“Our economic future is increasingly underwritten by the rise of Asia.”
It is interesting in Asia where lifestyles are good, the flow on economic slowdown has been less severe.
Something must be different?
Tonight I got a newsflash in my email alerts that Berkshire Hathaway has had its first loss since the 9/11 insurance claims payout in 2001. In a Washington Times version it says two credit rating agencies took away Berkshire’s “triple-A” ratings in 2009, including Moody’s Investors Service. Berkshire owns 20.4 percent of Moody’s parent, Moody’s Corp. Twelve months ago people sat up at hearing such news. Today it is just more old news about the economic woes.
This morning I was sitting in my favourite coffee shop near my home off Sukhumvit Road in Bangkok. I was having breakfast and reading the local and international papers. The Nation and Bangkok Post ran stories on business and economic issues but I noted the Herald Tribune had an editorial about US April unemployment figures released this week. The article said the reduction in the rate was hailed as a good sign. Another column stroked reader’s intelligence with stories about workers turning up to work for free.
I was also curious that half a million people losing their jobs in April in the US was seen as good news. But to be fair (if you still have a job there) one could be forgiven for seeing it just as a lesser loss then recent months. It was also curious that not too many months ago a report of even half those job losses was hailed a national disaster. I guess the message in here is the upturn is coming. Or is it? Not even Blind Freddy would be brave enough to say that indicates improvement is now on the way.
But this makes nearly 14 million unemployed in the US with many countries around the globe with a similar grim state.
In my job I am privileged to be able to empathize with more than one country and location I can call home. In my hometown in Melbourne Australia earlier this week I was treated to breakfast by my long time friend and business colleague, Ken Matthews who is Managing Director of, Matthews Steer a leader second tier business advisory firm in Melbourne.
Over scrambled eggs and coffee, before heading off for a busy schedule for the day, Ken told me some of the concerns they were studying now. He discussed advisory strategies for the so called false bottoming theory with the signs of the economic recovery. He said there is a school of thought that the signs of a recovery wave we are seeing could be, in metaphoric economic surfing terms, “A Dumper“.
He was also telling me about his schedule next week for the regular seminar program his firm runs for their clients and guests. This one will feature economist and highly rated popular presenter. Jonathan Pain. With such a notable speaker it is quite unlikely there are many guest spots left. But if you are in Melbourne next week and want to go, give Ken or his staff a call. I know it will be very worthwhile.
And we here in Australia very, very sadly have also turned our homes into glorified bank ATMs. Hence as a consequence, household debt in Australia now is at an all time record high as in absolute terms and as a multiple of income.
If you look in fact at house prices in Australia over the last 80 years on an inflation adjusted basis, we are currently approximately 30 per cent above that 80 year trend line. So in actual fact for us just to get back to the trend line we would need to decline by 30 per cent so a 20 to 25 per cent decline is possibly quite conservative.
In that interview he also reiterated that our economic future is increasingly underwritten by the rise of Asia.
If Pain and others are right, then the falsehood of the credit card world that many of us live in is still not fundamentally fixed. This still leaves high risk of more bad news as financial markets continue to correct and/or heaven forbid go back into free fall.
For my money all I can say is getting the house in order is a must no matter what. Get that credit card paid off and then just cut it up would be a good choice for many as a strategy. Same if you are in business.
So it seems the signs are still there that the tough ride is clearly a long way from done yet. And for those not in good shape it will be tough.
I wonder why it is not the same in Asia.
Is it because lifestyles are different with expensive home ownership and a credit card driven society less of the norm?