Gloom and Doom for Oz Thread

JulieW

JulieW

Well-Known Member
Silver Stacker
I thought it might be a good idea to actually consolidate all the prognostications.

Positive news welcomed. (rises in house prices aside :D).


Deflation is back on the front burner and it's going to destroy all of the careful central planning and related market manipulation of the past 6 years.

Clear signs from the periphery indicate that a destructive deflationary pulse has been unleashed. Tanking commodity prices are confirming that idea.

Whole groups of enterprises involved in mining and energy are about to be destroyed. And the commodity-heavy nations of Canada, Australia and Brazil are in for a very rough ride.

http://www.zerohedge.com/news/2015-07-26/deflation-winning-–-beware
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Gloomy but delayed:

Let's have a look at the capital expenditure stats in detail. This data is extremely important because without business investment, you don't have job growth. And without job growth you're not going to see a sustainable increase in consumption the driver of the modern economy.

First, I'll show you the actual capital expenditure figures for the March quarter. In seasonally adjusted terms total capital expenditure fell a large 4.4% in the March quarter. In the year to 31 March, it fell 5.3%.

For the quarter, mining investment fell 4.1%, manufacturing investment fell a whopping 9.4%, while investment in 'other selected industries' fell 4.2%. So much for low interest rates encouraging borrowing and investment.

While the March quarter figures are bad, it's only going to get worse. The ABS also released a survey of investment intentions in the year ahead. As pointed out in the quote above, mining, manufacturing and other industries all plan on investing much less in the 2015/16 financial year.

Then, in the year after that, you can look forward to the exit of the car manufacturing industry and the completion of all the big ticket resource projects. That's why I think you'll see some big infrastructure announcements to plug the gaps.

The great hope of the RBA was that lower interest rates would spur investment in housing large enough to offset the massive decline in mining investment. It was never going to happen. And these figures show it's not going to happen.

I've been arguing for some time that Australia is in a real mess. I don't do it for the sport of it. I don't do it to fear-monger. I do it as a concerned Aussie concerned about the direction this country is taking and concerned about the utter economic mismanagement we're subject to.

I've also argued that we won't get genuine reform until we have a genuine crisis. Well, a genuine crisis is on its way. Whether it hits this year, next year or even the year after that, it's a moot point.

What is almost certain is that our economic trajectory is assured. We have a completely inept government (on both sides, I might add) unable to see past their noses and understand the looming problems. Anything they try to do now will just make things worse.

That is, efforts to improve things over the longer term, via productivity enhancing structural reform, will cause short term pain. Governments have no appetite for that.

Instead, they'll go for short term fixes that build and build on the longer term pain we're going to suffer. A good example is the budget incentives for small business to spend. That's great in the short term, but what happens after that? Red tape and relatively high tax rates will still impede business formation.

An Aussie mate of mine lives in London. He is self-employed (by his company) and gets contract work with the big investment banks' IT departments. The company tax rate in the UK is 20%. In Australia it's 30%. That's 50% higher than the UK. Singapore, much closer to home, has a corporate tax rate of just 17%!

We're simply not competing on a global scale. We hitched our wagon to China 15 years ago and went for a coffee while everyone else got on with it. We constantly looked at the short term and forgot about the long term. Well, now the long term is bearing down upon usand still we try to ignore it.

So expect bigger fiscal deficits and more interest rate cuts to come. Anything to help keep our head in the sand for just a little bit longer or until the next election.

But for Australia, the day of reckoning will come. Our net foreign debt levels will go close to hitting $1 trillion this year. While the economy slows and national income growth grinds to a halt, we're maintaining our standard of living by borrowing more and more.

In the global search for yield and complete ignorance of risk, our creditors keep lending to us, mainly via the banking sector. The funds then go to the household sector, which bids up the price of housing and clocks the gains up as 'wealth'.

But as Greece knows only too well, when you're a debtor you don't hold too many cards when the proverbial hits the fan.

In Australia's case, if our creditors decide to reassess the risk of 'buying Australia', two things will happen. Our dollar will be the first to adjust lower. That's already happening. But it's happening too slowly.

The dollar adjusts lower when the supply of funds coming into Australia doesn't meet the demand. A lower dollar is the price mechanism to balance the market. It allows foreigners to get more bang for their buck, euro or yen.

The other adjustment mechanism is market interest rates. A sharply lower dollar will pretty quickly feed through to higher inflation. If the RBA ignores this and keeps cutting interest rates anyway, foreigners might decide to demand higher compensation (higher interest rates) for lending to a country that appears to be losing the plot.

Loss of faith in a central bank or confidence in a currency means the cost to hedge any cross border investment becomes too great it no longer compensates for the interest rate on offer. So the creditor asks for a higher interest rate as well.

When that happens, it's game over for our highly leveraged economy. That's probably still a year or so away. In the meantime expect more interest rate cuts.

http://www.dailyreckoning.com.au/prepare-for-recession-in-the-australian-economy/2015/05/29/
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Well thank heavens for...

...Clear signs from the periphery...
Click to expand...

so I had better watch out ...

... this year, next year or even the year after that...
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So more vague stories of some sort of collapse sometime in the indeterminate future. Better pack my panicking hat.

I understand that they have to sell subscriptions but I have 'calamity fatigue'.

