Reply to thread

Why are interest rates and inflation forecasts so low?

To some extent Interest rates are low because inflation expectations are low - As real returns (inflation adjusted) are what impact your future purchasing power, maybe this paradigm is not so bad.

Why aren't Aussie companies investing for the future? I look at this kind of data http://www.abs.gov.au/ausstats/abs@.nsf/mf/5625.0 and see new CapEx is down nearly half in only 4 or 5 years. This one really scares me.  Less nominal growth expectations due to lower inflation.

If prices of important stuff like housing keeps going up at the current rate what does it mean for standard of living which was one of the bedrocks of our awesome society? The fear you express in to much capital chasing too little supply in the last paragraph is probably more relevant here than in equities.

Why is our household debt so staggeringly high? Household debt is 1.8Trillion and Superannuation Equity is 2.2T.  The Market cap/GDP ratio seems to indicate these capital flows aren't effecting the equity market too much but my bet is that the cash component of the super pool is creating liquidity for the banks which is being converted into loans to buy housing.  Will it cause problems? Will people simply payout mortgages with Super once they get access - If they do can our society afford to finance their retirement if the primary residence exemptions stay in place and they choose not to fund their  own retirement but rely on the pension and pass on their housing wealth accumulation as inheritance instead? Do we become a class society based on housing inheritance?

All the big economic and social questions seem to be around housing! It is the wild card in the short to medium term IMO.

Another scary one I ask myself about: stock market is supposed to be about market mechanism causing efficient and robust capital allocation. But in Australia, every year, 9.5% of every salary earners real productivity is going into the stock market in the form of superannuation contributions, whether those companies represent a good or bad allocation of capital. It can't possibly be efficient, and has to be creating a base of bids for at least some companies that don't deserve it.

I don't mean to come on your interesting thread and be very bearish, just communicating my honest feelings, hope that is OK.More than O.K - thanks for the input.