2 speed economy

Old Mar 11th 2012, 3:45 pm
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Default 2 speed economy

The resources boom has prompted much discussion of Australia having become a two-speed economy.

Is this a new phenomenon or just another part of the usual cycle?

and if its new, how long do you think it will last?
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Old Mar 11th 2012, 10:11 pm
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Default Re: 2 speed economy

It's part of the usual cycle that everyone has to adapt to. It's called free market capitalism.
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Old Mar 11th 2012, 10:16 pm
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Default Re: 2 speed economy

It's not a new phenomenon. It's been going on for years. There's even a Treasury paper in 2008 on this matter but the Gov't and RBA refuse to intervene in the forex market.

http://www.treasury.gov.au/documents...%20economy.htm
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Old Mar 11th 2012, 11:01 pm
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Default Re: 2 speed economy

only cultures with a strong anti-success mentality like the "law of jonte" in nordic countries are what can achieve relative income equality.
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Old Mar 11th 2012, 11:02 pm
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Default Re: 2 speed economy

Originally Posted by nandnor View Post
only cultures with a strong anti-success mentality like the "law of jonte" in nordic countries are what can achieve relative income equality.
Is this similar to Tall Poppy Syndrome?
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Old Mar 11th 2012, 11:08 pm
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Default Re: 2 speed economy

Whats also happening at the moment is that many households are deleveraging and increasing their savings to 20-year highs instead of pumping the cash into the economy. it's not as if the GDP and employment were in a freefall.
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Old Mar 12th 2012, 1:34 am
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Default Re: 2 speed economy

More commonly called "The Dutch Disease" when connected with resource exploitation. Lasts as long as the resource boom does, and takes carefully management if you are not to derail your whole economy. Needless to say, not being well managed in Oz.

http://en.wikipedia.org/wiki/Dutch_disease
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Old Mar 12th 2012, 1:37 am
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Default Re: 2 speed economy

we need more mining tax!!!
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Old Mar 12th 2012, 1:48 am
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Default Re: 2 speed economy

Originally Posted by GarryP View Post
Needless to say, not being well managed in Oz.
Because?
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Old Mar 12th 2012, 1:58 am
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Default Re: 2 speed economy

Originally Posted by commonwealth View Post
Because?
The money is allowed to unbalance the economy, kinda obviously.

Best approach is not to allow mining companies to make a mint off it, but to put most of the wealth generated into a sovereign wealth fund, investing slowly into other industries within the country and bringing them to a world competitive level.
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Old Mar 12th 2012, 2:17 am
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Default Re: 2 speed economy

The 2 speed economy does not impress me.

Not everyone works in mining..there are millions elsewhere...

But to that end...I secured myself a mining job... based in Melbourne. Not planned, luck had a big part.
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Old Mar 12th 2012, 2:22 am
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Default Re: 2 speed economy

Originally Posted by GarryP View Post
The money is allowed to unbalance the economy, kinda obviously.

Best approach is not to allow mining companies to make a mint off it, but to put most of the wealth generated into a sovereign wealth fund, investing slowly into other industries within the country and bringing them to a world competitive level.
Only problem with this is Australia is a confederation of States , the mineral wealth still lies with the States not the Commonwealth Govt. ( the resource rent tax debacle will eventually have to go to the High Court if the States keep getting shafted )
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Old Mar 12th 2012, 2:52 am
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Default Re: 2 speed economy

Sovereign wealth fund? LoL.
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Old Mar 12th 2012, 3:00 am
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Default Re: 2 speed economy

Originally Posted by commonwealth View Post
Sovereign wealth fund? LoL.
We've already got one - Future Fund.
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Old Mar 12th 2012, 3:15 am
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Default Re: 2 speed economy

It is two speed in a geographical, industry and government sense.

WA and QLD = good geographically, Mining = good industry, Government = federal ok, states and municipals heading for big trouble.

We are fortunate that Australian governments have had the good sense to legislate and build solid super/pension funds (contrast with UK), to run solid surpluses during good times without magic accountancy in the form of public-private shams (contrast with UK) and not to allow the entire country to become as dependent on an industry as risky as financials (contrast with UK).
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