Why the commodities boom likely peaked with the credit bubble

Societe Generale’s Dylan Grice is is sticking to his statement that Australia is “a credit bubble built on a commodity market built on an even bigger Chinese credit bubble.” In this clip he explains why he is concerned about the Australian economy and why he sees a recession in 2013:Here is a direct link.

Many of his concerns about Australia mirror many of our own concerns about Canada over the next couple of years.

For more on the oppressive debt levels plaguing Canadians (now estimated at a whopping 165% debt to disposable income in Q2 2012) see: Canadian household debt approaching peak US levels

With the domestic economy weakened more than ever by household indebtedness, the Canadian dollar is tumbling this morning on dovish words from the BOC’s Mark Carney suggesting that the global slowdown is hurting Canadian exports, revoking the idea that Canadian policy rates are likely to be increased anytime soon:

“Elevated global uncertainty is holding back global economic growth and, thus, the demand for Canadian exports,” Carney said Monday. “There is some evidence that global uncertainty is affecting domestic activity.” See: What Mark Carney didn’t say

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3 Responses to Why the commodities boom likely peaked with the credit bubble

  1. John C says:

    Ironic, how things work.

    Japan was the first Asian country to adopt a Western-style economy (thanks largely to the country being, essentially, a US mandate). And now, decades later, the US (and Canada) are becoming more and more “Japanese” all the time, what with the liquidity trap, slow growth, low rates, etc.)

    Meanwhile our own BoC boss, Mark Carney is starting to sound suspiciously like that devious, bearded, academic economist ensconced in the Marriner Eccles building. As usual, the US is ahead of Canada.

  2. William says:

    And the chinese credit bubble was build on the premise of an ever increasing US GDP.

  3. Ralph Parry says:

    With regards to the Austrailian Commodities Boom/Bust video, I beleive Canada has missed a fair amount of economic downside for the same reason but may get hit like Austrailia in the future. Like Austrailia, we are a resource based, exporting country. So far a managable debt and a banking system that held few enough toxic assets pre 2008/09 has kept us from augering in, but productivity and exports will be key to holding on to any success we have had so far.

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