Ausnomics #5

The last ExposAsia of 2010, One Trick Pony? looks at Australia's current commodity boom and compares it with previous episodes of commodity euphoria in the country. These have all ended badly.

These days as the Australian government is apparently attempting to replicate the problems of the late 19th Century by also encouraging a new wave of financing sources that will keep not only the commodity boom firing but also the housing market - and both are intrinsically linked with each other. Recent legislation to create a 'fifth pillar' in financing, introduce permanent deposit insurance and allow financial companies to issue covered bonds are all worrying at this late stage in the cyclical game.

It is difficult to determine the timing of the downturn commodity/housing downturn in Australia but we believe that it is all bound up with real demand, and sentiment, from China.

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