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post #1 of 12 (permalink) Old 07-31-2008, 02:33 PM Thread Starter
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Australia facing worse crisis than America

Damn, that is where I was going if America tanked.

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Australia faces worse crisis than America

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:33am BST 31/07/2008

The world's financial storm has swept through Australia and New Zealand this week amid mounting signs of contagion across the Pacific region.

Australia now faces a worse crisis than America
Many fear the economic party in Australia will end badly

Financial shares were pummelled in Sydney on Tuesday after investor flight forced National Australia Bank (NAB) to slash a £400m bond sale by two thirds.

The retreat comes days after the Melbourne lender shocked the markets by announcing a 90pc write-down on its £550m holdings of US mortgage debt, an admission that it AAA-rated securities are virtually worthless.

In New Zealand, Guardian Trust said it was suspending withdrawals from its mortgage fund owing to "liquidity difficulties in the market".

Hanover Finance - the country' third biggest operator - last week froze repayments to investors. The company said its "industry model has collapsed" as the housing market goes into a nose dive. Some 23 finance companies have gone bankrupt in New Zealand over the last year.

It is now clear that the Antipodes are tipping into a serious downturn. Australia's NAB business confidence index fell to its lowest level in seventeen years in June. New Zealand's central bank began to cut interest rates last week on fears that the economy may have contracted in the second quarter, and is now entering recession. Housing starts slumped 20pc in June to the lowest since 1986.

Gabriel Stein, from Lombard Street Research, said Australia could prove vulnerable once the global commodity cycle turns down. It has racked up a current account deficit of 6.2pc of GDP despite enjoying a coal, wheat, and metals boom, effectively spending its resources bonanza in advance. Household debt has reached 177pc of GDP, almost a world record.

"It is amazing that in the midst of the biggest commodity boom ever seen they have still been unable to get a current account surplus. They have been living beyond their means for 10 years. What worries me is that productivity growth has been very low: they have coasting after their reforms in the 1990s," he said.

Australia's Reserve Bank has had to grapple with vast inflows of Asian capital, especially Japanese money fleeing near zero rates at home. Short of imposing currency controls, it would have been almost impossible to stop the inflows.

"The easy money went straight into real estate," said Hans Redeker, currency chief at BNP Paribas.

"Australia will now have to generate 4pc of GDP to meet payments to foreign holders of its assets," he said. This is twice as high as the burden faced by the US.

Both the Australian and New Zealand dollars have fallen hard in recent days and now appear to be breaking down through key technical support against major currencies, including the US dollar. "The Aussie is going down, big time," said Mr Redeker.

The picture is darkening across the Pacific Rim. The Bank of Japan's deputy governor, Kiyohiko Nishimura, said its economy may now be falling into a "technical recession". Household income dropped 2.1pc in June compared to a year earlier and manufacturers are the gloomiest since the deflation crunch in 2003.

The decision by National Australia Bank to make drastic provisions on its US mortgage debt could have ramifications in the US itself. It opted for a 100pc write-off on a clutch of "senior strips" of collateralized debt obligations (CDO) worth £450m - even though they were all rated AAA. No US bank has admitted to such fearsome loss rates.

My 401K is now a 400K (was 301K)
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post #2 of 12 (permalink) Old 07-31-2008, 02:47 PM
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I'll have to scratch them off the list as well ......
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post #3 of 12 (permalink) Old 07-31-2008, 03:18 PM
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Quote:
Originally Posted by 01whitecobra
The decision by National Australia Bank to make drastic provisions on its US mortgage debt could have ramifications in the US itself. It opted for a 100pc write-off on a clutch of "senior strips" of collateralized debt obligations (CDO) worth £450m - even though they were all rated AAA. No US bank has admitted to such fearsome loss rates.
yikes

admitted being the key word here....

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post #4 of 12 (permalink) Old 07-31-2008, 07:15 PM
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Fuck!

Back up plan needs to be readjusted.

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post #5 of 12 (permalink) Old 07-31-2008, 07:41 PM
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I'd move to Canada before I'd move to Australia... I think you can actually own a gun in Canada
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post #6 of 12 (permalink) Old 07-31-2008, 07:44 PM
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I'd move to Canada before I'd move to Australia... I think you can actually own a gun in Canada
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post #7 of 12 (permalink) Old 07-31-2008, 07:51 PM
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Originally Posted by Cooter
I'd move to Canada before I'd move to Australia... I think you can actually own a gun in Canada
New Zealand doesn't have the gun laws as Australia, that's why they were my backup plan.
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post #8 of 12 (permalink) Old 07-31-2008, 08:50 PM
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Quote:
Originally Posted by 01WhiteCobra
Damn, that is where I was going if America tanked.
I got a bro-in-Law deal working for Costa Rica. Canada as a fall back. But if Texas wanted to suceed I'd stand and fight

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post #9 of 12 (permalink) Old 07-31-2008, 09:58 PM
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Well hell, no wonder outback steakhouse is so dammed expensive.
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post #10 of 12 (permalink) Old 07-31-2008, 10:48 PM
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Come on... you guys have GOT to have a better plan than just fleeing to Australia. I like my buddy's Viet Nam idea. No one will ever bother him.

Hell, he takes every vacation there to go mountain biking. I bet that terrain is about as tough as it gets.
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post #11 of 12 (permalink) Old 07-31-2008, 11:05 PM
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I would go to Germany.

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I'd fuck her and confess my love while using my wife as the mattress.
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