With so much continuing to unravel economically around the world, it is impossible to accurately assess when we will reach the bottom. Each day that passes seems to indicate a deeper and more severe set of problems than first predicted.
In an environment where laughter is a valuable commodity, I can share a joke that is circulating amongst global diplomats and financiers: “What is the difference between Iceland and Ireland? One letter and six months”.
Referring to Iceland’s recent meltdown and Ireland’s collision course with the same fate, this joke has a deeply serious suggestion – that no matter which part of the world you live in, you are feeling the effects of the global frost.
Reports are indicating that Iceland, Ireland, Japan and other countries are in “depression”, rather than “recession” and with the UK predicted to be close behind, the true impact on Australia is still unclear. Chinese production is decreasing rapidly and the demand for Australia’s commodities is dropping daily.
The deflationary impact on housing prices throughout the world is presenting a new set of challenges for financial institutions and government as owner equity disappears.
We are all too aware of the requirement of lenders for borrowers to hold equity in property (usually in the form of a cash deposit). What will lenders require as property values decrease? Will banks call on borrowers to top up their deposits and what will happen if they can’t?
With new stimulus packages approved for the United States and Australia, the so called “experts” cannot agree on either side of politics. When leaders cannot agree it is little wonder that consumers struggle to find their way and ultimately choose to put off non essential or discretionary spending.
In watching the passage of voting for the stimulus package in the United States I was stunned that not a single Republican representative voted for the initiative.
The impact of indecision and cheap politicking is enormous – what has changed since President Obama took over from President George W Bush? What did George W Bush offer in his stimulus package that offered Republican members so much hope that they chose to vote for it?- Politics are very much at play!
President Bush has left a fascinating legacy that involves such mess and disaster that we are yet to fully understand it. I watch in total dismay as the politicians, law makers – our elected representatives use this terrible situation to further their political ambition. I hope they remember who they were elected by and whose interest they are supposed to be representing.