OZ ECONOMICS DOWN THE DUNNY?
Oct 12th 2008, 12:00 am
#16
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Re: OZ ECONOMICS DOWN THE DUNNY?
What a ridiculous statement. The AUD has been weaker against GBP and USD before. GBP has taken a hit against USD - but again, it's been lower before. I can remember USD1.40/GBP in the not too distant past.
Junior miners like Mt Gibson might be having a few problems - and some of the smaller new projects might be postponed, but the big boys, BHP, Rio and to a lesser degree, FMG are signed in to long term fixed price contracts. They are still expanding. They are looking beyond the current turmoil, at 2010 and beyond. They see China back on track (if they ever fell off - economy is still growing at 8-9%), industrialising, urbanising and booming. They are investing right now for this.
This awesome country is going to be okay.
Junior miners like Mt Gibson might be having a few problems - and some of the smaller new projects might be postponed, but the big boys, BHP, Rio and to a lesser degree, FMG are signed in to long term fixed price contracts. They are still expanding. They are looking beyond the current turmoil, at 2010 and beyond. They see China back on track (if they ever fell off - economy is still growing at 8-9%), industrialising, urbanising and booming. They are investing right now for this.
This awesome country is going to be okay.
Oct 12th 2008, 12:20 am
#17
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Re: OZ ECONOMICS DOWN THE DUNNY?
What that guy says makes a lot of sense. A lot more sense than the deluded "another boom on the horizon" commentators, with their portfolios of investment properties to talk up.
Ignorance will not be bliss in this case. Optimism is fine, but not when people are being sucked in to other people's get rich schemes, which require an endless supply of greater fools.
You will find that most people's opinions on recession and the closely related issue of property prices reflect their own exposure the market, how many investment properties they have, etc. That is to say, it's based on wishful thinking, with the analysis starting from the conclusion they want to hear.
Up to now, I believe the Australian media have been reluctant to speak about what is really going on owing to all the vested interests. The mood seems to be starting to change now as the elephant in the room is just getting a bit too big.
Maybe I'm wrong. Maybe there really is another boom coming. But how can that make sense when a whole generation is being shut out of the property market, when bank lending has been predicated on property prices rising indefinitely ("doubling every seven years" -- how many times have we heard that one?), outstripping wage growth forever?
Sure, nobody knows exactly what will happen, but anyone who really stops to think about it knows what needs to happen. I really hope Australia can get away with some kind of soft landing, but I think it is looking less likely with the bubble so highly inflated.
Ignorance will not be bliss in this case. Optimism is fine, but not when people are being sucked in to other people's get rich schemes, which require an endless supply of greater fools.
You will find that most people's opinions on recession and the closely related issue of property prices reflect their own exposure the market, how many investment properties they have, etc. That is to say, it's based on wishful thinking, with the analysis starting from the conclusion they want to hear.
Up to now, I believe the Australian media have been reluctant to speak about what is really going on owing to all the vested interests. The mood seems to be starting to change now as the elephant in the room is just getting a bit too big.
Maybe I'm wrong. Maybe there really is another boom coming. But how can that make sense when a whole generation is being shut out of the property market, when bank lending has been predicated on property prices rising indefinitely ("doubling every seven years" -- how many times have we heard that one?), outstripping wage growth forever?
Sure, nobody knows exactly what will happen, but anyone who really stops to think about it knows what needs to happen. I really hope Australia can get away with some kind of soft landing, but I think it is looking less likely with the bubble so highly inflated.
My thoughts exactly, spot on Exile.
Oct 12th 2008, 12:31 am
#18
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Re: OZ ECONOMICS DOWN THE DUNNY?
Oct 12th 2008, 12:53 am
#19
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Re: OZ ECONOMICS DOWN THE DUNNY?
What that guy says makes a lot of sense. A lot more sense than the deluded "another boom on the horizon" commentators, with their portfolios of investment properties to talk up.
Ignorance will not be bliss in this case. Optimism is fine, but not when people are being sucked in to other people's get rich schemes, which require an endless supply of greater fools.
You will find that most people's opinions on recession and the closely related issue of property prices reflect their own exposure the market, how many investment properties they have, etc. That is to say, it's based on wishful thinking, with the analysis starting from the conclusion they want to hear.
