Age of uncertainty
Thursday, October 11, 2007/
An election result will at least end the uncertainty in one part of the economy.
Small businesses with 10 or more staff are heading into an era when they will face enormous pressures to give bonuses and time subsidies to retain their most highly skilled staff.
Innovation, creativity and entrepreneurship (the ICE factors) are becoming more important for small-business owners trying to over-satisfy customers and prepare for their own exit. And all of this is happening in an inflationary economy that is not enjoying the usual trickle-down of prosperity because it is being fuelled by a resources boom.
Employees with experience and a track record of performance are at a premium, and are being attracted to big corporates on big salaries.
Australians’ uncertainty about the future is reflected in the growing number of federal seats that have become marginal. Neither party has told us what the future holds. As a result, people have no sense of the benefit of staying where they are; if they can get a better deal they will move.
For those who believe that Australian and New Zealand consumer confidence levels have learned how to defy gravity, I suggest that it is time to visit http://www.marshallplace.com.au/consumer-confidence
As we head for the Ides of October we are seeing the ASX continuing to go stratospheric and the US collywobbles continue to rise. By the time that the 17th Party Congress of the Communist Party of China gets under way in the next week, we can expect major revision of expectations in the US, including major industrial trouble as the auto industry learns that the rise and rise of petrol prices affects consumer confidence.
There has been talk of another interest rate rise, but Treasurer Peter Costello might be able to stare down any rate stirrings until after the federal election, whenever that is.
If the US dollar continues to be dragged down by Fed chairman Ben Bernanke’s pursuit of the Greenspan heritage and the Australian dollar heads for parity, we will see a furious withdrawal of funds for expansion in the Olympic Year. As the Australian dollar trips over the US95¢ mark, you will see corporate treasuries in China, Taiwan, Japan and Europe start to buy into the longer-term prospects of a Howard Government.
At the same time, we can expect the Swan/Rudd “steady as she goes lads” pour oil (at ever increasing rates per barrel) on to the local market in a vain attempt to get the media to recognise that reduced wages and increased profits are the only things share traders want.
Only a new or redirected Prime Minister, with a clearly defined and detailed set of prospects for small business, independent contractors and students can reshape the meaning of “a comfortable life”
To read more Colin Benjamin blogs, click here.