Australia best-placed to beat recession

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maveri's picture
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Australia best-placed to beat recession

Australia best-placed to beat recession

While I am loathed to believe such 'surveys' I do find it amusing that they rank Australia best placed to weather the storm!

All those images over the years of a layed back lifestyle must have left a favorable impression - then again, maybe it's because Australia has always just dug more wealth out of the ground to compensate?

What gets me is that so many people think this is just an economic problem, they have not even factored in population size, food supplies, energy, water etc etc etc.

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Australia best-placed to beat recession - not according to Keen

The Pool Room, Week Ending May 22nd 2009

Posted by Cassander in Debtwatch

Fans of the Australian movie classic “The Castle” will remember the archetypal line “This one’s going straight to the Pool Room”, uttered by the ever-optimistic Darryl Kerrigan whenever he was given a gift. If you haven’t yet seen the movie, consider setting aside a couple of hours to watch it.

Debtwatch’s “Poolroom gifts” come from the media coverage of the Global Financial Crisis. Some are gems–incisive bits of analysis that are an informative read. Others are … well, best characterised as spin, though they range from outright spin, to delusion derived from thinking like a neoclassical economist. <SNIP>

I also have the “Mainstream Media” to thank for the fact that my iconoclastic views on the GFC have achieved such widespread coverage.

So we have a system that on one level gets vilified, and on another does a sterling job–how then to assess its role? My take is to regard the media as another, special industry in the overall market economy, and journalists as its production line workers.


That’s enough of a prelude. Below is the first set of gifts for the Debtwatch Poolroom. If you’d like to nominate candidates for future weeks, please send them to that gfcwrap[at] Any feedback would also be appreciated. And thanks again to Evan Harris for taking on this role.


Australian-Related Links:

Push On To Sell Aussie Bonds, Lucy Battersby, SMH, 18 May
Unsustainable debt? No problem. Ramp up the “effective marketing of debt products” budget, retrain those stiff bureaucrats and don’t mention the debt.

Bond Boost For Big Four Banks, Chris Zappone, SMH, 18 May
Our robust and conservative banking cartel receives another taxpayer-funded profit boost. And “because of the state of the markets there’s less competition than there used to be”! More handouts, less competition, “bank fees soar despite slowdown”, “$1 billion in penalty fees”… never waste a good crisis. And what’s $2m between friends?

Shoppers Trade Down, Even Within Stores, Jamie Freed, SMH, 18 May
Deflation watch 1. Bye, bye David Jones, hello Target.

Rents for luxury property in Australia tumble, Bridget Carter,, 18 May [via Bubblepedia]
Deflation watch 2. Will sub-luxury rents also be falling “at least 25%” in the near future? Beach shacks also lose their chic as empty properties depreciate (along with their owners’ egos).

First Home Buyers Vulnerable, Chris Zappone, SMH, 19 May
Obviously a property story not vetted by the sales team. Doesn’t Mr Zappone know that Fairfax is on the ropes?

Recovery This Year: RBA [original title later changed], SMH, 19 May
Glenn Stevens forecasted the worst financial crisis since the Great Depression with unerring accuracy (“no one saw this coming”) and followed it up with an embattled (“recovery by the end of 2008”). He didn’t predict inflation to drop to a decade low as he jacked up interest rates less than a year ago. Here’s his latest foray: “… too soon to say if a recovery had begun, though developments over recent months are certainly consistent with the view that a recovery will get under way towards the end of the year.” A sage-like Ken Henry stands shoulder-to-shoulder with Stevens evoking happy memories of Bush, Howard and WMD.

Job Well Done Government Tells ASIC, Jacob Saulwick & Ruth Williams, SMH, 19 May
Obviously Kevin and his multi-millionaire Mrs didn’t take out margin loans with our robust and conservative banking cartel (Which Bank?) to invest in Storm Financial.

Home Affordability “Dramatically Better” Than Five Years Ago, Jessica Irvine, SMH, 20 May
“Dramatically better” doesn’t square too well with the verdict of the 2009 Demographia International Housing Affordability Survey, a respected independent survey widely cited throughout the OECD. Guess the great Australian dream isn’t that affordable after all. It would be useful to know the exact methodology behind the Reserve Banks “affordability” calculation.

