I and others I know have a feeling tha things arent good on the home front, retail vacancies increasing, spending way own, a feeling like just before previous recessions ony worse, anyone else getting this vibe ?
The government is also broke
This statement is demonstrably false - and by a loooong margin:
Housing is already slipping, I go on gut feel so I wont win any economic awards but it feels eerily spooky out there, massive job losses, companies outsourcing and/or moving OS and who can blame them, it's not good I think we're in for it.
Even our darling home grown Telstra has it's call centres in darkest Africa, how many Aussie jobs has that cost ?
Libs will cut Govt jobs by thousands, where will those people go ?
Of course, if the private sector continues to delever then at least one of two things must occur, either the government continues running a deficit and/or Australia starts running current account surpluses. Basically, the government line that it will return to surplus is a myth. If the private sector continues to delever and we continue to run a CA deficit then the government will continue to be in deficit. And it doesn't matter which side of the political spectrum the government of the day happens to be from. On the other hand, the current account surplus that we have been seeing of late is probably due, in no small part, to the private sector deleveraging.
The sum of the three sectors (public/private/external) must equal zero. To date what has happened is the private sector has born the debt burden, as opposed to countries like Italy and Greece where the public sector did.[/IMG]
This statement is demonstrably false - and by a loooong margin:
What about the capital account??? current account is only half the story.
Can I just briefly ask you to have a look at the charts you posted and make the obvious conclusion that they actually all contradict each other?
Maybe you should try a bit harder next time.
We do have the highest, along with the Netherlands. UK and USA are significantly below us.
Absolutely. A few examples (all of them are within the past month and are true, I've only removed the business names etc).I and others I know have a feeling tha things arent good on the home front, retail vacancies increasing, spending way own, a feeling like just before previous recessions ony worse, anyone else getting this vibe ?
Of course, if the private sector continues to delever then at least one of two things must occur, either the government continues running a deficit and/or Australia starts running current account surpluses. Basically, the government line that it will return to surplus is a myth. If the private sector continues to delever and we continue to run a CA deficit then the government will continue to be in deficit. And it doesn't matter which side of the political spectrum the government of the day happens to be from. On the other hand, the current account surplus that we have been seeing of late is probably due, in no small part, to the private sector deleveraging.
The sum of the three sectors (public/private/external) must equal zero. To date what has happened is the private sector has born the debt burden, as opposed to countries like Italy and Greece where the public sector did.
Well yeah, the two have to balance. For the purpose of my example though, it's impossible to have the private sector as a net saver and run a current account deficit and have the government in surplus.
WTF... I’m Confused.
O.K first confussion you talk firstly about the current account being in defict and then in surplus - We have run a current account defecit continously since 1975.
(3) Private Sector Surplus or Net Saving = Government Deficit + Current Account Balance
The trade balance (exports – imports) is not the precise term to use when considering all financial flows, the current account balance is. For the US, the two very close in magnitude. We’ll call equation 3 the Sector Financial Balances (SFB) equation. Again, this is an accounting identity, not theory. Disagreeing with it is akin to believing the earth is flat. For examples of this framework directly in use on this blog, see here and here.
Absolutely. A few examples (all of them are within the past month and are true, I've only removed the business names etc).
1. Large engineering consulting firm. Employee based in Melbourne tells me that "they aren't winning any work" because "nobody's willing to commit to anything given all the uncertainty".
2. Building trades worker who moved from Tas to SA. Suffice to say that he's now driving a delivery van due to lack of work in his trade.
3. Roofing contractor in Hobart. "Not much on and may lay off staff".
4. Victoria is widely reported as "on the brink of recession". Vic isn't exactly a minor state so that's significant.
5. Tasmania is officially in recession and the string of big job losses is becoming rather long. Forestry in chaos, TEMCO (which employs hundreds) shutting practically the whole plant in 2 weeks time and may never re-open, Bell Bay Aluminium (also employs a lot of people) reportedly considering closure or downsizing, K&D Bricks permanently closing the plant at the end of the month, an ongoing stream of job losses across the public service, Aurora Energy's "fire on completion" policy with apprentices, unemployment has hit 7% officially. That's just in Tasmania, and that's just what's happening right now.
6. Anecdotally, there's pretty overwhelming evidence that in most of the country, just about every industry other than mining or things associated with it are seriously struggling at the moment.
7. Various media reports of hundreds of people applying for low level retail etc jobs.
8. Practically everywhere you go, people are concerned about money. Either worried about security of their income, worried about the cost of living or worried about their investments. But just about everyone is worried about money in one way or another - the exact opposite of the situation a few years ago.
9. It's now relatively easy to get tradespeople etc whereas this wasn't the case during the boom.
10. The general mood seems to be one of doom and gloom.
Reading the end of that paragraph I'm not quite sure what I'm trying to say.
So you've managed to confuse as both then
Despite all this the Macro numbers are still healthy which implies a lot of the pain is structual. The danger is that we mistake cyclical for structural and investment to much in resources and decimate everything and everybody else beyond being able to recover when/if the terms of trade fall. Diversity in Australia's economy needs weaker terms of trades and soon, but I doubt if the mining magnates see it that way.
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