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Post by zorro1 on Feb 24, 2014 14:56:40 GMT 7
There is a world wide push to force the oz dollar down it seems. We are talking a long term downgrade and not just a knee jerk reaction to s a sudden Global financial collapse like a few years ago This a DSP'ers greatest enemy with forecasts knocking off nearly 30% off our pension. Lets hope this is not the case because its going to make living OS pretty much off the cards unless being a pauper in a 3rd world country becomes trendy  ] www.theage.com.au/business/markets/currencies/fears-australian-dollar-facing-benign-collapse-to-us66-20140224-33cfl.htmlThe Australian dollar could face a "benign collapse" to US66¢ by the end of next year amid falling commodity prices, declining mining investment and reduced government spending, Deutsche Bank says in one of the most bearish forecasts for the local currency. The plunge in the Australian dollar to the mid-US60¢ would come about if the Reserve Bank keeps interest rates on hold until 2016, if the US lifts its rates by mid-2015 and if the United States' dollar continues to strengthen, Deutsche Bank's chief economist for Australia Adam Boyton said. The forecast would see the exchange rate fall to its lowest levels since the financial crisis. The currency was fetching US89.60¢ in late trade on Monday, and has so far risen 0.5 per cent against the US dollar this year. It shed more than 14 per cent of its value against the US currency last year. . Photo: Deutsche Bank, Bloomberg Financial LP "Critically, we would view this as a benign 'collapse' in the Australian dollar; not one sparked by a domestic or offshore 'crisis'," Mr Boyton said in a research note, adding that the new projections fell below Deutsche Bank's current end-2015 forecast of US75¢. Advertisement "Our point instead is that a much lower Australian dollar should be considered a 'base case' and reflective of a 'central forecast'; not some 'tail risk' event. This suggests that the risks around our current end-2015 ... are skewed to the downside." Mr Boyton said the long-term weakness in the dollar could be key for the Australian economy as the unprecedented boom in the mining sector comes to an end. But over the next few months, the local currency could rise with an improvement in the labour market. . Photo: Deutsche Bank, Bloomberg Financial LP The German bank joins US investment bank Goldman Sachs in a similarly bearish outlook for the local currency. Goldman Sachs analysts tips the currency to tumble below US70¢ in the next two years as reserve managers at central banks reduce their demand for the Australian dollar, and as global demand for commodities falls. The median forecast for the Australian dollar, according to Bloomberg, is for the currency to fall to US85¢ by end-2015. At the top end of the forecasts, analysts expect the dollar to rise to US97¢. The lowest forecast for the end of next year is US75¢. RBS senior currency strategist Greg Gibbs said the bearish projection could be possible if China's economy struggles. . Photo: Deutsche Bank, Bloomberg Financial LP "A US65¢ number is quite possible in a negative scenario for China and much weaker commodity prices, and maybe a degree of financial stress in China, which has bigger global implications. Those are the kinds of things you need to get it down to those levels," Mr Gibbs said, adding that the Australian dollar had become a risk proxy for China. He said it would be difficult for the Australian dollar to return to higher levels as mining companies keep their costs reined in and with improved business confidence driven by a lower exchange rate. Mr Boyton's scenario for a mid-US60¢ came through a modelling of interest rate differentials between yields on 10-year US and Australian government bonds, one of the factors that drives the currency's movements. . Photo: Deutsche Bank, Bloomberg Financial LP "A narrowing in the Australian-US bond spread ... to around 25 basis points come end-2015, start-2016 suggests a significant decline in the Australian dollar," he said. "Indeed our preferred way of expressing the bond spread against [Australian-US dollar cross rate] raises the prospect of the Australian dollar trading in the mid-to-low US60¢ come end-2015." The modelling showed that a large part of the Australian dollar's fall could come about next year, as the bank expects the Fed to start lifting interest rates from their near-zero levels in mid-2015 after it completes its tapering of its unprecedented monthly bond-buying program. The highest, lowest and median forecasts for the Australian dollar against the US dollar over the next few years. The highest, lowest and median forecasts for the Australian dollar against the US dollar over