To me that’s evidence enough. Waiting until the dollar gets to $135 and iron ore to $100 is forcing an economic adjustment you neither need nor want. Indeed, to allow that would culminate in a collapse. China is going to rebalance in next few years. Commodity prices are going to fall too. Very likely both will happen more swiflty than the happy analysts of Treasury of the RBA reckon on.
Why on earth would you hollow out your tradeable sector on the eve of such a shift?
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.