Westpac Breakfast
Went to the post Budget Westpac breakfast talk by their Chief Economist yesterday. Short summary: worst environment in 70 years; recovery will be patchy and slow (maybe 3 years); but much more is being done this time compared to 1930s; we will get out of it and then business as usual; Australia better placed than US/UK re debt as % of GDP but current account deficit one of the worst in the world; Western Australia will hold up, but it will feel bad because growth will drop from 5% to 1% whereas the other states have already had to deal with and get used to decline; thought the first home owner's grant will be our subprime as it is sucking in people who should probably not be given loans.
Interesting to hear this and feel the mood of the business guys there (I think 4 women in all). A big contrast to the views of the blogs I follow. There is still a bit of hope/expectation that this is a bit of a recession and just tough it out for a few years.
I feel we are at a pivot point, with Governments doing all they (think) they can to keep people believing it will just be a bump and people don't want to hear really bad news so they want to believe it but still will be scaling back spending, you know, just to be safe.
Martin Armstrong recently told the story of a Japanese investor who bought into the market just at the peak. He asked why he did it and the answer was that the investor's broker had been telling him to get in for 6 years and finally he thought he should. Martin then says it is when the last person has piled in that a bubble busts. I think it is the same on the way down - not until the last person has lost hope will the bottom be found. The green shoots are telling us we aren't there yet. There are still greedy people out there wanting to make up their losses, or optimists that think we are at the bottom.
The question is whether Governments can pull the confidence trick off and keep the green shoots alive. If you don't think this is at all possible, I would suggesting reading this post of mine from last year. I don't think it is possible, but I also never underestimate the gullibility of the average person and their unwillingness to face unpleasant realities.
Interesting to hear this and feel the mood of the business guys there (I think 4 women in all). A big contrast to the views of the blogs I follow. There is still a bit of hope/expectation that this is a bit of a recession and just tough it out for a few years.
I feel we are at a pivot point, with Governments doing all they (think) they can to keep people believing it will just be a bump and people don't want to hear really bad news so they want to believe it but still will be scaling back spending, you know, just to be safe.
Martin Armstrong recently told the story of a Japanese investor who bought into the market just at the peak. He asked why he did it and the answer was that the investor's broker had been telling him to get in for 6 years and finally he thought he should. Martin then says it is when the last person has piled in that a bubble busts. I think it is the same on the way down - not until the last person has lost hope will the bottom be found. The green shoots are telling us we aren't there yet. There are still greedy people out there wanting to make up their losses, or optimists that think we are at the bottom.
The question is whether Governments can pull the confidence trick off and keep the green shoots alive. If you don't think this is at all possible, I would suggesting reading this post of mine from last year. I don't think it is possible, but I also never underestimate the gullibility of the average person and their unwillingness to face unpleasant realities.
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