Hotton

Intervening to support the currency. How about raising intrest rates
as well ,that would make the AUD more attractive.


nice one Rudd

Devlin

Yeah, Rudd is responsible for the commodity boom turning to bust and the carry trade being abandoned. Check your facts mate.

Hotton

Ha a Rudd supporter whell there is got to be one mate

Devlin

So I'm a Rudd supporter because I don't blame him for a global economic slow-down and a credit crunch? Good one!

Hotton

Mate try preperation H just cant work you out you have a history
of nasty one liners i see

Anyway to state Rudd dont have any influence on the RBA is a joke,
in my eyes the Rudd mob ant got a clue LOL

Geelong Gent

Make him comfortable, its not a nice thing to suffer from.

TheSubMainMan

The AU$ is being sold short in order to prop up the US dollar. It's also the reason why Australia is issuing bonds. The bonds are being purchased in US$ Another way to prop up the US dollar.

All the G8 countries + others.. are currently propping up the dollar. Soon after the US election ends, I suspect they will stop this policy and allow the dollar to fall, and fall and fall...

Just hope they don't take us all down with them...



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Hutch

Tell you what - he's a bloody fast worked, Kevin. According to the clueless finger pointers of the world he's managed to precipitate a once in 100 years global recession in under a year! Blimey he's good.

Interesting - I didn't know that. Will await the post-election period. I wonder if a plummeting dollar will hurt Obama's honeymoon or if everyone will realise it's the previous scrote's fault.

JR230898

Oi!!! You can't call GWB a 'Scrote'......Scrotes are useful, and serve a purpose.

moneypenny20

It's down to him that Golden Brown is in No 10, doncha know. It was probably him that made the Chinese contaminate the milk the other month. after all, he does speak Manderin. He IS all powerful.

IvanM

Others are saying the USD is going back up because of fund repatriation away from riskier climates such as Europe, Russia, Australia and China. Previously it was considered the crunch would affect the US more than anywhere else. Funds moved to where the money was in theory to be made.

The RBA doesn't like this sudden movement down in the AUD as it adds inflationary pressure and makes interest rate cuts harder. It also turns Australia's net debt free status into a country with a government debt that is more expensive to service.

Central banks are constantly smoothing out the markets. The only certain thing is that central banks cannot fight a sustained market correction.

TheSubMainMan

Once the elections are over, may be early next year 2009, the world is in for some massive inflationary pressure. Due to all the new currency they printed to bail out the financial systems (remember the 70s). Especially in the US & the UK.

I don't think the US are in a position to raise interest rates, the UK is in no position to raise rates. So there currencies are going to go pop!

Even if they do try to contain the inflation there is worse to come, Lying behind the sub-prime mess is a much bigger beast, called CDS's (Credit default swaps) these are a type of unregulated, contracted insurance agreement. Insurance against bad debt... they run in to the trillions & trillions... I don't know what exposure Australia has to these, but I suspect enough to do some serious damage.

They all know the bailouts will not work; all they are doing is buying time. The last thing they want is for everything to go tits up, two months before a US election. I mean who would you vote for after your entire life savings had been wiped out, pension gone, and your home worth a fraction of what you paid for it? Bush, Obama or that unknown populist third party "Ron Paul"... ?

Well only two weeks left... Just hope we get Christmas in...

Deep music playing here.....

dpande

Might be talking out of my a**e but I think the global CDS/ derivatives market is around $US600 trillion, of which the Australian banks (mainly NAB and ANZ but all are involved) total about $30-40 trillion USD.
Cash is king.........but which currency???

TheSubMainMan

Cash is only king in a deflationary recession !

as soon as you notice stuff going up in price get rid of it! or inflation will...

ps:

I never wanted to mention that $US600 trillion figure. It's just so.... .... .... ..... I can't put it in to words....

IvanM

Do you have a breakdown of whether the derivatives are on regulated exchanges or the unregulated types such as CDS which brought down AIG? Derivatives bought and sold on regulated echanges are liquid and transparent to supervisory bodies. CDS are not, however from fall down of Lehmans it appears most have hedged their CDS exposure and the risk has been well spread.

Regulated derivatives are used by every day companies to add certainty to their business eg QANTAS buying fuel at a particular price or BHP selling USD to ensure their return in AUD is predictable.

Most of the money pumped in as liquidity is being hoarded and unlikely to be inflationary. The halving of the price of oil and rise of the USD will give the US a big break from inflation. In Australia the inflationary pressures are the fall on the AUD, tax cuts and a massive $10 billion handout coming up. The comparison with the seventies is invalid because there was no liquidity crisis then. The main inflationary pressure in the seventies came from several oil shocks and an over reliance on Keynsian policies.

Governments are relying on unemployment and poor consumer and business confidence to counter the inflationary pressure. We are only just now seeing the effect of this part of the economic cycle on the economy in Australia and the world's manufacturer - China. Over the last 18 years China exported deflation by producing our goods far cheaper than anyone else. The capital gained from exports was relent for us to spend on housing. China's inflation is now over 15%.

Central banks are relying on the deflation of a recession to allow them to lower rates. I hope they are right but at best it appears that central banks are assuming a recession.