Congratulations Australia - You are not in a recession

[MRC & Co]

The thing is, Conzo even admits the Austrians know it WILL happen by not WHEN.

This was my exact point of bringing Soros into the scenario, he has been stating the downfall of the situation since the early 1980s, yet we are still yet to see it. So how will you profit from it if Soros himself has got it wrong so many times? It's all a matter of taking an opinion on a global-macro theoretical framework and letting price proove or disproove you. Nothing more, nothing less.

Then you get the rhetoric about Soros being an anti-capitalist, thinking his a god, trying to interpret his books with their limited brains. Fact is, if you understand what he is saying, you will see how open his mind is to any possibility (which is why he even constantly criticizes his own analysis which is what Gonzo tried to quote as a bad thing).

And on the talk of Black Wednesday, perhaps understand it before you shoot your mouth off again, what most don't understand is he saved the people of England further distress, because their high currency valuation peg was causing half of their problems. By Soros breaking this and forcing it's devaluation, he saved them numerous ongoing problems.

Later.

 

[Trembling Hand]

Any bets on Conza's Profession.

I got him marked in the "education" field.

 

[awg]

Hi Conzza88

May I ask if the economic theories you have drawn attention to suggest any asset class which are likely to out/under perform over the next 12 months.

Its a fairly dense thread, but I cant seem to distill this, other than you would support physical gold?

Not seeking any investment advice, fairly broad range of possibilities with answer

thanks

 

[beamstas]

Who is this guy? What a muppet

 

[nulla nulla]

Who is this guy? What a muppet

Another constructive post from beamstas. Good contribution, way to go. Maybe next time you could flesh it out with some specifics?

 

[Gordon Gekko]

Who is this guy? What a muppet

He may be right he may be wrong, he may have somethings to learn but he is entitled to an opinion without being made out to be an idiot.

So stop being such a prick.

G

 

[beamstas]

Now, if you want to lose all your money - buy ALL means put it back into the Stockmarket. Seriously... I'll bump this beauty when the time comes and we can all gather around the camp fire and laugh at those delusional enough to believe the propagandists and intellectual wh0re's of the State.

 

[nulla nulla]

Your posts seems a bit irrational. You should consider letting people know what you are on. That way when they have to call the medics, they can tell them what you've been taking. Might save your life one day.

 

[beamstas]

Your posts seems a bit irrational. You should consider letting people know what you are on. That way when they have to call the medics, they can tell them what you've been taking. Might save your life one day.

His words
Not mine

If he is going to come out with idiotic posts like that (on a share trading forum too)
Then he deserves to be questioned.

Maybe read through a topic before you jump on trying to be a white knight.

 

[Trembling Hand]

His not wrong. The theory as we all know is right and proper.

Where he has miss-stepped is the believe that,

1. He's ahead of the curve

2. He has no actual skill for extracting money from the market - yet laughably will lecture those that have the balls to step up and do it.

 

[Temjin]

An excellent post by Steve's Keen on his thoughts with the latest GDP data.

http://www.debtdeflation.com/blogs/2009/06/05/the-pool-room–week-ending-friday-5th-june-2009/

The Pool Room–Week Ending Friday 5th June 2009

Published in June 5th, 2009
Posted by Cassander in Debtwatch
Before the Pool Room, a quick comment on Australia’s recent 0.4% growth in GDP in the first quarter of 2009–largely due to a surprise growth in nex exports–and the sequel the next day of a surprise trade deficit.
Briefly, the “textbook” definition of GDP is:


GDP = C+I+G+X-M

“GDP equals Consumption plus Investment plus Government spending plus eXports minus iMports”


M fell by 9 billion, X (more on this below) fell by 3 billion, so there was a +6 billion turnaround in the “net exports contribution to GDP” (as it’s known).
Now for a healthily growing economy, all 5 factors (C,I, G, X, andM) would be increasing–including M, since lots of the C+I+G are spent purchasing them. But suddenly spending on imports has dropped $9 billion in a quarter–that’s of the order of 2% of GDP. That implies that spending has dropped, not risen. This is not what I call a sustainable “growth” pattern.


Secondly, the “increase” in exports that was spruiked when the GDP figures came out was not all that it seemed. The GDP figure is a “real” measure: the ABS has survey information on nominal output, and then produces the real estimate by deflating it (producing what is known as the chain-weighted GDP figure). So they take actual dollar amounts and divide them by a range of price indices to generate the real GDP figure, which attempts to quantify the actual level in output.


Since Australia is a large exporter of raw commodities, the export price index is obviously important. This is normally revised by the ABS every June, to reflect changes in annual contract prices that are normally settled in April.


For some reason, they used the revised price index in this quarter’s figures–one quarter earlier than normal. These revised contracts have much lower prices–up to 40% falls for some commodities–so the resulting price index was much lower. (Thanks to Gerard Minack of Morgan Stanley for the detective work on this).