the next few years. Photo: Bloomberg At the same time, the strengthening of the US dollar, which currency strategists expect to take place as the Fed withdraws its stimulus this year, would also contribute to the weakening local currency, Mr Boyton added. Deutsche Bank tips the US dollar to rise by 20 per cent against the euro and by 17 per cent against the Japanese yen over the next two years. Deutsche Bank predicts that the Reserve Bank would keep the cash rate on hold at a record low of 2.5 per cent over the next two years, with the fall-off in mining investment hitting the economy harder in late 2014 and early 2015. Government spending is already projected to tighten in the later years of federal budget projections, while state government expenditure is also tipped to remain soft, forcing the central bank to maintain a loose monetary policy, the bank said. Meanwhile, the decline in the terms of trade - a ratio that measures export prices to import prices - could weigh on the jobs market and keep the unemployment rate at multi-year lows of about 5.75 per cent until early-2016, Deutsche Bank projected. Read more: www.smh.com.au/business/markets/currencies/fears-australian-dollar-facing-benign-collapse-to-us66-20140224-33cfl.html#ixzz2uDxWiP1K |
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Post by nalang on Mar 3, 2014 21:42:26 GMT 7
Have to agree, followed friends advice a year ago to get out of the aussi dollar and shift into US and euro.
Cant see the aussi$ coming back . Thinking also to sell my house to the chinese before this bubble collapses and shift money into stocks.
If aussi dollars goes below 70cent foreign investments in underperfoming stockmarket will increase, i would say ASX can go well past 10000 points by 2017.
Always the same, housing up, dollar strong stockmarket flat, housing down stockmarket up dollar down.
Australia has a huge resession coming where house prices will fall by 30 40 50 %.... The final push is done with cheap chinese money at the moment, smart people sell now.
Still a good bet to go short on Aussi$ !
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Post by Denis-NFA on Mar 5, 2014 4:29:43 GMT 7
zorro1Although the AUD$ - $US exchange rate captures all the headlines what we have to be more concerned with is the exchange rate of the local currency where we happen to be visiting verses the $US. I know that the Philippines peso is also dropping against the $US so relatively speaking there is not much change in AUD$ - Php exchange rates.
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Post by Banjo on Mar 5, 2014 8:02:17 GMT 7
The AUD has slipped a little in Thailand currently a smidge under 29B.
Probably due to reports that the situation in Bangkok is stabalising.
It will never bother me, not having to make 3 or 4 international flights a year more than makes up for a weak dollar.
There were pensioners living in the Philippines quite happily when the dollar was 27 pesos and Thailand when it was 17 baht.
It's been as low as 23B while I've been coming here and I was still on 13 week portability.
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Post by zorro1 on Mar 5, 2014 8:13:21 GMT 7
I dont mind if it completely crashes as long as the BHT stays pegged to the USA dollar. I would sell my place here and then buy the OZ dollar with Thai Bht for a 30-50% profit depending on the drop of course
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Post by Denis-NFA on Mar 5, 2014 9:56:18 GMT 7
I dont mind if it completely crashes as long as the BHT stays pegged to the USA dollar. I would sell my place here and then buy the OZ dollar with Thai Bht for a 30-50% profit depending on the drop of course A few American $ put aside will never go astray in most countries. |
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Post by Deleted on Mar 6, 2014 0:05:46 GMT 7
Re-post.As i said in the other thread Zoro1 ... I don't think a lower A$ is on the cards ... Not long term anyways. Your a dooms day'er, ... If ever there was. The Aussie will fall ,,,, the aussie will fall. ..... the A$ to fall to 66c against the U.S ...  