The recession has started?

[r34ztune]

noco, Mate I am no particular fan of RUDD but NOT ONE BIT OF BLAME CAN BE PLACED ATTHE FOOT OF LABOUR.

The excesses that are in the economy now that WERE EXACERBATED by the huge credit expansion should theoretically have been controlled by the HOWARD government. Everyone knows that after boom comes bust and it is a matter of controlling the bust and hopefully having a soft landing.

In the end that is theoretically controlled by the Government of the day in its expansion phase.

John HOWARDS main claim to fame for controlling inflation was that he stopped wages growth.

John HOWARDS was pathetic. Real wages have been reduced year after year under HOWARD, and the only thing that prevented a real problem was that we had a huge commodities boom that allowed jobs for everyone, so that women with families could get full time jobs at the drop of a hat, or any other type of part time work they wanted.

The sad fact is that once interest rates went up and people were fully employed with no where to go, money was gong to be short.

Are you aware that when we consider inflation that to get the inflation rate in wages growth you have to add onto the top to allow for tax. In fact with inflation currently running at about 4.5% and a taxation rate of roughly 33% for a round figure, you have to be given a 6% pay rise so that after tax you end up witht the inflation rate of 4.5%. Let me ask you how many people this year are going to get 6% pay rises.

Do the maths over the years and you will soon realise that real spending power has been eroded over the years (both labour and liberal are responsible for this, however Liberals policy is less for the workers so they are the main offenders)

My brother in law was earning 65-70 grand a year at MIM in Mt Isa in the early 80's as a labourer. Most workers in the mines at Mt Isa certainly aren't on much more than a hundred g's give or take a bit. Sit down and compound out the inflation rate for the last 25 years and work out what 70 grand is worth today.

you can blame whoever you want, perception is reality, if we go into recession this will be "Rudd and Swan's recession" ,on the same token if we avoid recession it will because of "prudent fiscal policy" and putting "downward pressure on inflation"

 

[nunthewiser]

ROFLMAO @ the idea that the current gov is too blame for years of financial irresponsibilty and lapsisaical economic planning. did the current gove really place us in this current position ? get real . it didnt just happen guys , but the current gov gunna be blamed for it regardless

 

[kotim]

noco, I understand, my mother is a single pensioner and I know how hard it is. Politicians all round are not so hot. Real wages have not grown 17%. The old stats and lies routine. Do some work for yourself, it will only take a few hours, Work out the inflation figure and then allow for tax rates on top of it and then see what happens when you compound it out over the last 25 odd years. Go back more than 10 years and most people were paying almost 50% in the dollar tax, so yes the tax rates have reduced slightly. But don't forget that back then if inflation ran at 3% then to allow for tax you had to get a pay rise of 4.5%. Talk to the blokes working in Telstra, the Railways and all sorts of other average occupation and you will find that in many cases that they have not even been getting the equivalent of the inflation rate, let alone the extra for the tax part of it.

Peopel have a tendancy to be greedy. For every dollar a buisiness owner saves he will do his best to put all that in his pocket rather than giving a decent share of it to the workers. Hell that is the tendancy and whilst at a base level I don't necessarily disagree with it, becasue after all he took the risk, the problem is that if not enough goes back to the worker, then they end up short after a while.

The whole setup by the ogvernment is a big con. There is a reason why the government has to pay so much "help" money now to people (besides just old plain human greed)

Have a think about it. The government over taxs us and then promises to give it back in benefits, yet what they do is attach a lot of strings to those benefits and as each day goes by they attach more strings.

Government does not need you to vote for anything. They simply will say, if you want that benefit in future then YOU WILL do such and such and most people will not have a choice becasue they need the benefits that the government supplies.

Theoretically if we have a budget surplus then the money should be returned, first to the indivdiual and then maybe secondarily to the corporation.

 

[MRC & Co]

Interesting thread. Sometimes I think the amount of energy expended talking about economic statistics is not half as useful as the anecdotal evidence of the type on this thread.

