Just dropped in

Andrewbanker
By Andrewbanker on Wed, Apr 3, 2013 - 6:00am

Not much happening here in Oz?

I find Chris' articles very informative and well thought out. The difficult thing to assess is the impact on Australia if the 3 E's create the perfect storm.

It seems to me that we have-

Low unemployment, but struggling manufacturing, agriculture, tourism and retail business

Low productivity

An over-reliance on China

A reactive and visionless govenrment and opposition.

 

What are your thoughts? 

 

 

7 Comments

HelenaV5's picture
HelenaV5
Status: Member (Offline)
Joined: May 9 2012
Posts: 12
Hi Andreww, Wow, this group

Hi Andreww,

Wow, this group page has changed since I last dropped in, it took me 5 minutes to figure out how to reply to this...and where is the section that used to be on the home page for the group, where everyone sort of introduced themselves and there were conversations there?  Oh well.

I don't even pretend to have an opinion on what's happening anymore, I still am mindful of the three E's and the direction they're headed, but it seems to me that no one can predict the future, who really knows what the result of the limits to growth will be.

In regards to Australia, one thing you didn't mention was population growth, ours is out of control.  Everything else you've mentioned I'd agree with.  With regards to politics, check out The Stable Population Party, they are totally onto peak oil, environmental degradation, and every other issue that goes with unsustainable population growth.  They're the only party in Aus. that actually has their priorities straight and is looking at the bigger picture, IMHO.

:)

sim's picture
sim
Status: Member (Offline)
Joined: Jul 1 2010
Posts: 3
Confusing

.. and not just this forum. Unnecessarily complex system IMO.

Anyhow, regarding Australia..

As far as governments go, despite the idiocy going on, I think it's one of the better ones out there. If you want to find a visionless one and one incapable of making even minor decisions, it's hard to find a better example than in the US. Australia is miles ahead of it. Of course there's heaps of room for improvement,

Australia may be less reliant on China than people realize, but as a whole we are far, far too reliant on exporting coal and other mining products.

The good thing about low productivity vs other countries is that we can relatively easily adopt proven solutions to increase productivity, versus having to invent "new" ways of doing that.

The biggest long-term positives for Australia, I think, are the facts that:

  • The country for now produces food enough for 60M people, so even if crop yields drop dramatically (say 50%) due to climate change, we're still pretty much self-sufficient
  • Climate-wise it's a relatively easy place to live with low emissions; not much need for heating or cooling if you build properly. Say you couldn't heat your house for a year in a crisis - you'd still most likely survive.
  • NBN will enable a high degree of teleworking, if it actually gets implemented, and helps reduce reliance on private transportation

Along the lines "if I was in charge", I would:

  • Get the NBN done as soon as possible
  • Cut all fossil fuel subsidies, funnel money into building solar, wind and nuclear (yes nuclear - we've got uranium so could be self-sufficient in terms of that) power enough to have a zero-emissions country in terms of electricity
  • Build a MEL-CAN-SYD-BNE fast rail
  • Limit gas & oil exports, reserve them for domestic use until we can transition away from them.
  • Limit population growth (the Stable Population Party is on the right tracks here)

.. while there are still some resources to accomplish all that. And add some appropriate tax incentives etc.

Have lots more thoughts as well, but that's it for starters.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
The Invisible Idiot.

I voted you up Sim because you are right.

And rather than blow the bugie on high speed rail,I would rather see the Government spend any rail money on a real rail, shipping and road logistics system. 

There is too much "Invisible hand of the market" religion. Logistics in Australia leave a lot to be desired. There are too many trucks on the road, and too much price gouging in niche markets. Rail is much more energy efficient than roads, but are allowed to wither and die, sacrificed on the alter to the Invisible Idiot.

Andreww's picture
Andreww
Status: Member (Offline)
Joined: Oct 8 2009
Posts: 5
Market correction

 

So, a few months since our last post.... Do you think Chris' prediction about an iminent major correction is on the cards down under?

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Aussie conditions.

I work at a port that exports iron ore and imports fuel, so I get a good right brain impression of things.

There is a lot of complacency amongst the workers. The holders of the purse stings are spending big on infrastructure on the understanding that present conditions will continue into the future.

Edit: The infrastructure splurge might be a way of getting rid of $US while they are still worth something.

However- We are shipping iron ore at lower than market rates. This creates a loyal customer. The Baltic Dry Index is bouncing along the bottom, indicating an excess of ships.

Other areas of the economy are not fairing as well. Motor car manufacturers design products for petrol sniffers, with the consequence that they are going head to head with everyone else on the planet, with no particular advantage other than hubris. Hence they are loosing jobs and skills.

However things are changing. There is a carbon fiber factory going in in Geelong, I believe.

The politicians continue to sell their grandmothers for a fist full of dollars.

Retailers are whinging about the lack of spending. Airline tickets are noticeably more expensive. Airline companies are inventing more and more ways of fleecing their customers, a sure sign of trouble.

The old facking scam is happening in South Australia.

At the moment the port is empty. This might just be noise or it could be something big. I will wait and see.

When the axe falls, it will do so suddenly. I have my bolt hole.

bowskill's picture
bowskill
Status: Bronze Member (Offline)
Joined: Mar 16 2012
Posts: 78
re Market Correction

I don't know Andreww. It doesn't feel like it here in Perth that's for sure. Casual observers from afar of Australia's property market (even Mish) have called it as popped but I don't see that at all - not where I live. In one way I want it to because I am on the side lines waiting to buy. Prices are so high that a loan principle could never be paid off without later selling the property. They just don't seem to be falling but it is very difficult to get much detail on the true state of play here in Aus with respect to the 3 E's. My gut feeling having operated a local business for the last 10 years is that people are still better off and spend more than they did in say 2005. The boom times started for us in about 2007 and while the euphoria of that time is gone, the spending by the public is still increasing.

Many on this site have described how inter-connected the world finance system is and I guess the Aussie economy is at the mercy of larger forces elsewhere. It's like sitting on a sunny beautiful little island awaiting a tsunami. 

Andreww's picture
Andreww
Status: Member (Offline)
Joined: Oct 8 2009
Posts: 5
It is interesting at the

It is interesting at the moment. The ASX200 always followed the DOW for many years, and this has changed considerably since QE, with the Aussie market still 30% off the pre-gfc peak. The Dow has hit new highs. I guess the key factor will be employment growth.  While unemployment is 5%, the housing bubble might deflate with time rather than burst. Who knows. The deleveraging cycle is in full swing.

 

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