For the 50 or so years after WW2 the Western countries spent this time steadily industrialising with troughs and peeks to get to where we are today. In much of that same time period, roughly up until 2000, the Chinese economy suffered under communism and was primarily an agricultural economy. Soemwhere around 2000, the Chinese started opening up the economy resulting in a massive wave of industrialization. This industrialization was not going to take 50 or so years like the West because of various factors including increased productivity and mechanisation as compared to the 1950's, improved mining techniques, more ships to ferry material, improved communications, etc. With roughly a billion strong workforce they achieved the same as we did in roughly 10-15 years. It was a once-in-a-lifetime thing. It's not going to happen again.
The need to drive demand may bring on the next war. But of course, it will be framed as a fight to protect our freedom by politicians standing amidst a glorious display of flags and asking "who's side are you on?" "Flags are bits of colored cloth that governments use first to shrink-wrap people's minds & then as ceremonial shrouds to bury the dead." ...
The full effects of the downturn in the demand for coal has not been felt yet as record exports are leaving our shores. These are old contracts, the future is looking grim. Makes a mockery of the Green's calls during the height of the boom that there is no rush to dig up all the coal, it'll still be in the ground in 200 years. If there is demand for a product the sensible approach is to dig up and sell as much of it as you can whilst ther is demand.
When I came out of school in the early 90's housing was going bust and so was the gold rush. Then coal boomed... and had a mini crash in the early 2000's Then gas was king and then died There'll be another commodity boom and another crash. The only thing I've learned is, when it happens, just try to look as surprised as everyone else. :/
Thank you for adding something sensible in this thread. People don't know that Most things are cyclical and assume that once its over its over and get all political. I certainly hope its not over as I prefer my current job to previous jobs.
Not necessarily when the costs of digging it up are increasing at a faster rate than the price but in an "all other things being equal" scenario you are correct. Interesting looking at the costs structures of the mines before and after the prices went ballistic. Not quite right in my opinion - the boom/bust cycle would still occur with zero govt interference (ooh a man can dream eh!!). My view is govt interference exacerbates (heavily) the effects of a naturally occurring counter balancing mechanism resulting in bigger booms and harder busts and possibly longer timeframes between the lows/highs.
Quite right. My fault. The difference between a government manipulated market and a free market is that the latter would self-correct long before there was any widespread carnage. It would mean that there would still be sufficient capital to invest in other areas. Unlike the scenario we have now.
