Economic thread XII

I really did not know what to call todays thread. Will the market surge like yesterday (which I got wrong)?

Westpac seem to have shrugged off any profit concerns by just posting a 6% rise in profits. So it is not all doom and gloom.

(previous thread now closed – bring the discussion here. And sorry for being late with this new thread).

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21 Responses

  1. Completely and utterly off-topic, but it moved me and I am a cold-hearted b@stard… almost made me wish I was American (almost, but not quite, I dig Australia too much).

    http://andrewsullivan.theatlantic.com/the_daily_dish/2008/10/the-winner.html

  2. Adrian, Shane, Caney… ok, I’ll moderate my input. I suppose I should earn a dollar occasionally…

  3. Yeah, but Tom, do it for our sake too. It’s bloody tiresome you know.

  4. AS will I Tom. We are both obstinate on this matter so it’s no use continuously rehashing over old ground, but if there are new developments in IR and/or contemporary workers/business unions stuff then I see no reason not to raise the matter in spirited debate/discussion/barney/war.

    Westpac is good news (guess who I’m with and have some investment in?)

    Heard on the news this morning as Turnbull launched another attack on the Labor government apparently committing the greatest Australian government cock-up in the white history of this country by offering a bank deposit guarantee, Malcolm pulled out all of his money from managed funds just before the Rudd government announced the guarantee.

    joni: Here is the link to the article: Turnbull moves money before funds frozen

  5. I see Geoff Dixon of Qantas has suggested that the airline industry is in for some consolidation, following the economic crisis.

    Airlines are always hard hit by economic downturn. They are an immediate barometer of economic activity, their reventue identifies immediate changes in downturn and upturn cycles.

    I think the Qantas balance sheet is stronger than many other airlines, I’d like to see them acquire British Airways at a bargain price.

  6. Well I’m going to go out on a limb and say that I think the bear market is nearing its end.

    The average duration of bear markets in the US from the end of 1965 until the middle of this year was about 14 months. This one has now lasted just on a year. The longer it goes on, the closer is the next bull market.

    I reckon markets will pick up once Obama gets in. And the new US fiscal stimulas package is released.

  7. Turnbull moves money before funds frozen

    Oh there is so much stuff in there to pull apart and Turnbull just doesn’t realise it because of his position of privilege, which is why he’s on the nose with the public and has bought an opposition that was slowly gaining ground under Nelson to being in a position it was two weeks before Nelson was dumped .

    First look at this exaggeration couched in a truth but still misleading:

    “The real issue is the hundreds of thousands of people whose life savings have been frozen.”

    No the real issue isn’t that. As was pointed out the other day, and Malcolm knows only too well as these figures were thrown at him in an interview, there are around 250,000 in managed funds of some sort or another. Of those there are 190,000 directly affected by the freezing of funds (so it’s not hundreds of thousands) but of those there are only a handful that are suffering any real hardship because their liquidity is frozen, the rest are in a similar position to Malcolm. The government is working with the funds managers to help those suffering genuine hardship but apparently Malcolm wants the government to help all those who have funds frozen, including himself.

    Then this:
    Asked about the timing, Mr Turnbull said he had taken advice from financial planners .
    Well paint me pink. Aren’t every single one of those people in a managed fund in the same position to be able to get advice from financial planners, and haven’t financial planners being saying from well before the government bank guarantee for people to get out of managed funds?

    So Malcolm now wants the government to help people who either didn’t seek financial advice during a time of world wide financial crises (I certainly did, and was also given advice without seeking it from an advisor), or they ignored the same advice Malcolm got so are in the situation through their own negligence.

    Second point is why did Malcolm leave liquidity in other managed trusts having been advised to get out of property trusts? Wouldn’t that be because he knows or has been given advice that in the long run he will still be OK in these funds and they are relatively safe?

    So why isn’t he telling the others in these funds they are relatively safe (which is what Swan has been saying) instead of stating they will all be ruined, which is what his Small Business minister directly stated the other night and Malcolm has been inferring ever since he back flipped on supporting the bailout?

  8. And for an economy that is rooned – the All Ords is up 2.62% at midday.

  9. Very good post by Ken L over at roadtosurfdom.

    “Governments cannot prevent the bad times that are about to engulf us. If a good portion of the world has been living beyond its means then there has to be a reckoning. The most governments can do is provide a safety net for individuals who might otherwise starve or become homeless, and after the insolvency has washed out of the system, allocate resources funded by deficits in a smart way to kick-start economic activity again. “

  10. GASP!

    The market is at 3980 points. will it break through the 4000 barrier??

  11. That is exactly it joni. We (the so called developed nations) have been able to buy our trinkets aka plasmas with all the trimmings on the back of developing nations who bought our raw materials and sold cheap goods back to us at bargain basement prices.

    And all the while we got deeper and deeper into debt due to easy credit with no questions asked.

    Re Malcolm: me thinks that he is currently distracted, maybe probs with having lost squillions in the last couple of weeks.

  12. I clawed back $696 of my $102k loss yesterday 🙂 Just for those interested. 🙂

  13. I think we can expect Therese’s business to expand. Outsourcing of job placement etc is likely to be very lucrative. Pity she had to sell the Australian business, it will boom. On the other hand, she probably got out at the top of the market.

  14. 4000 barrier broken! woohoo!

  15. Off topic but can anyone out there help, maybe Adrian of Nowra? I’m trying to find out who Michael Costa replaced when he became an MLC. As it is to settle an argument a link would be good. Thanks.

  16. joni

    You spoke too soon you jinx. lol

  17. “find out who Michael Costa replaced ”

    Johno Johnson – see wiki.

  18. Shane

    Jinx am I? LOL – the market closed WAY above 4000…. ok, 4001.1

    hehe

  19. joni

    How lucky were you

  20. 15. handyrab | October 30, 2008 at 3:46 pm

    PTO has it.

    Members of the New South Wales Legislative Council, 1999–2003

  21. Interesting comments from Rick Battalino reported in the SMH today:

    http://www.smh.com.au/news/national/no-need-to-fear-house-price-dive/2008/10/30/1224956238429.html

    nlike the US, Australia’s housing bubble had already burst, about three years ago, Mr Battellino said. “The Australian housing boom ended because prices rose to levels that severely strained the financial capacity of buyers to pay higher prices, not because too many houses were built, as in the US.

    “The overhang of unsold houses in the US has created downward pressure on house prices as builders and developers have been forced to sell.” This had not happened in Australia, he said. “Rather, the shortage of housing here means that there are buyers waiting for better circumstances – for example, lower interest rates or rising incomes – to facilitate their entry to the market.” This latent demand would support the market.”

    This is similar to what I was saying last week or the week before about house prices in the context of the increase to FHOG; there is still greater demand than supply for housing so prices should hold up pretty well regardless of the FHOG increase. The increase should help, at least to a small degree, FHOs entering this market. If it also stimulates new housing projects then that is good for employment as well I guess.

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