Predict 2013

So 2012 comes to an end and from midnight tonight 2013 greets us. The BIG question now is “what will happen in 2013?”

If you’re brave enough it’s time to brush the cobwebs off the crystal ball and give fellow MacroBusiness readers your predictions for the coming year.

Reynard will leave this post open for comment until January 7th so,  if you require it, you have a bit of time to think it over. Once you think you know what is going to happen over the next 12 months feel free to jot it down in the comments.

You can be as broad in your predictions as you like, including US, European, Asian and/or emerging economies, housing, commodities , equities, and/or metals etc, but please try to make at least one prediction about an an aspect of the Australian economy ( GDP, unemployment, housing, equities, interest rates etc )

Reynard will save all of the comments as they should provide some interesting, and possibly amusing, reading on 31 December 2013.

Good Luck.



  1. 2013 is shaping to be totally awesome, with iron ore to back to the roof( at least $160 as a new normal), interest rates flat or dropping, property prices rising fast, oil back to below $70, gold crashing to below $1,400.

    The only black spot could be our dollar above $1.10 despite the RBA’s efforts.

    great year ahead.

  2. Gold will trade above US$2000

    AUD will trade below parity

    Situation in Iran will escalate

    Oil (brent) will trade above $130

    Liberal win for the federal election

    Iron ore will peak (for 2013) in Q1

    Property prices in AU will continue their decline in real terms (Nominal: Melbourne prices to fall over 5%, Perth prices will rise)

    • I’m a capricorn and here’s what it says:

      “Uranus in your solar fourth house of home and family may give you approval for a mortgage.”

      Uranus can stick its mortgage.

        • TheRedEconomistMEMBER

          I have seen it all now.

          Now the astrologer is making predictions about the property markets.

          My wife has been into me that we must buy a place next year despite living in a nice rental where the Landlord fixes things when ask and has not increase rent for 4 years.

          I am a Cancer

          “This is not a good year for you to invest in property. You and your partner could be at odds regarding your home or family member”

          Fairly accurate.. maybe my mum is right about the stars… ;>)

          • Make her watch this Red mate. I copped a load of this kind of pressure from my ex and a friend of my Mother, apparently I was some kind of loser for not being in a mortgage.

            New partner and proven right as they squirm in debt.

            Laugh last, laugh the longest!


            Since she left my fortunes have changed. I could just about buy my home cash…..but not until we are down to 3-4 years income ratio for housing.

            By the way, using that ratio prices might struggle even more if we see a drop in wages as UE pushes ever higher.

    • Read all 12 predictions and none mention

      “In September you realise that your investment property loses will take until the next transit of venus in 2117 to produce a capital gain”

    • What to do when sales are down … drum up more biz … how … I know 1 % of people believe in the stars … now that 1% of say 23mill = heaps of sales = quick get someone writting an article now

      all assets / investments must have their anaylsis done for an individuals persoanl situation (timeline / tax / sophistication) not some random “load up with another prop”

    • I like Leo, ‘You may successfully sell, rent, invest, open a home office or even sub-let your garage from the new moon of November 3’. that prediction pretty much covers all bases.

  3. According to the mystical squirrel who can read the future in his nuts the following are almost certain:

    * Australians will continue to display mild debt aversion and fail to respond with sufficient excitement to the existing rate cuts. Household debt growth will remain subdued.

    * This lack of debt ‘ticker’ will cause the usual suspects in the debt and related industries to call for more ‘jolts’, ‘support’, insurance, confidence blah blah from the RBA.

    * In an election year with an excitable Swan on the prowl, the RBA will grudgingly obliged but will squawk warnings the whole way down.

    * The price of housing will continue to be excessive but will bore most people senseless with its slow drift in real terms as govt does its best to keep the asset price genie alive (pop growth up, slow action on reducing red tape, grants and other bait to get people to join the scam).

    * Australian retailers will continue to find it tough going and will blame the technology of the 20th century for their woes when in fact the main problem is that they are being bleed dry by excessive rents in the tightly controlled / monopolised ‘retail’ zones in our cities and penalty/weekend wage rates.

    * China’s citizens will continue to find cause for complaint about CCP management and the CCP will keep trying to keep them quite building endless stuff that few in China (outside of the CCP) can afford to buy or use. The CCP will also try to keep the mob happy by waving sticks at the neighbours. Fortunately, these methods of crowd control require quality dirt and that keeps Australia munching on lotus for the year – even if some feel bad about it.

    * The $AUS stays above $1 – Partly because people like our dirt but mostly because the RBA and the govt are secretly flattered by the attention given the super $ and have no stomach for encouraging less local reliance on the saving habits of foreigners. All those govt securities for the NBN have to be bought by someone.

    * Manufacturing, education and tourism will continue to suffer for the high dollar but most who can still afford to will ease this pain with cheap clothing, electrical goods and trips to south east asia.

    * Abbott will continue to work hard to lose the next election but will face still competition from the government. The electorate may decide to reward effort displayed and then complain for 3 years about the choice.

  4. I don’t predict; but I have expectations, that Liam Halligan puts nicely for me: “I would also predict, though, that investor angst over the cliff is rapidly replaced by concern about the US “debt ceiling” and that the current dispute turns out to be just a dress rehearsal for a much more serious row – one that really could destabilise global markets. The inconvenient truth is that the US will also hit its federal borrowing limit on the first day of 2013….By messing with the debt ceiling, though, US lawmakers will raise the danger of a sovereign default, a prospect which… has the capacity to reduce global markets to meltdown status while halting investment worldwide.”

    • As a sovereign issuer of its own non-convertible, free floating currency the US Federal government can always avoid monetary default unless it’s politicians enforce a default by omission or commission.

      I don’t think the Republicans who control the House and, through filibuster, can frustrate the Senate are prepared to be the party that brings on a US federal government financial default.

    • Last time I heard from Halligan he was telling us how imminent rampant inflation was. Now it probably is in the future, but just not yet.
      The ‘borrowing limit’ is meaningless given they’ve already approved the spending.

  5. A flight to safty (cash) will be a theme for a few months (probably after a Euro country has a issue with bonds)
    The AUD will struggle to fall bellow where it is now (possibly direction after election)
    The US debt ceiling will be a story on slow news days
    Aust households will continue to repay debt (possible refinancicing rash will make loan figure look ok)
    I see baby boomers under employment pressure – more businesses going to the wall (less large more middle teir small biz)
    Asx ok till feb / march then ?
    property – sectors east coast – probably down 5% (adl probably worst or maybe canberra – although other places also look ordinary at best) probably data for sydney will look ok (small rise which will hold up national averages and bulls will call bears losers )
    gold about the current level

    anything & everything else … trivial …

  6. The federal election will be held in Spring, perhaps October or November, juggled around school holidays and public holidays. There will be no landslide, but if the government wins, it will be because the Australian population has accepted the short to mid-term need for deficits. If the opposition wins, it will be because we resile from the thought of ‘unbalanced books’.In that case, the new government will have little choice but to balance the books with the full symphony of razors, slashings and sackings. Australia dips toward a 2014 recession as the economy attempts to absorb the effects of surplus creation. The new treasurer, J. Hockey, admits that a surplus is unlikely before 2016, in time at least for an early election.

    Labor’s electoral losses are greatest in Queensland and it wastes no time in restoring backbencher K. Rudd to leader. J. Gillard retires from politics.The Abbott government enjoys an all-too-brief honeymoon and in the absence of any real political news, the Christmas period swirls with rumours of leadership change in the new government. Turnbull denies everything, but backbenchers in marginal seats hit by sackings and crashing real-estate continue to stir the pot.

    The closer to November the election is held, the less likely this will pan out, because A) Julia has had time to re-affirm her popularity; or B)an Abbott government has little time to talk policy before the Christmas holiday period, leaving big announcements until the new year.

  7. If world keeps it’s current speed, in 2013 nothing spectacular will happen. World economy will decay slowly with Europe leading. Australian economy – same story. Official unemployment up by 1-2%, house prices down by few percent, AUD and gold down a bit, rates down ~1%, GDP down … and the most important economic indicator “fear” will go up. 2013 is likely to be a boring year, bulls will hate it because of slowdown, bears will hate it because slowdown is to slow.

    There is a slight chance, that something (some political decision) speeds everything up and we see in 2013 things meant to happen in 2014 or after. Than, 2013 may turn into bears’ dream …

    • “2013 is likely to be a boring year, bulls will hate it because of slowdown, bears will hate it because slowdown is to slow”

      I tend to agree.

      A brief list.
      US – slow recovery in employment and housing.

      European – more political nonsense

      Asian and/or emerging economies – China keep trucking on with slightly lower growth targets

      Housing – slow melt, rents soften.

      Commodities – bouncy

      Equities – nothing much happening

      Australian GDP – positive but low. One quarter negative.

      Unemployment – slight uptick. Possible flattening/recovery by year end. No big moves.

      Interest rates – down a touch. Lots of ‘wait and see’ sentiment from the RBA.

      Election – Gillard to win.

      $AUD – test the $1USD mark. Not big crash.

  8. Unemployment will rise.
    Automatic stabilizers will keep Australia in deficit.
    Deficits are neither inherently good or bad.
    This deficit however is a bad deficit. One driven by a declining economy and rising unemployment.

    If we get Unemployment down say to around 4.0% I’ll happily eat these words.

