I don’t wish to be too alarming. These are stress tests and scenarios not yet reality. But, there is logic in the thought that we currently face the possibility of the final two scenarios happening simultaneously. That is, a Western recession triggered by European and US austerity (not to mention financial tumult) and a Chinese real estate pop.
via IMF stress tests China/Australia bust – macrobusiness.com.au | macrobusiness.com.au.
I’m not sceptical about this analysis. Is anybody?
And then the question is: so what’s the protective position for Australian investors?
The conventional wisdom seems to be cash and gold/silver.
I’m tending to cash and then high yielding blue chips in the communications sector.
This could get very ugly, no?
All countries will be on the que of Domino, with no exception， though China and Australia may be at the very rear part of it.
In its June issue of Elliottwave Theorist（？）， Elliottwave International predicted this big fall which we have seen as reality, and it said what would be happening is a super grand cycle degree fall that is once in more than a century. The conclusion is deflationary depression in the US (elsewhere as well I suppose?)—–the peak Unemployement rate in the US could reach 33-50%(it reached 25% during last great depression between 1929-1932).
Tes, cash is one of the few good investment should this prediction turns into reality—soaring purchasing power! When people are spending less and saving more, when the long term bond yeild hitting multi-decades low, deflation is showing its horn. RBA is too slow, and will be badly punished by the rapidly deteriorating Australian economy, because of their reactive rather than premptive approach during this critical juncture.
Good stuff Jason. That perhaps explains why I’m struggling to get my wave count to make sense. I keep on getting very bad downside that tends to confirm Colin’s (“I don’t wish to be too alarming”) simultaneous scenarios.
We’ll see in due course!