I don't live in Oz but I'm currently on holiday, been back about 12 days so far. I spent three nights at Magnetic Island, beautiful spot. Got talking to a cleaner who cleans holiday apartments, she said she was cleaning 6 - 8 apartments a week this time last year. Told me that if she wasn't cleaning the apartment I was staying in she wouldn't have any work.

Yep, this anecdotal evidence is THE leading indicator. The rest of the economic stats just follow on way after the fact.

 

[algis]

There is one political factor that may be affecting the current climate: govt cutback on spending will no doubt at least temporarily increase unemployment due to retrenchments and reduce demand of goods and services. An intentional deflationary action whilst food and fuel are likely to remain inflationary.

People with big cars are finding that their resale is not so great.

Other non-govt factors affecting the buoyancy of consumer confidence include: ongoing increases in mortgage rates, reduction in property values and increases in rent in many areas (well, at least in Sydney). All this is coming together at once and after years of an ongoing boom, it's starting to pinch.

Are there more contractors and small business people out there than back in the eighties? If so, I'd be guessing they would be more reactive to changed conditions than larger enterprises... so a quicker more pronounced reaction to poor conditions would be expected?

 

[white_goodman]

NSW south of Sydney

Never had so much construction work. While the Mcmansions (house and land deal) work has stopped completely. The reno type and custom type homes has picked up considerably this past year. Had to cautiously put on another 4 workers. I’m charging up to 30% more on the jobs I don't want and still getting them. We were quiet about 2-3 years ago, for about 12 months. Stockpiling money with all the bearish talk though. If anything this downturn will obliterate a lot of competition as the tradies run to the mines and other safer options. And create even more of a skills shortage.Good times for me atm

my dads booked up 9 months in advance, and hasnt looked like letting up once the past 10 or so years

 

[gfresh]

Renno always comes on strong when the boil comes off the property market, and people cut back, so if anything it's a good as indicator as any..

Our business (mainly small business retailers) have noticed many customers slow to pay their bills, many weeks late. Even the better ones we've never had problems with can be slow. That's a usual indicator their businesses aren't doing so well with their own cashflow. A few of the medium businesses we deal with have gone into administration in the last couple of months, which obviously is not a good thing. Billxpress collapse has tied up a lot of money for us, which we may or may not get back. So few signals here and there add up.

 

[wallyt99]

I sort of feel that a recession would help trim the fat off the economy anyway.


Too many workers have become slack in this time of low unemployment, and businesses which are innefficient and unneccesary are still making money.


Get rid of the slackers, and the inefficient production.....then lets work our way to an even BETTER tommorow.

 

[nunthewiser]

At least i might be able to get a plumber out for a fair price in the future

 

[Smurf1976]

Are there more contractors and small business people out there than back in the eighties?

I'd assume so given the amount of outsourcing that went on during the 1990's. 20 years ago government especially tended to do practically everything "in house" with its own employees, workshops and so on. Now all but the most specialised work has been outsourced, much of it to relatively small contractors or sub-contractors. Much the same with large corporations etc outsourcing their work.

One consequence of all this is that it is now MUCH easier to cut the "real" (including contractors) workforce of government or large business. 20 years ago it meant sacking thousands or works and all that entails. Now it's simply a case of not going ahead with the next project thus putting the contractor out of work. A major decision for senior management then. Something that can be done simply by NOT making a phone call to a contractor today. It's much, much easier to downsize now.

 

[Julia]

Theoretically if we have a budget surplus then the money should be returned, first to the indivdiual and then maybe secondarily to the corporation.

Disagree.
If we have a surplus, I'd prefer to see a decent chunk of it placed into infrastructure so that we don't have people dying on hospital waiting lists, we have some sort of supply of cheap rental accommodation for the thousands who can't pay market rates or buy a home,and we can include dental care within Medicare etc etc. The list is endless.

Many will say no to the above suggestion, and feel that a desirable alternative is to reduce taxes and expect people to provide for themselves.
Good in theory, but just not practicable.