  9. 1. GDP will grow by more than 1.5%,
    2. unemployment will be no more than 6.5%
    3. inflation will be less than 3.5% and 4. the government and RBA will do whatever it takes to ensure this outcome.

    I expect it will require another 0.5% cut in rates and a deficit of 4 Billion.

  10. There is a chance that a perfect storm is brewing.

    Most mortgage sales peaked in 2007-8 looking at If as has been suggested a very high number were both “low doc/no doc” loans, as well as 5yr interest only. I assess they will come out of the interest only period in 2013-14 and find themselves massively exposed.

    If they are in any negative equity at that point they are screwed. They will struggle to get credit secured against the property as banks assess the value of their homes to fall way short of their liability. So lower interest rates won’t help them one bit unless they can stump up the gap, which for most will be beyond them at that point.

    As interest rates drop pushed by the screams from the RE sector, retired BB will have to sell their IP as savings fail to generate enough cash to fuel the Winnebago up the coast at 75 kph in a 100 zone

    This at a time when the number of homes for sale starts to pile ever higher. If that doesn’t drag the market to a correction then I’ll start training to walk up Mount Kosciuszko with Steve Keen strapped to my left leg and David Collyer on my right.

    Europe remains on a knife edge, something seriously nasty could occur as political unrest builds up steam. Nigel Far

    Over all not too bad of a year ahead don’t you think?

    admin edit: removed personal attack on fellow commenter. 1st and only warning

    I also predict spruikers will continue to peddle his massive piles of spruik that stinks like the inside of a shit smugglers rucksack! and no I don’t buy into the we need balance at the expense of objectivity or pushing the upper limits of perception. To encourage people into debt at this stage of the game is dangerously wrong so grow some balls and stand up to these people.

    All the best to everyone else though lol

  11. Mining BoganMEMBER

    Australia to continue on like nothing has happened, desperately in search of a black swan event.

    Gina to become News Director at ABC to keep her media dream alive.

    Prime Minister Turnbull.

    Lots of pub fights when smartarses ask specufestors how that negative gearing has been working for them with flat house prices over the last few years.

    Kohler to be tragically killed live on air by a falling chart.

    Tony Abbott finally punches someone who asks him a question. Probably at one of the many kindergardens he visits.

    Iron ore below $90 by year’s end.

    Julia Gillard hears a recording of her voice and never leaves her house again.

    A limited edition release of 500 of Tony Greig’s broken toes as done by Jeff Thomson in 1975.

    Wayne Swan says charging $200 for a Springsteen ticket is un-Australian.

  12. For some reason I lost my mention of Nigel Farage being the UKs only hope in the Europe crisis.

    A very entertaining and no nonsense leader. A rare creature in the political arena.

  13. I see Australian banks heading into their own credit crunch as losses from Melbourne’s real estate market cause a mass withdrawal of credit to other parts of the country.

    Australia and the banks will lose their AAA rating while unemployment hits 6%-7%.

    We will see cracks in our LMI insurers and the government stepping in.

    Fear factor will increase by a factor of 10.

    As much as I would hate to see this I see the above scenario as having a higher likely hood than returning to 7% growth in house prices.

  14. I have felt for years and can verify this, that there will be some large destabilizating event in 2013, specifically in the year of the rat. So what’s that? A 10 month window?

    I’ve suspected a china/us problem, but japan/china seems to be the current wildcard.

    Time will tell. I’m happy to be wrong.

    • Agree myne,
      I say there will be a major event (most likely political as you mentioned) in 2013 where the XJO drops at least 30%

      • Can’t see it…what could possibly go wrong?

        Syria fails
        Egypt explodes
        Portugal/Spain/Italy/Greece exit the Euro. France fails. Euro collapses plunging much of it into severe recession/depression. Democracy starts to fail?
        Debt ceiling creates a US crisis. US becomes more isolated. Note above…more long term
        Iran goes nuts one way or another
        Extremists take over Pakistan and get Nuclear weapons.
        Then there are the unknown unknowns!

        Black Swan? There are so many of them one will crash somewhere. Whether this tilts the world totally off its axis how the heck would I know?

  15. I reckon nothing spectacular will happen in 2013. Pretty much a continuation of 2012.

    Slow melt of 5% in our property market, despite a further 50 bps drop of IR.

    AUD hovers above parity through out the year.

    AAA rating under pressure, but we end up keeping it. Not so lucky for big 4.

    Unemployment rate rises a bit to around 6%.

    In the US, fiscal cliff gets pushed back by short term deals among other measures, but never goes away. It will remain one of the hottest topics of 2013.

    Coalition wins the election. PM Tony Abbott… >_<

  16. Victoria completely down the toilet. Seriously. The general tone and mood of conversations I’ve been having with people has turned seriously south. My work (public sector) is pushing people to use up their leave in an attempt to cope with funding cuts. People who previously thought they were untouchable are suddenly nervous about their job (myself included). I’m very well placed to weather a storm but a lot of people I know are not. A very good time to be free of debt. I see the positive feedback loops built in to state government funding really kicking in in the downward direction in 2013.

    • Thanks brad…State funding in the face of a RE slump is surely an important issue that has to be faced.

    • +1

      It’s the same in the banking industry Brad. People at ANZ are being asked to take annual leave and in some cases, leave without pay and this is in the most profitable sector of the bank.

      Victoria has no real industry. It’s a bubble economy heavily reliant and over exposed to:

      international education
      Cafes and restaurants

      • Add Financial services.

        My predictions are:

        10% unemployment in Victoria (within two years)
        Residential property to be down 20% in real terms
        A property spruiker/talking head to come out and say that Melbourne property is historically cheap and is a buy
        Half of apartment developments to fall over and not go ahead.
        A major manufacturer to close it’s Australian operations

  17. * Slow Melt for the property market if there are no changes to Negative Gearing.
    * Libs will win the next election by default, followed by knifing of Tony Abbott by Turnball and Hockey.

  18. My prediction in relation to Melbourne housing is that a lot of mum and dad subdividers will get caught with their pants down. They’ve either heard how easy it is, or have done it before, so they’ve gone out and bought a place to develop. After waiting for council and everyone else in the process to rubber stamp it they are finally getting the builders on to the site only to start seeing the ‘guaranteed’ windfall evaporate right before their eyes. Now they have two mortgages (I’m assuming that the first place isn’t paid off) and really don’t know what they are going to do.

    Though I don’t have any predictions about how the Melbourne apartment glut is going to affect the price of property it will be interesting. The Brunswick section of Lygon street has been massively transformed in the past four years since I’ve been catching the No. 1 tram to work. Last year $35k was knocked off apartments at one complex as soon as the building came onto the market upon the completion of the construction.

    • Brunswick is in a massive apartment overbuild … Breese Street, Murray Street, 112 Union Street, Hopetoun, 180 Edward Street, 84 Union with a heap of shitty lil apartments that have been flipped and now can’t be flipped … 3-5 Union street the list goes on an on… sigh.


    • I have just advised my mother in law to sell her off the plan purchased recently finished apartment near the station in South Yarra. Another area over built recently.

  19. Question for all you prediction folks:

    What would it take for the government to implement a stimulus package again?

    • What would it take for the government to implement a stimulus package again?

      For the current voernment, it would require a gaffe from the likes of Reith or Robb, along the lines of ‘making poor people pay’, or something along the lines of bringing back work choices.

      This would put the ALP close to winning the next election, and if that was the case, EVERY marginal seat would be rolled in pork.

      If stimulus is required, they will get it no questions asked, mainly to preserve employment and housing prices, and the the future be damned.

      For a LNP government, if more loose money sloshes around globally, the stimulus from them will be payback for their bribes… erhhh campaign funding, and moving the inflation into asset prices… so housing and shares… the LNP will print money.

          • But that is very different to money printing?
            It would require the RBA to print or we explode even further the CAD.
            I just can’t see the room to do either.

            FWIW, as the outsider in these pages on this, in the absence of another fair rise in the A$, inflation will be applying some pressure towards the end of 2013. This pressure will increase through 2014 2015.
            At that stage the RBA will need to decide to seriously print. If they decide to seriously print can it be funded in the external account? Can the sale of assets to China keep up the pace? When will we run out of assets to sell?
            I dunno.
            I’m just reminded of Gerard Minack’s prediction around the beginning of the GFC
            “The outlook is dark and gloomy because the sky is full of chickens coming home to roost”

          • ,i>But that is very different to money printing?

            No, it was entirely the ‘high growth’.

            Increased nominal values, it had nothing to do with chain volumes.

            A ‘return to sound fundamentals with average families seeing a consistent return on their savings/investments’ is a very easy sell.

            The funding of it via the external account does not need to occur, we can have our currency debase and our labour and savers lose out. But the external acount fudning it will be he likely policy where it can.

          • They can change the RBA’s mandate, then instruct treasurey to print.

            I would see the former as the waymarker of printing, if it were to occur. If threatened by high unemployment, our very own QE or variation of it I would foresee as the money printing response.

  20. 2013 sees:

    Increased business failure in small/medium enterprises (it has already begun with many businesses going into the 2012 holiday break never to return – worse this year than ever in past history)

    Unemployment to break 7%
    Deficit to be much, much larger than anticipated on the back of lower taxes and rocketing social security
    Retail to see a major corporation seek a debt to equity conversion in order to keep doors open
    Newspapers continue to bleed to death with a radical restructure to our reading patterns of some 150+ years
    Property to go nowhere
    Interest rates down 50 basis points
    All Ords to test sub 4,000
    Au to test $2,000
    Abbott to the Lodge, Gillard to the shitter! And Rudd hangs around like a bad smell

    • interesting what u say re small biz under pressure, we have seen this a lot, in our biz we see a lot of small biz operations and yes big slow down. the govt has also increased the amount of green and red tape and this in my biz is an additional 5.2% in the last 2 years and more expected in 6 months time. This has the effect of removing 1 full timer as market forces means i can’t just add to my prices.

