Bad News Day: Australian Financial Review
I am away at site keying this up on my notebook. I always bring my notebook when I work away at site on Tuesdays, Wednesdays, and Thursdays but I rarely actually get it out and key up a posting. Also when I am away I generally buy a couple of papers each evening to read while whiling away the time alone in the motel unit. Typically I get the Australian Financial Review (known as the Fin Review by regular readers) and The West Australian.
I have to say that today’s Fin Review was not exactly uplifting. After skimming over it I felt like I needed a couple of Valium.
On the front page was an article covering how many Australian companies are in significant trouble trying to refinance loans made just before or during the Global Financial Crisis. The problem is that banks are not lending and are not interested in providing refinancing. So this means some well known large Australian companies may not be able to refinance. The outcome of this could be devastating for these companies and this inability to refinance has already taken its toll on BlueScope Steel. The Fin Review indicates that numerous large companies are in dire need of refinancing well over $100 billion in loans over the next three to four months.
Then on page 5 we find out job advertisements have fallen for the second month in a row. The job market is drying up. Never a good sign.
On page 13 in the World News section the International Monetary Fund (IMF) warns that austerity measures across Europe are failing badly and that major government stimulus measures are needed to avoid a “threatening downward spiral”. The problem is that European governments have very little left to pump into stimulus measures.
In the Market Wrap we told that world share markets suffered their worst trading month in August since the Global Financial Crisis, and that there is no evidence to show that September will be any better.
On page 41 in the Financial Service section we read that Australia’s Big 4 banks are fighting to save their AA rating after a global review of banks conducted by Standard & Poor’s. It seems the Big 4 Australian banks are way overleveraged in depending on wholesale funding (whatever that means) and that this is likely for their status to be downgraded which in turn puts up the cost to them of international funds which in turn means they can loan less overseas and have to charge more for it (in interest). None of which is good news for Australians wanting to borrow money.
Finally on page 48 the Deutsche Bank points out that there is little or no chance of any house price growth “in the next few years” as householders work to deleverage (whatever that means). The bank pointed out that supply shortages of new housing is not going to drive price growth. The Deutsche Bank states “We expect household deleveraging to be the overpowering influence on house price dynamics over the next few years”. The bank is expecting a further 10 percent fall in house prices in Australia over the next three years.
I might not buy a Fin Review tomorrow. I might get an FHM instead.