Sez who ... People bang on that the Aussie will fall back to the levels they where 10 years ago are full of crap. The Australian economy is larger than it was 10 years ago ... So telling people to hedge the Aussie at 89 cent coz the you think the Aussie will fall back to 66c is foolish if the Australian dollar rises back above parity ... Hence why the RBA is (jawboned) the Aussie, coz it wont stay down. The reason it wont stay down is because ov several reasons. (( & none of them point to a long term fall of the Australian currency )) It's always the same ... CHINA ... CHINA ... CHINA ... (( China was not a factor 10 years ago )) Now it is. B4 the GFC ... the Aussie was at 47c against the US coz the world was bust ... China came along & bought up Australia's minerals in the 2000's under the Howard years (( mining boom )) This forced the world price for minerals up ..... the Aussie was rising & rising & rising & in 2008 - 2010 ( under Howard ) the Aussie dollar hit a high of $108 Against the U.S. ... The cost of Minerals where rising & rising & rising ... China knew it had to do something to stop their costs rising. On 27 July 2011, the Australian dollar hit a record high since the floating of the dollar. It traded at a $1.1080 against the US dollar. So they tryed to control the minerals & miners by buying Rio Tinto ... BHP Billiton fought them & logged a takeover of Rio Tinto itself ... China & BHP became locked in battle for control of the world markets. Know-body could win. Stalemate. So China did the only thing it could do .... Stop buying stuff & stop buying Australia's minerals. This saw the price of minerals fall .... This saw the Australian dollar fall .... & this saw overseas inverters leave the Australian market This Also saw China quietly re-enter the Buying market where they saw the low price of minerals & the Australian dollar .... Where by China started buying up everything they could .... China bought up Not just Australia's minerals ..... This time while the Aussie was low .... They bought up everything they could b4 the Australian Dollar & & the mineral market prices started to rise Again. China started to buy up mining company's, Real-estate Food Brands & company's & farms ect ect ... The Aussie $ gradually recovered & by 2009 it was back to 94 US cents. By October 2010, the Australian dollar reached parity . On 27 July 2011, the Australian dollar hit a record high since the floating of the dollar. It traded at a $1.1080 against the US dollar. ... & it was still strong ... By all accounts the Aussie would have kept rising to 1.20 against the U.S dollar .... Some even said it would rise to 1.40 against the U.S This spooked the Australian government who set about weakening the Australian dollar .... But the Australian economy was getting stronger & with 22 years of Australian growth without a rescission investors started to look at the Australian economy different .... World governments adopted Australian reforms, & Rudd was seen as a economic leader on the world stage ... The G20 ( under Rudd ) was made the world foremost economic body. The Australian economy was given a Triple A rating & the Australian dollar was made a reserve currency ..... The rise & rise of the Auusie was set in stone & China once again did the only thing they could .... STOP BUYING AUSTRALIAN MINERALS & COMPANY'S (( until the Australian dollar weakens )) & this is where we are today ... China is just waiting for the Aussie to fall low enough that it can re-enter the Australian market & start buying everything up .... But China knows .... If it lets the Aussie fall to far ... Other nations such as Japan, The European nations the USA & Canada will also re-enter the Australin market & China may miss out on the sweetheart deals & cheap contracts & bargan out there Such as Mining company's ... Dairy Companys ... Canada's Suputo has already started to buy up Australian dairy's ... So you see despite your doom & gloom .... I dont think the Aussie will fall to 66cents .. (( if it does it wont be there for long )) How Australia is different from 5-10 years ago ... The Australian dollar is a reserve currency now Along with the U.S dollar, & Euro ... (( This means foreign governments & banks / company's MUST hold Australian dollars )) The Australian economy is now the 12th largest economy in the world. The Australian economy has access to the Asian markets via ASEAN & APEC ... the rest of the world is drooling over that fact. The Australian economy is geographically close to Asia .... Another advantage Australia has over Europe & the America's. Australia has an abundances of gas, oil & minerals ... Everything the world needs most ... Also a strong Aussie dollar means Australian exports of manufacturing products such as cars & textiles ect ectr are less competitive & see a downturn in exports ... Thats why the Australian gov & RBA jawbone the Australian currency ... I don't think saving the car industry & the textile industries would be an issue in 2014 & beyond .... Wouldn't you agree. So buy all means ... you hedge your money at 89cents .... I think ill wait for a better deal. (( somewhere around parity )) Falling Aussie Dollar = higher inflation ( rising petrol & food costs ) ....... Inflation = higher rates ...... Higher rates = a rising Australian Dollar. Australian to hit 66 cents against the u.s ... The sky is falling ... The sky is falling.
