New Government

Hi
I was just wondering how other investors feel about the Governments handling of this economic crisis.
I personally think that the change of Government couldn't have happened at a worse time from an economic viewpoint. I'm getting tired of hearing them talking down the economy and standing idly by while Australians are losing their wealth and their superfunds.
Isn't it time for some reassuring words from Mr Swan or the government in an effort to calm the markets. Low unemployment, booming resourses, increasing migration, why are they painting such a bleak picture? Yes inflation is increasing but consumer confidence has already started to wain and spending will slow. The high price of oil will kick in soon to further slow the economy.
So what's the general feeling out there?

 

Hi Lorrimer,

Apparently spending is finally slowing.

Unfortunately these tax cuts which the government had to promise aren't exactly helping (ie, people will have more discretionary income which is contrary to raising interest rates to slow inflation).

Unless people are actually selling their assets they aren't crystallising any paper losses in their super fund. Depending on your superfund, you may have to pay tax when you sell down the assets, switch out or move into pension phase.

Personally, I'm ok as mine only does the first, being rather young and having another 25 or so years until retirement I am not to worried about the long term.

As long as the AUD is appreciating against the USD faster than the USD price of a barrel of oil we are ok. Eventually, the AUD is going to slow and oil is still going to continue upwards. I'm hoping between 2010 and 2012 a car manufacturer will release a PHEV (Plug-In Hybrids - EAA-PHEV). Until then I'll keep my current 2.5l car...

Remember, OPEC and the oil companies charge what they want because there is the massive demand for oil. It'll be interesting to see what happens when the oil reserves run out in 2040 (Peter Hall from Hunter Hall according to BP research).

Cheers,

Dan

PS All of the above is speculation and is not to be used for investment purposes. Before making an investment decision speak to your FPA registered Financial Planner.

 

I agree that the government could be doing more.
It's probably lack of experience as well as hesitation in case whatever they do or say makes things worse.

I think they could start with dissolving the RBA board and appointing their own people.
That would put a stop to the interest rate raises..

Additionally, with all their extra cash they could start a new bank or a massive super fund that lends every1 cheap money,
that would teach the greedy banks a lesson...

Finally, don't give people tax cuts, deposit the tax cut as a lump sum into our super fund.

Cheers