|
December 28, 2007
The odds of an increase in interest rates in February have shortened after the sold-out sales over Xmas. The emphasis has been on the big ticket items---game consoles navigation devices, LCD and plasma TVs, digitial cameras were racing out the door in Sydney and Melbourne.
My PC at Victor Harbor, which ran Microsoft Windows XP and Office 2003, died just before Xmas. I've decided not to upgrade to Microsoft's Vista and Office 2007 for my personal use. I'm shifting over to an Apple Macbook, display screen, i-pod and photographic software. But I am going to pay off one of my credit cards before I spend up big.
Alan Moir
The Xmas sales indicate that the household debt level and the current interest rates are not too restrictive for Australian households. The resources boom continues, house prices continue to rise the field of investment dreams grows ever more expansive, there is easy money is too be made and the Liberals have been swept into history. The future is ours.
The public mood is rather different in the US. House prices continue to fall and consumers are underspending. it's enough to cause jitters on Wall Street that is finding it rather hard to spin the huge loses incurred by the global banks and brokerages (eg. Merrill Lynch) from the sub-prime mortgages as good news. The US is headed towards a hard landing in 2008. Nouriel Roubini, over at Project Syndicate, spells this out. He says:
The US is now headed towards recession, regardless of what the Fed does. The build-up of real and financial problems – the worst US housing recession ever, oil at $90 a barrel or above, a severe credit crunch, falling investment by the corporate sector, and savings-less and debt-burdened consumers buffeted by multiple negative shocks – make a recession unavoidable. Other economies will also be pulled down as the US contagion spreads.
Robert Schiller has an article at Project Syndicate, which explores our images of economic disaster entitled Imagining Recession. He says that:
Popular images of past disasters are part of our folklore, often buried in the dim reaches of our memory, but re-emerging to trouble us from time to time. Like traditional myths, such graphic, shared images embody fears that are deeply entrenched in our psyche. The images that have accompanied past episodes of market turmoil are largely absent today.
However, there is an image that does exist in the US :
The images that are uppermost in our minds are of a housing crisis. We imagine residential streets with one “for sale” sign after another. Worse, there are images of foreclosures, of families being evicted from their homes, their furniture and belongings on the street. If home prices continue to decline in the United States and possibly elsewhere, there could be many more vivid images. You may yet be presented with the image of your child’s playmate moving away because his parents were thrown out in a foreclosure. You may see a house down the street trashed by an angry owner who was foreclosed. Such images become part of your sense of reality, and could disturb your sense of confidence and reduce your willingness to spend and support the economy.
This is what is happening in the US now, though not Australia. The good times are rolling along courtesy of the resources boom.
|
Gary
I read that there have been around 300-400 people an hour going through Ted's Camera Stores in Pitt Street Sydney and Chadstone Melbourne buying video cameras and digital SLR's. That's a lot of people and cameras.