Why Australia is buoyant and now well placed for the next GFC shock(s)?

Resources growth, infrastructure construction, technology advances, business opportunities and optimism have served Australia well since the last quarter of 2007 which is when history will place the commencemnt of this world crisis cycle when major financial institutions began to distrust each other’s credit commencing a squeeze which sent many to the wall and a re-assessment of asset values which is not over yet. If anyone wants direct no nonsense guidance about business, investment, companies and opportunity in Australia come to www.maddenslaw.com

Business is ticking over nicely but residential property slows & asset values uncertain

As I move around the city of Sydney from meeting to meeting, all report that small and medium size businesses in my clientelle are ticking over nicely but directors and managers are nervously sniffing the breeze to assess what kind of economy unfolds. The brief excitement in the spring residential market seems to have subsided with fewer sales going through conveyancers. And of course, the big end of town is content with funds raised in the rights issues and the outcome of the stimulus package despite volatile share prices and shareholders sniping at directors remuneration in recent round of AGMs.
I suspect that assets will reach their true value early in the new year at somewhat lower levels despite what the share market may do in the coming months.

What can it mean? Gold price goes higher & the Sage buys a railroad & Roubini predicts crash as US$ goes up

4 Nov. The IMF gold 200 tonnes of it went to the Indian central bank despite the Chinese offer to buy it. Who bought the the other 203 tonnes? No doubt the Chinese will keep buying on market. Would that mean the price must go higher to US$1200 per oz  or is the market flooded? Now piece that with Warren Buffett’s bet on the US economy recovering quickly by buying a huge railroad based in Texas.

  If Buffett is right the US dollar appreciates as the US economy comes good then Professor Roubini’s prediction that the international carry trade & its asset bubble borrowing USdollars to buy assets shall crash with some considerable havoc. Interesting times are not over! Never dull is it?

And from Europe: “But the surge in gold prices may be a thing of the past soon. Gold prices are set to fall to $800 or below $800 levels thanks to the decision of the G-20 countries allowing the International Monetary Fund (IMF) to sell 400 tons of gold reserves in the open market to raise funds for its global projects. ‘ – Commodity Online.

”Gold prices are set for a big fall in the next two to six months mainly because of the IMF gold sale. There will be abundant supply of gold in the market in the coming months thanks to the release of 403 tons of IMF gold. Moreover, with stock markets looking up after the big falls, gold prices are likely to fall to $800 or below $800 levels,” bullion analyst Mark Robinson told Commodity Online.

What next? Roubini says we have time before next catastrophe

“Most investors follow the same strategy of borrowing in dollars and investing in assets across the world and when the greenback’s downward trend reverses, there may be a crash in global assets” Nouriel Roubini, Chairman, RGE Monitor, told CNBC Monday. There is a wall of liquidity…chasing assets,” Roubini said “Now we are in the mother of all carry trades,” he added. “Asset prices have been inflated by the cheap funds but the dollar cannot keep falling forever, and there could be “a market crash all over the world” when the currency’s course is reversed. But this will not happen too soon as the real economy is still very weak and the Federal Reserve is likely to keep interest rates close to 0 percent for longer”, Roubini added. “The reality is that the U.S dollar is the funding currency of the carry trades. Because of that the dollar weakness is going to continue for a while.”  [Roubini was not the only one predicting the GFC ]

Comment from broker in the market Jeremy O’Gorman: ‘I am not sure what scares me more, the absolute need for trading houses around the world to work out ways to manipulate the financial system or the lack of regulations that allows the exact same situation to occur less than 2 years after our first melt down in the GFC.’

So what does myself, Philip Madden say? I the am thinking the same, as I believe are you. How to get set and take advantage? Rather basic but if one accepts this analysis best to stay in cash as it is impossible to predict timing. Roubini could be wrong about interest rates staying very low for longer – why would anyone invest in USA with such low returns?

What time is it Cassandra? Time for that 2nd correction (equities & property crash)

Now Cassandra what time is it? Time to take a second hard look at the share markets when share Price/Earning ratios are averaging 27! and there are reduced profits, reduced dividends or none! What else is this? They are talking up real property too soon, when most banks are just starting the mortgagee sale process (inter)nationally because they did not want to take the write downs while raising capital or begging assistance from government. Have you seen any loans to small-medium-enterprise? It is now so tight for even big business unless they had a rights issue recently.

