I'm in Australia.
My prediction is the economy isn't going to fare very well. I also think that the property market is going to drop. I also think there will be high inflation to come.
I can explain why I think these things, although I think it's not the point of the question. It's not about what I think will happen, it's about how I should react to it.
So my question is, if under these economic conditions, where would be the best place to park my money?
If I leave in the share market, then I'll lose money from stock prices falling. If I leave it in the property market, then I'll lose money from property prices falling.
If I keep it in the form of cash, then inflation will eat away the value of my cash.
IS there a safe way for me to park my cash?
EDIT : Okay for the purposes of clarification, this is what I think will happen to the Australian economy. It is a unique situation given the proximity and size of Australia.
Right now, Australian house prices are crazy high. Eg. The Economist predicts that there is a bubble bigger than the size of the US one. Inflation is also rising due to global inflation.
What I predict is that interest rates will rise until about the end of 2011, and then the house prices will start to come under pressure - they're already under pressure now, but people have borrowed so much, that high interest rates, more will be forced to sell.
In the face of a property market crash, central bank will lower interest rate - at that point, the Australian dollar will crash, leading to even higher inflation. Just as in the case of Ireland, a declining property market crash will sink the economy and lead to high unemployment.