Economy XXII

Hindsight is a marvellous thing. Economists are very good and explaining why certain things have happened in the past, however try asking one to predict what’s going to happen in the future and you may as well ask your grandmother.

Six months ago most economists everywhere were predicting that the Australian dollar would reach parity with the US dollar by now. Woops, got that one wrong didn’t they?

Eight months ago economists were predicting that China’s emerging middle class with its insatiable appetite for merchandise, consumables and motor vehicles would save the world’s economy (and in particular Australia’s) from wholesale destruction. This premise is begining to look a little rough ’round the edges too.

Ask anyone today, what’s going to happen in six to twelve months time, and you’ll hear economists on one side declaring that we are heading for a global recession of catastrophic proportions, of which Australia will not be excluded, while on the other hand you’ll hear economists state that while there will be (or currently is) a recession in Europe and the US, although Australia will have a relatively soft landing.

Personally, I’m inclined to think the latter. There are signs that the housing market is beginning to pick up in Australia, with rapidly decreasing interest rates and the new FHOG (First Home Owners Grant) incentives encouraging many young people to enter the property market.

Also, the enhancements to the FHOG don’t appear to have had the artifically inflationary effect of maintaining the “property price bubble” as I and a number of other commentators feared, with recent reports suggesting that house prices are still falling.

This makes housing increasingly affordable for new entrants.

The main concern for Australians is job security. While there is bound to be a contraction in banking and finance, retail, hospitality and services, let us not forget that Australia still has a skills shortage.

Despite a market downturn, China is still forecasting a growth of some 8%+ which by anyone’s standards is still remarkably strong. Add to this the Chinese Government’s trillion dollar fiscal stimulus package which is yet to be initiated.

Some local martet analysts are also calling the bottom of the market. That is, that we are actually at the lowest point in the local sharemarket, or very close to it. One thing is for certain. The longer the bear market drags on, the closer we are to it ending.

As I have said before, the media loves a “bad news” story. Which is why all we ever hear about is doom and gloom. And of course it’s very easy for an economist that enjoys media coverage to be the doomsayer of the market and then say “I told you so” if on the off chance things don’t improve.

One thing is for sure, you never hear from these people when the market does improve. Which usually happens fairly quickly. The problem is that many people are too cautious to declare that the market is rallying only after a period of about 12 consistent months of improvement. By which time, if you haven’t already been in the market at the bottom, you would have missed out on the typically dramatic gains when it starts to rally.

Some economists are predicting that market volatility will continue for another 18 months. Personally I think we will see some signs of the market begining to rally in about six months. Particularly once the US and China’s economic stimulus packages have been initiated. There’s also talk of the US government bailing out the motor vehicle sector there. While there are ethical/moral issues surrounding such a measure. I can’t help but think that this is the type of measure that will boost confidence in the US and global markets accordingly.

And “confidence” is really what it’s all about at the moment. There are some very well-priced stocks around at the moment. We just need people to feel confident that they can buy them. People are beginning to return to the market albeit slowly and cautiously.

It should be noted that any return to confidence in the market can take 6-12 months to be felt in the greater economy. That’s just the way the market works. If you wait to see an improvement in the economy, you will have effectively lost 12-18 months of gains in the market.



109 Responses

  1. reb

    Well said. Doomers are always doomers and boomers are always boomers and when they are right they crow about it and when they are wrong these is deafening silence.

    You forgot one thing. They also predicted that oil would be $200 a barrel by the end of this year. It is now $41.75 when I last checked. Cost me $60 to fill the car this week instead of $90.

  2. Good point Shane (about oil).

    I remember “the economists” blabbing on about how we’d never see petrol under $1.40 a litre ever again.

    The fact is, no one can predict the future.

    However, there is never a shortage of people out there who want to put their faith (and hard earned cash) in the hands of some self-professed guru like Rene Rivkin or that guy who was spruiking property investment in QLD a few years ago.

    Also 12 months ago there were ads everywhere for people to invest in CDO’s (whatever they are) as a “sound investment” and now they have disappeared without a trace.

    We’ve all heard stories about unscrupulous financial advisers ripping clients off, however there are a few good ones around.

    And it’s the good ones that survive because they value their reputation more than making a quick buck.

    I asked mine 18 months ago, whether I should use the equity in my house to invest $100,000 in shares and he said “No, the market is too high, it’s bound to burst soon”.

    And he was right. I would have lost $50,000 if I had gone with my gut instinct to be part of the euphoria, rather then listen to good common sense.

  3. The best example of the ‘look at me!’ economist must be Steve Keen, the associate professor of economics at the University of Western Sydney.

    His apocalyptic predictions makes him a popular figurehead in the media.

    Chris Richardson from Access Economics was reported a month ago as saying this:

    “Certainly in Australia, it is clear that our consumers are curling up in a little ball and whimpering, and I can understand that, because that guy from the University of Western Sydney keeps getting on the TV, and bad news is good news as far as the media is concerned,” Richardson opined.

    “First he said unemployment was going to 10%. I think this week he’s saying unemployment’s going to go to 20%, next week it may be 100%. The week after — it’s the life of your first-born. It’s getting pretty biblical. It’s also not going to happen.”

  4. Nice post reb,

    You hit the nail on the head in that much of the current crisis is in fact a crisis in consumer confidence.

    Many out there – not everyone, but those who still hold the same job as a year ago; those whose mortgage interest rates have been rapidly decreasing; and those whose cost to fill the family jalopy has plummeted – would likely not realise there was a global financial crisis if they didn’t read the bad-news-papers or listen to the six-o’clock-nasty-news.

    Oh yes, they would notice their superannuation statements showing their balance has fallen dramatically, but, as unfortunate as it may be for those close to retirement, this can reasonably be attributed to the normal cyclical nature of the stock-market.

