http://stockcharts.com/charts/gallery.html?$usd

Clearly the US dollar has strengthened significantly since the recent bottom, in absolute terms (well as absolute as the US Dollar Index gets). Therefore, the decline of the AUD against the greenback needs to be looked at in context.

Having said that, my understanding is that commodity exports contribute significantly to the balance of trade in the Australian economy. With global commodity prices falling and increasing expectations of significant global growth slowdown, it is not surprising that the Australian dollar is depreciating like this.

Apparently, a large portion of Australian debt is considered high quality debt by many, based on the grounds that a good portion of Australian debt is held by high income households. However it is apparently also the case that as a nation, our household savings are not too fantastic. It will be interesting see what happens to this “high quality debt” if these high income households suddenly become low or no income households thanks to a surge in unemployment sparked by the commodity slowdown.

Perhaps this scenario is impossible, but then again, I'm not an economist.

In any case, maybe at least now, powers that be might recognize the need to diversify our economy using our mineral wealth. Sometimes it makes sense to close the barn doors even after the horse is long gone.

http://stockcharts.com/charts/gallery.html?$usd

Clearly the US dollar has strengthened significantly since the recent bottom, in absolute terms (well as absolute as the US Dollar Index gets). Therefore, the decline of the AUD against the greenback needs to be looked at in context.

Having said that, my understanding is that commodity exports contribute significantly to the balance of trade in the Australian economy. With global commodity prices falling and increasing expectations of significant global growth slowdown, it is not surprising that the Australian dollar is depreciating like this.

Apparently, a large portion of Australian debt is considered high quality debt by many, based on the grounds that a good portion of Australian debt is held by high income households. However it is apparently also the case that as a nation, our household savings are not too fantastic. It will be interesting see what happens to this “high quality debt” if these high income households suddenly become low or no income households thanks to a surge in unemployment sparked by the commodity slowdown.

Perhaps this scenario is impossible, but then again, I'm not an economist.

In any case, maybe at least now, powers that be might recognize the need to diversify our economy using our mineral wealth. Sometimes it makes sense to close the barn doors even after the horse is long gone.

http://stockcharts.com/charts/gallery.html?$usd

Clearly the US dollar has strengthened significantly since the recent bottom, in absolute terms (well as absolute as the US Dollar Index gets). Therefore, the decline of the AUD against the greenback needs to be looked at in context.

Having said that, my understanding is that commodity exports contribute significantly to the balance of trade in the Australian economy. With global commodity prices falling and increasing expectations of significant global growth slowdown, it is not surprising that the Australian dollar is depreciating like this.

Apparently, a large portion of Australian debt is considered high quality debt by many, based on the grounds that a good portion of Australian debt is held by high income households. However it is apparently also the case that as a nation, our household savings are not too fantastic. It will be interesting see what happens to this “high quality debt” if these high income households suddenly become low or no income households thanks to a surge in unemployment sparked by the commodity slowdown.

Perhaps this scenario is impossible, but then again, I'm not an economist.

In any case, maybe at least now, powers that be might recognize the need to diversify our economy using our mineral wealth. Sometimes it makes sense to close the barn doors even after the horse is long gone.

However, the Brazilian real has dropped by almost 30%, and that country is as dependent on commodities as Australia, if not more. There may be a grain of truth to this theory.

As well as the commodities issues I suspect that there are some real worries about the Australian housing market. This whole crisis began with inflated housing prices in the US. Property in Australia is very expensive. Very glad I don't have a mortgage right now.