The big picture in Australia

[explod]

I don't know how old it is but....

In terms of business debt, our companies have deleveraged strongly since the GFC and company debt is at a historic low.

Financial debt has been growing as a result of a housing bubble. There's not much else to say about it. Preferably it wouldn't happen - but this I have said many times, it is no secret that the taxpayer will bail out the banks when house prices plummet. Best to just get over it since it will not change and the repercussions cannot be stopped.

A lot of business debt is short term, ie builders doing speckies and in the last year or two banks have been reluctant to lend which may account for a seeming improvement in the national debt level.

May not translate into a good situation going forward, money is needed to make money.

 

[craft]

Great post Smurf, fat lot of good it will do tho. I don't think Juliar and Swanny read this forum Something needs to be done to arrest this slide into mediocrity or this country will end up royally ******.

Most of the things that Smurf listed can be traced to structural change in the economy. If the dollar floats and commodities are traded at market prices, then you either have to make the structural changes dictated by the market, or the government has to get involved through its control of the tax and transfer system. That is exactly what labour was trying to do with the resource rent tax. Seems like a lot of those opposed to the resource rent tax are also the ones moaning about the structural changes occurring.... I guess it’s easy to want things both way as an armchair critic.

 

[McLovin]

That is exactly what labour was trying to do with the resource rent tax. Seems like a lot of those opposed to the resource rent tax are also the ones moaning about the structural changes occurring.... I guess it’s easy to want things both way as an armchair critic.

The killing off of that tax by the mining lobby was probably the best RoI in human history. ~$50m in campaigning to save $200bln.

I agree with you, a wasted opportunity that we will wear the cost of down the track.

 

[notting]

Yep, I agree with Swany. The mining propoganda was an assult on our democracy and our people.

 

[Smurf1976]

Most of the things that Smurf listed can be traced to structural change in the economy. If the dollar floats and commodities are traded at market prices, then you either have to make the structural changes dictated by the market, or the government has to get involved through its control of the tax and transfer system. That is exactly what labour was trying to do with the resource rent tax. Seems like a lot of those opposed to the resource rent tax are also the ones moaning about the structural changes occurring.... I guess it’s easy to want things both way as an armchair critic.

The bit I don't like is the "unfair" part of competition in the market.

How much are the workers in China paid compared to those in Australia? Do they have the same OH&S laws? The same environmental standards?

Why should we be allowing petrol, for example, into the country if it was produced by workers on $5 an hour or without proper protection of the environment? I can see the point in free trade, but there's a place for some restrictions.

So far as I'm concerned, the aim ought to be to encourage genuine efficiency etc but there needs to be some means to prevent gaining an advantage simply through low wages, poor safety, poor environmental controls etc. All we're doing at the moment, is offshoring our industries in order to escape Australian rules and regulations.

 

[notting]

So far as I'm concerned, the aim ought to be to encourage genuine efficiency etc but there needs to be some means to prevent gaining an advantage simply through low wages, poor safety, poor environmental controls etc. All we're doing at the moment, is offshoring our industries in order to escape Australian rules and regulations.

Not to mention invading countries around you and using their people as slaves and literally working them to death to build your roads and infrastructure as well as cutting out their organs and selling them to rich Chinese etc.

As much as I dislike the union culture they should have formed a free world global alliance to prevent job destruction by countries that do the above and use child labour etc.
In the end a Country is not a business and the tickle down theory is a furphy!
Human rights include treating people with fairness and dignity in the work force and import bans etc should not just be to stop nuclear proliferation they should also be extended to workforce human rights etc. Other wise slowly but surely your own country will be reduced to well, mass unemployment etc etc.because your competing with kingdoms of slaves. The Slavedomes use your money to build their armies to control the slaves and eventually, you!
The hard part is that it's questionable whether certain closed societies would open up at all if those conditions were applied or whether giving them all that rope will eventually lead them to hanging themselves as they become drunk with out of touch opulence as in the Gadhafi family.

 

[Uncle Festivus]

It's all about how China & Japan perform as these are our biggest trading partners. We all know that Japan is a basket case about to collapse completely(?) so how are our eggs going in the China basket?

S&P reports that a Chinese GDP collapse is entirely possible:

As Europe’s leaders grapple with a debt crisis and recession, and the Obama administration looks for ways to bolster the U.S. economy, world growth in 2012 will rely heavily on China. After real GDP growth in China slowed slightly to 9.2% in 2011, our base-case economic scenario calls for about 8% GDP growth this year from double-digit expansion in recent years.


We view the risk of only 5% GDP growth in China as plausible, although a stable one at this point. If such a scenario were to materialize, its negative effect on the U.S. and global economies could be substantial, particularly in the commodities and materials markets, where China is a large source of demand.
​

The latest data for AU was pretty terrible ie GDP, trade and unemployment, so high probability of an interest rate cut to 4% in April? Punish the savers again......

 

[Starcraftmazter]

The latest data for AU was pretty terrible ie GDP, trade and unemployment, so high probability of an interest rate cut to 4% in April? Punish the savers again......

Very single cut gets us closer to ZIRP - the point of no return. I'm sure the RBA understands the gravity of this, and I hope they will hold out longer.

In my view it's quite likely that the RBA is targeting small house price drops and will keep the rates at just the right amount to entire house prices do drop - but also try and prevent them from dropping too much.

Thereby I would consider the nominal house price indicator to be the best lead on RBA's decisions.

 

[Julia]

http://www.abc.net.au/radionational/programs/bigideas/oliver-hartwich/3833906
Dr Oliver Hartwich gives his wide ranging views about the world's economies and focuses on the paucity of decent leadership anywhere.
Nearly an hour long, but imo well worth a listen.

The tectonic plates of the world economy are shifting. While the West is in crisis, Asia is set to dominate the 21st century. CIS Research Fellow Oliver Hartwich sees Europe not just in a financial crisis, but also in a social, political and demographic decline. So where will all of this leave Australia?

 

[IFocus]

Very single cut gets us closer to ZIRP - the point of no return. I'm sure the RBA understands the gravity of this, and I hope they will hold out longer.

In my view it's quite likely that the RBA is targeting small house price drops and will keep the rates at just the right amount to entire house prices do drop - but also try and prevent them from dropping too much.

Thereby I would consider the nominal house price indicator to be the best lead on RBA's decisions.

Suspect you are right the RBA would not be blind to the over priced property market.

They would want to bleed it down slowly rather than a blow up.

 

[sptrawler]

Very single cut gets us closer to ZIRP - the point of no return. I'm sure the RBA understands the gravity of this, and I hope they will hold out longer.

In my view it's quite likely that the RBA is targeting small house price drops and will keep the rates at just the right amount to entire house prices do drop - but also try and prevent them from dropping too much.

Thereby I would consider the nominal house price indicator to be the best lead on RBA's decisions.

+1 agree 100%.