When it happens I will deal with it as best I can, in the meantime, all the doom saying is doing nothing but getting everyone depressed. How can we live in a country with this much wide open land, beautiful beaches and fantastic weather and yet still talk ourselves into a depressive state? I believe people will do whatever they can to ruin a good thing whenever they see it. Turned off the TV and Radio years ago, haven't picked up a newspaper in decades, if it is really important I will hear about it, everything else is just noise made to sell me stuff I don't want.
 
Jislizard said:
I understand that they have to sell subscriptions but I have 'calamity fatigue'.
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Same here, I tuned out completely over a year ago and am much happier for it. Sold my TV and pay very little attention to news that doesn't directly relate to me.

What happens will happen. I just try to do alright for myself and my family and avoid the 'noise'.
 
Then we have the other side...Boomers and Growers. The economy is great, unemployment is steady, green shoots appearing, hope eternal that the economy must grow.

MSM giving us great coverage on reality TV shows, best singers, how to renovate houses etc. Then sport is the drug of the working class.

Do they give you THE BAD NEWS like 47 million people getting food stamps in the US distributed by J P MORGAN.

Yes you can stop reading the papers, stop watching TV and you will feel much better not watching the horror of never ending wars..Remember the countries that supply the arms to all the armies. The more they sell, the better their economy. If you dont know such things, there is no need to worry.

The US IS $18,000,000,000,000 IN DEBT... How often is that figure quoted on MSM.

I believe that our western societies are in deep trouble but the general population don't know it yet... In my heart,I hope it never happens but my head tells me otherwise.

Someone IS GOING TO BE RIGHT, but who, that is the question. When and if the economy collapses, that is another question.

Why do I have house insurance? Because if my house burns down, I can rebuild another.

My thinking is, if the economy goes down, then my silver stack is part of my insurance package.

Regards Errol 43
 
Things is good in Australia.
No wars.
Apart from houses everything's cheap.
Amazed walking around supermarkets , bread for a dollar, apples for $2 a kilo.
Free hospital..
Good working conditions..
Lots of sun, relatively un polluted, not so cold.
People love to complain.

We're rich.
If we lose half of it we'd be still rich.
 
Australia will be Greece 2.0 start saving now so you can buy the barrier reef in a few years.. I think any government that can't balance it's books after 2 years should be made to immediately stand down. As it's paramount to treason.
 
Peter said:
Things is good in Australia.
No wars.
Apart from houses everything's cheap.
Amazed walking around supermarkets , bread for a dollar, apples for $2 a kilo.
Free hospital..
Good working conditions..
Lots of sun, relatively un polluted, not so cold.
People love to complain.

We're rich.
If we lose half of it we'd be still rich.
Click to expand...

No wars? What is the private sector debt?

Regards Errol 43
 
Capex cliff:

capex_cliff_macquarie.jpg

Source: Australia's unprecedented collapse in business investment, in one chart
 
And the beat goes on... everlasting....

CapEx Cliff is no more. +0.8 per cent quarterly increase to $28.3 billion for private new CapEx.

+17.6% bounce in the third estimate for FY2017-18 capital expenditure to just under $102 billion (against market expectations).

Unemployment steadily declining. Job ads in says up 12% on last year.

S&P reported a drop in loan delinquencies from 1.21 per cent in May to just 1.15 per cent in June. 90 per cent of apartment completions have already settled, with a default rate of under 1 per cent.

Copper up 50% from last year. Iron ore, zinc, aluminium and nickel all moving higher.

Sydney created 71,001 jobs in the first 7 months of 2017. Melbourne 60,036. Brisbane 19.789.

90%+ LVR' loans down from ~10% to 5%.

:)
 
As my brother inlaw points out to me. The Apple store is always busy and people are still buying coffee. Positive stuff
 
When I saw the heading "Gloom and Doom for Oz Thread" I thought when, where and who?

I tried getting floor tilers into my house to do the floor, 3 weeks wait. New blinds took 4 weeks to get installed-too much back log they said. Go to the club, car park is full and people are giving the pokies a bit of a bash. Flights and cruises are close to fully booked, seems to be a bit moola floating around.

On any given day there is no shortage of customers in cafes buying $4 coffees and expensive meals. And don't forget the supermarkets, always a queue to get out, people everywhere. I forgot to mention the local cafe got a sign up "Barista wanted" and it's still up. No one inquired.

I think Australia and it's people are doing very well in the world and I also agree with the poster further up from here who said how good we got it with our medicare. Totally free no matter who or what status you are, free for all citizens. That and many more reasons to live here.

28 Degrees on the 3rd day of spring, and all the Fathers out there down the beach or on the waterfront enjoying some quality times with their families. It's a pretty good joint this place.
 
mmm....shiney! said:
There is no such thing as free public health care. ;)
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Ahhhhh yes we pay tax to fund it. So do the Americans but look at the 10's of thousands of dollars they pay for insurance and procedures, that's the difference. Here a homeless person can get free state of the art cancer treatment from a public hospital. I would never trade that for anything.;)
 
^^Yes that's right, now Medicare even pays $400 for prosthesis for a breast that has been removed. We are so blessed in this country that we don't have to sell our house to get life saving surgery.
 
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