  21. US will stabilise its current account with lower energy imports and reduced military spending. However SNAP recipients will still rise above 50M. Velocity of money will continue to fall.

    Deleveraging in Europe, particularly Germany, UK and Italy, will keep the Eurozone in decline.

    China will be flat meaning Australia will be flat or worse. China will continue strategy of direct offshore investment in Africa, India, SE Asia, USA, Europe and Australia rather than buying financial assets. Looking to acquire distressed assets wherever they are permitted.

    Australia will start to see deleveraging (at last) causing a 12% fall in house prices in real terms. At some point principles have to be paid back and there is a lump of the population approaching the point where they become net savers. The GDP will decline for at least one quarter in 2013.

    Australia’s current account to continue south but reduction in AUD to other currencies will keep more AUDs spent at home thereby retarding the fall. Will also lower mining inputs.

    RBA will take interest rates below 2% but banks will increase their margin to ensure they can keep justifying the outrageous salaries of senior executives.

    Mining margins will decline and manufacturing continuing to falter so ASX will end 2013 at 4300 despite the steady profitability of the banks.

    Gold will make some gain to USD1850.

    • Rick
      “China will be flat meaning Australia will be flat or worse. China will continue strategy of direct offshore investment in Africa, India, SE Asia, USA, Europe and Australia rather than buying financial assets. Looking to acquire distressed assets wherever they are permitted.”

      This looks like more of the same except that I’d say that trend will accelerate.
      As such it would tend to head off your next statemrent

      “Australia will start to see deleveraging (at last)”

      It’s the same ole same ole…we can keep up our unrealistic lifestyles by continuing to sell off the assets as quickly as possible.
      Nothing to worry about!

  22. * Abbott will be usurped by Turnbul, who wins the next election. Gillard and Rudd are both exiled and Shorten leads the ALP into the wilderness.

    * Australia goes into austerity mode after the coalition win – for possible outcomes, see Europe.

    * The AUD drops to about 90c US by the end of 13, not because rates fall (they will) but because Australia’s economy in general slows further.

    * The US has the recession that it has to have. At least two further shock drop’s in Dow over the year.

    * China disappoints with anaemic growth. Blames falling demand in developed West.

    * Aus house prices continue slow burn, accelerating downward toward the end of 13. 2014 predicted as danger year.

    * Europe re-enters a continent-wide recession, France catches Spain’s cold, but not as severely, nonetheless Frances strong unions constipate country with industrial action.

    * Africa and Latin America increasingly displace Australian mining projects.

  23. OK my stargaze……

    I reckon the slow worsening of consumer sentiment, employment lead indicators, and real estate will continue. Any sudden worsening of one of the above will flow through to the other two unless the government/RBA intervenes some way.

    -The Govt/RBA will quickly intervene (although they may not be successful) if real estate worsens sharply as this starts to bring the Australian banks into question.

    – the AUD will remain nailed to the roof and well above USD parity, but that when it drops it will drop some way and quickly – presumably when global investors get nervous about the decaying outlook for the Australian macro story. I think the RBA may try another 50Bp cut early in the year to see if they can take the dollar down (but I think this will fail) in a ‘managed’ way. I think when there is an exit of AUD by global investors that exit will be somewhat disorderly.

    -the RBA will at some point knock on the door of the Govt and hint that fiscal stimulus may be a better bet and come up with plausible budget deficit reasoning. I think the politics of the election could well delay the point at which this is electorally viable (possibly to the detriment of the economy).

    -Recession towards the end of the year or in 2014, with the recession more severe the longer we wait for it (or are forced to wait for it with the political cycle).
    – jobs will weaken until such point as a major employer announces a surprise plant closure or larger scale job loss scenario, and at that point attention will again turn to the idea of generating jobs in the longer term (ie some form of industry policy). I think the whole idea of discussing ‘productivity will become far louder over the course of this year, which will start to bring in some form of longer term industry policy type thoughts at a government level. I reckon ABS unemployment will make 7% this year.

    – iron ore and coal demand will be reasonably strong from China, and that will in some ways support the economy and budget, Iron ore to continue its rebound only a little further before easing back, metallurgical coal sharply dropping after mid-year, energy coal to be subdued but not slumping. But I also think Australia will continue to leak and post major current account deficits – to the point where this begins to trigger balance of payment concerns.

    – Australian private debt levels will remain very elevated, and that this will be reflected in an economy overtly suffering malaise.

    – Melbourne may become the epicentre of a serious risk to the Australian real estate market, and that the thought of a glut of unsold apartments may see either the government look to bend rules to allow Chinese and Indian buyers into the market in greater numbers, or conversely that the risk of an exodus by these same could lead to a price slump, which has wider ramifications.

    – Melbourne may also see the first serious signs of manufacturing heading south (with attendant job loss possibilities).

    – the US will continue as it is (with or without a fiscal cliff/debt ceiling issues) and that unemployment will not drop significantly. I think that US politics will show signs of making a serious break with the past generation and either swing identifiably right or left (as opposed to dividing/impasse).

    – the Eurozone will continue its high wire act – sapping sentiment across the board. I think the coming German 2014 election will add an element of volatility to German responses to Euro debt issues. I think the Tories in the UK may start making increasing noise about the worth of the Eurozone.

    – Japan will continue its lost generation. I think the China Japan tensions will be another element of significant volatility for the global economy.

    – China will continue reasonably strongly but not strong enough to generate global significant strength. I think inflationary pressures in China will see more relocation of manufacturing away from the country. I think Real Estate pressures in China will continue to drive significant overseas buying of real estate by Chinese with access to overseas markets.

    – oil will remain about where (105-120 Brent) it is with ME tensions supportive.

    – gold will drop further before rebounding and passing $2k/oz (maybe later than 2013)

    – the 2013 election will throw up a very close result with a surprising number of independents, and a marked deterioration of the standing of both the ALP and the Liberals towards Greens (from Labour) and assorted fruit bats (from conservative side)

    I think that Fairfax will throw in the towel and either roll up many of the print versions of their papers , or find a buyer.

  24. my gosh you are all so depressing it s scary

    US businesses (even small) not doing bad at all now, everything will follow.I frankly dont think it s rational to be that bearish, there are tons of great opportunities out there, just enjoy.

      • unfortunately I dont really see it as realistic, it s more being bear, and that doesnt pay much, especially the last few years where bulls have made a killing despite the “gloom”, bears are left with gold, ugly useless stuff that s going nowhere.

        I frankly have great expectation for 2013, honestly (even if for investment purpose I would much prefer property to stay flat or declining (I now mainly focus on land/property, and I need to buy few more this year))

          • Share market (I dont like shares but +12% this year), bonds, pretty much anything really, even properties as the investor type ones ( lower priced /closed to amenities/ infrastructure investments) are usually doing very well and rents a rising really fast (immigration to the roof, not much building going on), interest payments dropping like stone thanks to RBA.

          • Share market (I dont like shares but +12% this year),

            That’s assuming getting in at the bottom, as well as leaving without having their capital crushed in 08/09.

            Stating this year in isolation in very GB-ish, and really does not bode well for anyone making plans for longer than trading periods.

            To assert ‘shares are good’ in a trading sense, you also have to pick exit points.

            Otherwise, you assert than shares are stilll a good bet this point forward?


            Yep, because we have seen large degrees of yield compression.

            I would state unlikely to repeat itself for the next year (not that I am making a forecast on it… funny for this thread I know).

            But if bullish behaviour is ‘this is my 1st Jan 2012 to 31st Dec 2012 trading position’, and you made that your position 12 months ago, then it’s not good looking in the rear view mirror.

            pretty much anything really,

            I wouldn’t assert ‘pretty much anything really.

            Gold hasn’t been that good.

            Bonds have had a good year because of a rare 12 month pattern. If you had a holding period for the last few years, to finally away your pay day in 2012, that may not have been good window.

            even properties as the investor type ones ( lower priced /closed to amenities/ infrastructure investments) are usually doing very well and rents a rising really fast (immigration to the roof, not much building going on),

            Housing still has high holding costs for a poor yield. The last criteria points to a Mexican stand-off, which I would state has a high(er) chance of market dislocation.

            Then I would say priority should be paid to risk rather than return. if that is the case, then price in the risk, and again, point to an exit point, or nominate an exit trigger.

            interest payments dropping like stone thanks to RBA.

            Lower interest rates… such as ’emergency lows’?

            That’s not an high grade investment environment in my mind, despite moderate price rises.

            Debt is a multi-decade obligation for things like housing.

            Contagion out of Melbourne property (and we have seen it before) makes a one-off year of killing in 2012 seem a misguided view.

            Unless of course you pick an exit point and capture your gains.

            My point in all this is, if most areas are fundamentally sound, with an onward and upward projectory from here on seeming more likely than not, then 2012 has been a great lead-in year, then the bulls are fine.

            If however, 2012 was a year that captured loose money, money seeking security and irrational exuberance, then nothing is gained unless traded, with gain captured.

        • “…where bulls have made a killing despite the “gloom”, bears are left with gold, ugly useless stuff that s going nowhere.”

