Breakfast with Paul Clithero
by Steve Tippett - Intercept Perth
November 13th 2008 - Last weeks breakfast with Paul Clitheroe was one of the most informative talks on economics I have ever attended, Paul has a unique ability to make sense of economics especially at a time when we are all looking for information and a direction forward. His way of putting everything into perspective cuts through the hype and bias that tends to be highlighted by the media. This does not mean that you ignore the media and all your problems will go away, what he was saying is to look beyond the headlines and examine what lies beneath, especially when you hear stories of the RBA running short of $100 dollar notes!
We gained some insight on stocks to purchase and some of the areas that would be a good investment for the future, a look at categories of people that will be hit the hardest, especially young families with a mortgage now above their homes value, a new car in the drive way and extensive purchases on 2 years interest free. Reliance on overtime and bonuses to live week by week may also be dangerous.
Paul commented on the way we will change to accommodate what is happening in the economy. We will begin spending on a needs basis rather than want. We will still go to restaurants, changing from the expensive to more economical.
The big message is to look for the opportunities that will come our way, be prepared and have our eyes open. Paul commented he understands times like this compared to real boom times and is able to see things more clearly.
Paul feels there may be an increase in unemployment and housing prices will fall due to elevated unemployment as well. He commented a number of times on the debt exposure tied up in mortgages at this time, although he feels we may see a further decrease in interest rates and maybe a weaker Australian dollar as well.
Paul explained why he feels Australia has 3 safety nets;-
Interest rates of 5.3% can still be lowered if needed.
No Federal debt
and weak Australian dollar supporting export
All in all this was a great talk, honest feelings were relayed and explained and we are wiser for the experience.
