Wednesday, December 15, 2010
Fish and chips in Kiama
I write to make an observation – one for all the currency speculators out there. We stopped for a meal on the way South. South of Sydney (hence with cooler water) is the unfashionable part of the New South Wales coast. A beach-town cafe in decidedly middle class Kiama – and without water views is now as expensive as a cafe on the Upper West Side of Manhattan. (The fish and chips are better in Kiama though.)
Some of this price level is due to wage structure – but most of it is new. Australia is just expensive and getting more so – and the Central Bank (justifiably) feels the need to raise interest rates. Australia is now a very expensive place to visit and I do not recommend it except for the very wealthy.
It's hard to call the end of the Australian bubble – but the boom and prices have gone far beyond rational. I don't see what breaks it other than an end to the Chinese construction boom. These prices are the downside of being China's coal and iron ore mine. In America I saw no obvious inflation between trips. On the South Coast of New South Wales I can't say the same thing.
If you are an Australian and you are not in the process of shifting 25 percent of your asset base offshore you are probably remiss. And if you are a currency speculator liking the carry on Australian government bonds then it has been a great trade but I hope you get to the exits early.
Meanwhile you can enjoy ordinary ice-cream cones in small coastal towns at US $5.30 each.
*There is a blog post in that internet company – but it will have to wait for the new year. I want to talk to management to hear their side of the story first.
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