          HUH? An 11 year bull run in gold that has outperformed almost every other asset class means Au is ‘ugly, useless stuff that is going nowhere?’

          “Gold is in the 11th year of a bull market in London, the longest winning streak since at least 1920, as investors seek to diversify away from equities and some currencies. The metal is up 29 percent this year, outperforming global stocks, commodities and Treasuries. Bullion slipped 2.3 percent to $1,833 an ounce by 8:07 a.m., headed for a second daily decline after reaching a record $1,921.15 yesterday. Gold climbed 12 percent in August, its best monthly advance since November 2009.”

          Bullion Baron would have more recent figures, but you get the point.

          Gold and selected precious metals are good baby and real and tangible. I’m not saying it can’t experience a major price correction, but there are many arguments for it versus paper fiat e.g. store of money, security hedge etc etc.

          The fact the central banks like it, private investors and funds are hoarding it, the Asians have gone crazy for it, various sovereigns want to audit their collections, and billionaire fund owners are generally saying ‘don’t buy gold’ but are secretly buying gold mines and real gold (not paper) should tell you everything you need to know.

  25. RBA to cut interest rates by 50bp in the first half of the year. World’s greatest treasurer to take credit, but apportion blame towards the US Fiscal Cliff for any thing that goes wrong regardless of the outcome of negotiations.

    More mainstream attention and recognition given to the likes of Keen, Soos, Collyer and Putland. Perma bull commentators to continue spruiking via the usual channels.

    State governments to follow in the lead of South Australian treasurer Jack Snelling towards increased public service number slashing.

    Turnbull to lead the Liberal party to the next election.

  26. My Chinese housemate says (in basic broken English) the Chinese people really really want a war with Japan. I asked why she hated Japan so much? Because of the Nanking Massacre? She looked confused. She loves Japan, she said. She hates her government, the CCP. The Chinese people want war with Japan because they think they’d lose the war, then they’d replace the CCP with a democracy. Bizarre, hey.

    The CCP is trying to fan nationalistic patriotism by trucking in paid protestors and delivering them to Japanese embassies and businesses, for the photo ops and news coverage.

    Now the Chinese people are double-daring the CCP to go to war, and accussing them of cowardice for not. Called a rock and a hard place for the CCP.

    So no China/Japan war in near future.

    • I have yet to meet a Chinese who give a crap of CCP not being democratic.They do very well without our stupid democracy.It s the last thing they need.

      • Most of the Chinese I have ever met (and I have met a few) havent really given a toss about democracy as such – and like (benevolent?) dictatorships everywhere place a much bigger emphasis on stability.

      • You are asking the wrong question if you are asking do they ‘want our democracy’ which usually means ‘US democracy’ anyway. Why would any proud Chinese or anyone else for that matter admit that?

        Assuming you are not talking to some beneficiary of the CCP, and there are plenty of those around, try asking them do they want better wages, less corruption and less rules telling them what they cant do.

        Most want that and are very keen to get it – they just dont care who provides it.

        If the CCP can provide it then all is good. Like most people most Chinese don’t care who runs the country providing it works. Singapore is hardly awash with people upset by the dynastic/rigged nature of their political system.

        The issue is whether the CCP can continue to do what they have done quite well to date – align themselves with Chinese culture – which is a lot older than a book full of western communism – and improve the living standards of the population as their expectations of their living standards continues to rise.

        As we all know people can be remarkably ungrateful to their leaders even if they ‘have never had it so good’.

        The CCP will not be challenged by democracy – at least not the sort we have in mind – a regular battle between boofheads.

    • So no China/Japan war in near future.

      I bet they said the same thing 6 months prior to Anschluss.

    • Chinese here. I have no freaking idea wth your housemate was talking about.

      Even though I like Japan, don’t condone the violence, I know/saw plenty of friends/friends’ friends/random Chinese people who hate Japan with a passion. Probably due to historical events plus years of propaganda. But hehaviors of Japanese govt/leaders only made it worse. Basically I don’t see the need for CCP to “truck in paid protesters”.

      You’d be very naive if you think most Chinese are ready get rid of CCP for good. Replace them with what? Chaos??

      • + 1

        Most Chinese don’t have a problem with the CCP.

        Older generation Chinese particularly have a hatred of Japan for what happened in the war. Younger generation not so much. Couldn’t really see a war occurring though. A bit of nationalistic pride through saber-rattling is useful for Beijing, but actual conflict would be disastrous for both parties.

    • While I wouldnt put my money on a war between China and Japan in 2013 I honestly cant say its not a possibility.

      As the situation continues to escalate the Chinese people seem to be more pro war everyday.
      I have read several interviews with several regular Chinese and they believe a war may be good for China because it would reduce the population and give those from the Chinese interior a chance to succeed instead of Beijing/Shanghai elite continuing to dominate China and monopolise its economic success.

      My prediction is continued escalation, Chinese vessels and aircraft increasingly entering Japanese territorial waters and perhaps even some warning shots fired by the Japanese. However in my opinion the Japanese government will formally apologise for the atrocities committed by the Imperial Japanese Armed forces against the Chinese people (its already being discussed within the halls of power in Japan), which will buy time for a stop gap diplomatic solution.

      However in the long term unless there is a large change in politics and public opinion in China and/or Japan war is a likelyhood. Currently neither side has an honourable way to back away from the dispute and neither side is willing to give any ground.

      Both sides are left with a catch 22 situation.There is 3 options the way I see it.
      1. The U.S and Japan back down and China takes what it wants all over Asia making the U.S look weak and Japan develops nuclear weapons for its own defence.

      2. China backs down, other nations with territorial disputes with China hold fast to their claims with U.S/Japanese backing. This makes the CCP look weak and the people might think the time right for a revolution.

      3. War.

      Right now there is no option 4, however for all our sakes I hope they come up with one.

  27. Let’s see….

    *The bull version*

    Scientists finally discover the magic material that makes the room temperature superconductivity possible. Hundreds of start-up companies are established around the globe that manufacture superconducting cables.

    A pilot plant of nuclear fusion facility delivers the first successful artificial sun. Combined with the room temperature superconducting cables it is more than enough to powers the entire planet.

    Aided by the newly designed nuclear fusion engines, NASA begins an expedition mission to a nearby comet that contains a large wealth of precious metals and other resources.

    *The bear version*

    The unusually cold winter causes millions to freeze in North Korea. Kim Jong-un’s regime launches a surprise attack to the South. After their outdated conventional forces are destroyed, Kim Jong-un’s regime resorts to a nuclear attack.

    Prior to this event, North Korea had successfully smuggled nuclear devices to Tehran in exchange for food and fuel. Before Tehran could complete its first nuclear program, however, Mossad launches a secret operation which destroys Iran’s nuclear facility. Iran and Syria declare war against Israel. Israel counters with a nuclear attack.

    In response to the nuclear conflicts in the Korean peninsula and in the Middle East, a missile commander in Kazakhstan presses a wrong button by accident, which quickly escalates to WW3. The end of civilization as we know it.

    *my prediction*
    I am quite sure that the real 2013 will turn out to be somewhere in between these two versions.

  28. OZ..its all about commodity prices.. As long as money printing is fashionable, commodities will strengthen.

    Possibly of higher activity in property due to cheap money but in general low returns in property, large cap shares and savings will increase appetite for risk, possibly for commodities, small businesses and gold etc.
    A possible shift from Iron Ore to Gold/Silver might shrewd, the latter having more upside on world currency problems.

    AUD/USD 1.15+
    GOLD 1900+
    inflation and Interest rates lower.
    No change in unemployment but the ‘numbers’ slowly increasing.
    GDP growing..

    Postponing the inevitable balancing.

  29. Righto, here goes…..

    Aust economy continues to slow. Business becomes even less confident. More retailers shut there doors, as do a number of mid-tier miners who can’t afford to pay $150k pa for drivers. Unemployment up (6% – 7%). Underemployment up significantly more.

    Unable to fund an overbearing mortgage, defaults rise. Banks take back property, only to throw them back onto an overloaded market….prices decline, however stubbornness and ego prevents anything too devastating. Residential property “investors” grimace, trying to convince their workmates that they are happy with a 2% p.a. gross yield… “Investors” and mortgage holders continue to shoulder the burden till exhaustion or bankruptcy rules otherwise (maybe 2014, 15, 16…).

    Interest rates cut early in the year – maybe 0.50% or so….

    Knowing that the unrelenting credit growth of the past 25 years is a thing of the past, banks keep some margin and fail to pass the full cut on. Today Tonight run a special, pleading corporate greed and calling on a national revolt of the banking system. Aussie John offers some sound bites. Lower rates + economic conditions see an “A” knocked off our “AAA” rating. FOREX markets respond, the $AUD drops to(ward) $0.90 USD. China slows their imports, allowing the glut of coal/ore to build up in our ports and prices to drop before placing their orders….we are reminded that Communism offers some great advantages when it comes to enforcing sensible policy.

    Govt. looks to manufacturing sector to fill some of the profit void left by the miners….govt. realises they were all killed off by a decade of bad policy and one-eyed focus on our dirt.

    Liberals win election, Turnbull eyes off the big chair and positions himself to take the reigns (probably in the wake of an Abbott gaff). Wayne Swan yearns for his “Treasurer of the Year” glory days, and blames the cooling economy on the Libs. ALP leadership changes, independents chase a better carrot from the Libs.

