Must admit I am a little surprised at the sudden upturn in the economy.

Was it not only three plus months ago that we were undergoing the largest economic downturn since the great depression.

Demand was sliding, unemployment was going to rise, low interest rates due to low inflation expectations, housing prices falling, stockmarket on a freefall, debt out of control and then suddenly everything appears to be pretty rosy.

Has anything actually changed? My humble opinion is no. Why?

- Demand still rising slightly mainly due to access to debt, helped by a little stimulus - thanks Kevin and well done for avoiding that recession.

- My understanding of the definition of unemployment is that it only kicks in for those working less than 12 hours per week. Not only have many workers’ hours been cut in the last 6-12 months but I reckon many of those middle management workers who were lucky enough to cop a redundancy still aren’t standing in the dole queue.

- Interest rates are on the rise. The RBA in their wisdom state that inflation is above acceptable levels and hence textbook monetory policy says to raise interest rates to calm things down. Hello folks have a look beyond the numbers and perhaps see why your ‘basket of goods’ is getting a little more expensive. We have the most ridiculous duopoly in the 2 major supermarkets Coles and Woolies which was quantified by a report over the last few days which stated grocery prices had increased 41% since 2002 (Imagine how many consultants it took to find that out). Petrol prices up, gaming up yet strangely enough no real pressure on wages which is actually one of the main reasons to raise interest rates when inflation rises. Honestly.

- Housing prices are starting to rise in a few areas. Helped a little bit by the dash for the first home owners grant. Construction sector also going pretty well thanks to more of Kev’s stimuli. Both props ending very shortly so should be interesting to see how the market goes.  In fairness there is a bit of a shortage of housing as our population grows. One thing for housing prices to go up due to an increasing population and another to determine where everyone is actually going to work in 20 years. Any ideas Kev, Julia or shoud I read the 2020 summit paper more closely.

- Great to see the stockmarket rise back to the levels it was nearly 12 months ago. Obviously massive multiples on company earnings is justified. Things surely have to get better, in fact fifteen to twenty times better. We have a lot riding on the value of superannuation to help ease the burden of the ageing population so go the All Ords. And well done JBWere for sponsoring the Masters and having a couple of your senior execs have a round with Tiger. I am sure those people who paid you your large commissions when having to sell at a huge loss over the past 12 months would at least be happy to see their hard earned money well spent.

- Debt has been reigned in a little thanks to a few government bailouts mainly o/s. Apart from that debt is still alive and well and is a sleeping giant. The sooner something serious is done (by all concerned) the better.

So things are looking good. A little cynical yes. My advice;

- Do something good for those around you and even those you dont know

- INNOVATE at work, at home and wherever else you choose to spend your time

- Buy BHP shares.

Why, because it Just Makes Sense.

No doubt we are going through tough times relative to what most of us are used to.

Whatever the reason(s) the harsh reality is that many people are going to lose their job, or at least have it significantly downgraded.

But were many of these jobs justified in the first place?

Take 3 sectors - Mining, Retail and Financial Services.

Mining (together with agriculture) has been the backbone of the Australian economy for a long time. The past few years have seen unprecedented demand in resources which has created many jobs. There comes a time when they can’t keep building in China however. On top of this we have the environmental concern. I really hope some of those who have invested strongly in shares/joint ventures of Australian mining stocks are having a good look at renewables. Point is that whilst some people have made a dollar, what we have seen within mining over the past couple of years is not, and was never, sustainable.

There seems to be a retailer going into administration every week. Jobs lost as a result. Why do retailers feel the need to open x amount of stores per year? Why not just stick to a good formula, make a good profit and share a bit with your employees? Why employ people at a rate of knots and then wait until a situation like we are in to realise that you are possibly a bit over resourced. No offence to those involved but maybe that merchandise planner’s assistant didn’t need an assistant?

Retail sales growth over the past few years has been distorted by excessive credit coupled with an inflated value of personal assets. Not by wages growth. It will be a fair while I reckon before we gain real momentum in a retail sense.

Many an organisation and individual involved in the financial services sector have profiteered greatly over the past few years. Whilst I am sure there are many of you involved in the sector that had the greatest intentions the reality is this wealth was in most cases built on the insatiable appetite of other individuals and businesses for ‘growth’ and want (not need).

Unfortunately this ‘growth’ was funded in the most part by debt. For a while whilst the good times rolled this appeared to be a case of everyones a winner. Unfortunately that aint the truth.

Now here in Australia and around the world we are faced with massive decline in asset values and unfortunately this becomes a bit of a snowball effect (asset prices devalue, credit harder to come by, demand softens, people lose jobs, demand falls even further, more people lose jobs, asset values fall further and so on).

One thing is for sure and that is that we will come out of this better for the experience. This will only happen when the vast majority of people realise that the ‘wealth’ and ‘growth’ and levels of employment in certain sectors as a result of ridiculous amount of debt were never going to be sustainable.

I just hope, apart from anything else, that what we are going through makes people aware of this and what should be important to them.

Fortunately, you just get the sense that this is starting to happen and in the long run we will all be better for it.