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Dusting off the Cobweb Cycle
As recently as May 2011, the Australian Budget Statement forecast only a gradual decline in iron ore prices. “The terms of trade are forecast to increase 19¼ per cent in 2010-11, underpinned by strong increases in the prices of Australia’s key non-rural commodity exports, before declining gradually over 2011-12 and 2012-13 as increasing global commodity supply starts to match growth in demand,” it said.
As is not news to anyone today, the decline in Australia’s terms of trade in the first three months of financial year 2012-13 has been anything but gradual: it has fallen five times as much in three months as Treasury expected to happen over the entire year.
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2012-09-14 12:00:26
Source: http://www.debtdeflation.com/blogs/2012/09/14/dusting-off-the-cobweb-cycle/
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