Divide a known dollar figure for coal exports by a smaller estimated price index and what do you get? A dramatic increase in the volume of coal exports… In fact, the exported tonnage probably fell significantly (this could be calculated by adding up all the reported tonnages, but since the ABS GDP survey works at the higher level of aggregation of dollars produced [and disaggregation would mean recording dollars of brown coal, dollars of coking coal, blah blah... and deflating each separately] this isn’t an option for them).


This explains the “huh” factor of the very next day’s announcement that we had gone from a substantial trade surplus to a deficit. How does that tally with the “increase” in exports in the GDP figures? The trade deficit is the dollar value of exports minus the dollar value of imports–there is no “price deflating” going on.


So putting this all together (looking just at C+I+G+X components), the probable outcome for real output in the last quarter was a fall of the order of 1-2%, or an annual rate of decline of 5-8%.

That's how the ABS play around with statistics and numbers to hide the fact that Australia is in a serious downturn.



Of course, the general public would all believe that we aren't in one at all because the government's calculation on official GDP say so.

 

[Timmy]

Nice post Temjin, - will be reading the links etc. more closely ... initial thoughts are wondering why the ABS used revised pricing (apart from the obvious 'massage the figures' reason) and how they will justify it if questioned (which I hope they are).

 

[Conza88]

Now who is shifting the goalposts, student?

Ah, you are right. I got mixed up with Warren Buffet. Buffet lost billions this year. "His worst financial performance since taking over famed US investment group Berkshire Hathaway in 1965.

The group's net worth dropped by $10.9bn (£7.6bn) in the final quarter of 2008." I apologize.

Soros seems to appreciate the bubble has been building since the US went off the Gold standard, i.e that's the "20's" thing that was mentioned...

His proposition he made at Davos, which is what I was criticizing originally isn't exactly a solution to the crisis.

What I am saying is you cannot name billion dollar traders and put yourself in the same "school".

You are just an unproven mug who thinks he knows enough to lecture people like myself who take $$ out of the system daily which you think you are an expert on. But you are empty.

Again with the strawman. Are you a farmer or something?

Learn to differentiate between investment and economics. Then re-consider the one I said I was fairly proficient at, and the area I said I wasn't. Then re-read your post as see if what you have said is correct and applies to me or not.

 

[Conza88]

His words. Not mine.
If he is going to come out with idiotic posts like that (on a share trading forum too). Then he deserves to be questioned.

Hahah, the last part was edited in and all in jest.

Any bets on Conza's Profession.

I got him marked in the "education" field.

Loss Adjuster in the Insurance Industry. International Business / Business, studying economics on the side.

What's with all the attempts at character assassination? I'm open to a reasonable civil discussion, yet I don't seem to be getting one in return? Ignoring my questions isn't exactly polite.

Are you ever going to address those questions I raised earlier, or are you just going to take bets?

His not wrong. The theory as we all know is right and proper.

Where he has miss-stepped is the believe that,
1. He's ahead of the curve
2. He has no actual skill for extracting money from the market - yet laughably will lecture those that have the balls to step up and do it.

Ok, so you think Austrian Economics is correct? "right & proper"

1. Only in terms of economics, and only if you believe the Keynesian's & Monetarists / mainstream fools, who didn't see this coming - yet have the gall to proclaim they have the answers as to how to solve it.

i.e where this whole thread section, started from: The believe Australia avoided a recession. You can model your way out of anything with statistics. And from the very start I proposed why the model they used to say Australia is out of recession is FALSE and provided the argument for it.

Anyone address it? No - it's all about me personally, ad hominem's, attack the person, not the argument. Fist full of fallacies.

2. Strawman. I haven't done such a thing. In fact, I explicitly stated I am still learning about investing and that folks here could help. I simply stated, a better understanding of economics - the fundamental underpinnings of a market and knowledge about how it works, could be very useful to investors? I know about the Economic side fairly well. I just thought others could be interested & should be. I don't understand what the hostility is for?

 

[Conza88]

An excellent post by Steve's Keen on his thoughts with the latest GDP data.

That's how the ABS play around with statistics and numbers to hide the fact that Australia is in a serious downturn.

Of course, the general public would all believe that we aren't in one at all because the government's calculation on official GDP say so.

Thanks for the data and re-iterating the point that we're not out of a recession, and that governments often alter their modeling / statistics to achieve desired results.

I rejected the notion out of the fact, that "since government’s revenue, in contrast to all other institutions, is coerced from the taxpayers rather than paid voluntarily, it is far more realistic to regard all government expenditures as a depredation upon, rather than an addition to, the national product."

But it's more interesting to note that from even their own Keynesian modeling it should be considered a down turn, if they were being honest about it with the numbers!

 

[noirua]

A few congratulations from the UK after Australia avoided recession. Mind you, this singer is bound to have put the mockers on it for the next quarter: http://www.youtube.com/watch?v=oLV4c-QRKn0

 

[Beej]

You also doesn't seem to understand the proper connection between inflation and prices. According to the Reserve Bank of Australia's figures, M3 rose 114% since June 2001 to May 2008. From 469.3 Billion to 1004.8 Billion.

