I take it that while we've been busy with the election and then Chrissie pressie hunting, nobody's been minding the shop.

Suddenly Australia has gone from the best economy in the OECD to also-ran. At this rate of deterioration we'll be a basket case by, let me see, February.

But then that's 2004 for you. For all the speculation that it was about to raise interest rates, and occasionally that it was about to drop them, the Reserve Bank spent the entire year doing absolutely nothing about them.

All the work, it turns out, was being done by us. You know, all that brow wiping spending on imports paid by credit. And then Peter Costello has the nerve to talk about the danger of debt even as Christmas looms. That's gratitude for you.

He's even warning about a slower economy next year. Except we seemed to have got a slower economy retrospectively the rise in GDP in the September quarter dropped from 0.8 to 0.3 per cent.

If that's not enough to give the markets cause for a pause, wait till you see the December quarter. It has to be bad because we've got most of the figures for October and November already, and they're not pretty. There's nothing about this month that's likely to change this.

For all the new jobs being generated, it seems we'll be lucky if the

December quarter even has a plus sign in front of it.

And what about the anticipated Christmas spending boom? Going on what big retailers have been saying, we've been blowing the budget on big ticket items such as plasma TVs, air-conditioners and iPods. No wonder other spending has been slow there's nothing left.

This big-ticket spending, I suspect, is a last hurrah before a national tightening of belts in the new year. After, of course, the January sales.

None of which augurs well for either retailing or bank stocks.

The truth is that spending by the mums and dads is a strong as ever, which is why jobs are being created, but in undermining an already weak balance of payments, it's starting to backfire.

After all, it was the poor export performance against surging imports that has slashed the growth rate.

Economists are hoping exports will pick up as new resource investment comes on stream later in 2005.

Except exports haven't budged for more than three years and that's during a period of good global growth, record commodity prices and a weak dollar.

Besides, the early signs are that global growth in the new year isn't going to be as robust. So by the time the new mines come on stream, the extra output will probably be depressing prices. Great.
At least there should be no more nonsense about the dollar spiralling up.

The truth is it's been the US dollar spiralling down, and don't bet on that continuing because the Asian central banks won't allow it. They'll be buying big time.

Which means the biggest threat in 2005 is likely to be currency inspired. That will make for volatile markets to say the least.