In Reply to: Can you answer this one for me please? posted by dana on Thursday, 20. May 2010 at 23:18 Bali Time:
The Australian dollar is in free-fall due to foreign investors pulling their money out of both the Australian currency and the equities market. Two factors are in play:
1. the financial crisis in Europe and fears that the global economic crisis is about to worsen and the small recovery that the rest of the world has experienced is short-lived and we are about to see the real crisis. Australia is doing OK, but only because of China, and China is slowing down.
There are fears Greece is about to default on it's debt and if that happens the proverbial will hit the fan.
2. the uncertaintly that the 40% mining tax imposes on Australia. I can't believe how little is being said about the long reaching, catastrophic effects that this legislation will have on the Australian economy, and how it will affect you and me on a day to day basis.
What we are seeing right now is funds pulling out of Australia as it is now seen as high risk due to the Resource Super-Profit Tax (RSPT), and the uncertaintly that brings.
Personally I have seen massive multi-million dollar project cancelled in the last few days. One client who was in the process of employing 2000 people, is now laying off their existing employees.
We are going to be in for a rough time, and Australia could very well join the rest of the world and really feel what the GFC is all about.