Go to the link for the charts. http://ftalphaville.ft.com/2014/08/11/1923502/is-the-australian-model-in-trouble/ Business Investment More p.s. One of the comments below the article is very interesting:
There's a critical problem that needs more focus: It looks like the unemployment rate trend is increasing, and the job openings to population is getting worse. Nothing on the horizon will reverse these trends. Now think about that from the RBA's perspective.... they will be forced to keep rates on hold or even reduce them once more this year or early next year. Simultaneously, the US dollar is getting stronger. Stagnant or dropping interest rates in Australia will act to fuel housing price growth, both from local buyers and from overseas investors as the AUD drops in relative value. It also opens up opportunities for currency carry trades. And we all know what happens if this goes on for too long.
Australia is hanging by a few threads.......Lets wait until the car manufaturers close down then re asses the situation then.
No, let's look at some of the f***ing stupid things we're doing right now and maybe consider doing something about them: 1. Lack of macro-prudential policies to quarantine the effect of interest rates into certain sectors. The RBA drops rates to encourage economic activity, but everyone just borrows more money to spend on bidding up property prices. 2. High costs as a direct result of 1. Businesses can't find cheap employees because all the workers need a big, fat salary to pay their big, fat accommodation costs. Whether you're paying a mortgage or paying rent, you need a more money. Ask any worker you like if they'd take a $100 pay cut in exchange for $100 off their rent/mortgage and virtually nobody will care one way or the other (and why would they?). That's $100 a productive business could save on labour costs, rather than having it churned into an unproductive increase in real estate prices. 3. The tax treatment of options payments to employees who are prepared to work for "sweat equity". They're treated the same as cash. Cash doesn't suddenly become worthless if the business folds. Share options do. Don't tax options as if they were cash. 4. Gutting the STEM sectors (science, technology, engineering, and mathematics). These are some of the biggest generators of economic value, particularly added value. You lock a bunch of really smart people in a lab with a bunch of cool toys and they come out with a cure for some horrible disease or a computer program to make businesses more efficient or a new material that can be made with less of something and do more of something else. Both the smart people and their toys cost money. Over the course of human history, spending that money has generally been an incredibly good investment. 5. Building inappropriate infrastructure. Roads are fun for politicians to plan and build. Train lines are not. None of them even understand fiber networks because there's always some IT boffin who'll fix their computer when the big E on their desktop goes missing. 6. Undervaluing our mineral resources. We've saved no hard currency from the mining boom and are actually now have debt. Norway saved money from their resources boom and now has about $170,000 for every man, woman and child. 7. Under-utilizing our natural resources. We have an abundance of land, sunlight, coasts, winds, uranium and thorium. Instead of using them, we dig up old trees and set them on fire. So no, let's not just wait and see what happens because with many of these things the results are entirely predictable and often not very good.
Value add? All the wool in the world and we send it overseas to the millers and then buy the finished clothe back off them. Iron ore and coal sent OS and then buy the steel back.
Those that believe that an economy can be managed by central planners also believe in Santa Claus, the Tooth Fairy and Easter Bunny, but because as a grown adult it is socially unacceptable to admit to such, you have to substitute one fantasy with another. Read more: http://www.caseyresearch.com/cdd/bi...economists-more-precise-number-bigger-the-lie
The same think was happening in some communist countries in Europe--the rest is history--hoping we can avoid it here--can we?
The difference between what may have happened in a communist country and what is happening here is one of market demand and government regulation. Re Australia: it's simply cheaper to process ores OS, re communist Russia: price had no bearing. Whilst the pie may end tasting the same, the recipe may be different.
Nothing can be done. Realistically, population growth is unstoppable and the simple fact is that the employment to population ratio has been getting steadily worse, most especially for those under 24. Some nice charts covering the recent data in this article: http://www.theguardian.com/business...-it-time-to-cut-back-on-working-holiday-visas And there is so far no sign of any magical future industry that will reverse the trend. If anything, it is accelerating. Face it, the coming generations are totally fucked.
Only if they are incompetent asswipes that believe they need everything handed to them from someone else. As long as they are remotely allowed to freely determine the fate of their own lives they can create their own jobs in the context of the world economy that exists at the time they are living just like the previous few hundred generations. To believe they are turtled is to believe that they are incompetent or that they will be living under greater fear and oppression than now.
How do you value add when my rent alone is far higher than wages in the places that are processing that wool right now? and I have cheap rent!
What's fear and oppression got to do with leaving a huge mess for the next generation? Our children's children are incompetent if the can't fix the damage we cause?
Probably not worded as best as I could. I was referring to leaving them strong institutional barriers to them easily being able to set their own destiny. Such as the legacy of Stalinism, Maoism, Sharia Law, the EU Commission etc. As we've seen from history these have long-lasting effects. I think it's also worth pointing out that the concept of "future generations" is quite fuzzy. Really there are overlapping generations with indistinct transitions and a host of complex interrelationships rather than a handing over a baton from one generation to the next.
