I was reading a weekly newsletter I receive with interest this evening and it (and the current state of the economy) got me wondering. Firstly let me say - I am NO economist and there are many many smarter people out there than me …… so I guess I will be prone to misunderstanding or being plane wrong …. But…..

I cant help wondering where our economy is going. Alan Kohler’s newsletter had an interesting graph which started me wondering …… the size of Australia’s Budget deficit.

Its not a good look in this context is it. I know I hear that it is a smaller percentage of GDP than other countries ….. but the fact remains we still have to make this up in surplus …. someday somehow. Don’t we?

Add to this picture the fact that a report today spoke about Victoria’s desalination plant. Thiess has apparently agreed to pay workers up to $200,000 for carpenters with a $700 a week living away from home allowance to work on the project. Combine this with the wages mine companies are paying people and one wonders what effect this will have on inflation?

Combine this with a small piece of news I heard from a friend the other day where a friend of his had made $70,000 in 1 week from a real estate transaction. That’s right he sold a property one week after it settled for $70K more than he paid. Again I am no real estate guru - but that smells like a bubble to me?

If you have any thoughts on this I’d like to hear them.