The state of the economy at the street level

[Smurf1976]

High power prices are killing consumers and businesses and are making us one of the most un-competitive nations on earth.

Nailed it although I strongly suspect there are other areas of the economy where the same applies.

Anyone know how competitive we are with internet, freight movement (land, sea, air) or water for example?

 

[SirRumpole]

Nailed it although I strongly suspect there are other areas of the economy where the same applies.

Anyone know how competitive we are with internet, freight movement (land, sea, air) or water for example?

No. 50 on overall connection speed, 6 for mobile speed.

https://en.wikipedia.org/wiki/List_of_countries_by_Internet_connection_speeds

 

[Toyota Lexcen]

What is a recession going to do? Everybody keeps calling for a recession across a lot of discussion groups.

Why do we need a recession? How will that benefit the public, world etc?

 

[qldfrog]

Recession eliminates the sick companies, give a chance to newcomers,reduce status quo and corruption, and make it u bearable behaviour like billing people for water they do not use, bring back rates to realistic level and bring back the basic values
Shelter, efforts, eating unless recession get twisted into more socialism which is an option in our so called democracies

 

[satanoperca]

What is a recession going to do? Everybody keeps calling for a recession across a lot of discussion groups.

Why do we need a recession? How will that benefit the public, world etc?

Interesting question, so before I elaborate, how is the current status quo of no recessions working out?

Think of a river system, if you control the flow of water and over time restrict it, Murray Darling what happens, it dies.

Why? as all natural system require a flushing out, you can only hold the shi..t in for so long.

Same with a flood, it washes away the bad and replenishes the system with new, over time.

So what do we have in our economy and the world economies is a build up of sh--it, commonly called debt.

This debt has grown and grown, slowly destabilizing the system, not allowing it to grow again. So with any recession, people and companies go broke, hard times come about, but just like a flood, the debris is removed from the system so it can grow again, short term pain for long term growth.

Most importantly, with hard times comes innovation and determination, something Australians have forgotten about, or the last 3 generations.

It is time we asked ourselves, can the good time last forever, it is something I asked myself when I was high on MDMA (wonderful drug especially when in the company of your preferred sex), answer, NO, good times do last forever.

So you ask, how is a recession good for the public? I would prefer a large cut to the leg than a thousand smalls ones over time.

However, you simple questions shows me you are young and have never experienced a recession.

 

[Toyota Lexcen]

Doesn’t sound too good going broke and tough times.

Sounds like people whinging about things

 

[Smurf1976]

What is a recession going to do? Everybody keeps calling for a recession across a lot of discussion groups.

Why do we need a recession? How will that benefit the public, world etc?

I don't think it's so much a case of wanting it as such but rather of seeing it as inevitable and thinking that a modest recession now is better than delaying it and ending up with full blown depression.

It's like saying that if I'm driving east when I should be heading west then the sooner I realise this, the better.

 

[Smurf1976]

How 12hr days, day after day passes a risk assessment is beyond me.

Did a few years of that in the past. 12 hours a day. 7 days a week just about every week.

Worse things could happen although I wouldn't be hugely keen to do it again, at least not for a prolonged period. Probably wouldn't be allowed these days anyway.

I look on the positive side though, people in far worse situations than that.

 

[macca]

What is a recession going to do? Everybody keeps calling for a recession across a lot of discussion groups.

Why do we need a recession? How will that benefit the public, world etc?

Hi,

I am not suggesting that a recession is good but to borrow money to artificially keep the party going is wrong. We had good times then the world slowed so we should have adjusted our expectations and lifestyle accordingly.

Like a lot on here, I have children and now grandchildren and I really do not believe that we should have borrowed money to have a jolly good time and then expect coming generations to repay our "drinks bill"

All the debt created does have to be paid back sometime and that bugs me.

We have a layer in Society that thinks while ever Oz can borrow money we should continue to virtual signal to the world how wonderful we are.

The way the western world is heading with all this VS BS we will be at the mercy of China and the International banks and the future generations will struggle because of the debts they have to repay.

 

[Smurf1976]

We have a layer in Society that thinks while ever Oz can borrow money we should continue to virtual signal to the world how wonderful we are.

I think that's actually a consequence of going so long without a recession.

Reality is that if you're under age 50 and always lived in Australia then no chance you've worked in any profession requiring a tertiary education during a recession and if you're under about 44 then no chance you've worked in any job at all during a recession.

So we've got people now in middle or even senior management roles with no personal experience of a serious downturn. Equally to the point, anyone under 28 wasn't even born last time and people of that age are now moving up in the workforce, buying houses and so on.

So we've got a pretty substantial chunk of the population which won't likely grasp that not only is this as good as it gets but that "normal" is substantially worse than what we have today.