Up to now, I believe the Australian media have been reluctant to speak about what is really going on owing to all the vested interests. The mood seems to be starting to change now as the elephant in the room is just getting a bit too big.
Maybe I'm wrong. Maybe there really is another boom coming. But how can that make sense when a whole generation is being shut out of the property market, when bank lending has been predicated on property prices rising indefinitely ("doubling every seven years" -- how many times have we heard that one?), outstripping wage growth forever?
Sure, nobody knows exactly what will happen, but anyone who really stops to think about it knows what needs to happen. I really hope Australia can get away with some kind of soft landing, but I think it is looking less likely with the bubble so highly inflated.
Ignorance will not be bliss in this case. Optimism is fine, but not when people are being sucked in to other people's get rich schemes, which require an endless supply of greater fools.
You will find that most people's opinions on recession and the closely related issue of property prices reflect their own exposure the market, how many investment properties they have, etc. That is to say, it's based on wishful thinking, with the analysis starting from the conclusion they want to hear.
Up to now, I believe the Australian media have been reluctant to speak about what is really going on owing to all the vested interests. The mood seems to be starting to change now as the elephant in the room is just getting a bit too big.
Maybe I'm wrong. Maybe there really is another boom coming. But how can that make sense when a whole generation is being shut out of the property market, when bank lending has been predicated on property prices rising indefinitely ("doubling every seven years" -- how many times have we heard that one?), outstripping wage growth forever?
Sure, nobody knows exactly what will happen, but anyone who really stops to think about it knows what needs to happen. I really hope Australia can get away with some kind of soft landing, but I think it is looking less likely with the bubble so highly inflated.
OZ GDP versus Personal debt ratios are staggering
As for the view that the China/OZ Commodities party will continue in isolation to world events - a house of cards in waiting.
In the scheme of things this awesome country is really a small player and will not be immune to a protracted depression.
Oct 12th 2008, 2:53 am
#20
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Location: Ilukapool. WA
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Re: OZ ECONOMICS DOWN THE DUNNY?
I'd second that Exile!
OZ GDP versus Personal debt ratios are staggering
As for the view that the China/OZ Commodities party will continue in isolation to world events - a house of cards in waiting.
In the scheme of things this awesome country is really a small player and will not be immune to a protracted depression.
OZ GDP versus Personal debt ratios are staggering
As for the view that the China/OZ Commodities party will continue in isolation to world events - a house of cards in waiting.
In the scheme of things this awesome country is really a small player and will not be immune to a protracted depression.
I third it, sadly. Tough times ahead, I'm just glad I have a relatively secure job at a university.
Oct 12th 2008, 2:58 am
#21
Proudly Deplorable
Joined: May 2003
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Re: OZ ECONOMICS DOWN THE DUNNY?
We'll have to agree to disagree on this.
Oct 12th 2008, 8:25 am
#22
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Re: OZ ECONOMICS DOWN THE DUNNY?
The UK media has been talking in a recession for the past 12 months
Oct 12th 2008, 8:55 am
#23
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Re: OZ ECONOMICS DOWN THE DUNNY?
I don't agree that the media has been talking things down here in the UK, as an example the Express is constantly reporting the opposite, and it is ridiculous to suggest that this is the cause of the upcoming recession. You cannot "talk yourself into" the situation that we have all found ourselves in over the last few weeks. There are real global economic factors in play here and they have been building up for 4 or 5 years to this financial catastophe which is currently playing out.
We know much more about what is happening because of the information we have at our fingertips these days, and have more access to "case studies" about people who are affected through forums such as this.
The UK is dependent on the financial services sector for a huge amount of employment. The trickle down from city worker bonuses has a massive effect on the UK economy in good and bad times. It is reliant on other nations to import food and we do not have a manufacturing base here anymore.
My feeling is that I would rather be anywhere than the UK at the moment, things are going to get bad here very soon. As far as how Australia will be affected I have to say that I have to listen to others who have much more knowledge in this area than myself but it has to be better placed than the UK at the moment.
We know much more about what is happening because of the information we have at our fingertips these days, and have more access to "case studies" about people who are affected through forums such as this.
The UK is dependent on the financial services sector for a huge amount of employment. The trickle down from city worker bonuses has a massive effect on the UK economy in good and bad times. It is reliant on other nations to import food and we do not have a manufacturing base here anymore.
