Aussie Dollar Plummets
 

AUDUSD=X: Basic Chart for AUD to USD - Yahoo!7 Finance - Share Prices, Charts, News and more

Looks frightening:eek:

I'd say it's a matter of perspective.

It doesnt look frightening to those of us who work overseas and send our savings home. Nor, I imagine, would it look that bad to farmers, manufacturers, the tourism industry (especially the airlines) etc. :ok:

Yup...its all of about 4 cents below the 25 year average...terrifying:rolleyes:

Big payrise in Oz$ terms for me and all my mates in the last few months:ok:

Toys for the Bo are more within reach then hey?;)

I was lucky with my toys...... mind you the next big hit is a 20% increase in the GST amount I will have to pay when the goodies come through customs.:(

Hateful for me as an importer ,but it wasnt that long ago it was around the 50 cent mark
75c would be good for the country but I got a felling it will climb again.

Tin

I do recall a time where it ht around 38-39c ...... unless that was a nightmare I had:rolleyes:.

I see the euro is falling and others..... so this is against the USD :ugh: And I thought their economy was all screwed up.......... gotta make ya wonder!

I think around the 80c mark will be the norm, but who knows!

J:ok:

US economy tanks...their $$$ goes UP....pls explain.:ugh:

It's actually our dollar going down, check it against the cross rates! The US is one of Australias main trading partners, our other big partners China & Japan rely heavily on the US dollar also, hence the US dollar dives our dollar dives more....:eek:

Jaba hope not.:uhoh: you arent thinking of gold at $USD34 an ounce in the 70's?
When I escaped from Maoriland in the 60's a maori pound would get you one pound two and six in OZ.:uhoh:

The drop could be short lived with the 1% cut in official interest rates just announced!:eek:

Interest rate cut!

Why will a drop in % rates firm up the AUD?

Based on yields and global economic doldrums this should help it get clobbered. AUD- carry trade, sentiment and commodities currency???

And Then - agreed! Interest rate cut will put pressure on the AUD if anything, should go down some more...

The AUD is trading about 64 US cents, a whopping 35% drop from its peak just a few months ago.

In theory the AUD is becoming more attractive for students from overseas coming to train in Oz, but with a global recession becoming inevitable, I wonder how many airlines and operators will be left operating or actively recruiting.

I hope yesterday's rate cut will stimulate enough domestic consumption but unfortunately so much is dependent on the rest of the world.

Received the following email yesterday:

Lodown, that's pure gold :}

Makes me laugh even after looking at the value of my funds, and that says something :ooh:

'lodown' you email sending friend has gotta run for president, no come to think of it he/she won't make it, their too clever:ok::D
Would have been a good idea to buy lots of green backs a few months ago & stuffed yr pillows with them.




CW

Tin
You are correct, my mistake it was 48-49 cents and that was back in March 01.

1973-74 it was around AUD$1.00 = USD$1.48

No wonder that was the flood of Cessna, Piper and Beech machines down under!

And for Chimbu Chuckles the average monthly rate for the last 25 years was USD$0.723 so you were a day ahead of your time coz it is that now!

J:ok:

AUD1=.6689 as of a hour ago.

For the younger viewers of this financial meltdown please ponder the amount of control being exerted by your elected leaders, precisely zero, for next time they are making claims as to their economic prowess. Australian political leaders, of whatever persuasion, are mere voyeurs - as much victims of what goes on overseas as we are. What they do next shows whether they are morons or not...and they all are.

When they drop interest rates and pump liquidity into the market - the way all western govts are at present -Australia less, so far at least - they are doing that in vain hopes of propping up asset values artificially. If assets are over valued, and real estate in Australia most assuredly is, making money too cheap merely sustains the bubble a little while longer (if they are lucky - and in the current circumstances they are, most assuredly, out of luck) and delays the inevitable correction.

In Australia of late an average house has been 6+ to 7+ x average wages. Historically in Australia it was closer to 3 - 3.5x. In the US, Canada, UK and EU just before the crash it was around 3.5x.

So what do you think house prices are most likely to do next? They weren't going to go up for much longer even without the current financial crisis.

NSW has been in recession all by its lonesome for 12 months. Victoria lives in relative recession permanently as does SA. That leaves NT, WA and QLD, the mining states (ACT is on a different celestial orbit:ugh: ) - with Asia going into recession demand for minerals will inevitably drop, offset a little by the helpful exchange rate - look for layoffs in the mining sector and the unravelling of house prices artificially inflated by CUBs (Cash Up Bogans) who went from marginally employable to 6 figures working for the mines and live in a house they think is worth 600k and have at least 1 very late model Falcon/Commodore/SUV (probably something similar for the Mrs), a new wake boarding boat and a brand new flat screen TV that covers half one wall in the living room opposite the brand new leather lounge...all bought with cheap credit...oh and lots of stuff for their 4 kids. Even a prime mortgage becomes sub prime in a heartbeat if you can't make the payments and the real value just decreased 40%. Think it cannot happen? Watch...real estate had tripled in the last 7 until just recently. Utter madness. Perth will be hit HARD.

Either peoples wages double or house prices crash - which do you think the govt would never let happen...which do you think the govt cannot stop?

This, our consumer economy, is what the Reserve Bank is desperately trying to prop up. Ultimately they cannot because it is impossible.