No Distress in Pub Sales, Says ALE, Natalie Craig, SMH, 20 May
Of course not. The Managing Director of ALE says so.

Bailing On Britain, Jesse’s Cafe Amercain, 20 May
Australia is the number one choice for disenchanted Poms who want out. Maybe they can buy those empty beach shacks.

Diving Shares Teach University a Lesson, Heath Gilmore, SMH, 21 May
What do General Motors and University of Sydney have in common? Both seem to have morphed into wannabe investment funds first, car manufacturers / educators second. Task for University of Sydney Economics graduates: how many full-fee-paying foreign students does it take to plug a 23% capital loss on a $1.15 billion portfolio? (Extra marks for subtracting fund management fees)

Altruism at the Fee Factory?, Ian Verrender, SMH, 21 May
Great article by the ever-critical Ian Verrender. Key quote: “Imagine what would have happened to the profit if the Canadians had not ridden in on a white charger in the nick of time.” Yes, ma and pa pensioners in the land of the maple leaf are propping up Macquarie bonuses this year. The lobbyists help out too. More drivel.

NZ Couple Laughing All the Way from the Bank, SMH (Dominion Post), 22 May
Contributed by Steve Keen. Perfect illustration of how credit money is “manufactured” outside of official Central Bank policy. Whoops! I only meant to make $100,000 boss! Wall St and Hedge funds manufacture US$1,400,000,000,000,000 of derivatives and that’s okay. A couple runs off with US$6,000,000 and it’s time to call the CIB and Interpol. Though maybe the party is coming to an end.

$A Fall the Work of Speculators, Clancy Yeats, SMH, 22 May
Oh my God: the RBA discovers that investors make decisions without reference to “new information about either the global or domestic economy”. We didn’t deserve a currency crash in 2008 on par with Iceland. Their debt-based Ponzi-scheme is also denominated in foreign currency but they don’t have kangaroos.

NAB is $1b breakthrough Offshore Funding Deal, Richard Gluyas, The Australian, 22 May
NAB withdraws from the public teat (for now): “It’s another step towards the return of normal funding arrangements [pre credit crunch].” Yes, it’s normal for total Australian debt to be over 160% of GDP and now it’s normal to jack it up some more. As Chuck Prince said “As long as the music is playing you’ve got to get up and dance”… just before he was fired.

Stock Pickers See Upturn within a Year, The Australian (Times Online except headline), 21 May
The same stock pickers who pushed the stock market to new highs following the credit lockdown in August 2007? The same stock pickers who predicted a sluggish economy in early 2008 that would rebound later in the year? The same stock pickers who’ve shifted the results of their catastrophic bets onto the taxpayer after looting hundreds of billions in bonuses? Perhaps the same stock pickers who manage your pension fund. The sub-editors at the Australian have helpfully sexed-up the original Times’ headline, Alistair Campbell style. Charlie Aitken pours the whisky in the kids’ milk… just don’t scare them with memories of his famous call “the whole sub-prime issue is over-stated and losses/defaults will be nowhere near where the armageddonists believe. “ And be sure not to notice that his argument ignores the role of debt (unlike 23% of consumers). Yes, Charlie, “you appear smarter if you are bearish”. MACCA cites the highly regarded David Rosenburg as a dissenting voice (also on video).

Great Southern Crash Fells Expert Opinions, Michael Pascoe, SMH, 22 May
The assumption seems to be that expert opinions (this time KPMG) can be relied upon for anything other than bloated fees. A tip for young players: now that’s just silly.

Australia’s Debt Mountain Pales Into Insignificance, SMH, 22 May
That ol’ chestnut: when downplaying debt, be sure to only focus on government debt. Yes, Australia’s government debt is tiny compared to other countries. But so was Iceland’s before it imploded (all the debt was held by the over-sized banks). Even the US, the undisputed debt behemoth, doesn’t look too awful when you only focus on official government debt (ignoring unfunded liabilities). So record credit card debt, record auto financing, Harvey Norman 48-month interest free loans, massive mortgages (requiring two income earners to cover the monthly payments), highly geared commercial real estate, record corporate debt and now record government stimulus spending matched with shrinking government revenues are all nothing to worry about? Has anyone noticed Aussie government bonds have leapt above 5% in the last week? A great way to end the week.


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