04 November 2010, The Day The Aussie Dollar Shows Its Strength

[tim armstrong]

AU$ may get even stronger in the next few days/months because Oz has just put up interest rates and US is about to inject another $600 billion not $500 as originally planned.

The only question i have to ask is how hard will it fall when things turn around for US

Well, this is a pattern that will continue. The $US dollar will not bounce back, neither will the UK pound. This IS the change in the world order that's been talked about for the past 10 years. Watch China and other Asian countries. The Aus dollar is reflecting the re-alignment. Have a read of Samuel P. Huntingdon's book on the new world order. Its happening and he said it 10 years ago. I think its good news. Also have a look at the UN publication released today on human development, particularly the projections for the next 20 years.

Not everybody agrees with this:

http://www.nytimes.com/2010/04/06/opinion/06brooks.html?_r=1&emc=eta1

Excerpts:

The United States already measures at the top or close to the top of nearly every global measure of economic competitiveness. A comprehensive 2008 Rand Corporation study found that the U.S. leads the world in scientific and technological development. The U.S. now accounts for a third of the world’s research-and-development spending. Partly as a result, the average American worker is nearly 10 times more productive than the average Chinese worker, a gap that will close but not go away in our lifetimes.

There's the problem - economic competitiveness is not the only measure of development. Research spending on what? arms,oil and pharmaceuticals to the benefit of who? But to the $AUD. Clearly a country with 23 million people cannot compete economically with one of 300 million. But where would you rather live ? According to the UN its Australia - for at least the next 20 years

[waza]

Excerpts:

The United States already measures at the top or close to the top of nearly every global measure of economic competitiveness. A comprehensive 2008 Rand Corporation study found that the U.S. leads the world in scientific and technological development. The U.S. now accounts for a third of the world's research-and-development spending. Partly as a result, the average American worker is nearly 10 times more productive than the average Chinese worker, a gap that will close but not go away in our lifetimes.

There's the problem - economic competitiveness is not the only measure of development. Research spending on what? arms,oil and pharmaceuticals to the benefit of who? But to the $AUD. Clearly a country with 23 million people cannot compete economically with one of 300 million. But where would you rather live ? According to the UN its Australia - for at least the next 20 years

Hmm with the aussie $ this strong my vote on where to live is Thailand, at least for the forseeable future.

[mommysboy]

It is an amazing sight to see, I wonder how long it will last or if it will go further.

Baht exchange rate is roughly the same as it has been for a few years. In fact five years ago I remember 31. Nevertheless, it's a real result when you consider pound, dollar, euro.

Lucky old Aussies !

It may well last a couple of years too.

USD could really tumble.

, it was

It was only 2 years ago that the $AU was at record lows to the Thai baht, $1=20 baht, today its $1= 30.046, Quite a nice turn around.

I agree I am in China now and the Aussie worker is 10 time more productive than the Chinese worker. But that is mainly down to the eduction systems. The Chinese aren't trained to think laterally, that is to problem solve. So any problem stops production.

A quick story on automation. When I worked for GM Holden, workers in the weld shops complained about the heat in the summer, the company didnt like the regular stops of production for heat relief, so automated the weld shop, but then the robot couldnt work in the extreme heat and the factory had to be airconditioned. The end result millions spent on automation and airconditioning, hundreds of jobs lost, and no nett increase in production.

I wouldn't say it's because of anything other than the credit crunch, which basically levelled those effected, US and UK being prime examples.

I'd guess Aussie workers might actually be less productive than UK or German workers for instance.

Australia is really now connected to Asia, and the credit crunch has been a very western phenomenon.

Obviously the ace in the pack for Australia is commodities, primarily destined for China.

As regards the currency, well obviously there is the 5% interest rate (is that right?).

Basically US and UK plough 'free money' in to foreign bonds knowing they can make a very clean and safe profit, hence the buoyancy of AUD and Baht, and the devaluation of home currencies. It's really a form of protectionism.

Worth feeling good about, but just enjoy it for what it is, anyone who seriously thinks the west is down for good must have their brains in a place diammetrically opposite to their heads.!

[Naam]

Basically US and UK plough 'free money' in to foreign bonds knowing they can make a very clean and safe profit, hence the buoyancy of AUD and Baht, and the devaluation of home currencies.

where did you hear this fairy tale?