Is the Aussie Dollar Going to Crash? – Part 1: Qualitative View (20:53)
Is the Aussie Dollar Going to Crash? – Part 2: Quantitative View (17:25)
There has been quite a lot of speculation in the financial media about Australia and the Aussie Dollar in the last month or so. Mostly negative.
Business Insider carried a piece with the headline Why Shorting the Aussie Dollar is the ‘Trade of the Century’. Stefan Molyneux recorded a very slick video titled The Fall of Australia.
Anyway, here’s my 2 cents. The first video lays out the qualitative arguments, both pro and con. The second video re-visits the M3 money supply chart and technical analysis.
The Aussie Dollar is in trouble but what about Australia?
In the last couple of years my view of Australia has come full circle. In this section I want to keep track of Australia’s rise up the international rankings. For example:
- Australia ranks 1st on the OECD Better Life Index behind Sweden, Canada, Norway and Switzerland. The Better Life Index is based on 11 factors, including housing, income, jobs, education, health, work-life balance, etc. (Source: OECD Better Life Index 2013 )
- Australia now ranks 5th for Economic Freedom behind Hong Kong, Singapore, New Zealand and Switzerland. Well above the UK at 12th and the US at 18th. The economic freedom index is based on size of government, legal system, sound money, international free trade and regulation. (Source: Economic Freedom of the World 2012 )
- Australia now ranks 5th for least Sovereign Debt Credit Risk behind Norway, Sweden, Switzerland and Finland. Well above the US at 15th and UK at 22nd. (Source: BlackRock Sovereign Risk Index 2011 )
- Australia’s credit rating is AAA across all 4 credit rating agencies: S&P, Fitch, Moody’s and Dagong. The US has been downgraded by S&P and Dagong. The UK has been downgraded by Fitch, Moody’s and Dagong. (Source: Wikipedia Country Credit Ratings )
- Australia has 4 cities in the Top 10 Most Liveable Cities. Melbourne is the number 1 most liveable city in the world. Adelaide, Sydney and Perth are numbers 6, 7 and 9 respectively. (Source: The Economist Liveability Ranking 2012 )
- Australia ranks 1st for Personal Rights, which include Political Rights, Freedom of Speech, Freedom of Assembly and Private Property Rights. Canada ranks 2nd, Switzerland 3rd, the UK 4th and the US 6th. (Source: The Social Progress Index 2013 )
- Australia ranked 2nd for Best Place to be Born in 2013, behind Switzerland and up from 18th in 1988. The ranking takes into account: income per capita, unemployment, debt, life expectancy, personal security, climate, geography, etc. (Source: The Economist Intelligence Unit 2013 )
- Australia ranked 3rd for Best Place to Retire in 2015, behind Switzerland and Norway. The ranking takes into account: health, including life expectancy and access to quality health services; finances, including the strength of the financial system; quality of life, including factors like crime rates and air pollution; and material well-being, meaning the ability to live comfortably in retirement. (Source: Natixis Global Retirement Index 2015 )
- Australia ranked 3rd for Cleanest Country in 2014, behind Switzerland and Luxembourg. The ranking takes into account: air pollution, water quality, habitat protection, intensity of agriculture and fishing, use of pesticides, greenhouse gas emissions, etc. (Source: Environmental Performance Index 2014 (Yale University) )
And at last this view is getting some attention, albeit in the alternative media. Sovereign Man called Australia the New Switzerland in April 2013 and said “given such fundamentals it’s easy to see why Australia is replacing Switzerland as a global safe haven”.