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Post by Deleted on Mar 6, 2014 0:09:56 GMT 7
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Post by Deleted on Mar 6, 2014 0:13:34 GMT 7
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Post by Deleted on Mar 6, 2014 0:16:36 GMT 7
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Post by Deleted on Mar 6, 2014 0:23:10 GMT 7
Facts to Consider .....
April 12, 2013
The Australian and Canadian dollars will be separately identified in the International Monetary Fund’s data on official reserve holdings from the third quarter, the fund said.
The so-called Aussie gained 50% since the end of 2008 and the loonie advanced 21% versus the U.S. currency as investors, including central banks, seek to diversify their holdings of dollars as well as euros. More than 75% of 60 central banks polled in February are investing in or may buy the two currencies, Royal Bank of Scotland Group Plc said April 7. The IMF releases quarterly data on US$6.1 trillion in allocated reserve assets in its Composition of Official Foreign Exchange Reserves report.
“These two currencies are expected to be included in the data from third quarter 2013,” Ismaila Dieng, an IMF spokesman, said in an e-mailed response to questions. “The proposal is to separately identify these currencies in the COFER reporting template, which would allow increasing data granularity to support better analysis, while safeguarding data confidentiality.”
A survey by the IMF’s statistics department found that “several countries” hold Australian and Canadian dollars, Dieng said.
Allocations to the two currencies are currently reported under the “other currencies” category, which rose to a record 6.1% at the end of last year, according to data reported March 29 by the IMF. The figure climbed from 5.4% at the end of 2011. Holdings of U.S. dollars declined to 61.9% from 62.3% over the period, while the euro’s share fell to 23.9% from 24.7.
The IMF data currently provides reserve holdings of the U.S. dollar, euro, yen, British pound and Swiss franc.
China, the world’s biggest holder of reserves with $3.44 trillion at the end of March, doesn’t report what it invests in to the IMF.
Bloomberg.com
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Post by Deleted on Mar 6, 2014 0:32:29 GMT 7
Press Release No.13/236June 28, 2013
The International Monetary Fund (IMF) today released on its website the quarterly data on the currency composition of official foreign exchange reserves (COFER) with an expanded currency range, separately identifying two additional currencies—the Australian dollar and the Canadian dollar .
COFER is an IMF database managed by the IMF’s Statistics Department, containing end-of-period quarterly data of reporting countries and jurisdictions. With the separate identification of Australian dollar and Canadian dollar reserves, seven currencies are now distinguished in COFER data: (1) U.S. dollar; (2) Euro; (3) Pound sterling; (4) Japanese yen; (5) Swiss franc; (6) Australian dollar; and (7) Canadian dollar. All other currencies are included indistinguishably in the category of “other currencies”.
COFER data are reported to the IMF on a voluntary and confidential basis. At present, there are 144 reporters, consisting of member countries of the IMF, non-member countries/economies, and other foreign exchange reserve holding entities. COFER data are publicly disseminated on a quarterly frequency in aggregate format so as not to reveal individual country information.
Following consultation with the IMF’s Executive Board, the IMF developed an Action Plan in 2011 aimed at expanding COFER reporting. One main component of this initiative was to expand the currency range to capture developments in reserve assets denominated in “other currencies”. For this purpose, the IMF’s Statistics Department conducted a survey of all COFER reporters. Based on the survey outcomes, the Australian dollar and the Canadian dollar were considered for separate identification in COFER data.
COFER data provide a crucial insight into the evolution of the currency composition of foreign exchange reserves, facilitating analysis of developments in international financial markets. These timely aggregate statistics on the currency composition of member countries’ official foreign exchange reserves are relevant to the work of the IMF and generate considerable analytical interest from users in central banks, other official institutions, and the private sector.
