What is the timing on this?
Like yen, can stretch it out a long way.



August 2012
http://www.variantperception.com/sites/default/files/reports/samples/australia_-_the_unlucky_country.pdf



AUSTRALIA

My many reasons for preferring the Aussie dollar to the U.S. dollar remain intact (higher interest rates, more robust financial system, stronger economy, etc…), so I am inclined to accumulate a larger bullish position.

For now, I am assuming this W-bottom will hold absent materially poor macroeconomic news, particularly out of China.

http://seekingalpha.com/article/210074-australian-dollar-firming-but-resistance-looms

The two banks that went after this market were the CBA and WBC

ANB UNENDING MORTGAGES
However, as a measure of housing affordability, house price to income ratios are very misleading as they completely ignore interest rates. Ultimately, housing affordability comes down to debt servicing costs of which interest rates are a key driver. This not only means that house price to income ratios are fundamentally flawed as a measure of housing affordability but also makes intertemporal and cross border comparisons of these ratios next to meaningless.

In Australia, the house price to income ratio rose from an average of around 3 in the 1980s to an average around 5 since late 2003.

However, the major reason for this has been a structural (read permanent) reduction in interest rates. Mortgage interest rates in Australia in the 1980s averaged around 14%, however, since 2000 the average has been close to 7%. This reduction in mortgage interest rates has effectively been capitalised into house prices.

he halving of mortgage interest rates almost fully explains the measured rise in the house price to income ratio leaving the house price to income ‘mean reversion’ argument appearing myopic at best. Housing affordability and the sustainability (or otherwise) of current house price levels are extremely complex issues and drawing conclusions from simplistic aggregate metrics such as house price to income ratios is very unwise."


It is no surprise then that yields on rental houses have plummeted from around 8 per cent in 1987 to around 3.5 per cent currently (Chart 4).

http://www.unconventionaleconomist.com/

This hypothesis is broadly supported by this recent investigation by the Economist, which found Australia’s housing market to be the most overvalued in a sample of 20 countries using an average price-to-rents methodology. Similarly, the IMF recently found the Australian housing market to be amongst the most overvalued in the OECD based on price-to-rents and price-to-incomes (click here).

A greater concern is that an external shock leads to a steep rise in unemployment and/or a credit crunch. If such an event occurs, we can expect a house price crash and a prolonged period of debt deflation, similar to the experience of the USA and Europe following the GFC.


The government and banks will no doubt try anything to keep the housing Ponzi scheme alive and prevent the housing bubble from bursting. But for how long can the Australian housing market defy gravity?


When coupled with a potential flood of vacant properties onto the market as house prices begin to fall, then the perceived shortage of houses in Australia could easily turn into an oversupply, just as it has in the United States.


Companies like Rio Tinto (RTP), Potash (POT), Alcoa (AA) are classic shorts in that case.
Buy long out of the money put options on the Yuan ETF (CNY,CYB)
Short Australia ETF (EWA)
Short the Russian ETF (RSX)
Short the Japan ETF (EWJ)
Short Canadian banks
Buy the dollar
Buy gold

http://seekingalpha.com/article/211153-how-to-profit-from-the-coming-collapse-of-china




mark mobius
debt gdp lower
reserves high

not case in china not leveraged
need 20-30% down payment

china series of countries
coastal increase yes

thai stockmarket done ok

chile good companies
peru good,
turkey

vietnam,malaysia, indonesia