EDITORIAL MONDAY 03.11.08.
Well it’s that time of the year again. Melbourne Cup time; when the real winners are the bookies and the betting agencies as everyday people become punters for a day and plunge millions on the race that reputedly stops a nation. This year of course the big race coincides with the United States Presidential election, which might be a two horse race, but is nonetheless just as difficult to pick. To complete the trifecta, the Reserve bank of Australia will have its monthly meeting and decide whether or not the economy needs another interest rate cut.
Although it seems to be a foregone conclusion that rates will be cut again, there are signs that some uncertainty exists. While the Global Financial Crisis continues to make its influence felt and retail and property figures are still down, it’s not all doom and gloom. The Australian economy is not in recession, the impact of the Federal Government’s $10 billion cash giveaway is about to hit next month, and inflation is still high. These three factors might just be enough to persuade the RBA to hold steady on interest rates. If they do, it would be a mistake. I expect the Reserve will play it safe and drop rates by 0.25%.
Across the Pacific, the United States is contemplating whether to elect a 72 year old war hero as President, or to make history by electing an African American to the post. Despite the best efforts of Hollywood to sell the idea in fiction, it remains to be seen if mainstream America is ready for that leap. It’s not simply a question of race, as only a minority will see that as an obstacle. It’s also a matter of age, experience, divided opinions about the Iraq War, and even the question of the right to own guns. While, the Republican Party deserves to be punished for its economic and foreign policies, conservative values can seem attractive in times of crisis. While the rest of the world might favour a Barack Obama victory, I’m not convinced that the American People will see it that way. I believe it will be tight, and that McCain might just pull it off, even though Obama would likely be the better President.
As for the Melbourne cup, there might be two dozen horses to choose from, but it’s the easiest one of the three to pick. Really, there is only one choice. The cup will be won by Mad Rush. So there you have it… a modest interest rate cut, McCain for President, and Mad Rush to win the Melbourne Cup.
Hang on a minute, I’m still not sure about McCain… That’s just too hard to pick.