Another stable day awaits the ASX. The Dow’s up a couple of hundred points. Gold is steady. The dollar is holding around 73 US cents.
The real action on markets won’t kick in until we start to see the US dollar strengthen.
There’s been a very strong correlation between the softening US dollar and the resumption of rising commodities and share markets.
The USD index (which measures the USD against a basket of currencies) fell around 8% from the start of the year. But, in recent days, the index has started to recover some of that ground. When that strength begins in earnest, watch the volatility increase.
Speaking of baskets…what a basket case this upcoming election is shaping up to be.
Eight weeks of Malcolm and Bill — and the token Greens — telling us why their ‘cures’ for our economic ills are just the tonic voters need…please, end the pretence now. Your economic quackery is the problem, not the solution.
In addition to the Federal pollies eight-week long vote buying exercise, in Queensland we have our (Labor) Premier telling us how Malcolm is dudding our state by not handing out a bigger bucket of money for her government’s wish list.
No doubt each state premier will also be trying to extort funding promises from Malcolm and Bill over the next 53 days.
The fact these handouts aren’t properly costed is completely irrelevant. Don’t worry about minor details like that.
As my colleague Greg Canavan pointed out in yesterday’s Daily Reckoning, the budget’s forward estimates were in tatters before the ink even had time to dry on the Treasury’s papers.
The Treasury’s rose-tinted forecast on the iron ore price means there’s about as much chance of the budget numbers being remotely accurate as there is of me being named in the Queensland State of Origin team.
It is a farce that these men and women ordain themselves with the title of ‘The Right Honourable’. Wrong and Dishonourable would be a far more accurate portrayal of their political characters.
The problem is this is IT…the supposed cream of the crop.
Good God what a miserable harvest it must have been.
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The government’s dirty little deal on the submarine contracts (endorsed by the Opposition), to sway South Australian voters, gives you an insight into the priorities of these people. It’s all about power…and to hell with prudent financial management.
Both sides acknowledge we have a growing debt and deficit problem. The Greens can be excused for not recognising the problem, as they truly believe there’s a magic money tree at the bottom of the garden they inhabit.
The solution to said problems? Fabricate GDP growth numbers and keep spending.
Why do they need to go to such lengths of deception? Part of it comes down to a politician’s DNA; the other part is that we, as a society, cannot handle the truth.
So we go on our merry little way, pretending this lie of living beyond our means can be lived forever and a day.
If the government really wanted to splash around a lazy $10 billion, here’s a suggestion: pay for five million of us to go to Greece for a few days and see what a society that lived that lie looks like — a wake-up call that just may pay dividends.
Oh, I forgot to mention: taxpayer-funded study trips are only afforded to The Wrong & Dishonourable…
While the government has its dodgy budget in hand, the Opposition is snuggling up to the unions for more campaign money. Money that comes with some serious strings attached. These relics of the industrial age, if allowed, will hold this country to ransom with their ridiculous workplace demands.
Has anyone told these people and their blinkered members that there are a couple of billion people to our north who are offering their labour at a fraction of the price?
Whether you call it exploitation, slave labour, or un-Australian, like it or not, that’s the cold hard reality we face in a globalised world.
Capital will gravitate to cheap labour.
Putting your head in the sand, pretending the First World is all ours and that it is business as usual is a road to ruin. People wonder why factories, mines and other industries close the doors — except, of course, submarine-construction businesses that cannot build a canoe — when these competitive pressures makes many of our industries uneconomical.
Go through your cupboards, closets, tool boxes, and electrical goods and see how much Australian made stuff you have. I bet there’s not a lot. Why? Because, with stagnating wages and falling retirement incomes, each of us wants the lowest priced, best quality product we can get — and that’s not coming from Australia.
With our minimum wages, penalty rates, maternity leave, bereavement leave, sick leave, holiday leave, stress leave…you know what leaves? Our money to cheaper imports…
Throw into the mix the rapid uptake of automation (and, with really cheap interest rates, why wouldn’t a business invest in technology to replace expensive labour?) and the disruption to the workforce is going to be complete.
Instead of recognising the threat to our economy from a global oversupply of labour, an excess capacity to produce things and intelligent technology, we have politicians actively pursuing policies that take us deeper into debt, weakening our defences against the next (and more powerful) economic shock that’s building within the global economy.
This irresponsible, reckless and blindingly stupid approach somehow passes as credible economic policy. And the most galling part is they can look you in the eye as if they really believe it. And if they actually do believe it, God help us.
Here’s my take on what I see happening.
As governments, and their central banks, pursue their so-called ‘go for growth’ policies, the gap between rich and poor is going to widen.
Stimulus strategies only stimulate the assets of the ‘haves’.
As the ‘have-nots’ feel the squeeze, and the disparity between the two groups becomes greater, governments are going to be forced to quell the revolution with more handouts, while announcing policies designed to tax the rich.
In truth, the rich will find a way to minimise the tax…or they’ll just head for the Bahamas or the south of France.
As far as I can see, we have to choose one of the following on 2 July: the Devil, the Deep Blue Sea, or a Donkey vote.
I think the ‘ass’ is smarter than all of them.
In the meantime, I’ve decided to tune out and watch the US elections instead. They are far more entertaining, and somewhat unpredictable. At least Trump is not (at least not yet) your cardboard cut-out politician and is good for some shock humour…far better than mundane Malcolm and boring Bill.
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