03/24/02
While there are some features of Australia that puzzle a visitor from the States – driving on the wrong side of the road, drains circling the wrong direction, unbelievable heat in the middle of March, Australian rules football – there is one thing that is remarkably familiar: debt.
Australia is a credit-financed society. Banks and finance companies "queue up" to get at the average Aussie’s money like 9-to-5ers at the pub during happy hour. "Levels of personal debt are over 40 percent of spending," says one reliable source. "In 1999 the average household debt was $26,500 and Australians owed unprecedented amounts on credit cards (an average of around $3,000 per person) and personal overdrafts." The year 2001 saw an unprecedented level of bankruptcies.
And, as with the rest of the world, all eyes down under are on Wall Street. "Economic recovery" in the US means, Australians seem to believe, the good times can keep rolling here, too.
Meanwhile, a profit warning from McDonald’s, that great bastion of the Western world, helped to smack stocks down on in New York on Friday… just at the moment when US investors are beginning to fear the Chairman will yank the IV from their veins. The Dow closed 179 lower for the week to 10,427 on "worries" that the Federal Reserve will soon start raising interest rates.
The Nasdaq also fell Friday… down 16 for the week to 1,851. The S&P 500 index shed a sliver on Friday to round out the week at 1,148.
Cheers from down under,
Addison
March 23-24, 2002
* * * * * * * * * * * * * * * * * * * * * * * * * * *
THIS WEEK in THE DAILY RECKONING
by Bill Bonner
03/22/02 PAPA TRAPP’S TEARS
"… We may not know anything about foreign policy, but we have a well-developed sense of absurdity. The WAT has been such a big hit with the public, the patsies want more of it. When will they haveenough?…"
03/21/02 TOO BIG TO SUCCEED
"… We Americans have a right to be proud. But pride is a challenge to the gods. We don’t know whether it will be the god of the markets… or the god of war… but… one of them is bound to take a swat at us before toolong…"
03/20/02 STOCKS AND WAR
by Doug Casey
"… If you trace the history of America’s wars relative to its stock market, what stands out is that betting against America has always been a losing proposition… the market usually gets quite weak at the start of a conflict… but history tells us that it’s smart to buy stocks after the initialsell-off…"
03/19/02 NAPOLEON W. BUSH
"… we still like our heroes. But we know that just as every dog has his day, every fool has a moment of glory. And it’s a rare hero who doesn’t also make a complete mess of things when he gets achance…"
03/18/02 MONSTERS TO DESTROY
"… In the long, gray winter – deprived of sunlight for months – a love-starved Luxembourger might begin building a bomb in the trunk of his Mercedes… Luxembourgers are just as likely to go mad as everyone else, of course. But there are just not enough of them to engender much worry… America gave the world little trouble in the first decades of its life, she was too small and too remote. But by the 20th century the world hadchanged…"
Sign Up for The Daily Reckoning e-letter and receive a copy of Bill Bonner's The Trade of The Decade report… at NO CHARGE.
We Value Your Privacy.
ShareThis