That being so, it's almost a given that they'll be taking all manner of risks blissfully unaware of what the other part of the cycle looks like.

 

[sptrawler]

No. 50 on overall connection speed, 6 for mobile speed.

https://en.wikipedia.org/wiki/List_of_countries_by_Internet_connection_speeds

I think I read recently, we are now just behind South Korea, with mobile speed. U.S.A and Switzerland are faster apparently.
https://www.smh.com.au/technology/a...than-its-5g-survey-shows-20190719-p528t1.html

 

[sptrawler]

Hi,

I am not suggesting that a recession is good but to borrow money to artificially keep the party going is wrong. We had good times then the world slowed so we should have adjusted our expectations and lifestyle accordingly.

Like a lot on here, I have children and now grandchildren and I really do not believe that we should have borrowed money to have a jolly good time and then expect coming generations to repay our "drinks bill"

All the debt created does have to be paid back sometime and that bugs me.

We have a layer in Society that thinks while ever Oz can borrow money we should continue to virtual signal to the world how wonderful we are.

The way the western world is heading with all this VS BS we will be at the mercy of China and the International banks and the future generations will struggle because of the debts they have to repay.

Add to that, the media nearly every day is sprouting another cause the Government should be increasing spending on, if it isn't drought relief, welfare payments, infrastructure, basic wage, education, health, it is on mitigating climate change.
Is there any wonder people are confused, they are being told Australia is in a lot of debt and there is a likely hood of recession. Then in the next breath they are being told the Government should be spending more money and that the Government shouldn't have given the tax cuts, because we can't afford them.
Talk about mixed messages.
Is there any wonder people aren't spending, the best thing that could happen, would be the papers to go broke. IMO

 

[basilio]

It's interesting to hear people talk about individuals being responsible for the huge indebtedness weighing down our economy.

It seems that, in fcat, it is companies which have the greatest exposure to a recession and if things go south many corporations will be vulnerable.
Of course that means all their employees will also be on the block as well as shareholders, banks and ex employees with company pensions

Global economy faces $19tn corporate debt timebomb, warns IMF
Update on markets lists eight leading countries, including US, China and UK, as vulnerable

Low interest rates are encouraging companies to take on a level of debt that risks becoming a $19tn (£15tn) timebomb in the event of another global recession, the International Monetary Fund has said.

In its half-yearly update on the state of the world’s financial markets, the IMF said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would be impossible to service if there was a downturn half as serious as that of a decade ago.

The IMF noted that the stimulus provided by central banks in both developed and developing countries had the side-effect of encouraging firms to borrow more, even though many would have trouble paying it back.

IMF haunted by fears that history might be about to repeat itself
Read more
Officials at the Washington-based organisation fear that the buildup of debt makes the global financial system highly vulnerable and are telling member states not to repeat the mistake of the early 2000s, when warning signs of a possible market meltdown were ignored.

The IMF said share prices in the US and Japan appeared to be overvalued, while the credit spreads in bond markets – the compensation demanded by investors against risk – seemed to be too low, given the state of the global economy.

Tobias Adrian and Fabio Natalucci, two senior IMF officials responsible for the Global Financial Stability Report, said: “A sharp, sudden tightening in financial conditions could unmask these vulnerabilities and put pressures on asset price valuations.”

In a blogpost published alongside the GFSR, Adrian and Natalucci noted: “Corporations in eight major economies are taking on more debt and their ability to service it is weakening.

“We look at the potential impact of a material economic slowdown – one that is half as severe as the global financial crisis of 2007-08. Our conclusion is sobering: debt owed by firms unable to cover interest expenses with earnings, which we call corporate debt at risk, could rise to $19tn. That is almost 40% of total corporate debt in the economies we studied.”
https://www.theguardian.com/busines...-faces-19tn-corporate-debt-timebomb-warns-imf

 

[qldfrog]

It's interesting to hear people talk about individuals being responsible for the huge indebtedness weighing down our economy.

It seems that, in fcat, it is companies which have the greatest exposure to a recession and if things go south many corporations will be vulnerable.
Of course that means all their employees will also be on the block as well as shareholders, banks and ex employees with company pensions

Global economy faces $19tn corporate debt timebomb, warns IMF
Update on markets lists eight leading countries, including US, China and UK, as vulnerable

Low interest rates are encouraging companies to take on a level of debt that risks becoming a $19tn (£15tn) timebomb in the event of another global recession, the International Monetary Fund has said.

In its half-yearly update on the state of the world’s financial markets, the IMF said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would be impossible to service if there was a downturn half as serious as that of a decade ago.

The IMF noted that the stimulus provided by central banks in both developed and developing countries had the side-effect of encouraging firms to borrow more, even though many would have trouble paying it back.

