What happened to the economic clock?

2pm in my view ... the falling interest rates are a result of 'unusual' circumstances.

 

AT

You could say the same about the credit squeeze.

It is possible that we had the credit squeeze before the share market correction and it is also possible that the FHOG and the cuts in interest rates will stop property prices from falling and we will go straight to 8pm which is: Rising share prices.

I can't wait...

Cheers

 

have they been reading your posts ???

 

Heh, I know you meant to say "insulated" and it was a typo, but did anyone else reading this LOL (Australia being insulted by the USA )

 

LOL - I did once you pointed it out... damn spell check not factoring for me being a *****.

 

You could consider it an insult to the rest of the world that America's sub-prime lenders have triggered such a massive domino effect.

 

I don't think the rest of the world is completely innocent, a big chunk of Western Europe saw significant drops in housing prices as well. Though the good old US of A didn't help things any with the whole freezing of the credit markets.

On the plus side they may have also pushed stock prices so low that we are probably seeing some of the biggest bargains we'll see on the stock market for a couple of decades...

 

Just thought I would bring this thread back up again as its been three months since the last post. I think we are around the 5-6pm, realestate still has to fall further and as Sim mentioned earlier interest rates falling is due to the credit crunch. Any takers?

Chomp

 

I love re-reading old post to see by just how much I was wrong, and just how much I have learned in the least 3, 6, 12 months...

In terms of where we are I'm thinking we are probably around 5 o'clock, though the rest of the world is further along that us, they are probably closer to 6 o'clock.

 

Hi Chris,

I think we are more around the 6 o'clock as interest rates are almost at the bottom (saying that they can drop to 0% but certainly closer now than September 2008 to the bottom). Once a little more confidence comes back to the economy people will start to become more share and property oriented, especially as we are still expecting further rate drops between now and later in the year.

Cheers,

Dan

PS This is my humble opinion and probably incorrect as I don't have a crystal ball.

 

I can appreciate your view point on interest rates having already dropped, but I'm of the opinion that considering interest rates haven't even been dropping for 6 months yet that we still have a long way to go on this front so I'm thinking we are only just getting to 5 o'clock, plus we are only just entering the recessionary part of the economic clock, Australia isn't that far into this phase yet, nor have we really seen real estate values drop to the extent I'm expecting they will. So I didn't want to say we are further along than I think we are. Of course this is just my interpretation, I know mine is a little different than most of these forums, with the exception of O2BSure (he's a good old fashioned bear at the moment ).

Back on the falling interest rates phase, I can appreciate that we don't have that much further to decline in nominal terms, but I'm confident that when all is said and done we'll have a cash rate under 1% but the RBA will be depreciating it at a slower rate in the coming months. Of course I'm of the opinion that if they dropped the cash rate to 0% tomorrow it still wouldn't have that much of an inflationary effect, it might temporarily boost things but ultimately I think we'd still hit a deflationary recession.

So for me, the only reason I see the cash rate not dropping to 0 - 1% would be a result of the RBA conceding that the ZIRP (zero interest rate policy) being adopted by many countries is, for all intents and purposes, ineffective in stimulating an economy with this much deflationary pressure in it. People don't want to borrow, especially when they fear the biggest enemy of debt holders, deflation, is just around the corner. It looks like central banks like the FED, BoJ, and just recently announced BoE will have to enter the financial markets and buy the assets themselves to fill out the contracting money supply, which is not a good sign...

So I'm of the opinion that this recessionary stage of this economic clock cycle will drag out longer than most expected, including the interest falling segment of the clock.

 

Been a slow day at work, ages since I've been on the site, but anway I think we are at 8pm

Anyone up for a stab at it?

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Chomp