IvanM

And the banks somehow packaged up this debt as high quality and sold it on. Nearly all busts have happened when the markets realise the boom has become debt fuelled and is unsustainable.

No one has ever beaten the economic cycle. It is as certain as death and taxes.

IvanM

My statement was that if mining goes down the pan ie into recession then the economy is as f&ck3d as the US/UK. I stand by that statement. It does not mean that mining will go down the pan but states the importance to the wider economy of mining.

Without mining Australia would just be a nation of sheep shaggers like our cousins across the ditch.

iamthecreaturefromuranus

Forget all the incomprehensible, at least to most of us, stuff you read about the economy. Recessions start like this....

I had planned to have a new kitchen fitted and new front doors as well… total cost was probably about $25k. That won’t be happening now. The money will be staying firmly in my pocket. I will be one of tens of thousands of people making similar decisions, and there, in a nutshell, you have your recession.

asprilla

So, what about the other 92% of the economy? I guess that doesn't count.

IvanM

That makes Australia like the US/UK/NZ. Please enlighten me on the state of those economies.

asprilla

eh? I don't understand what you mean. Of course the Australian economy is made up of different sectors, just like other economies.

What is your point?

IvanM

That if mining holds steady the Australian economy will probably stagnate and tax rises may not be needed. The more mining contracts the greater the chance of a recession like the UK/US/NZ will have or are already having. The more commodities falls back the more our taxes will be. Very few other countries in the world have a commodites sector as significant as Australia has. It is not just a minor sector of the economy.

jimbo_d

FMG are in deep crap, their 20 year business plan has fallen over after 3 years, their predicted shipments for next year have been slashed from 39mt to 30mt, which wont fulfill their current capacity, let alone any further expansions. I doubt they'll still be functioning as FMG in a years time. Mining although still expanding is looking like Wiley Coyote when he runs off the cliff still running in mid air before he falls, however there's a large gas & infrastructure industry in Oz which should mop up most of the carnage in my industry when the miners finally hit the earth. Was looking at sunrise, the great news oracle it is, they're saying rightly so that Perth's housing market looks to be decimated when the miners do start being made redundant.

asprilla

I still don't quite understand what you are getting at.

You originally said that Australia would be nothing without mining.

I said that mining only makes up a small proportion of GDP.

You said "that makes Aus like US/UK/NZ...and look at their economies" ? And then you go on to say that Australia has a very significant commodities sector.



I think that you need to take a more balanced view of the Australian economy.
a) consider the economy as a whole, not just one sector.
b) consider a wider range of economic indicators and compare these to indicators for other countries.

IvanM

No I said Australia would be as f&ck3d as the US without mining. Mining is hugely significant and not a minor part of the economy as you and some others think. The other sectors of the economy depend on mining for low taxes and infrastructure spending.

Petals

Aus does alright given that we have such a small population.

The dollar is down where it should be. No subsidies here so the low dollar helps our exporters and they are far more important than people taking trips o/seas.
Also stops all that stupid junky stuff being imported here.

No-one is an expert and no-one really knows what will happen or when if anyone did know none of the present world economic shamozzle would have happened.

sr71

NZ is in a pretty good state really, recessions are a natural part of the economic cycle.

Have a look at the Baltic Dry Index (BDI), could be some very rough times for the Australian mining sector.

IvanM

There are a number of subsidised industries, especially the car industry. A low dollar may increase the price of junk but it also increases the prices of many other necessary imports such as medicines, building materials etc. which pushes up inflation and diminishes wealth.

A steady predictable dollar helps us all. The economic cycle has always happened. Its timing and variation is just hard to predict. The main cause of the downwards part of the cycle is excessive debt fuelling prices above sustainable levels. The problems today are because the financial system found new ways of fuelling debt out of sight of the regulators.

IvanM

They are and as long as they are not too deep they provide a cleansing affect to the economy. Fingers crossed the recession is not too deep.

Twinset

Like 4Margaret says: main thing I pick up from everyone I speak to is that everyone is nervous, more than a little fearful of the future and that all are battening down the hatches. That in itself is going to cause casualties in a whole load of economic sectors.
The simple fact is that no-one knows where this is going, but we should know about the worst of the current financial exposures within the next couple of months as all the toxic debt becomes apparent.
On the plus side, we really have never had it so good: look at the quality (and quantity!!)of your life vs that of your parents or grandparents.