Would you like sugar with your meltdown?

In the past week we've all been affected by the "adjustment' in global stock prices through superannuation investments or direct shares. Further falls are expected on the Australian market today.

Statements from Commsec Securities have indicated that many of their margin loan customers are choosing to reduce their loans with cash rather than sell shares in a declining market. This would indicate that investors are still optimistic for the future and are prepared to stick out the short term pain.

In the recent past we've seen:

World share markets tumble
USA Fed lower interest rates
Australia's RBA increase interest rates
USA House prices falling
Australian house prices rising

Those events got me reaching for the text books and refreshing myself on "The Economic Clock". The clock represents the economic cycles of economies as they move from boom - bust - boom - bust. For every bust their follows a boom and in the boom of the last few years, this is the bust we had to have.

According to the clock the USA has rounded the depths of depression at 6 o'clock with falling real estate and falling interest rates. The USA is headed for rising share prices. (They couldn't go lower could they?)

Australia is somewhat behind USA and still enjoying a booming economy, full employment and rising interest rates. Depending upon the strength & speed of the USA recovery will determine how quickly and severely our economy can move through the bust portion of the cycle.

Wayne's prediction for 2008. In aeronautical terms, Tighten your belts for a rough touch-and-go before resuming normal flight.