    Central banks continue to eye off ZIRP as investors forget that what goes down can come back up, fuelling Bond bubble.

    US stabilises and settles into a new normal of very low growth. Stories on the Eurozone mess move from page 2 to page 23.

    All Ordinaries continues a roller coaster ride on pretty low volumes. In the short-term, relief of getting past “fiscal cliff” gives a nice boost, before investors realise that matters at home mean a lot more to the companies listed on our exchange. Brokers & investors reevaluate their valuations; realise they may have got a bit carried away with the 2012 Xmas optimism. Volatility ensues. XAO breaks through 5,000, but settles below 4,700.

    US, FTSE market have a better year. Less ambitious targets for DAX, HSI & N225.

  30. RBA to come under intense scrutiny as an institution: salaries, staffing, management, promotion practices, governance all to be exposed by media.

  31. Bob’s very long-winded gas bag guess for 2013 and beyond:

    PART I

    The global financial system is in very dangerous territory. Ben Bernanke engaging in ‘QE4EVA’ has to be a red flag for the coming implosion of the entire financial system given the central bank is injecting approximately 85 billion PER MONTH into the system. This appears to be an attempt to monetize government debt and American fiscal profligacy (huge budget deficits) whilst simultaneously driving down funding costs for private banks and over-leveraged households; keeping the whole Ponzi alive. The end of QE4 needing to correspond with an unemployment figure of 6.5% in the US suggests never-ending intervention by the Central Bank in the US and near zero interest rates for the foreseeable future.

    The American economic recovery is simply a pipe-dream with a massive surplus of housing post housing bubble implosion (see stats on shadow housing inventory withheld from the market by financial
    institutions), huge household debts and very large government budget deficits. The ‘Great Recession’ entered into in 2008 simply never ended, and the US and the broader global economy is ‘double-dipping’ into an extended depression (possibly deflationary or marked by ‘biflation’). This was not evident before, due to large stimulus interventions by governments all around the globe in response to the 2008 crisis.

    Unfortunately, this has run its course, and none of these governments are in a position to repeat these kinds of extraordinary interventions, given high debt to GDP ratios.

    Australia and other commodity producers will not be immune from the global downturn, since global ‘debt deleveraging’ will mean huge sums of money that would have otherwise chased goods and services is ear-marked for serving debt – resulting in huge reductions in demand in all sectors. The experience from history is that debt deleveraging can last decades, with Japan being a recent example. Given global debt is unprecedented, the downturn should be expected to be similarly severe and prolonged. The US will avoid a ‘fiscal cliff’, but continue to run huge budget deficits in addition to ‘printing money’ at supersonic speeds, but flat to no growth can be expected in the near term. Future broad deflation or ‘biflation’ is very possible.

    The Japanese central bank has engaging in QE for many years to no avail and now the ECB is basically in on the act too. Of course we are told this is sustainable and prudent and that is everything is okay. Bullshit. The Japanese have had periods of outright deflation over the last 20 years and things are nowhere near solved, with the government holding a world record amount of debt using % of GDP as the yardstick. The ECB will keep can kicking in Europe, but sovereign bond yields will continue to rise in the ‘periphery’ – putting Spain, Portugal and Greece into danger territory (near 7% borrowing costs which is the recognised limit of sustainability) and slowly rising in other deeply imperiled (indebted) euro nations such as France and Italy – which despite being rated in the Aaa category are really junk bonds. Eventually, Greece may be first to leave the Euro and default on debts causing chaos, but it appears monetary bribes (more debt piled upon already unpayable debt) have pushed out the Greek problem until possibly even 2014. Any elections held in the Euro region will show a voter revolt and strong swings to the hard right and nationalist parties e.g. think Golden Dawn in Greece.

    Eventually, debt restructuring will be required for many nations in the Euro zone given debts that can’t be paid, won’t be paid and there is no precedent for debts this large (as a % of GDP) being repaid in known economic history. That is, it is simply impossible for these countries to outgrow their debt problems. The reticence to date to write down private and government debts is about protecting banking shareholders
    and bond holders in preference to the broader community who are forced to endure harsh austerity, privatization of public assets and tax-payer funded bail-outs of banks, in opposition to direct bailouts of THE PEOPLE via partial debt jubilees and similar methods. The fact that this is occurring and unelected ‘technocrats’ have been inserted into various governments such as Italy and Greece during this process indicate the political systems are completely beholden to the financial elite in the Euro-zone i.e. the 1%. Effectively, socialist capitalism is in full force with respect to the entire financial system (privatization or profits, socialization of losses) and this will continue for the foreseeable future. Eventually when sovereign defaults begin to occur and countries return to their respective currencies, this will cause a huge outflow of capital in addition to savage currency devaluations and an extended lock out from the international money markets, but eventually these countries will recover on the back of lower debt burdens, monetary (interest rate) control and trade competitiveness derived from much lower exchange rates.

    At the end of the day, ‘liquidity’ in the system (all the money pumping the central banks have been doing) means nothing if it doesn’t translate into LENDING, which is not happening because those people can’t or won’t borrow. This has been evidenced by the divergence in the proportion of funds in the US financial system showing a record 2 trillion difference between deposits and loans; the genesis of which began in
    2008 (funny that). There’s simply too much debt and nothing will change until it is purged sufficiently from household, corporate and government books over years if not decades. Depressed aggregate demand = massive deflationary force as producers can’t move products unless margins are cut. Further, production will fall in response to reduced demand, resulting in higher unemployment and little to no wage growth.

    The negative wealth effect will endure in Australia and elsewhere (subdued discretionary spending and focus on paying down debts prolonging tepid GDP growth), because the economic system is about GROUP PSYCHOLOGY AND NOT MATHEMATICS as these pencil neck chumps would have us believe. The obvious exception is the stock market which is completely rigged by the flow of cash from the shadow banking system and high frequency trading by Goldman Sachs, JPM and other well known criminals who front run orders, cause ‘market momentum’ and many other dodgy practices which have not been yet outlawed.

    Falling house prices, ongoing deflation in prices of goods and services, rising unemployment and so on will reinforce this negative mindset. Elevated levels of bankruptcies and debt restructuring will soon become the norm. The aging demographic and increasing government liabilities for aged care, pensions, super etc will eat up government revenue in larger amounts – making less room for Keynesian stimulatory measures in the future, particularly since most sovereigns are already up to their necks in debt.

    Hence, it is likely that the lack of money velocity resulting from muted lending will therefore NOT lead to hyperinflation as predicted by many of the doom and gloomers. Instead QE means we will likely continue to see some commodity inflation and bull markets in shares and a flood of money seeking ‘safe assets’ such as government bonds and other low income yielding instruments which provide a negative real return after inflation (e.g. US Treasury real yield curves are often negative). Preservation of capital is currently the game in town, NOT trying to grow your capital. Consequently: yields will be driven down on bonds in the US and other perceived safe havens; cash will continue to yield negative real interest rates (interest is outpaced by inflation); property is likely to continue deflating; share markets are in the short term likely to remain elevated – but can expect to be driven down severely in the medium to long term on the back of poor corporate earnings and dismal earnings growth; silver, gold and other precious metals are likely to remain elevated in price and see continued annual price rises of 5 – 10% on the back of a flight to real (tangible) assets e.g. central banks have become net buyers of gold in recent years. That DOES NOT mean that gold and silver will be immune to significant corrections in the medium – longer term however e.g. silver is very elevated in price against long term price trends. Mining commodities (iron ore, steel etc)
    are likely to be very volatile, but will generally be driven down in response to high prices by historical standards in addition to large amounts of supply coming on-line globally given very large capital investment by the mining behemoths.

    In this environment, continued ‘biflation’ is also possible: steep inflation in goods and services we need (electricity, rates, food, transport, fuel etc) and deflation in goods and services that have been purchased by
    debt (primarily houses and investment properties in Aussie’s general case). The ongoing deflation of property prices will seriously impoverish Australians, given around 2/3rds of total Australian wealth by asset class is in property. Over 1.1 million negatively geared investors will continue to be pummelled in this market and will increasingly try to offload their properties to minimise the economic damage. This will add to
    housing oversupply issues already evident in Australia which is itself exacerbated by 35 year low growth figures in housing credit. Given very strong correlations between housing price growth and acceleration or
    deceleration in credit growth, prices will fall. Additional properties will flood the rental market over time (when they are unable to be sold), driving down rents and increasing rental vacancies, except in those
    markets with very tight markets e.g. Darwin, Sydney.

  32. PART II

    Obviously, the devaluation of the US dollar and money printing by all is reducing relative purchasing powers of currencies – hence the run to hard assets like silver and gold and (allegedly) ‘safe’ sovereign AAA bonds etc, despite abysmal yields. The problem is they have screwed all risk pricing in the market for capital and all these interventions have distorted everything beyond belief. Effectively, it is so rigged, I would not be investing anywhere right now until the reset is hit in the next year or two. The Aussie dollar will continue to remain very elevated and at about parity with the US dollar.

    Recent ABS figures show: 1) a REDUCTION in per capita disposable income and 2) Gross Domestic Income growth has diverged from overall GDP growth. Aussies are getting a smaller slice of the economic pie over time and given that income growth has been shown to be based on largely the terms of trade boom in recent times, with this ending, real incomes are set to FALL. Much wailing and gnashing of teeth is coming I tell ya. The population ponzi (opening the immigration floodgates everytime the economy is set to fall over) is also subject to the law of diminishing returns in this country, despite the best efforts of our federal overlords.