IMF haunted by fears that history might be about to repeat itself
Read more
Officials at the Washington-based organisation fear that the buildup of debt makes the global financial system highly vulnerable and are telling member states not to repeat the mistake of the early 2000s, when warning signs of a possible market meltdown were ignored.

The IMF said share prices in the US and Japan appeared to be overvalued, while the credit spreads in bond markets – the compensation demanded by investors against risk – seemed to be too low, given the state of the global economy.

Tobias Adrian and Fabio Natalucci, two senior IMF officials responsible for the Global Financial Stability Report, said: “A sharp, sudden tightening in financial conditions could unmask these vulnerabilities and put pressures on asset price valuations.”

In a blogpost published alongside the GFSR, Adrian and Natalucci noted: “Corporations in eight major economies are taking on more debt and their ability to service it is weakening.

“We look at the potential impact of a material economic slowdown – one that is half as severe as the global financial crisis of 2007-08. Our conclusion is sobering: debt owed by firms unable to cover interest expenses with earnings, which we call corporate debt at risk, could rise to $19tn. That is almost 40% of total corporate debt in the economies we studied.”
https://www.theguardian.com/busines...-faces-19tn-corporate-debt-timebomb-warns-imf

You are right Basilio but companies as people do what the government want them to do, except in the us, here in europe end japan, we go toward negative interest rates
It is sensible to get debt under these conditions
I am old school and do not do it, but if i can get loan at below 2pc, i should do it and buy stuff be it land RE factories shares or even my own shares as a corporate
Let's not blame individuals or corporations for the federal Banks and politicians madness

 

[sptrawler]

It's interesting to hear people talk about individuals being responsible for the huge indebtedness weighing down our economy.
f

I can't wait to see who is going to be responsible for this evolving problem, not the spender of course, probably those who lent them the money.

https://thewest.com.au/lifestyle/dr...-business-to-bring-in-afterpay-ng-b881357083z

 

[Jack Aubrey]

I'm not an economist but I do think the personal/housing side of the the national "debt problem" may be a bit overblown and that a lot of financial "journalists" are just being doomsayers. Stephen Koukoulas is one commentator who has been pretty spot on with his (contrarian) views about Australia's economy over the past decade and he published this piece on household debt last week:

https://www.thekouk.com/item/543-the-truth-about-our-debt.html

To me, for Australia at least, it is the unemployment and underemployment rates that need to be watched carefully - and they seem to be holding despite the obvious downturn in some sectors. (I am concerned at the way these things are defined and measured as I think we now "hide" a large amount of both un- and under-employment.)

It is interesting to see how the "debt bomb" issue is being discussed in other countries. The (very) old idea of a "debt jubilee" is getting traction in the UK and USA and at least one of the Democratic candidates for the 2020 Presidential Election is canvassing cancelling student (uni) debt, which is out of control in the US. I'm not convinced by the arguments one way the other on debt cancellation but here is a quite balanced discussion of the background and issues:

https://theconversation.com/the-deb...t-solution-to-a-modern-financial-crisis-11816

 

[sptrawler]

Interesting read Jack, the debt issue in reality can't be resolved in a normal balance sheet way, there just isn't enough GDP, liquidity etc to balance it, so at some stage some form of reset will be required like a debt consolidation on currencies.
Where each currency is rebalanced and revalued against the standard, according to the Countries outstanding debt obligation i.e money printing, I just can't see any other way, of writing everything back to a sensible balanced 'norm', where the currencies actually have any credibility.
The current modus operandi, just appears to be if the Country looks like its economy is turning to $hit, just 'print money' and spend your way out of the problem. This has to undermine the whole integrity of the fiat system IMO.
It will be interesting to see how it all pans out IMO.

 

[SirRumpole]

(I am concerned at the way these things are defined and measured as I think we now "hide" a large amount of both un- and under-employment.)

The obvious factor is that only one hour of work per week is sufficient to regard someone as employed and therefore not contributing to unemployment. This is a historical measurement but it produces a distorted view or reality and the real situation must be much worse.

There must be a lot of people , probably middle aged, out of work, not able to find another job that are too proud to get Newstart and are living on their savings.

They may not be a problem for the government at the moment because they are hidden but they could be a significant voting block in the future.

 

[Smurf1976]

They may not be a problem for the government at the moment because they are hidden

I suspect there's rather a lot of economic things which exist but which are hidden by various means either intentional or unintentional.

Economic statistics such as debt levels often obscure the detail since consumers will act based on their personal situation, not a statistical average, and most people are in practice not average.

 

[sptrawler]

I suspect there's rather a lot of economic things which exist but which are hidden by various means either intentional or unintentional.
.

Well a mate I was talking to on the weekend, used to be a graphic artist, but chucked it in to drive uber.
Well he has change from uber taxi, to uber eats and can't believe who are using the service.