Brave hearts may remain in the market and fools may now wade in, but have a look at the historical crashes, always a repercharge almost like nothing has happened (like now) after the first awful crash and then….who took the floor away….freefall for a total shock. So stay in cash, get into cash, be prudent, be vigilant on the data and spot the vested interest(s) talking up risk again. Keep smiling and be kind to your fellow man (and woman)

Significance of seeking connection and do not be anxious

Two happenstance of yesterday made an impression on me. Walking the beach with my family we met old friends at the south end who we used to see quite a lot . He is now redundant after two banks merged and after 25 years service. He is positive, fit, seems happy and getting in golf with old friends. Asking about mutual friends, clubs and generally interested in life. Not anxious and getting on with life.

In the evening I saw the film by Nora Ephron, ‘Julia and Julie’ relating the story of Julia Child’s life and her French cooking reprised by a blogger. Julie started her blog at a low in her life and by the end of a year of passionate recipes and tribute to Julia Child’s attitude to life, good things began to happen.

None of us need be anxious about life; if we play to our strengths and get on with it very good things will happen.

Money in sustainable business investment decisions – absolutely

I read that the US tosses 22,ooo tonnes of perfectly good food away every day and that the world produces enough food for 12 billion people annually and we have 6 billion to feed. Why are too many of them starving?

We dump huge numbers of superceded computers and elctronic communications devices each year in land fills yet the rare elements in the circuitry and screens are some of the most valuable on earth. Why?

There is a corporation called 5 Star Green which perfected technolgy for making large bricks from rubbish years ago but can not get adequate investment to go into major production despite the facts that the bricks are cheap, clean, build a house very quickly as they are relatively large and light to handle, require  no finishing as they are smooth and paintable and superb insulation. Non-organic rubbish recycled brilliantly. Why isn’t their product everywhere?

Perhaps the only answer can be there is no new thinking and too many of the same people who brought us the GFC are still presiding over banks, private and government funds and the purse strings around the world. Show me some new sustainable thinking and I can show you where the money is!

Gold at US$1050/oz and dealers predict US$1500 – what can it mean?

Gold at US$1050/oz and dealers predict US$1500 – what can it mean?

It must mean some very wealthy people, cashed up corporations and governments, all well-informed, are extremely nervous about the world economy and the US dollar in particular. Historically, this kind of hedging in gold immediately precedes major dislocation like wars, economic catastrophe, national collapse. This flight to gold is more evidence that this GFC is not over and may be just starting whatever else may be about to break.

So, apart from buying gold, what can anyone do to prepare for whatever may come? Plenty! Get out of debt, stay out of debt, look for sustainable solutions for your next major decision. Thinking creatively what am I doing now? What goes into this communications device? My Blackberry and my cellphone too? Rare earth metals, molybdenum etc., a whole range of them and where is 90% of the worlds known supplies mined? China and they are using them not exporting them. No brainer really, invest in miners of rare earths in the rest of the world and you will make your fortune. These rare earths are rarer than gold, more valuable and more useful in our world of communicating devices. Gold runs like this always make me think….

Does anyone invest in truly sustainable technology?

From what I see it is No. For instance we have patented technology proven
by Lloyds which removes sulphur & toxins from diesel fuel cheaply. Its brilliant.
Is government interested altho low sulphur is mandatory? No. Investors? Yet
to meet sensible people who understand the potential, significance for eco-
sustainability, transformation for cities & industry and the wealth this process
will deliver. Contact me if you support sustainable & want to know more
better still if you want to support & invest!

sustainable architecture sustainable works

There is a lot of talk about going sustainable and reducing carbon. Greenwash most of it! I have built the Australian Sustainable Development Fund with my colleagues from StableGroup.com.au go and look at their site. Better still visit  us at LifeStyle Working at 117 Old Pittwater Road Brookvale in Sydney for the best example I have yet seen of really practical operational truly sustainable architecture in a workplace.

The debate about the ETS is enough to make me cynical about the life experience and intellectual capabilities of our politicos! People we ourselves must make the moves and change the way we live and work! Anyway, we are.