Jobs will be lost in the mining sector, tourism etc and that ripples out across the economy...estate agents, boat, car, TV, white goods sales all fall...law firms who specialise in conveyancing, trucking firms, mine support industries. All laying off staff and that ripples out further...builders, brickies laborers, plumbers, electricians, roofing people..and then banks.

Local and State govts start to feel the squeeze from a lack of stamp duty revenues etc...they wont fire people of course so they borrow and/or put up rates - we've seen that already - save water they screamed, so we did, they lost revenue and put up the rates based on artificially inflated land values. Wanna lay bets on how fast land values will be adjusted downwards and thus the rates?

Then we get to commercial real estate - already taking a hammering in the US - in fact had it not been for the commercial real estate bubble lasting until a few weeks ago the US would have been in recession last January. Businesses go broke and vacate leases, new businesses don't start and yet look at the mad building of commercial real estate that has been going on in the last 7 years - new shopping malls, industrial estates and theaters.

Look at the enormous amount of high density living that has gone up on the coast, much still unfinished...and look at the developers flirting with insolvency as we speak.

All this debt collateralised, leveraged, rated AAA and sold off to the ignorant in CDOs (Bonds) and worse, CDSs, (placing a highl leveraged bet that debts will default)...all completely un regulated...thank you elected officials again...and NO-ONE knows where all that worthless paper is or what it is worth...this is the real elephant in the beer fridge.

Then we get to the airlines.:sad:

This all must happen. Australia probably won't be hit as hard as the US/EU but we will be hit...how hard depends on how hard asia is hit. China, Japan and India in particular. We'll probably recover quicker because of the exchange rate and our minerals...3-6 years if history is anything to go on.

Who is to blame?

Ultimately our elected officials make the policies/turn a blind eye that allow this madness with low interest rates and affordable housing mandates that entice, or in the case of the US demand, lending criteria to be relaxed so people who couldn't get a mortgage all of sudden are convinced they can afford it.

Mortgage defaults/repo/bankruptsy were at historical highs in Australia for the 12 months before this latest fiasco..what do you think happens next?

If you're older than early to mid 40s you're seen it before - probably not as bad - for you 20 somethings watch and learn. Watch the pollies **** this up.:hmm:

Anyone else see the UWS Economics professor the other night on the 730 report? He was very much doom and gloom. I would not be going anywhere near starting out in aviation if you listen to his advice. Basically he said get rid of as much debt as you can and get employment in a secure industry and hang on. Best case scenario was a recession that hits hard and last for a few years. Worst case scenario was great depression stuff. I will post the transcript when they print it.

Chimbu, some very astute observations, as always ;)

BUT I think you're wrong in one of the central and early assumptions in your chain of events: Asia, and particularly China, and to a lesser degree India, will not be dragged into a massive recession methinks.

Why? China is so incredibly cashed up (they are the main financier of the Bush administration's loose monetary policy, a delicate irony often overlooked) and is such a huge net buyer of commodities, that it is very resistant to economic downturn elsewhere in the world. Most of the growth in China is home made. There are hundreds of millions of peasants climbing the social ladder, a development akin to industrialisation in Europe a few hundred years ago. In my view pretty much nothing can stop them. Also, they're protected by a system that is not pure capitalism and as such can be more inventive and ruthless in times of crises.

Of course trade of China (and India for that matter) with the rest of the world will slow, but most of the growth in those countries as I said comes from within and ripples out (private and infrastructure construction is probably the biggest part). Economic growth comes in large parts from population growth and access to means of production, and this is in its purest form what is happening in India and China these days. (I'd even go so far to say that this won't stop even if the world's financial system grinds to a halt. China will simply decree a system of their own and continue. A little far fetched? Maybe. Possible? Absolutely. But I am digressing..:E)

The US are going down fast, and deservedly so, and are taking the willing participants of their financial follies with them. Good! That bubble needed to burst much earlier. I won't look at my share portfolios for a few years and otherwise probably not be affected too much..

Aviation: As mining will continue to develop (maybe a bit slower), demand for aviation in those parts will not dry up. The training industry will continue to grow, demand from China, India, the Middle East and the rest of Asia will not slow too much (see above, growth there will continue). The Middle East is equally cashed up and rapidly growing with their oil money, so I don't expect that too slow either.

House prices in Australia? You're spot on, the situation is ridiculous and there's a bubble waiting to burst, and I've got a few bob stashed away for when it'll happen, I'll snatch up a nice little bargain then. Every folly needs at least two willing participants. In this case it's greedy bankers, estate agents and developers on the one side, and silly private individuals on the other hand who would rather ruin themselves than rent. They've got another thing coming!

Yes, eventually there will be a property crash in Australia, but it's not going to be as a direct result of this US-made crisis. (There'll be a change of government in the US soon, and things will calm down and right themselves, capitalism has a way of adjusting supply and demand automatically).

When it does crash Down Under, it'll crash big, because we're sitting on a house bubble worse than in the US (7.5 times annual earnings? Ridiculous and unsustainable!). But Aussie homes are not secured by the dodgy financial instruments that are falling apart in the US, and banks not majorly affected (we are at the end of the world, remember? :E).

What results the crash here will have I can't even begin to speculate on. But it will hopefully end a situation where the government can keep land release for development way behind population growth (thus artificially increasing land prices), and maybe, just maybe, it will dispel the imported Anglo-Saxon myth that it's somehow uncool to rent..

In three words: Keep flying guys :ok: Demand for pilots will continue to increase, especially because now even more budding pilots will shy away from forking out the cash to get their CPL's.