" On the other side of the fence we may see increased savings and debt pay downs by households which represents cheap money for banks on the one hand but kills the consumer economy on the other."
Thats the problem, the debt is not being payed down, household debt is rising, wages are still falling in real terms as the cost of living rises.
Government spending is rising at speed.
With wages low compared to the cost of property and other major items people dont have spare money. Most people I know dont spend much on things like alcohol and cigarettes. Most people I know dont smoke at all. The last figures for the economy have fallen. Thats because people dont have the money to spend.
The only positive I see is being people dont have the money for major items they may buy the more minor items. Even new cars have fallen.
The AUD is at 72c in just a few years it has fallen 30% about the same as some of the banks.
Ive been alive since the mid fifties and Ive seen a few recessions, 70's,80's,90' in fact one every year imo the 70's was the worst but this coming one is going to be worse than all of them imo. There will be no big collapse just a slow damaging grind downward. Its going to take a few years but the Housing market is rolling over in every state now, wages depressed, rates will rise regardless of whether the banks use USD or Yuan makes no difference. This current BOOM has been alive way too long and is just propped up by deliquent CB strategies.
The RBA can do nothing now, imo it has gone beyond anything they can do.
