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Washington, Aug.12, free portfolios .- Lately, every day it seems like some Wall Street expert or financial commentator has a dire prediction about the U.S. economy and the dollar.
But I'm tracking what I believe is a much more urgent currency crisis...
The economic news out of Australia seems to get worse by the week.
Now, economic commentators especially like to warn of China's imminent collapse. So, early last week, when China's newest trade numbers came in shockingly weak, the talking heads had a field day with the news. So, what does this have to do with Australia?
And China just isn't buying as much of Australia's natural resources as it once bought.
Iron ore is Australia's No. 1 export, and China just isn't buying as much as it used to. That may explain why iron ore spot prices plunged 30% between February and May of this year.
But its problems aren't in the past. Like I said, the economic news out of Australia seems to get worse by the week.
Forget China: Watch Australia for Economic Collapse
The Australian government admitted that its budget deficit is going to balloon to $30 billion this year.
Now... $30 billion may not sound like a lot, especially in comparison to the United States -- which has been running TRILLION-dollar deficits since Obama took over. But Australia is a much smaller economy, with a 2013 national budget of A$398 billion.
On a percentage basis, $30 billion works out to roughly an 8% deficit. Worse yet, the 2013 deficit was anticipated to be only $18 billion just a few months ago.
The problem is an unexpected and rapid $33 billion drop in tax revenue caused by a slowdown in trade with China, and tumbling commodity prices.
"We are now facing a deteriorating economy when the rest of the world is actually getting better," Treasury Secretary candidate Joe Hockey said.
And Shane Oliver, the chief economist of AMP Ltd., one of the largest brokerage firms in Australia, publicly described the Australian economy: "I'm shocked by how much it has deteriorated."
Falling Growth Forecasts, Interest Rates
Even the eager-to-be-re-elected politicians are admitting there is a problem, as last week they cut their 2013 GDP growth forecast from 2.75% (which was made in May) to 2.5% and warned that unemployment would rise from 5.75% to 6.25% this year.
Last week, the Reserve Bank of Australia also cut benchmark interest rates to a record-low 2.5%, with the central bank citing weaker commodity prices and slower growth as the primary drivers behind the decision.
In addition to taking action to prevent economic collapse, Australia is also making a move to prevent a banking collapse by levying some deposits.
Tax The Rich! (Yeah, That Will Work...)
Australian politicians are stealing a page from U.S. politicians and looking to fund their budgetary problems by taking money from those evil corporations and you-didn't-build-it wealthy individuals.
Australia plans to levy a new 0.05% tax on bank deposits up to A$250,000, which could generate A$733 million in an 18-month span.
Unlike the government of Cyprus which taxed (penalized) the depositors, Australia is going to tax the banks instead. Of course, Australian banks will, in turn, pass on the cost of this tax to consumers in the form of higher fees or lower interest rates.
It is bad enough when governments raise taxes on our investment income, but I am hard-pressed to think of a worse way to discourage growth than to tax people's capital.
Bottom line: Australia is an economic train wreck waiting to happen. And you'll want to be on board when it derails.
I have filmed a short video (10 minutes) in which I further explain how the Aussie dollar crash will unfold -- and reveal an easy way to play the coming crash for a quick 20%-plus gain. Click here to watch it now.