Oz and the American Dream

[Rob Schaap <rws@xxxxxxxxxxxxxxxxxxxxxxxxx>]

G'day Penners,

Oz is currently hosting global economist, fund manager, markets guru,  and
besuited, arrogant, tell-the-dumb-locals-to-give-it-up-for-daddy, bloody
American David Hale (I mean to condemn but a particular genus of Homo
Americanus here, of course - Americanus Armanirolexicus.  They're a
migratory lot, and you only have to sprinkle a few consultancy contracts on
the average Australian lawn  to attract a flock of 'em.  As pump-action
shotguns are illegal here now, I don't bother any more.)

Hale tells us the US Fed's model for valuing stock has Wall Street
somewhere between 10 and 20% over the odds.  At current rates of euphoric
appreciation, that figure could be between 30 and 40% by Christmas.  By
then, he reckons, any correction might better be termed a crash (is he
telling Greenspan to hit the interest rate button now, I'm thinking ... ).

Mind you, he warns earnestly, we're in uncharted territory here; what with
such enormous civvie participation, with mutual funds bigger than the
banking system, and with a DJI approaching five figures ... we may no
longer be able to trust these old valuation models ...

Oh, and the Yen must ultimately fall too (at least he reads the PEN-L
archives, eh?).  It's just a matter of holding off that date until regional
current accounts have stabilised (he didn't say how and when that would
come about).

So what should Australian investors (and 40% of us have our shaking mits in
the markets) do about that, asks the concerned anchorman.  Why, fully
privatise Telstra and all your other public utilities, says Hale.  That
way, you'll have a much more diversified exchange, and you'll depend less
on the cycle-vulnerable commodities that dominate Australian market values
today.  But wouldn't Oz exchange levels still depend on Wall St
fluctuations, asks our boy.  Well, if you depend on your spare dollars a
lot, and in the short term, well, get into cash quickish, pronounces Hale
blithely.

So the markets are overvalued and volatile to the degree they can't be
trusted in the short term, Japanese problems will be decisive and negative
in the medium term, and we should trade in all our public infrastructure so
we can more fully be exposed to the benefits of that action.

Thanks, Dave.  It's all clear to me now.

Arrogant as some of these proselytising Yanks may be (and an American
accent and an Armani suit gets you on any current affairs show you want
over here), it must be said they are right about one thing.

We are dumb locals.

Cheers,
Rob.