I wrote in my blog dated 29/1/09 that between 10th and 12th February that the D word will replace the R word in the global news about the financial crisis. Unfortunately, my prediction was off target by one week!
Japan’s economy has contracted by an annualised rate of 12.7% in December quarter, and the radio, TV and print media have reported that “Japan plunges into depression”. This is only the beginning, because the USA has yet to admit that they are in depression, around first or second week of April.
The financial rescue packages put in place by many countries will produce temporary relief, but the beneficial impact is not sustainable. One by one, starting from England, all the other EU members will recognise that they are going down the path of depression, NOT just recession.
The positive effect created by the Rudd’s government financial stimulus package will be proven to be short-lived. The biggest mistake is the increase of the first-home buyers’ grant. This seduces those who probably can’t really afford to take up loan during this uncertain time.
The sales increase during Christmas and New Year period has to be welcomed with great caution. Many large ticket items were the preferred choice and the amount of cash handout could not cover the purchase price, and thus applies that most of such sales were paid credit. What this really means is that when the credit card statements for the Christmas/New Year purchase arrive, the debt financed purchasers will get into bigger debt trap.
Australia has to face a year of disasters – not just financial, but also natural. The flood in Queensland and New South Wales, and the Black Saturday bush fire are making a big dent to the national coffer, now and years to follow. Officially, the Australia’s federal election could be held at the end of 2010, or January of 2011, but the disaster situations seem like God-sent which favour an early federal election before 2010 budget is handed down.
Japan’s economy has contracted by an annualised rate of 12.7% in December quarter, and the radio, TV and print media have reported that “Japan plunges into depression”. This is only the beginning, because the USA has yet to admit that they are in depression, around first or second week of April.
The financial rescue packages put in place by many countries will produce temporary relief, but the beneficial impact is not sustainable. One by one, starting from England, all the other EU members will recognise that they are going down the path of depression, NOT just recession.
The positive effect created by the Rudd’s government financial stimulus package will be proven to be short-lived. The biggest mistake is the increase of the first-home buyers’ grant. This seduces those who probably can’t really afford to take up loan during this uncertain time.
The sales increase during Christmas and New Year period has to be welcomed with great caution. Many large ticket items were the preferred choice and the amount of cash handout could not cover the purchase price, and thus applies that most of such sales were paid credit. What this really means is that when the credit card statements for the Christmas/New Year purchase arrive, the debt financed purchasers will get into bigger debt trap.
Australia has to face a year of disasters – not just financial, but also natural. The flood in Queensland and New South Wales, and the Black Saturday bush fire are making a big dent to the national coffer, now and years to follow. Officially, the Australia’s federal election could be held at the end of 2010, or January of 2011, but the disaster situations seem like God-sent which favour an early federal election before 2010 budget is handed down.