It's six weeks to Christmas and I hear you say "where did the year go ?" - unless you're like Charlie's granddaughter, who can't comprehend such long periods.
Many of us who are a bit older are looking forward to an overseas holiday at Christmas with a bundle of strong Aussie dollars. I hear the snow bunnies in the eastern suburbs, who like to extend the winter season, are keen on the snowfields of Japan and, increasingly, China.
In Japan, they are celebrating the centenary of the introduction of skiing by an Austrian army major: the aptly named Theodor von Lerch, who must take some considerable credit for convincing our industrious Japanese friends to indulge in this downhill frivolity.
Just a hop across the Sea of Japan (also known as the East Sea) lies China, our other great trading partner, where many now believe the first people took to the slopes 5000 years before the Scandinavians. It's around here, on the ski fields along the legendary silk road in the prefecture of Altai, that Genghis Khan might have passed on his way to world domination.
"His cross country technique was phenomenal," says Louise.
Skiing would have been pretty tough in those days, without diesel-powered ski lifts. The trip downhill would probably have been about as quick as today quicker with Genghis behind you, but the way back to the top would have been a serious, all-day slog.
It is a bit like the way we respond to the Reserve Bank's decisions on interest rates. After the last interest rate rise in November last year, we saw all our retail clients and the economy generally head downhill pretty fast.
And now with Melbourne Cup day interest rate cut, it's back to the slopes, sturdy stocks in hand, as the long haul up the mountain starts again. As far as we can see, there's been almost no movement in the economy. As one of our clients said, we've seen a cautious store-on-store improvement in sales compared with a reasonably strong sales week in the previous year.
On the other hand, for the great many of us who are responsible for the record level of bank savings, an interest rate cut means a little less cash growth. So, sadly, this move is more likely to have a negative effect in the short term, although the hope is it will turn positive in the future, particularly if it is followed up with further rate cuts.
There is an argument that the lag between interest rate cuts and their impact on retail spending is about 18 months. I hope this time frame can be shortened because there is no reason to hold our economy back.
It would make a lot of sense for us to fully understand and accept that we have a once-in-a-century boom.
By any standard, we have a very strong economy.
The fact is that while we have been included in the G20, where our Prime Minister has been boosting her ratings, we come in at number seven, just inside the G8.
Instead of snow skiing, why not stay at home this summer, take a water skiing holiday - our lakes are all full after the good rains. Enjoy our great country and support the local economy.
Frequently Asked Questions about this Article…
What did the Reserve Bank's Melbourne Cup day interest rate cut mean for everyday investors?
According to the article, the interest rate cut signalled a shift from the previous tightening cycle — it can be negative for savers in the short term because cash growth falls, but the hope is that rate cuts will eventually boost spending and the economy. The author describes the market picture as "back to the slopes" with "sturdy stocks in hand" as the long climb for the economy resumes.
How will the interest rate cut affect my bank savings and short‑term cash returns?
The article notes that many Australians hold record levels of bank savings, so an interest rate cut typically means a little less cash growth for savers in the short term. The piece suggests this is likely a short‑term negative, with potential upside only if cuts are followed by further easing and a pickup in economic activity.
How long does it usually take for an interest rate cut to boost retail spending?
The article mentions an argument that the lag between interest rate cuts and their impact on retail spending is about 18 months. The author expresses a wish that this timeframe could be shortened so the economy can recover more quickly.
Is the Australian economy strong enough for investors to feel confident?
The article describes Australia as having a 'very strong economy' and even calls it a 'once‑in‑a‑century boom.' It also points out Australia’s solid standing internationally (ranked around seven in the G20 by the author), implying a generally healthy backdrop for investors.
Should everyday investors consider staying invested in shares after the rate cut?
The article suggests a positive view on holding 'sturdy stocks' as the economy starts climbing again after the rate cut. It presents this as the author's market metaphor rather than specific investment advice, indicating confidence in equities as conditions begin to improve.
Will the rate cut help tourism and consumer spending this summer?
The article hopes that rate cuts will eventually stimulate retail spending, though the impact can be delayed. The author also recommends supporting the local economy by holidaying at home, noting that lakes are full after good rains and domestic leisure could benefit.
How does a strong Aussie dollar factor into holiday and investment decisions?
The article points out that many Australians were considering overseas holidays because of a strong Australian dollar, which makes foreign travel more affordable. However, the author encourages domestic holidays as a way to enjoy the country and support the local economy.
What local holiday activities could help support the economy this summer?
The article suggests staying home for a water‑skiing holiday and enjoying Australia’s full lakes after recent rains. Choosing local leisure and tourism activities is presented as a simple way to support the domestic economy.
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