Foreign exchange reserves reported through COFER consist of the monetary authorities’ claims on nonresidents in the form of foreign banknotes, bank deposits, treasury bills, short- and long-term government securities and other claims usable in the event of balance of payments needs. The definition of foreign exchange reserves in COFER follows that in the IMF’s International Financial Statistics (IFS).
The classification of countries in COFER (as advanced economies or emerging and developing economies) follows that currently used in IFS world tables.
www.imf.org/external/np/sec/pr/2013/pr13236.htm
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Post by Deleted on Mar 6, 2014 0:56:37 GMT 7
APEC leaders agree on new free trade zone
Sun Nov 14, 2010 8:47pm AEDT
APEC leaders have committed themselves to establishing a massive free trade zone, which would cover more than half of the world's economic output.
World leaders are attending the APEC summit in Yokohama, Japan, and have also vowed to resist protectionism and to boost economic growth.
After almost two days of talks, the 21 leaders vowed to establish the free trade area of the Asia Pacific.
The zone would cover about 40 per cent of the world's population and more than half of the globe's economic output. The summit did not put a timetable on establishing the free trade area.
Australian Prime Minister Julia Gillard says APEC leaders are committed to a framework for growth in the region.
"APEC has said that it too wants to show leadership on the hard grind of structural reforms that economies need to do as the world economy turns to growth," she said.
Just before the final communique was released, China's president warned that the global economy was confronted with "significant uncertainties" and protectionism was on the rise.
"Advanced economies have to cope with serious unemployment problems, while emerging market economies are confronted with asset price bubbles and inflationary pressure," Hu Jintao told the other leaders of the 21-member grouping.
"Moreover, protectionism in various forms has risen notably."
And Mr Hu reassured world leaders that his country posed no economic or territorial threat.
He says China was committed to being friendly and a good neighbour.
China and the United States still remain deadlocked over trade imbalances and currency distortions.
As they do at every summit, the APEC leaders also affirmed their commitment to concluding the long-elusive Doha round of free trade talks.
However, they also took some concrete steps to oil the wheels of trade at a time of rising concern that competition for exports to boost growth could lead to a wave of protectionism.
They extended a 2008 freeze on new barriers to investment or to trade in goods and services for another three years to 2013.
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Post by Deleted on Mar 6, 2014 1:01:47 GMT 7
ASIA SHIFT Inquirer P2.
AS the world economy emerges from the financial crisis, a startling new phase of globalisation is being revealed.
For a generation, freeing up trade and capital flows around the world has been driven by the rich nations, led by the US. Having been hit hardest by the crisis, however, these developed nations are now struggling to reconstruct their economic growth models.
They are burdened by unprecedented peacetime debts, being forced to wind back unaffordable social entitlement systems and are underprepared for the costs of their ageing populations.
The US is printing money to generate a lower dollar and to revive job growth; Europe is gripped by a sovereign debt crisis and battling to save the euro; Britain has been forced into its most savage austerity since World War II; and Japan yesterday suffered a sovereign credit downgrade.
As the rich world struggles, globalisation now is being powered by the big emerging market economies, led by China and India and extending to Indonesia, Brazil and others. Emerging market globalisation is even bypassing the rich world.
This is the irresistible theme among the couple of thousand political, financial and business elites who gather at this time of the year for the World Economic Forum in the Swiss ski resort of Davos. Indonesian president Susilo Bambang Yudhoyono told these high priests of globalisation that Asia was undergoing a "rapid and strong economic, social, cultural and strategic resurgence, the size of which is certain to redefine global affairs". He called it "the big shift" that would shape what he called "21st century globalism".
This new globalisation is already making nations like Australia much richer & more influential on the global stage. The rise of an emerging market urban middle class centred in Asia is pumping up the prices of commodities we export, from iron ore, coal and copper to beef and cereals. But this new world order also is likely to be more volatile, for instance as rising food prices spark social unrest in poorer nations and prompt some commodity producers to curb their food exports.
