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RE: Morgan Stanley Warns of Waning Chinese Investment, a Major Aussie Bank Stress Tests a 30% Property Crash, and Delusional Economists Expect an RBA Rate Hike - Australian Property Market Update for Week Ending 6 August 2017
devaluation is not the permanent solution of the problem (as you mentioned RBA wants AD to 70 cents on the dollar) because devaluation these days does not remain normal devaluation but competitive one and that creates problem for both in long term as macro economic scene changes and more countries will join the trade league..
It's the race to the bottom. The only real solution is to let the market determine borrowing costs, which would certainly lead to higher interest rates, a stronger currency, and exporters going out of business. As they say, pay me now or pay me later. Unfortunately, the later option will be more painful.
yes I agree with you on this but I don't think interest rate gonna be decided by free markets as there are whole breed of keynesian policy makers around the world (active intervention- actually too much active intervention). And yes your second last sentence of the comment is holy true- cash flow is the king, but people expect too much free lunches from government and that's really bad thing for same people. Major fiscal imbalances are due to this mentality (expecting free lunches).