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Christopher Pavese, CFA
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Mr. Pavese holds several positions within the Broyhill family offices, serving as Chief Investment Officer of Broyhill Asset Management and BMC Fund, Inc., an SEC registered investment company. His primary responsibilities include macroeconomic research, strategic asset allocation, portfolio... More
My company:
Broyhill Asset Management, LLC
My blog:
The View From the Blue Ridge
  • Who Can It Be Now? 1 comment
    Jul 27, 2010 9:03 AM

    Who can it be now?

    The Australian government ran conservative fiscal policies during the commodity boom, resulting in a government debt level among the lowest in the industrialized world.  More recently, the commodity exporter largely escaped the jaws of the Great Contraction.  But now, after one of the longest economic booms in the developed world – virtually “recessionless” for nearly two decades – households appear to have caught a nasty case of what BCA Research calls, “Anglo-Saxon Disease.”  Household debt levels in Australia has surged past both the US and the UK, reaching more than 110% of GDP, as consumers have continued to spend right through the crisis.

    While local media often maintains that Australia simply dodged the bullet, we are not quite sure.  Any significant reduction in commodity demand could easily provide Australia’s property bubble with a Chinese Pin. We are already beginning to see monthly declines in Chinese home prices, as Tightening Property Policies Continue.  Then again, bubbles of this magnitude often collapse under their own weight as gravity pulls valuations back to earth over time.

    The most recent edition of The Broyhill Letter, which details the risks of an overheating Australian property market, was recently published at Forbes in two separate installments here and here.  The full letter can also be downloaded directly below.

    The Broyhill Letter (Q2-10)



    Disclosure: Short Australian Dollar
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  • Paul Hanly
    , contributor
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    Also to be considered is that the substantial stimulus that has been applied to the Australian economy is reducing now and the massive school building program will be largely completed by the end of October.

     

    Anecdotal evidence is that many builders and construction workers are concerned about the forward order books and prospects after November.

     

    Both the governing (at federal level) Australian Labor Party and the opposition Liberal and National coalition seeking government at the 21 August federal elections have committed to return the budget to surplus by 2012.

     

    Latest TV news reports ((ch 7, 29 July) are that house prices have continued to rise and there are concerns first home buyers will be priced out of the market.
    29 Jul 2010, 08:36 AM Reply Like
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