As well, prolonged high unemployment and budget austerity could produce a damaging political backlash in rich countries. That already is showing up in the currency war between Washington and Beijing that is making countries such as Brazil and South Africa less competitive.
The US Federal Reserve Board's "quantitative easing" is encouraging a flood of capital into the higher-growth emerging markets and pushing up their inflation and interest rates. In turn, developing countries are flirting more with controls on capital inflows to restrain their currency appreciation.
So far, however, the rapid rebound of China and other big emerging markets has helped pull the world economy out of recession quicker than many hoped.
Famed New York-based economic bear Nouriel Roubini called it a LUV recovery. The euro-zone economies, tipped by the IMF to grow a tepid 1.5 per cent this year, were in an L-shaped path out of the crisis. The US is in a U-shaped recovery, tipped to expand a sub-par 3 per cent this year. America's big corporates are in good shape, having pared back their costs and built up massive cash reserves. Yet the emerging markets -- led by 9 per cent-plus China and 8 per cent India -- are the V.
While many are relieved that a global depression has been averted, the crisis has exposed the weaknesses of the rich country growth model. At Davos last year, even the IMF was warning that the global recovery was still too fragile for budget stimulus measures to be quickly withdrawn.
But that was just as the Greek sovereign debt crisis was erupting before spreading to Portugal and Ireland. And that has forced Europe into budget austerity to cap the rise of its huge government debt burden lest financial markets impose a more brutal solution.
And, in his annual State of the Union address this week, Barack Obama said the rules have changed from when Americans could get a good secure job by merely turning up at the nearby factory. "Today, just about any company can set up shop, hire workers and sell their products wherever there's an internet connection," the US president said.
"Meanwhile, nations like China and India realised that, with some changes of their own, they could compete in this world and so they started educating their children earlier and longer, with greater emphasis on math and science. They're investing in research and technologies. Recently, China became home to the world's largest private solar research facility and the world's fastest computer."
In the new globalisation, the US president is saying that China and India are educating their workers better than many Americans. At Davos, this represented a broader shift. Some suggested that a multi-national corporation could just as easily get access to a few hundred skilled engineers in India than in a rich economy. And these new production opportunities are lining up with the new sources of consumer demand as the emerging markets shift their growth model away from exporting to the US and Europe.
"I think what's really happening is that the slowdown of the Western world and the continued expansion of the emerging market world is really shifting the balance of power in terms of where the consumer lies," Azim Premji, chairman of India's global IT services company Wipro said.
Obama called it the US's "Sputnik moment", harking back five decades ago to when the Soviet Union beat the US to putting a man in space. He outlined a growth and competitiveness strategy to lift America's lagging school performance, invest more in economic infrastructure such as high-speed rail, cut company tax, review business regulation and freeze parts of federal budget spending to contain the public debt explosion.
"President Obama articulated clearly the need for the US to restructure its economy," Washington-based international policy economist Fred Bergsten said in Davos. "He didn't go far in suggesting how that would happen."
Bergsten said Obama identified the need for the US to rely less on debt-financed consumer spending and government deficit spending in favour of increased saving, higher exports and stronger private investment; the so-called rebalancing of global growth called for the successive G20 leaders summits.
A substantial fall in the US dollar, at least against the Chinese yuan and some other Asian currencies, was the "transmission mechanism" to deliver this more balanced growth, Bergsten said. But the rest of the world was justified in waiting to see whether the US would do its part, such as by attacking a budget deficit that the IMF tips will hit 11 per cent of gross domestic product this year. "The US is getting perilously close to that threshold point for a financial crisis," Bergsten warned.
While Obama was talking in Washington, Yudhoyono was flying into Davos from New Delhi, where he attended India's national republic day celebrations and signed more than $15 billion of trade and investment deals. In Davos, Indonesian officials described the two economies as complementary. Indonesia needs infrastructure investment in railways, airports and energy generation. India needs the raw materials resource-rich Indonesia sells.
