sackofspuds

Well, it seems as though the insatiable appetite for debt-funded consumer goods and the huge debt burden imposed by over-inflated property prices is finally starting to catch up with Australia; the latest current account deficit is the worst on record - see http://www.news.com.au/story/0,10117,12408363-2,00.html :

chr1sarter

Does this mean the dollar will go up against the pound. Is this good news for all of us in the UK that need to change money soon?

markeh

Hiya Chris,

The minister blames the "strong australian Dollar" this should inmply that he wonted more $ to The £ or whatever, he has this the wrong way around.

If there were actually less $ to the £ then the dalance of payments would be lower.

Who Knows

Bye
Mark

Bix

But I only been here 4 months

markeh

I think they should make sure all imigrants know how to do the washing up & use a mangle, and don't expect a refrigerator or A/C.

Back to basics aproach


It will also ease the strain on the grid in Queensland

Bye
Mark

Devlin

Australia is on the brink of the worst recession it has ever had thanks to the Howard governments fiscal short-sightedness.

The Trade Deficit is apalling and will be the trigger for the downturn, and expect this to get even worse when commodity prices begin their downward spiral again. This is not to mention the rising inflationary and therefore interest rate pressures.

What limited protection there has been in the past for local industry and jobs has evaporated, which has been fine during the good times but will increase the pain in the inevitibly bad times.

If any of you Brits are going over there without a job lined up in the year or so you need your head read - even having a job lined up is no guarentee you will be in employment there.

Quinkana

Commodities will do nicely for a while but not much need for more city folk.

Devlin

And for all those thick Australian voters who voted Howard's government in on the promise of fiscal responsibility:

http://www.theage.com.au/news/Tim-Co...546867448.html

bondipom

Has the the Mrs been borrowing Mr Visa again?

Quinkana

Not much call for manufacturing any more:

FEVERISH Asian demand for coal and steel has set a new benchmark for export earnings, prompting the chief commodities forecaster to predict a record $115 billion for 2005-06.

The latest forecast from the Australian Bureau of Resource Economics shows significant growth in commodity export earnings from the 2004-05 forecast of $98.6 billion.

The increase follows the record coking coal and iron ore price rises achieved by Australian producers in Japanese markets in the past few weeks.

Export earnings from coal are now forecast to increase by more than 50 per cent to $25.8 billion, while the value of iron ore exports has been revised up from $8 billion to $13 billion for 2005-06.

Coal and steel exports race ahead


THE Reserve Bank of Australia (RBA) has raised official interest rates to 5.50 per cent from 5.25 per cent taking rates to their highest level in four years.

Rates up to curb inflation

wombat42

ThE OZ economy is one of the best in the world and is and is booming
with record high growth and will continue to do so. We have trillions of dollars in natural resources, Gold, oil, iron ore, coal, natural gas etc. and there is massive demand and good prices for these reources from china and JApan, We have record low unemployment 4%, record low interest rates and inflation, Our national debt is nothing compared to USA and many other western countries. The reason debt is increasing is because of our success, Aussies have more money to spend so they buy more imported goods.

Quinkana

That is where things stand now. The reason debt is increasing is because interest rates are too low. The reason interest rates are to low is due to the burst Nipponese bubble of 1990, the huge Yen US Treasury Bill carry trade, the burst Yankie bubble and the huge US Treasury Bill carry trade - amongst other things.

Simone

Right, so what does this all mean for us...(I'm only just starting to get my head around income tax, interest, mortgages etc! )

We're 26 and 23, both have permanent jobs that pay a reasonable ammount(will keep going up for a while), and are now just starting to look at buying a house, we can afford one for about 200.000(15 year mortgage) which will take us to a suburb about 16km's from the cbd here in Perth, and I strongly believe the price will keep rising there for a bit still(and especially if we buy a crappy house and do it up)
So, what do we do... Buy anyway(we're wasting money on rent...) or save a bit more and buy a better house.....

4lex

I'm not familiar with the housing market in Perth, but for the scenario I worked out in Sydney's Eastern 'burbs, buying is a mug's game. A property costing 400k attracts a rental premium of around 300 dollars per week.

In my relatively simplistic analysis I figured out a mortgage on the 400k place would be about 625 per week (at 7%,pro rata), and that if I were to save this amount less rent at a relatively modest 5% return I'd have 937k dollars saved in 25 years time. The housing market would have to sustain at least a 3.5% growth to match this, which it certainly isn't doing at the moment.

There are missing factors in my sums. No allowing for changes in base rates, no consideration for the future value of capital nor the effect of inflation on the savings, no consideration given to cost of mandatory insurances, stamp, registration etc, no consideration for maintenance of the property.

I'm not going to bother working it out any further, it's not an attractive enough proposition for me - we're going to weather the storm with our property in the UK instead.

Simone

Well, we don't have any other property, so will have too.
And I can get a house for 200000 here, so about 1300 a month mortgage or so, and we can afford that easily, and even if we have kids in 7 or so years, we'll still be able to afford it.