Money and Metals

A British finance mogul had a warning for the west. "Jim Mellon says 2006 is the year to hunker down and consolidate. The high-flying financier says the party is over and it's time to prepare for the great depression of the 21st century. 'My suggestion is that the next two or three years are going to be a dangerous and difficult time for us,' says Mellon."

"The global entrepreneur and economic pundit is picking a rough sailing for western economies like New Zealand's. And he says much of the problem is stemming from America. 'Every man, woman and child in America imports approximately $16 worth of foreign product and they only export $9 so there's a gap of several dollars a day for every man, woman and child, multiplied by 282 million people, multiplied by 365 days a year, equals $US 650 billion a year which is bigger than most countries GDP by a mile...that's how deficit is financed...by the Chinese and Japanese banks buying American government debt,' says Mellon."

"'Ultimately how does America pay for that...there's only one way out and that's a lower standard of living for the Americans and hence for the rest of us in Anglo-Saxon economies.' Mellon says the West can't compete with China on a manufacturing basis because the average wage rate is between 20 and 30 US cents per hour while in Germany and the UK it's $US30 per hour. And he says the skills gap is not that great. 'We have approximately 15 years before China overtakes the US - it's already overtaken the UK, France and Germany.'"

"And Mellon says New Zealand has experienced the same 'frenzied boom' as in the UK, America and Australia. 'Property prices have gone up 10 times in the space of 20 years...that's a ludicrous rise and incomes haven't risen 10 times.' Mellon's own 'rough forecast' is that over the next five years or so properties could fall 50 percent."

"He is concerned that many people are loaded with debt rather than savings. 'There's no stigma attached to being in debt any more so your grandparents would have been mortified if they'd owed more than 5 shillings on something but now it's acceptable.'"