    Falling government revenues will mean treasurers will continue to talk up the GST in Australia (a regressive tax which disproportionately impacts the poor) instead of instituting a comprehensive
    land tax as recommended by Ken Henry (which did NOT recommend a GST increase). Politicians, treasurers and other low-lifes will continue to remain firmly in the pockets of the landed gentry, which will be best illustrated by federal and state policy that flies in the face of all available, non-partisan evidence. Effectively, the greater national interest will remain a mystery to these superficial turds. Dreams of a ‘scary’ 3% land tax across all residential, commercial and agricultural land values per annum to REMOVE payroll tax, stamp duties and a range of other regressive state taxes, in addition to stabilizing government revenue will remain the soft porn fantasies of commentators & readers of MB, Prosper, LVRG and a handful of other websites that engage in bear-minded heretical thinking.

    Other guesses:

    – Central bank rates at 2% by the end of 2013
    – Housing down another 5-10% nationally in real terms in 2013 (the slow melt continues)
    – Unemployment rises to 6 – 6.5% by end of 2013
    – More second tier banks will experience their first losses in 20 years in 2013 and mortgage insurers may well start to go out of business
    – Gillard’s surplus will never eventuate in the face of deteriorating revenue
    – The terms of trade drop another 10 – 15% and the government budget deficit will blow out accordingly
    – Productivity growth and real income growth outside of mining related activities will be extremely muted. Despite a narrowing of the polling numbers, Gillard loses the federal election in a close call after Abbot
    fails to step on any further major landmines in the next 6 months
    – Australians will continue to show a preference for saving money in cash and paying down all forms at debt at an accelerated rate. Inducements for additional credit, personal or other debt will be rejected in the
    – Continued argy bargy around falls in tax expenditure make the calls for taxation reform louder. The usual suspects will do everything to make sure a comprehensive land tax is never implemented, because the lazy rentiers want their ‘milky wilky’ bitchz, despite the fact that this could remove almost 125 regressive taxes by Ken Henry’s assessment
    – The deficit continues to blow out significantly in response to the end of the mining investment boom in 2013
    – Banks domestically and abroad will continue to commit all kinds of nefarious crimes and receive slaps on the wrist in return e.g. illegal loans, launderming money for drug cartels, sanctioned sovereigns, terrorists, stealing client money and losing it in risky derivative or other bets in the global casino, sweet deal interest rates for politicians, sweet deal appointments for pollies who scratched their backs, more egregious price gouging with associated fees, sub prime loans that cut corners and other associated outright fraud that will never be punished by toothless tigers such as ASIC and APRA who are too busy navel-
    gazing. We will be continue to be told that anything reining in this kind of behaviour would ‘imperil’ the system, despite the fact that it is already on death’s door, with a taxpayer morphine drip for chronic pain relief
    – Middle class welfare and pork-barrelling will remain sacrosanct items which can never be discussed for outright removal e.g. baby bonus, child care benefits etc
    – Greens, independents or any other politicians not belonging to the two-party dictatorship (LNP & Labor) will continue to be unfairly demonised, as they threaten the vested interests
    – Tony Abbot will appear in budgie smugglers on no less than 3 occasions in 2013. A long bike ride will also be MSM fodder by May 2013
    – Julia’s nose, arse and flaming hair will continue to be the focus of much derision in the MSM. Feminists will continue to be outraged that a female PM is judged more on the cut of her jacket, than the intent of her policy
    – Glen Stevens will continue to pontificate in econo-waffle speak which is purposefully impenetrable and non-sensical to the common man and woman. He will continue to rewrite history suggesting that he did
    everything he could to prevent a large household debt bubble and find every reason in the book to lower rates to never before seen levels. Despite this, the interest rate lever will NOT bring the punters back
    – Soft corruption will continue to flourish in this country with the lobbyists, billionaires and all other special interest groups getting many of the items on their wishlist. In doing so, they will continue to undermine
    democracy step by step
    – The federal government will continue to trample on civil liberties by encroaching further and further on internet freedoms and through the monitoring of individuals. Police will dramatically escalate requests for
    information on individual use for investigation of potential crimes etc. As usual, the sheeple will sid idly by and do nothing in response, because they are too busy finger f**king their i-phones and engaging in Facebook status updates, despite the slow approach of Big Brother on their watch
    – All in all, Australia is due for one big wake up call and the deluded sense of exceptionalism which exists everywhere will be shattered in 2013

    Final comment:

    In the next few years, we may well witness the end of the grand experiment of exponential credit expansion and cannibalization of a market driven by pure unadulterated, insatiable greed begun decades ago.

    Markets have become rigged casinos where the house (private financial institutions) always win and the punter (the 99%) always lose by socializing losses.

    In short, the markets have lost the trust of the people and become completely dysfunctional – and a grand reset/collapse/implosion is likely in the next few years as every effort by the central bankers and their criminal counterparts in government to save Global Plutocracy Mk 1.0 fails.

    • Bobby Fischer one of the best posts I have seen on Macro Business.

      Come 2014 this post needs to be bookmarked, tops 99%.

      All I could add is ‘Capital Flight’ will have an negative impact in 2013 and into 2014 on Australian investment and existing wealth pools, and the consequences will be tough for many.

      On the positive side, intelligent Australians will dig deep to create and support their families or join the flight of capital overseas!

      • I think the point about capital flight – a standard feature of the BRICS and third world commodity nations – is one to think about. I hit the turps last night with a load of professional types who were all talking about moving to Europe.

        Yes everyone knows there is stuff all work there and their economies are going to be ugly. But the prevailing sentiment was there is stuff all work here (and will be less soon) and the economy is ugly despite mining. It is cheap there.

    • Very nice.

      Though I am not inclined to let the non-LNP/ALP pollies off the hook even if they are being unfairly demonised.

      They have a frustrating tendency to engage in economic wishful thinking as a solution to the current state of affairs.

      They seem to think by rejecting the current economic model we will have access to some magic pudding that will provide for all.

      The solution to the current state of affairs will be difficult and will involve, as usual, the vast majority doing the heavy lifting.

      This will require the ‘progressive’ side of politics explaining why change is necessary and that it will involve a lot more hard work than simply taxing mining or increasing taxes on high income earners and cutting middle class welfare and the funding of private schools.

      The solution is not some simple choice between free-markets or European style social democracy.

      We are best served by ignoring the traditional models of what left wingers and right wingers are supposed to think when it comes to finding economic policies for the year(s) ahead.

      The bottom line is that everyone has an obligation to work as hard as their capacity allows – whether they be mechanics, teachers, process workers, bankers, economists or politicians.

      There is a lot that needs to be done to get us beyond the current mess but it is very very doable.

      Compared to previous challenges faced by earlier generations this one barely rates.

      • Hi all and thanks for comments. I also agree with your sentiments expressed above Pfh007.

        You know, there I was thinking I had completely transmogrified into a complete ZH conspiracy nut and should balance the ledger with a more optimistic forecast, when I stumbled upon this information below.

        BTW MB, here’s another one for the permanent criminal banking thread that is missing from your site (you know I’m gonna keep posting them to prove a point) 😉

        In this instance, “Global intelligence” company Stratfor uses their dodgy connections with that rat’s nest of an institution – Goldman Sachs – and their global knowledge to invest in ‘geo-political instruments’ to make a killing off legally questionable investment funds.

        Inconceivable I tell ya. Do you reckon anyone is ever gunna face charges? Tell yourself you’re dreaming…

        “Stratfor’s use of insiders for intelligence soon turned into a money-making scheme of questionable legality. The emails show that in 2009 then-Goldman Sachs Managing Director Shea Morenz and Stratfor CEO George Friedman hatched an idea to “utilise the intelligence” it was pulling in from its insider network to start up a captive strategic investment fund. CEO George Friedman explained in a confidential August 2011 document, marked DO NOT SHARE OR DISCUSS : “What StratCap will do is use our Stratfor’s intelligence and analysis to trade in a range of geopolitical instruments, particularly government bonds, currencies and the like”. The emails show that in 2011 Goldman Sach’s Morenz invested “substantially” more than $4million and joined Stratfor’s board of directors. Throughout 2011, a complex offshore share structure extending as far as South Africa was erected, designed to make StratCap appear to be legally independent. But, confidentially, Friedman told StratFor staff : “Do not think of StratCap as an outside organisation. It will be integral… It will be useful to you if, for the sake of convenience, you think of it as another aspect of Stratfor and Shea as another executive in Stratfor… we are already working on mock portfolios and trades”. StratCap is due to launch in 2012.

        Stratfor did secret deals with dozens of media organisations and journalists – from Reuters to the Kiev Post. The list of Stratfor’s “Confederation Partners”, whom Stratfor internally referred to as its “Confed Fuck House” are included in the release. While it is acceptable for journalists to swap information or be paid by other media organisations, because Stratfor is a private intelligence organisation that services governments and private clients these relationships are corrupt or corrupting.

        WikiLeaks has also obtained Stratfor’s list of informants and, in many cases, records of its payoffs, including $1,200 a month paid to the informant “Geronimo” , handled by Stratfor’s Former State Department agent Fred Burton.

        Damn you Wikileaks with your inconvenient truths… and in the Year of the Rat too, which I am told represents people who are ‘shrewd in accumulating wealth’. Oh the sweet, sweet irony.

        Think I’ll torrent that file and investigate further.

