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Credit Markets are the Key

The volatility in equity markets impacts on consumer and business sentiment which is critcial to investment and spending behaviour. Whereas, it is the credit markets that hold the key to the long term recovery, however in the short to medium term it is likely there will be an increase in wholesale funding costs globally. For any investor who wishes to understand the maturity (funding) profile of the Australian banks all you need to do is look at their term deposit rates.


Interest Rate Prediction - December 2011

Chairmont does not believe that the RBA will lower the official cash rate when it meets next week. We believe it will have a wait and see attitude despite the events unfolding in the Eurozone and the Federal Government's contraction in fiscal policy so it can achieve a budget surplus.

Greek Debt - Cultural Change Necessary

Greece defaulted when the debt was re-scheduled some months back and in some senses it does not matter what the outcome of the referendum is. The real issue is the major culture hurdle concerning the Greeks attitude to work. Just as Australia went through a work ethic transformation after the floating of the dollar so that it could compete on the world stage, Greece will need to do the same.

Capitalism v Democracy

There is a natural tension between the goals of capitalism and those of democracy. These tensions are bubbling to the surface, e.g. Occupy Wall Street Movement. It is encumbent upon the political leaders across the "free" world to address the issues that underpin this heightened level of tension.

Interest Rate Cut

The 25 basis point reduction is welcomed, even if not all of it is passed on to home and bsuiness borrowers by the banks. As readers will be aware Chairmont has been advocating a cut since early this year, even though in our last blog we thought that the RBA would not act and wouldl keep rates on hold.