Hi everyone
Earlier it was announced that Congress had rejected the Wall St Bailout. And sharemarkets around the world crashed. The Nasdaq was down just over 9% in a few hours.
What does it all mean for us?
First, money will be very tight so make sure you have access to enough cash to see you through in the next 12 months. Have a few options up your sleeve just in case your banker gets a little nervous and decides to no longer provide you with the funding you need. Talk to other banks and have a store of ready cash handy.
It will get worse before it gets better so don’t even think about riding out the storm. It will be a long wait and you just might drown.
Think twice about any major expenditure right now. Access to cash is going to be critical. The banks will certainly be getting very careful about the loans they make in the coming months.
I agree with many commentators who suggest that the system in Australia is better controlled but it will not save us from the economic fallout. It will probably be less than what the Americans experience but it will be felt.
China is still predicting about 8% growth and that will certainly help our economy. But I wonder about the state of their banking system. It is relatively new and was established in the boom times. Do they have the rigorous regulation in place to ensure the soundness of their banking system? I’ve not read much about that and there is a little warning bell in the back of my mind. Then again, perhaps I’m too cynical.
For now, batten down the hatches, don’t be too adventurous and take your bank manager out to a very nice lunch.
Cheers
Hi everyone
I was in Europe for 7 weeks, longest holiday since I started my business. It was great. It went from the sublimely relaxing to extreme mountain stuff. The Austrians call it walking but it went far beyond that in my book. We were in the Alps between Austria and Italy. I’ve climbed mountains in this region a few years ago but this was harder!
When we climbed we were roped up so if I fell I’d be OK. On this so called ‘walk’ over the mountains there was no rope and it got veeeery dangerous. I can tell you from first hand experience that fear does overcome exhaustion! It was 12 hours a day, up and down the mountains (max altitude was 2,450 metres) mostly above the tree line, sleeping in the huts (they are great) and then on our way early next morning.
But the scenary was just magnificant - from the high peaks, to alpine meadows, to dense forests and the wildflowers were endless in colour and variety. So the rewards were there.
Now to the economy…
The ‘relaxing part’ was spent in Sperl Cafe (Vienna) reading the papers and eating too much of that freshly baked Austrian cake.
The papers are full of doom and gloom, much more so than in Australia. The Georgia situation has re-ignited very negative feelings about Russia. That hasn’t helped. Perhaps the mood is best summed up by a comment from an equity investor that I met, ‘I’m advising my clients and colleagues to buy gold. Not the shares but actual gold. Even though prices may go down I still think that they’d be better off in the longer term.’
With a US election in November and the uncertainty in Europe we all need to monitor the implications for the Australian economy. This will impact on both business and personal financial positions. My advice, read the Financial Review and the more reputable commentators in the next 6 months. You might just save some money.
Cheers