  33. A bit light on content Booby, could you expand on some of your more salient points please mate………………..


  34. Jesus Bob, I thought I was gloomy and had slotted in a few hours of drinking to lighten up. After reading yours I think I will have a joint as well

  35. Bob, agree, a top post and a definite bookmark to review as the year progresses.

    At 5.30am on New Years Day all I can say is thank God the shotgun is locked in the cabinet, the carving knife is in the dishwasher and the Valium pack is out of date.

    I’m going to be a minor celebrity at the coffee club gathering in a few hours when I give them the “good news”. The only group you haven’t pasted is the SMSF’s, of whom I am vitally interested, but I think I know your likely response….start unbuckling your belt and lowering your duds, the tax man commeth!

  36. 2013 will be a interesting year. Rates will remain flat, I would be surprised if the dropped further, but not impossible. If they do, it will be a sign that the Australian economy is in trouble.

    Australia will have a new Prime Minister, welcome to the job Tony Abbott.

    With Austerity happening in Queensland, NSW as well as other states. This will force many people to tighten the purse strings.

    Once Tony Abbott becomes Prime Minister this will happen at a Federal Level as well.

    In Queensland, public service at both State and Local are currently downsizing, forcing many property owners and investers who are public servants to offload there properties. Which is why I think that rate cuts won’t and is not having the desired affect that the RBA would wish.

    Offshoring of jobs will continue across the country, making people feel insecure about their employment.

    I suspect that the global economy will be rocky, that China will move to drive down ore prices which will have an adverse impact on Australia.

    Yes, 2013 will be a awesome year. 🙂

  37. Here is my Predictions for this year.

    Australian shares will be around 8-10% higher, the USA will be around 15% higher.

    property will be flat, but a dimly lit light will be visible at the end of the tunnel and some areas will start to see a gradual improvement. (

    The Big Ferris wheel in the Docklands, Melbourne will finally get running.

    Landlords will start to drop their rents because too many businesses are closing down.

    Another international food grocery retailer will get its foot in the door in Australia.

    The population will start to feel and look less stressed as the interest rates stay the same if not drop and revert to a more simple life (IE Not buying igadgets every three months.)

    Librels will come power.

    The new petrol discovered in the North of England made from Air will become more widely available. ( this will be more favored than electric and will sound the death knell of electric cars.

    Gold will be around $1500 an ounce.

    The AUD will be at parity with the USD

    MYKI still wont be working properly.

    That my lot on the subject.
    have a great year everyone.

    • MsSolarFelineAU

      May I say that you Victorians, are quite lucky to have the stored-value transport card system/contactless electronic ticketing system using smartcard technology you have, compared to Sydney….just a thought…. 😉

      It may not be perfect, but, at least you aren’t using paper tickets. 🙂

      Oh and you’re going to hate this, but we Brisbanites have had gocard since 2008, same as Perth with it’s SmartRider system (since 2007)…oh, and if one of the swipe terminals doesn’t work, use another one…

  38. I predict MB will go from strength to strength and our rival Oz Property Forum will be forced to close down when everyone realises 99.9% of the members there are either trolls or sock puppets.

    • rival ???
      weird view, one is just a forum that leaves a pretty large freedom of expression / thinking, mostly focused (but not exclusively) on property.
      The other is a truly astonishing blog with great content that is very loosely focused of property, mainly with bear bias.

      quite different isnt it ? if you re more about financial return it looks best to take your investment ideas from OPF, shorting mining and despising property investments are not very rewarding moves 😉

      • “freedom of expression” – hmmm interesting that differs from reports I’ve had from a couple of people who posted there in the past within forum rules and had their accounts changed so every post needed to be admin approved (no posts since made it through)… if you think that APF is a platform for free exchange of ideas/expression with all due respect you are deluding yourself.

  39. Can I have a bit of a rant, it’s not about predictions as the above 95 replies have been great reading on this boring hot New Year’s day..but I am very grateful to be above ground.
    My Rant.. How much wealth does one need to get invited to these in crowd parties on NY’s Eve and NY’s day in Sydney…Jeez I’ve been slogging it out here for over 30 years and I got a house and flush after selling 2 IPs and I’m feeling so left out of all this happy,famous midnight extravaganza and the invites to the Icebergs at Bondi and Lenonardo’s been to see us and some wankers I’ve never heard of who have an island bar in Rosé Bay somewhere that scary spice knows about. ..I ask again how much more money do I need to get on the Sydney wanker train around this time of the year?? I’m exhausted from my negative gearing days (the good ole NG days) and pissed off that I don’t seem to have made it yet into the social pages whilst clasping a glass of dreams.
    Happy anew Year to all the Real People out there on MB.

  40. There’s a flocking lot of Black Swans circling and once the first lands, the rest will follow. All things being equal and the world muddles its way along for another year resolving nothing I reckon;

    AU$ to hover around the 1.03 mark +/- 3c for a while yet until we get to the ‘oh f**k’ moment at point 3;

    Interest rates down another .5 – .75% (banks to keep .25% for themselves with savers crucified even further);

    Business lending to continue its decline (as it did in Nov) with housing to grow mildly (as it did in Nov). By mid year there will be an ‘oh f**k’ moment when the RBA and Treasury gets uber jittery about rising unemployment (6+% by mid 2013), default and stressed mortgages edging up with a dwindling number of businesses to keep people in employment. Mining will continue to provide cover but cracks in the wider economy are too deep and fractured finally exposing the ‘luck country’ myth. This will lead to 1% growth ex-mining with a stimulus package pre-election. State finances to also feature big as tax revenues decline. Social cohesion in Australia will also deteriorate as the economy slows.

    Rudd v Turnbull to contest the Oct / Nov election. Goolia will be rolled (unless she calls a snap election to thwart Rudd) by edgy Labour backbenchers and factional warlords; Rudd won’t contest a spill, he’ll be tapped on the shoulder for the job. Abbott’s unpopularity will continue with the polls telling the Libs a story they’re not listening too. The Libs will have no choice but replace Abbott when Labour becomes resurgent under Rudd. Neither side will go into the election with big promises.

    Europe continues its ostrich impersonation until the joint nearly blows up with wide spread rioting and general pissed offness;

    The US will muddle along with anaemic growth and political paralyses;

    Iran and North Korea will continue to be a deadest pain in the ass;

    China will continue to hoover-up foreign assets (Aust included) aided by a totally complicit political class and will continue to grow at 7.5%.

  41. World economy continues to stagnate.

    Aus economy continue to slow – prob not technical recession, but small and medium businesses will struggle; main issues will be post-2012 debt levels really starting to bite as inflation in “needs” really hits the pscyhe of the business and household budgets; people realising that mining really is struggling and housing just can’t get off the floor, will set the stage for gradually increasing UE and a poor position leading into 2014.

    Watch Japan inflation in the cost of living, and gradual erosion of faith in the Yen; US Fed will fight flights back to the USD by printing more aggressively; also watch Japan/China tensions as both countries of politicians try to divert attention (and “save face”) from their “ailing” economies.

    Gold to finish end of the year > $1800; AUD to decline to sub-paritty, and find resistance at parity at the end of the year.

    My 2c

  42. Europe to talk up progress and stability in Q1, with the sweetness turning sour towards Q2-Q3 with rising tensions ahead. I think the seams of the EMU fabric will be stretched to the extreme by the end of the year if not before. I don’t see EMU lasting in the current form beyond 2014 anyway.

    US talking up slow recovery and slow it will be at best for all of 2013.

    China talking up both growth and reform in Q1 and by mid year we will see how much of the slowdown is lingering beneath the headlines. I expect to see a sharper downturn in China from Q3 onwards with execs and money leaving as in 2012, exports slowing further etc, resulting in a sharp correction in base metals.
    Black swan could be the south China sea situation. Hope not and hope the Chinese don’t take after the Americans in diverting public attention from internal politcs to foreign wars.

    Australian politicians talking up confidence and positive thinking again. Negativity seriously frowned upon.

    My crystal ball is cloudy with everything but more so with gold. I don’t see it crashing apart from possibly some scary looking short corrections but I don’t see it booming to 2000 either. Best guess low of 1500ish and high of 1880ish.

    AUD who knows but maybe around the 1.03-1.05 mark for now and if China slows then to parity and possibly below, by the year’s end.

    Property. I’m getting converted into the slow melt camp due to the great masses of faithful property investors in Aus. I now think many of them are willing to risk looking at their property porfolio in 5 years time with the same stunned shock as they experienced when they dusted their share portfolios from the back drawers after 2008.

    Corruption. I expect a lot more on this front to hit the headlines.

    Banking. I expect headlines questioning the credibility of the words prudent banking and interest only investment loans in the same sentence.

    That’s it and no more time for the task. I don’t believe in crystal balls so what I expect will probably be way off the mark.
    Happy new year all!

  43. OK my turn …

    1. USA will continue to deflate their debt and cause more global grief as no once can police the global policeman

    2. ‘New wars’ will spring up in Asia-PAC

    3. Aussie will float between 103-110 all year

    4. Iron ore will peak mid year at 145 but drop to 90 by December

    5. Europe will add more zombie states 3 by my reckoning (zombies always come in 3’s)

    6. Steve Keen will make new Bear comments that will scare more Bears than Bulls and be right in 10 years time

    7. Japan will have a lousy year and population is their only issue – aging that is.

    8. NZ will tick over and keep selling their ‘land parcels on special leases to PRC for 2013 keeping then in bed with the black not completely the red yet.