It's perhaps the most striking example of the new emerging market globalisation: the world's biggest Muslim nation becoming more economically tied to the world's second most populist and Hindu-dominated nation. But it's repeated elsewhere. The IMF this week forecast that sub-Saharan Africa would grow more than 5 per cent this year and nearly 6 per cent next year, thanks to growing trade and investment ties with China, again related to resource demand.
In Davos, Australian trade officials were surprised to discover that China is Brazil's biggest trade partner: it's Australia's main iron ore rival. "Everyone is looking to the Asia Pacific," Trade Minister Craig Emerson said in Davos. "How do we get part of this 8, 9, 10 per cent a year growth."
Remember that this is happening less than 15 years after the East Asian financial crisis that thrust Indonesia into the harsh grip of the IMF and only a decade after China joined the World Trade Organisation, an anniversary yesterday marked by a special session at Davos. Of course, the US decline could still be turned around, while emerging markets such as India's bubble might burst if the capital inflows reverse.
But Yudhoyono suggested that Asia's renaissance meant that countries such as Indonesia and regional groupings such as the Association of South East Asian Nations would play a more strategic role in resolving global problems. With the relative decline of the US, "no single power can shape the world order alone", he said.
The Indonesian leader called for the major economies to finally nail a deal this year on the WTO's Doha round of global trade liberalisation. Yet French president and this year's G20 chairman, Nicolas Sarkozy, neglected to mention the Doha round in his remarks at Davos on Thursday, instead calling for measures to stabilise commodity markets. Former head of the WTO forerunner Peter Sutherland berated Sarkozy for the omission.
In Davos for a trade ministers' gathering on the Doha round, Emerson was not impressed. "Anyone who is concerned about high prices for agricultural products should be in favour of trade liberalisation," he said. "If there is liberalisation of trading rules then those countries that are good at producing agricultural products will be able to produce more of them. If you produce more of them, that takes pressure off prices."
The good news for Australia is that the emerging market globalisation appears driven by the projected expansion in world population from less than 7 billion to 9 billion over the next generation, with most of this in Asia.
And, as emerging market populations become more urbanised, they are driving demand, and hence prices, for the mining, energy and agricultural products Australia controls & exports. Rio Tinto chief executive Tom Albanese suggested the mass spread of mobile phones was encouraging 5 billion or so people to aspire for rich world living standards, including living in city apartments with airconditioning.
"They want the stuff we produce," the mining boss said, saying it would be very difficult for any "black swan", or left field event, to disrupt this booming emerging market demand for raw materials.
At the same time, however, new resource deposits were becoming harder to find and taking longer to develop in order to satisfy stakeholders. "Nobody wants a big mine in their backyard," Albanese said.
The message is that it will take time -- perhaps 10 to 15 years -- for global mining supply to catch up to the surge in emerging market demand. That would mean an extended period of high export prices for Australia.
The more troubling Davos take, however, came from New York-based political science and risk consultant Ian Bremmer who dismissed the G20 exercise as a panicked response to the financial crisis.
Now the worst had passed, the G20 was being exposed as cumbersome and ineffective.
Instead of the G20, Bremmer has made a splash by dubbing the new globalisation as "G zero". "What we have is everyone for themselves," he said yesterday. The old G7 (basically, the US, Europe and Japan) was too weak to provide the global leadership needed to resolve pressing global issues such as nuclear proliferation, climate change, trade and economic policy co-ordination.
Yet emerging market nations were either not capable of providing global leadership or held views incompatible with those of the developed economies, such as through their promotion of "state capitalism".
"Globalisation for the last 40 years has been the West reaching out and bringing in the emerging markets, their labour and profits," Bremmer said, "and a lot of people did very well. But that globalisation is over because the West can't consume the way it used to, the west's fiscal constraints are greater and the emerging markets want to define globalisation their way."
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Post by Deleted on Mar 6, 2014 4:16:31 GMT 7
Oh .... & lets not forget about other world currency's & the collapse Euro & the break up of the European Union.
Australian dollar is set to strengthen Against European Currency's as-well.
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