hard to re-start at present. What about a bond bubble then?
Interest rates are near zero; that is the definition of a bond bubble so we already have one of those. Now the stocks markets have borne the brunt of risk off since 2008...
END
Note we do not have real GDP growth we have continued fresh debt based GDP growth. GDP is growing not business. GDP is just a number that can be manipulated like a balance sheet. Pump in $40B+ of deficit and throw it all around and measure it and call that growth - this is what is happening so Swan can claim victory and so the ALP can claim they 'manage' the economy well I don't buy it!
Yes denial from Swan and all around actually. Yes Gillard blowing horn that is all she does - waffle and politicize and do deals to entrench herself in power and get what she wants. Yes problem to survive with finances intact over coming years. Yes wrong choices made by this and other governments.
