RBA bears watching

Now that Ben Bernanke has given the world word that the US economy will remain slow, and that the failure of the Greek parliament to confirm a five-year austerity deal will have major ramifications for world markets, it is up to smart companies to keep a close watch on the central bank bears.

In Australia we have the RBA preparing to send Australia into an east-coast recession next year as part of an unstated goal of driving inflation rates towards Bernanke’s goal of about 2% in the USA, and a Chinese government determination to keep inflation below 5%.

The big banks and investment houses see this as a great opportunity for wealth management funds in the coming year – generating their funds in major infrastructure developments offshore and supplying to firms that can carve a niche in the supply chain to the growing infrastructure requirements for the mining boom.

As a result, the RBA is prepared to crash the confidence of retail investors to curb growth in retail and construction outside the commodities boom, and to try to encourage skilled labour to head for the mines.

 While the prospects for the national economy will get better in the next few months, RBA governor Glenn Stevens will be stomping all over any hubris that might encourage a wage breakout or spending on domestic housing construction and renovations.

Already we are seeing signs that all this negative jawboning is having an effect, with consumer confidence falling or stagnant and business confidence leading companies to hang on to cash and current staff, rather than take on more full-time employees.

Consumers and small retailers should take this opportunity to put their trust in Telstra and other firms that stand to benefit from yesterday’s deal for high-speed broadband.

To see the potential for smart companies that focus on high-speed broadband applications, just look around the world at countries where high-speed networks have been built.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.