As we see the Eurozone all but collapsing before our eyes, Greece and Ireland are rummoured to already be undertaking the printing of there own new currencies in anticipation for being kicked out of the Euro.

The Aussie Dollar has fallen over the past week and has dropped well below parity, and is likely to stay there, a far fall from $1.08USD in only Feb this year.

We are constantly told by governments and other bodies that Australia will be fine, as we have the mining boom. This has been true in the past and certainly we have the mining boom to thank for preventing us feeling the same economic fall out over the past few years as most of the Euro zone and the US.

However the important thing to note is that this ‘great’ mining boom was dependant almost entirley on the consistant growth of our Asian friends in particular China. China is already starting to feel some pressure in regard to there own growth prospects and has seen their competitive edge being eroded by their own success. We will feel the brunt of this cooling of the fire, that was the hot Chinese economy, and although it will still burn brightly into the future they are going to pick and choose the products and prices they pay for these products very carefully.

How does this effect you? Well it is my belief that Australia will now start to feel the global meltdown in a much more servere way. To make this worse is that when we thought we were going into a financial crisis back in 2008 we had almost no national debt and a $40bil surplus. Now we as a nation has over $166bil debt and a $1.5bil surplus if we are lucky!

So as a nation we are worse off.

I still here you asking how does this affect me?

• As our economy slows we will see unemployment rise
• we will see confidence drop
• we will see international funds dry up as ultimately the RBA will be forced to drop interest rates
• We will see a dip in the short term property market, demand will still be there however at a lower price
• Commodity prices will fall delivering another deficit for this government, not the promised and much hyped surplus
• Investors will want higher yields to compensate for low growth figures
• bankruptcies will go up by 10-20% pa.
• Banks wont pass on rate cuts to mortgage holders.
• Power prices and other utilities will increase – pushing up cost of living

This affects you because you are living, working, paying a mortgage inside of this great big thing we call an ‘economy’. Everything that happens within that economy effects you in some way. It may be that you get a slight reduction on your interest rate, but because your confidence is low you dont want to spend it, so you either save it or decide to pay off debt. This is a good strategy for you, but if we all do this the economy will be starved of funds and we will see further slowing. Any savings that you may have been planning on making may also be eroded by the higher living costs we will all see. This is not only due to a slowing economy but a lack of natural resource supply, increased demand for it and a large point that not many people bring up is a severe lack of competition!

The banking sector is the industry that most demonstrates what a low competition environment can do to our personal situation. The banks are basically the only true credit providers left after the global economic shakedown of 2008. This has made it a safer/lower risk market place, but this has come at a great cost to the everyday mortgage holder. No longer are we able, or confident to take our loans away from a tier one lender and place that same loan with another provider. Instead we simply leave the loan where it is and watch as the banks, who wait for these corrections every ten years or so, restock the kitty by increasing there lending margin(difference between what they buy money in for and the price at which they lend it out). These very margins were squeezed over the past ten years as they had to constantly reduce there margin to retain and regain market share.

Remember that we control our own destiny, if we take action in our own lives we can determine the greatness we can achieve.