Debt spiral looming for Australians

Posted to Herald Sun (18/5/2011) on 18/5/2011 at 1:53 AM
Commenting on "Debt spiral looming for Australians"
http://www.heraldsun.com.au/news/more-news/debt-spiral-looming-for-australians/story-fn7x8me2-1226057787036

Australia is definitely heading towards a recession. The truth lies in the trilogy of negative demand - real properties, cars and household items.

In recent months, the supply of properties in the market has increased, but there are many people who cannot afford to buy. They have neither the earning capacity to convince the bank to lend them money, nor the ability to repay after the initial down payment. Renovation market has also slowed down.

Car is the largest personal asset item. Car sales have also slumped, and compounding the problem is the increasing petrol prices which turn away potential buyers from buying bigger cars or 4-wheel drives.

David Jones, Myers and JB HiFi are reporting slow sales for the past few months. This is the third and critical negative demand that puts the nail in the economy coffin.

Glenn Stevens and his RBA team are just not good enough to come up with inaccurate forecasts month after month. Sitting in the boardroom, looking at graphs on computer and talking with big businesses and then come up with the economic rationale to increase interest rate is unacceptable. Not all Australians are miners, and not all 95% employed are full-time workers!

Why June is too soon for an RBA rate rise

Posted to The Age (9/5/2011) on 9/5/2011 at 4:37 PM
Commenting on “Why June is too soon for an RBA rate rise”
http://www.theage.com.au/business/why-june-is-too-soon-for-an-rba-rate-rise-20110509-1eez3.html?

Predictions by Glenn Stevens and his team at RBA are far from satisfactory. Either the economic models used or the way the results produced by the models have been interpreted need to undergo vigorous challenge.

The trilogy of negative demand, as I called it, is a signal for heading towards a recession. This may sound farfetched, naïve and ill-founded, but a rationalist will see the wisdom of this doomsday prediction. The trilogy of negative demands is real properties, cars and household goods including fashions. These three categories of items are in descending sequence in terms of average value. In recent months, we witness the trilogy of negative demands take place.

I have written in many blogs and newspaper comments about my predictions, a lot more accurate than what RBA has been predicting. Using dollar value as the key element in prediction is inadequate. The total quantity demand must be taken into consideration for normalisation.

CPI increase, unfortunately, always targets at increase in price which can be due to real reason and artificial manipulation. If quantity demand is increased, causing shortage of supply and thus pushing up the price, then there is room to call for increase in interest rate to dampen the demand. However, it is irrational to increase interest rate because electricity charges, water rates, local petrol prices have gone up, and that the quantity demand of these utilities or items is in fact unchanged or decreased. In short, the total dollar increases bear no relation to the demand curves.