Global Economic War Chest Almost Empty

Global Economic War Chest Almost Empty

Welcome to the July 19 edition of Tony Alexander's Weekly Overview

This week I start by taking a five page look at the way central banks and governments in most Western countries are now in the unfortunate position where traditional economic stabilisation via fiscal and monetary policies is no longer an option. This is bad news for global growth in the next few years in an environment where there is no solid sign that the deleveraging process initiated first by falling US house prices in 2006 and then the global financial crisis is easing.

I then list notes taken from an Economist Bellwether conference in Sydney last week. In the Interest Rates section after noting a small decline in wholesale borrowing costs this week I take a look at what I would do if I were an investor at the moment – a section I shall only include every few months given that the comments hardly move from month to month.

In the Housing section in the absence of fresh data I take a run through of the fundamentals driving the market upward and ask to what extent the deteriorating global economy will impede our market’s rise, whether already high price to income ratios matter, and give a reminder about the approaching affordable housing crisis.

In the FX section I look at the week’s climb back up in the NZD to a record high against the Euro.
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Tony Alexander
Chief Economist
www.tonyalexander.co.nz

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