to be or not to be...qe is here to stay, page-5

interesting comment there TB


"I have no problem with our RBA keeping out of it all and with the new government, probably for two terms at least, being conservative we shouldn't suffer the destruction of our currency."

Yes but a strong currency is an enemy of exports. The hollowing out of the manufacturing base in Australia began decades ago, but the high AUD is not helping other sectors, including tourism.

Domestic chaos can still ensure in Australia. I think there must continue to be an unwinding of personal debt and that is also contracting in effect on the domestic economy. For now the low interest rate environment is encouraging a lift in personal spending but I don't think that is sustainable. Consumer sentiment is still nervous.

Elsewhere you have noted Australian currency having safe haven status. This is precisely why our assets, including land and housing are being bought up. This is inflationary in effect for housing, although some sectors seem oversupplied (such as highrise smaller apartments, or luxury apartments) while the high AUD is deflationary in effect on imports.

How it unwinds is going to be very interesting indeed, it's far from simple.

cheers

DV