The people with money finally woke up today when the Australian Bureau of Statistics advised the worst deficit on current account for some years, a massive $3.5 billion deficit…like they must have slight amnesia or forget what trends follow a commodity price collapse..
Hello recession, hello deflation and hello depression this time round….
Anyway wakes wakey … Volatility strikes on 10 year bonds…those with money want to get out of this lucky country, as shit has stuck… No wonder Twiggy a tad anxious, too much debt means trouble.
In ‘normal’ economy, if all things are equal then one may not have this knee jerk reaction, simple fact of the matter is that there is no monetary depth in the investing markets…liquidity has dried up.
And not to be outdone, Japan a mad scramble to jettison also…
Take note that these are 10 year Bonds, the savvy investors are no doubt aware that rates are on the move up and do not want to be caught ‘long’ in any currency. When rates rise in the US the implications are an increase in the USD and a drop in all other currencies, together with a higher interest rate applicable on all USD loans….which guess what?
Both the Government and corporate Australia has a lot of US debt… so prepare yourselves for a interest twist of Australian Reserve Bank with interest rates of 2 percent or lower and loan rates spiraling upwards … for those people that haven’t locked in mortgages at fixed rates you are stuffed, well and truly stuffed.
As I said in prior articles, this mess is coming to a crunch, depression is coming and the effect overall will be a nut cruncher ……