My feeling is that I would rather be anywhere than the UK at the moment, things are going to get bad here very soon. As far as how Australia will be affected I have to say that I have to listen to others who have much more knowledge in this area than myself but it has to be better placed than the UK at the moment.
Oct 12th 2008, 9:04 am
#24
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Re: OZ ECONOMICS DOWN THE DUNNY?
The recession was in large part caused by greed. It was the I'm alright, beggar-thy-neighbour-and-the-next-generation, it's-all-good, booms-are-great-unless-you're-on-the-outside-looking-in attitude.
Robert Peston is not the cause of the recession. He just explains what is happening.
Oct 12th 2008, 9:18 am
#25
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Joined: Apr 2008
Posts: 592
Re: OZ ECONOMICS DOWN THE DUNNY?
What that guy says makes a lot of sense. A lot more sense than the deluded "another boom on the horizon" commentators, with their portfolios of investment properties to talk up.
Ignorance will not be bliss in this case. Optimism is fine, but not when people are being sucked in to other people's get rich schemes, which require an endless supply of greater fools.
You will find that most people's opinions on recession and the closely related issue of property prices reflect their own exposure the market, how many investment properties they have, etc. That is to say, it's based on wishful thinking, with the analysis starting from the conclusion they want to hear.
Up to now, I believe the Australian media have been reluctant to speak about what is really going on owing to all the vested interests. The mood seems to be starting to change now as the elephant in the room is just getting a bit too big.
Maybe I'm wrong. Maybe there really is another boom coming. But how can that make sense when a whole generation is being shut out of the property market, when bank lending has been predicated on property prices rising indefinitely ("doubling every seven years" -- how many times have we heard that one?), outstripping wage growth forever?
Sure, nobody knows exactly what will happen, but anyone who really stops to think about it knows what needs to happen. I really hope Australia can get away with some kind of soft landing, but I think it is looking less likely with the bubble so highly inflated.
Ignorance will not be bliss in this case. Optimism is fine, but not when people are being sucked in to other people's get rich schemes, which require an endless supply of greater fools.
You will find that most people's opinions on recession and the closely related issue of property prices reflect their own exposure the market, how many investment properties they have, etc. That is to say, it's based on wishful thinking, with the analysis starting from the conclusion they want to hear.
Up to now, I believe the Australian media have been reluctant to speak about what is really going on owing to all the vested interests. The mood seems to be starting to change now as the elephant in the room is just getting a bit too big.
Maybe I'm wrong. Maybe there really is another boom coming. But how can that make sense when a whole generation is being shut out of the property market, when bank lending has been predicated on property prices rising indefinitely ("doubling every seven years" -- how many times have we heard that one?), outstripping wage growth forever?
Sure, nobody knows exactly what will happen, but anyone who really stops to think about it knows what needs to happen. I really hope Australia can get away with some kind of soft landing, but I think it is looking less likely with the bubble so highly inflated.
I know very little, but a very well balanced post, not stating micro issues but explaining it in easily understood "how it happened" terms!
Nice One, Cheers, kEITH.
Oct 12th 2008, 9:30 am
#26
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Re: OZ ECONOMICS DOWN THE DUNNY?
Do you think s/he works in the finance/banking industry...?!
Oct 12th 2008, 10:50 am
#27
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Re: OZ ECONOMICS DOWN THE DUNNY?
Oct 12th 2008, 6:05 pm
#28
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Re: OZ ECONOMICS DOWN THE DUNNY?
The current problems and the next threat lay largely with something few of you have probably heard of (without wishing to sound patronising) - Credit Default Swaps (CDS's). Partly quoting The Times:
These obscure financial instruments began to be widely used in the 1990's as a way for companies to insure themselves against borrowers who failed to pay their debts. In simple terms, a company worried that it might not get paid by a borrower strikes a deal with another party to compensate it if the borrower defaults. The risk is transferred and thus it is called a 'credit default swap'.
Later these contracts came to be traded, further spreading the risk - and the exposure. The market has grown rapidly and is now worth more than US$50 trillion. The problem is that the trading is unregulated and the deals are struck between private companies. Exactly what the mountain of CDS deals are worth or whether parties can actually meet their obligations is not easy to find out.
