You might want to have a look at the value of the Aussie dollar at the time of the GFC and compare it to the dollar today. No one in Europe is going to be bringing wads of cash over to Oz to buy houses. When you consider the exchange rate and the growth in Aussie house prices, it just doesn't make sense. I think you need another input to your Ponzi scheme.
The Aussie dollar was close to 1 USD before the GFC (not far off where it is now).
Then the GFC hit, interest rates were slashed, and the Aussie dollar fell to around 0.6 USD.
Are you saying the Aussie dollar won't fall this time, if there is another GFC and interest rates are cut? Why not?
You might want to have a look at the value of the Aussie dollar at the time of the GFC and compare it to the dollar today. No one in Europe is going to be bringing wads of cash over to Oz to buy houses. When you consider the exchange rate and the growth in Aussie house prices, it just doesn't make sense. I think you need another input to your Ponzi scheme.
The Aussie dollar was close to 1 USD before the GFC (not far off where it is now).
Then the GFC hit, interest rates were slashed, and the Aussie dollar fell to around 0.6 USD.
Are you saying the Aussie dollar won't fall this time, if there is another GFC and interest rates are cut? Why not?
If you look at the GBP, Britain being a country that supplies a lot of immigrants, then the GBP was >2 AUD before and through the GFC, with a spike due to the GFC at > 2.5AUD. The Euro did something similar (though it has been more stable post-GFC, so far at least).
This allowed immigrants to come to Aus with a good wedge to fund their new life.
This will not happen if theres another Europe-inspired GFC. If Euros do leave, they a) wont be coming with much b) wont have much appetite for investing in assets, particularly houses.
I think the AUD will drop some in this scenario, but it wont be a huge difference (Euro will also drop) and unless its accompanied by a big drop in property prices in Aus, they will still look very expensive to your average European. GBP could rise against AUD, but my guess is it would take time to get above 2, which is the key threshold to make people view Aus as "cheap" again.
Why this is complicated for people to understand, I have no idea. A China crash of course is another animal - low AUD, lower house prices. That would do the trick.
If you look at the GBP, Britain being a country that supplies a lot of immigrants, then the GBP was >2 AUD before and through the GFC, with a spike due to the GFC at > 2.5AUD. The Euro did something similar (though it has been more stable post-GFC, so far at least).
This allowed immigrants to come to Aus with a good wedge to fund their new life.
This will not happen if theres another Europe-inspired GFC. If Euros do leave, they a) wont be coming with much b) wont have much appetite for investing in assets, particularly houses.
I think the AUD will drop some in this scenario, but it wont be a huge difference (Euro will also drop) and unless its accompanied by a big drop in property prices in Aus, they will still look very expensive to your average European. GBP could rise against AUD, but my guess is it would take time to get above 2, which is the key threshold to make people view Aus as "cheap" again.
Why this is complicated for people to understand, I have no idea. A China crash of course is another animal - low AUD, lower house prices. That would do the trick.
Catweasel think that idea that foreigner emigrate to a Australia or buy the big mortgage in a Australia because of a global meltdown one of most mad as batshit. But it not the surprise in a Australia given the intersect of media, feel good, and a zany perspective of mouse behavior.
Five years ago this week, the Rudd government launched its first round of stimulus spending to pre-empt a return of the Great Depression.
Australia escaped Mr Swan’s forecast recession thanks to his initial $10.4 billion cash splash (which held up Christmas spending confidence), his decisive shoring up of the banks, further Reserve Bank rate cuts, the sharply lower dollar and, most of all, the mother of all stimulus packages from China.
China may have shielded Australia from the initial blast of the crisis. But, five years on, we are being forced to belatedly adjust to an inflated mining boom cost structure.
The high dollar is squeezing much of the trade-exposed economy. China, India and other developing economies that helped Australia through the crisis five years ago have come off the boil.
The economy is set for two or three years of sub-par growth. That’s likely to drive the jobless rate higher than its GFC peak.
We’re left with a high wage and inflexible workforce and a welfare mentality that the reliance on low-rent spending stimulus may have even encouraged.
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