 

[Paladin]

Disagree.
If we have a surplus, I'd prefer to see a decent chunk of it placed into infrastructure so that we don't have people dying on hospital waiting lists, we have some sort of supply of cheap rental accommodation for the thousands who can't pay market rates or buy a home,and we can include dental care within Medicare etc etc. The list is endless.

Many will say no to the above suggestion, and feel that a desirable alternative is to reduce taxes and expect people to provide for themselves.
Good in theory, but just not practicable.

Absolutely. Personally, in an inflationary environment, I'm dead against the notion of tax cuts. Really felt Rudd et al sold out on that one (although it would have been suicide not to match the Libs). I'd MUCH rather see our government generating larger surpluses and investing them both in essential infrastructure and also in a way to ensure a long-term 'future fund'.

Half the genius of Howard was selling the idea to the Australian people that the government of the day is somehow in control of those global variables that affect our economy most. He got all the glory for the good times, and now Rudd will get the blame for the bad. Sigh. I'd like to know two things:

1. Who elected the American prez to be "leader of the free world"? The yanks are so fond of that phrase, but I appear to have missed that vote.

2. In a similar vein - who voted the government of our teeny tiny nation to be in charge of interest rates, exchange rates, the Chinese resources need, oil prices, and all those other lovely pan-economic waves that we get to surf the ripples of? The government of the day, like a surfer, can carve a little direction hither and thither and maybe throw in a nice move or two, but they can't make the ocean move.

 

[Aboundz]

Paladin,
Excellent summary. Amen and amen.

 

[MRC & Co]

If we have a budget surplus, it is planned for a reason in the context of broader fiscal policy.

If you return it to the community or anybody else, then you are defeating the purpose of a surplus.

What about the times you have a deficit? Should we then pay extra to cover that deficit?

 

[CanOz]

Disagree.
If we have a surplus, I'd prefer to see a decent chunk of it placed into infrastructure so that we don't have people dying on hospital waiting lists, we have some sort of supply of cheap rental accommodation for the thousands who can't pay market rates or buy a home,and we can include dental care within Medicare etc etc. The list is endless.

Many will say no to the above suggestion, and feel that a desirable alternative is to reduce taxes and expect people to provide for themselves.
Good in theory, but just not practicable.

It is my view that investment in infrastructure during a downturn in growth is a good way to stimulate employment, and therefore economic activity. The Chinese are doing it now, with the massive surpluses they have. Bridges, highways, hospitals and schools are being built. Say what you want about the Chinese, but when it comes to economic policy they learn equally from what not to do.

As a contrast, the US chooses to buy votes with tax cuts and stimulus checks, while in the meantime the interstate road system is decaying, bridges are being condemned, and the rail networks are rusting beyond repair.....where is the sense here? (I love Americans, but honestly people, go vote the knuckle heads out for good! Everyone hates your stupid government.)

I hope Rudd builds hospitals, schools and roads.

Cheers,


CanOz

 

[CanOz]

If we have a budget surplus, it is planned for a reason in the context of broader fiscal policy.

If you return it to the community or anybody else, then you are defeating the purpose of a surplus.

What about the times you have a deficit? Should we then pay extra to cover that deficit?

Should the American people pay more to pay down their budget deficit? Of course, someone has to pay, you can't borrow forever....but watch them try....they just raised the ceiling too!

Cheers,


CanOz

 

[noco]

noco, I understand, my mother is a single pensioner and I know how hard it is. Politicians all round are not so hot. Real wages have not grown 17%. The old stats and lies routine. Do some work for yourself, it will only take a few hours, Work out the inflation figure and then allow for tax rates on top of it and then see what happens when you compound it out over the last 25 odd years. Go back more than 10 years and most people were paying almost 50% in the dollar tax, so yes the tax rates have reduced slightly. But don't forget that back then if inflation ran at 3% then to allow for tax you had to get a pay rise of 4.5%. Talk to the blokes working in Telstra, the Railways and all sorts of other average occupation and you will find that in many cases that they have not even been getting the equivalent of the inflation rate, let alone the extra for the tax part of it.