As companies run into difficulty in the recession (and everyone will have one, no exceptions), loan defaults will rise. That in turn will put pressure on the CDS market. If firms that have offered default protection find they cannot now pay, it could have a domino effect - one firm's default could cause a different one to go bankrupt."
It is estimated that half the US$700 billion bale out package is needed to cover the CDS's relating to the collapse of Lehman Bros with those who guaranteed their loans only likely to receive 9 cents in the dollar.
I presume the OP is questioning the Oz economy rather than Oz economics?
Many of you underestimate the psychology of a recession/depression. It's why PM's and ministers and some country's press try to talk things up. To talk things down in the interests of being honest is economic (and political) suicide.
China has already announced cuts in steel production - delivering one of the main reasons for stock market mayhem around the globe on Thurs and Fri.
Australia won't avoid recession but at least Australian banks are on a sounder footing than their UK and US (and Icelandic!) equivalents with better capital ratios, far fewer 'toxic assets' and less off balance sheet CDS's. Australia showed the way with the 1% i/r cut; Brown showed the way with his bank rescue package, Bush and co have frankly dithered and they caused most of the mayhem.
These obscure financial instruments began to be widely used in the 1990's as a way for companies to insure themselves against borrowers who failed to pay their debts. In simple terms, a company worried that it might not get paid by a borrower strikes a deal with another party to compensate it if the borrower defaults. The risk is transferred and thus it is called a 'credit default swap'.
Later these contracts came to be traded, further spreading the risk - and the exposure. The market has grown rapidly and is now worth more than US$50 trillion. The problem is that the trading is unregulated and the deals are struck between private companies. Exactly what the mountain of CDS deals are worth or whether parties can actually meet their obligations is not easy to find out.
As companies run into difficulty in the recession (and everyone will have one, no exceptions), loan defaults will rise. That in turn will put pressure on the CDS market. If firms that have offered default protection find they cannot now pay, it could have a domino effect - one firm's default could cause a different one to go bankrupt."
It is estimated that half the US$700 billion bale out package is needed to cover the CDS's relating to the collapse of Lehman Bros with those who guaranteed their loans only likely to receive 9 cents in the dollar.
I presume the OP is questioning the Oz economy rather than Oz economics?
Many of you underestimate the psychology of a recession/depression. It's why PM's and ministers and some country's press try to talk things up. To talk things down in the interests of being honest is economic (and political) suicide.
China has already announced cuts in steel production - delivering one of the main reasons for stock market mayhem around the globe on Thurs and Fri.
Australia won't avoid recession but at least Australian banks are on a sounder footing than their UK and US (and Icelandic!) equivalents with better capital ratios, far fewer 'toxic assets' and less off balance sheet CDS's. Australia showed the way with the 1% i/r cut; Brown showed the way with his bank rescue package, Bush and co have frankly dithered and they caused most of the mayhem.
Oct 12th 2008, 6:56 pm
#29
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Re: OZ ECONOMICS DOWN THE DUNNY?
Sure. But would you care to elaborate why you believe this commodity boom will not turn to bust this time? Is it because you believe demand for Chinese exports will hold and therefore their appetite for raw materials won't diminish?
The only way I can see this happening is if domestic Chinese demand increases enough to outweigh the the inevitable sharp slow-down in European and US imports from China.
The only way I can see this happening is if domestic Chinese demand increases enough to outweigh the the inevitable sharp slow-down in European and US imports from China.
Oct 12th 2008, 8:29 pm
#30
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Re: OZ ECONOMICS DOWN THE DUNNY?
Guys,
Interesting to note that conservatism (with a small c) in Australia may win the day - check out Robert Peston's blog today on the BBC - £50 bn required to bail out the UK banks - leaders amonst them Royal Bank of Scotland and HBOS. The shame.......rename them and take out the S (cotland) word!! To think we were known as the conservative financiers......
In fact, let's see: Government Of Britain, Share Holder In Times of Emergency......GOBSHITE!!!
Can you do better??
Twinset
Interesting to note that conservatism (with a small c) in Australia may win the day - check out Robert Peston's blog today on the BBC - £50 bn required to bail out the UK banks - leaders amonst them Royal Bank of Scotland and HBOS. The shame.......rename them and take out the S (cotland) word!! To think we were known as the conservative financiers......
In fact, let's see: Government Of Britain, Share Holder In Times of Emergency......GOBSHITE!!!
Can you do better??
Twinset