    9. FMG will be on the verge of collapse by Q4 after breaching special debt covenants a pit too fa again

    10. Hong Kong property will bust by Q2

    11. Singapore will follow Hong Kong in Q3

    12. Australian property market will be melting faster but no relief as all counter measures have been fired

    13. RBA will be forced to increase rates contrary to all predictions as inflation takes off … long shot but 13 can be tre unlucky! (boon for savers at last!)

    Thanks for the free education MB team and commentators love all your work.

    I wish you all the best for 2012 even if this makes no sense when we all want different things but ain’t sentiment grand!


    Kind regards, TM.

  44. If the Japanese election is anything to go by, 2013 will hopefully be the year CB’s in the high income world are finally forced to fix the economy. Even if it means higher inflation and baby boomer whinging.

    • Anyone who thinks inflation fixes anything has never lived through high inflation or is a complete fool with his own distorted self-interest at heart.
      Krugman is in the latter boat.

      • Which boat are the Japanese people in? Why did they elect Abe? Was it just a collective brain fart?

        People are waking up. All the anti-inflation hysteria is the face of anaemic growth and high unemployment is finally being exposed as nothing more than boomer & bondholder self interest and hypocrisy.

  45. I’ll do what Craig James does every year and predict a 12-15% return on the ASX.

    He was right last year (for once).

  46. 13. RBA will be forced to increase rates contrary to all predictions as inflation takes off … long shot but 13 can be tre unlucky! (boon for savers at last!)

    I believe this is the central point most are missing. The signs of coming inflation are everywhere. They are just being ignored. If the RBA raises rates, or doesn’t reduce rates further, on the back of this inflation then I’d guess most here would want to re-visit their prognostications.
    However it’s reasonable that inflation, while obviuous to some of us who care to look, might not become undeniably obvious to most until at least late 2013. The RBA will likely try to use the ‘look through’ BS argument to avoid stampeding the herd before the election.
    In which case look forward to total dislocation through 2014-2015.

  47. 2013 Predictions

    China’s internal politics/unrest stabilizes with a renewed focus to “lets all just make some money” means expanding export markets, and moving another step up the food chain. The big question is who looses market share and how do they react. QE4…6 anyone?

    Direct external investment by Chinese state owned enterprises crowds out all other mining investors, especially in Africa, Mongolia and the neighboring ‘stans. Raises the question of how patient China will be with a these completely dysfunctional and mindbogglingly corrupt regimes. (sowing the seeds for establishment of a Chinese “Kwantung army”??)

    China continues East Asia saber rattling, and concludes one highly asymmetric bilateral agreement with one of the weakest regional countries. Kinda “kill the chicken to scare the monkey” agenda.

    Australia bungles along with totally hamstrung politics, we need the Terms of Trade a buoyant China delivers but at what long term cost?

    Australian Small business operating conditions continue to deteriorate over the next 12 months.

    Sydney and Brisbane housing recovers up 5% to 10%, pressure on Melbourne prices, Perth, Darwin and Adelaide stable.

    Acceleration of on-line retail business in Australia results in some big name main street (Mall st) bankruptcies.

    • Not bad but you didn’t say anything about a change of government, which could lead to what?

  48. – Property will continue the slow melt as unemployment increases. No dramatic drops until unemployment hits 7%. At 7.5% unemployment, it will go from slow melt to full spring thaw with a possible 20% drop in property prices.

    – but I don’t expect 7-7.5% until 2014.

    – Darwin will continue to outperform everywhere until 2015, when it will stall.

    – RBA will drop rates to 2% and may be .25% below.

    – February will have a Turnbull take over bid for leadership. Turnbull will be next PM if he gets lib leadership. But I will never doubt Abbott’s pure rat cunning and he may retain the job. Turnbull by a landslide, Abbott by a slim margin.

    – Either way Labor is back in the wilderness in November 2013.

    – All economic woes will be blamed on Gillard for the the next 10 years despite GFC and global distress.

    – Libs will preach austerity and rip the heart of the economy “to keep their promise of no deficit”

    – Mining tax and NBN to continue, Libs will say its too hard to unwind.

    – print media dies. One major newspaper goes out ugly.

    – Rupert Murdoch lives and continues to control News limited, much to his children and shareholders disgust.

    – Usual disasters in the middle east.

    So much more but right now there is no time to finish reading the crystal ball.

  49. I’m a trend follower, I don’t commit or marry my idea’s. I don’t look very far into the future – there’s just too many contingencies/variables for my brain to hold. The Only certainty is Uncertainty & all that.

    The Future – Same as it Ever Was – there will be always be a new crisis (real or conjured) around every corner to keep us in fear, divided & repressed in some form regardless of which country we live in (In Oz it’s debt). While not a conspiracist, the more I read various websites, disappointingly, the more I can see the corrodors of power are far more Macchiavellian than the reality most people on the planet (want to) see, or live. Although in saying that I do think there is a glacial mass awakening occuring.

    Soon enough we’ll be forced to line up like dung beetles to vote on which is the most polished, unpolishable turd. The only guarantee is that any ‘winner’ will more than likely be just another deceiver & betrayer in what is just another choice suffocating duopoly. I doubt there’ll be as much change as people hope for if there is any new claimant on the dung hill.

    More HFT sodomising, fund implosions, market riggings, more regulators looking as bad as the banking crooks & still no jailings (& they’ll still wonder why trust has vapourised?) More deny, delay, distract & deceive from Anyone in the public eye.

    All pretty safe prognostications really… So after all that cynicism, whats in store for me? I’ll just keep doing what I do, FX. Keep abreast of possible/probable/proven central planning lunacies to avoid going against them. Keep a good eye out for sentiment changes. Look for trends on whatever timeframe shows one, & ride it as well as I can. Same as it ever was.

    A big thanks to you guys & your commenters on their quality precis of looming situations presented to us. I’m no economist, & reading your economic input helps me to educate, calibrate & formulate my own idea’s as to what landmines may? be ahead. I do find MB a most excellent & balanced anchoring point to start from.

    Good luck everyone in 2013 & thanks for enhancing my ongoing education!

  50. I met a Taswegian from the West Coast many years ago and he told me this anecdote: “When the wind stops blowing the cows fall over where I come from.”

    The Cold War was over, the wind abated and the government fed fat cattle fell over the cliff to their debt.

    Those who provide the artificial wind and those with the cardboard cutout cattle will be the beneficiaries of largesse in 2013 and forward. Sorry Flawse.

    Jenny Macklin: Labour Minister- salary- $6350 per week. 25 times the dole. Round figures , she earns in a week what a person earns in half a year on the dole.

    Love you Bob Shithead Hawk. Is that Comrade or Brother? No mention of poverty or anything else other than the States should be abolished. Peter Beattie agrees.

    Commo elites unite. Socialist elites rejoice.Fat arse wombats rejoice.

    A $630k per annum socialist- your Fn kidding me!!!!!

    I had the affront on the telephone this evening from a police community sevice entity sourcing funds. I asked why did not their members (inc. other public services) contribute their excess above and beyond the private rate of superannuation contribute to the funding of charities, with the excess rate?


    When I explained that it was me and other like people me that provided the gap between their rates (12.5+ in QLD) and (15.5%+ in Federal super benefits) to private rate of 9%.

    2013? When the mark of the plague is regarded as a beauty spot. Yes if the plague has waned and has been subdued by natural attrition. If not not? – Beware in the extreme.

  51. After re-reading AntiFragile the only prediction I am moderately confident of is that night will follow day.

    Oh, and as an outlier, thanks to Grattan Cassidy the ABC Canberra Press Gallery and various household handouts, Labor wins in 2013.

  52. When predicting you should always reveal your method (for reliability): crystal ball, spiritual gift of prophecy, Mayan calendar, my Oreo cookie told me…

    and ‘HAPPY’ NEW YEAR to all the 2012 BULLS that piled into the market when all the dooms-dayers were building concrete bunkers underneath their rental properties!

    Happy Summer Holidays fellow investing enthusiasts!

  53. Hi all,

    Love yas all…

    What a good year we look forward to…

    By the end of this year we will see:

    Us buying another signed national footy teams auctioned Guernsey before the start to the season…

    We will finally see our 4 year old wiping his own ass by the end of the year.

    Our 14 month old spending most of his waking hours getting the 4 year old beck for all… the wrongs over the last 13 months

    Our 5 year old will stop whining over there perceived misfortune and stop trying to use underhanded tactics to get there own way.

    Precious will spend most of the year subdued and brake free in the 14.

    That might give us time to buy…

    Best wishes to all for the upcoming year.

    Thanks to all at

    Kind regards,


  54. My predictions:
    AUD/USD around .98 by 2nd half
    Unemployment to reach 7%
    Real estate down 8% with worse to come in 2014
    ASX 4,200
    A division of Mega Bank to have a massive SNAFU resulting in share price down $5 (not the usual Megabank suspect)
    Turkey to be the shining light of economic growth
    LYC to $2
    Election in first half of the year driven by a political health issue/personal tragedy. Turnbull to win the election but regret it from day 1 as the economy turns sour and he becomes a target of MSM and is blamed for everything. He doesn’t last and politics gets worse ala USA where more people start aligning to parties irrespective of policies and support the party no matter what. More and more political bias in MB comments (we know who they are even though they don’t see their bias).

    Whilst I rarely comment I am a regular reader and greatly appreciate the articles and comments (even the spruiks).
    Thank you all.