Peopel have a tendancy to be greedy. For every dollar a buisiness owner saves he will do his best to put all that in his pocket rather than giving a decent share of it to the workers. Hell that is the tendancy and whilst at a base level I don't necessarily disagree with it, becasue after all he took the risk, the problem is that if not enough goes back to the worker, then they end up short after a while.

The whole setup by the ogvernment is a big con. There is a reason why the government has to pay so much "help" money now to people (besides just old plain human greed)

Have a think about it. The government over taxs us and then promises to give it back in benefits, yet what they do is attach a lot of strings to those benefits and as each day goes by they attach more strings.

Government does not need you to vote for anything. They simply will say, if you want that benefit in future then YOU WILL do such and such and most people will not have a choice becasue they need the benefits that the government supplies.

Theoretically if we have a budget surplus then the money should be returned, first to the indivdiual and then maybe secondarily to the corporation.

Kotim old mate, log on to Google "Past 10 years wage increases statistics for Australia", this may dispell your "old stats and lies routine". The average increases have been 4% PER YEAR up to 2008.Don't take my word for it.

 

[MRC & Co]

Should the American people pay more to pay down their budget deficit? Of course, someone has to pay, you can't borrow forever....but watch them try....they just raised the ceiling too!

Cheers,


CanOz

Are you talking about a budget suplus/deficit, or trade surplus/deficit?



Many opinions, which are just that.

According to a very close family member of mine, he could run the economy far better than it currently is, easy to be an arm chair economist with little clue of how it actually functions. In reality it is FAR FAR FAR more complex than anybody could imagine. After years of study, I still have little clue on many specific areas. Try learning about something as simple as the over-night money market.

I spent weeks perusing the RBA site and still could barely make heads or tails of it. I recieved a High Distinction on a piece on it years back, simpy because a lecturer knew just as little!

I think economists who actually know how the economy works are few and far between, I would say there are only a handful worldwide and even then, they would be specialists in one area. Talk about a complex and chaotic system!

 

[YELNATS]

I work in retail, And I typically have lunch at a major shopping centre, it's noticeably a bit quiet in the major food courts, whereas a few months ago finding a spot to sit down used to be impossible. And looking for parking spots has been easier too.

I guess it's just a question of whether this is a sign of people just temporarily cutting back or if it's permanent. Maybe we will see a pick up from here, but for now it sure seems to be slowing down.

I have a busy retail business in a medium to large shopping centre. Fortunately, I'm reasonably "recession-resistant" and my trade is about 5-10% down on the same time last year. However, talking to other retailers, their trade is down by a whole lot more and it's been very noticeable for them from around February-March-April.

It seems the RBA is blissfully unaware of what is happening in the real world until about 6 months after-the-fact and a good deal of our current malaise must be laid at their doorstep. Too many gung-ho rate hikes and not enough accountability on their part.

 

[Warren Buffet II]

Recession is knocking our doors, this is a nice list I got today:

Layoffs

Starbucks 700
Don Smallgoods 640
South Pacific Tyres 600
Holden Fishersman Bend 530
Qantas 500 (up to 1500)
QantasLink 20
IAG 600
Suncorp 60
NIB 40
SPC Ardmona (CocaCola) 60 (plus a large reduction of seasonal workers)
Colorado 10

Grand Total = 3760

So here you go, this is only what we know from newspapers, so we can be pretty sure much more has been happening behind the scene.

I was also reading some stuff about immigration this weekend and the current immigration rate is not covering for the outflow (people leaving) migration and the death rate, so we are pretty much growing from birth, which will stall once you got hit by recession.

I can only see this stopping once real estate prices stall for about 5 years (do not want to say fall because 99% of Australians think that prices do not fall, everyone is smart and pays only fair or below market price for their properties) and when I can get a decent plumber/electrician for about $20 per hour without the call-fee .

WBII