There is a reason a paddle pop used to cost below $1, and now it's just below $2. Essentially doubling in price. Hint: it's not because the company got greedy. lol Housing prices are exactly the same.

Just on this - what exactly is it I don't understand? What all the Austrian-heads don't seem to understand is that what you describe above is exactly the sort of outcome that the central banks/governments of this world are trying to engineer! Inflation of 2-3% pa - nice and steady without any great troughs, deflation or peaks, + 3-4% pa of real economic/GDP growth. Ideally without interruption but dealing with the reality that growth will be interrupted from time to time and deal with these periods accordingly (as we see right now) with appropriate monetary and fiscal policy responses. This is how you provide an increasing standard of living and grow wealth over-all within an economy, without periodic depression and regular bouts of deflation as used to be the the norm in the 19th and early 20th century..... when we had the gold standard and all that.....

M3 (total money supply) is of course going to increase in line with (and actually help produce) this economic growth and limited inflation. 7% compounded M3 growth (3% inflation + 4% growth let's say) gives us an EXPECTED 83% growth in M3 anyway right? The actual growth is slightly higher, but I bet if you look at the figures in a years time they will pretty much match the growth + inflation trend due to the over-all pull back in lending from the current down-turn; exactly as would be expected, then it will accelerate again to help kick start growth once more.

A steady rate of relatively low inflation is desired as it stops people from sitting on cash for too long. Actual money is only an abstract concept anyway and the system wants to keep the money moving in the economy. Cash hording is the opposite to this. Once you realise this and accept it, I think it is clear that it is best to join the party and consume (enjoy life - get things you like thta make your life more fulfilling, comfortable, fun, whatever floats your boat) with a portion of what you earn and INVEST the rest (hopefully a fair amount!) in things other than cash (except for shorter terms), like shares, property, bonds, businesses etc etc. If you do these things inflation is your friend, not your enemy!

I know this is so very mainstream of me! But well - you know - that's the way the world works! You can't fight city hall - better to accept it and figure out how to make a buck/get ahead in that context, rather than just bang on about the "theroretical" flaws and injustice in the prevailing system. Key point - actual money is abstract - it's only good for what you can do with it, Ie consume, and invest to build income producing wealth through assets.

Just because the internet has suddenly enabled all the fringe idealogy to get a hearing once again does not mean the the way things actually work is likely to change anytime soon! Tell me about it again when you have convinced all the university academics that do the research for and train all the future politicians and RBA board members etc etc..... then I might be more interested!

Cheers,

Beej

 

[prawn_86]

Ok for all those with a short attention span like mine i have managed to distill this thread down:

Economics = theory and conjecture and does not explain how to make money

Investing/trading = experience and learning how to use the system to ones own advantage instead of trying to change it.

That about right Conza?

 

[prawn_86]

2. Strawman. I haven't done such a thing. In fact, I explicitly stated I am still learning about investing and that folks here could help. I simply stated, a better understanding of economics - the fundamental underpinnings of a market and knowledge about how it works, could be very useful to investors? I know about the Economic side fairly well. I just thought others could be interested & should be. I don't understand what the hostility is for?

You will find that economics and succesful investing have very little correlation. Economics seems to more concerned with forecasting from historical data, whereas the share market is a leading indicator. Individual stocks do not behave rationally or as they should in 'theory' hence why the study of economics is not that useful.

 

[MR.]

The housing market is complex though and simplistic Austrian idea's will never provide you with decent entry/exit signals IMO, especially for something as specialised as a purchase in a specific suburb/city, and with such high costs of entry/exit plus even a high cost of not being in the market (ie rent!). If that is what you are looking for - all they will tell you is to never enter the market! Riiiighhhht....... I mean if you can't pick an inevitable stock market correction to within +/- 5 years when they occur roughly every 10 years, what hope do you have to time a major housing market correction when they have happened (in a serious way - Ie more than 20% nominal price falls) maybe only 2 or 3 times in the past century?? Anyway good luck with that one - but I am very confident now that this period in history is NOT the time when the AU housing market is going to see any major correction - the opportunity for a systemic financial crisis to trigger that has passed - so maybe if you wait another 10, 20 or 30 years you might be proven correct
Cheers,

Beej

Perhaps a little exaggerated! Could you not assume an inevitable stock market correction was on the cards? Come-on. It was pretty clear. Staying out all together (ie +/- 5 years) isn't the solution, do agree, but we had a nice old run didn't we, 16 years wasn't it! .......

Somehow Australia is still going to avoid a major correction in the property market and what? Another 10, 20 or 30 years perhaps now are needed. With property leveraged in Australia of some of the highest in the world and with worldwide prices falling, blah blah blah, you heard it all before......

1. How exactly did stock investors sound before the stock market crash?
2. What did the property investors speak after the 1987 crash? .... What did it take "a year longer"?

We all see the risks (not just in property), so it’s all about the timing.........

Of some interest 48 minutes “Property”
http://video.google.com/videoplay?docid=2696194771594185697&hl=en