    Confidence breeds confidence like success breeds success and money makes money. What we need is for our political leaders to act with confidence and talk-up our prospects, and consumers will follow suit, and vote with their wallets.

  5. By the way, I’m not saying there isn’t a ‘GFC’, or that it isn’t important. It’s just that it hasn’t affected some as much as others, and a bit of confidence is all that’s needed to encourage those luckier ones to return to their ‘normal’ spending patterns.

  6. The other thing that needs to happen is that big business not have a kneejerk reaction and sack heaps of people as we are seeing at the moment. ANZ sacks 800 staff yet Board and bosses receive no salary cut but rather an increase.

    There are a lot of economic journalists that seem to have opened their eyes for a change and are now saying big business should not sack staff but rather they should lower wages for upper management until things improve again because employed staff are what keeps the economy going.

    If they sack staff then those staff cannot buy the goods their large customers sell and that affects the Banks income and profitability as a result of the decline in their own customers. it is a vicious cycle which can only be halted by sensible action.

    Unfortunately no CEO these days thinks like Paul Simon. I wish he would enter politics ( don’t care which side) to put some sanity into the big business end of town.

  7. Guido,

    Spot on. That Steve Keen has no idea. I saw him on TV proclaiming his prophecy of doom and that he was selling his apartment in Pyrmont because everybody “should get out of debt”.

    I guess the fact that he’d still have to pay rent somewhere else hadn’t occurred to him.

    What a moron. I heard another economist remark that Keen’s comments were nothing less than sensationalist and unfounded.

    However this is the sort of people that the media give airtime to.

  8. Tony. I agree. When I arrived in Australia (Sydney), unemployment was at 11%.

    I managed to find a job in three weeks. The guy who interviewed me said I was the only applicant.

    He seemed genuinely surprised exclaiming that “there’s meant to be a recession going on!”

    That was back in 1992. Admittedly it was just a job in retail. But it was enough to get me established in Sydney, find a place to live and pay the bills, until such time as I found a job in my “usual career”.

    My philosophy is that there’s always work for people who want to work. Even if it’s just cleaning n stuff.

    We could learn a lot from the Chinese in that respect.

  9. I agree if you want a job to tide you over then there are ones available. It is the stigma thing more than no jobs available.

  10. Opposition frontbencher and former health minister Tony Abbott has said he does not begrudge struggling families getting a one-off payment to spend before Christmas, but he fears some could blow the chance to help the economy.

    “There are very credible fears that at least some families, particularly in some areas, are going to be spending this money on booze and gambling and so on and that’s a pity,” Mr Abbott said on ABC Television.

    “I am not saying that families don’t need the money. Obviously I don’t begrudge families doing it rough this extra money,” he said.

    Amazing. The Liberals claimed that aussies would be sensible with their one off payments of $1,000 and also the ridiculous baby bonus of thousands of dollars, but now that they are not in government people will act differently and waste this one off payment because it is coming from a Labor government. What utter hypocrits. !!!!

  11. “It is the stigma thing more than no jobs available”

    True. The ego takes a bit of a hammering, when you go from middle management to working in retail.

    But then it’s also about having a reason to get up in the morning, and feeling that you’re doing something worthwhile.

    It must be something to do with the protestant work ethic!

  12. This is the same Tony Abbott that said Australians were ‘sleepwalking’ to the last election and that asbestos sufferer and subsequent victim to asbestosis wasn’t “pure of heart”.

    FFS. Why doesn’t Tony Abbott just keep his ignorant gob shut and f*ck off back to church or somethin.

  13. “particularly in some areas, are going to be spending this money on booze and gambling and so on”

    That’s a relief: I was worried they might just waste it. 🙂

  14. reb

    I am catholic (well not practising) and cannot believe the hypocrisy of Tony Abbot over many years.

  15. Unfortunately there is a catastrophic crisis affecting the owners of assets bought as speculative investments (including real estate), and they are leaning very hard on governments to minimise their losses at the expense of ordinary wage and salary earners.

    So the masses may not have experienced personal pain yet but don’t worry, they will. Rudd’s mob have been carefully orchestrating the onset of a recession for months. The masses can always be called upon to take one for the team in the interests of The Economy (aka keeping the rich in the style to which they’ve become accustomed).

  16. ‘it must have something to do with the protestant work ethic’ – Reb

    Hmmm. Interesting comment (wink).

  17. Confidence, smonfidence, what a load of (mostly) bull.

    So all that’s needed is for everyone to be confident and there will be no worries. Straight from the Howard/Costello/.Turnbull school of economics.There’s really nothing wrong, you are only being told there’s something wrong, so ignore that and spend spend spend. Maxed out your credit card, well get another, oh that one’s full as well, there are plenty more out there and plenty of finance companies willing to lend to you as well.

    My god you can get 3 years interest free so why worry about the future, buy that plasma, lounge, bedroom suite, computer and camera now. Get it all. Just have confidence that in three years time you will still have a job, your wages will have gone up as will have your house value, and your farts will smell like roses.

    Sorry I’ve never been a big believer in this consumer confidence thing to the degree some are. Wasn’t it government’s and companies geeing up consumer confidence that has led us to this crisis, and yet I still hear some saying we need to gee up that confidence again. What, so we can have an even bigger crash in 10-15 years?

    Nah stuff the confidence and tell the consumers the way it really is.

  18. Poor ol’ Rupert, continues to deliver diatribe in the form of his latest and last installment of Boyer Lectures.
    I may well be accused of cherry picking Rupert’s rubbish, but hey, in context, that would in fact qualify me to become a staff member.

    So here we go, some insignificant gems from the king of mediocrity, R. Murdoch:

    ‘that is what freedom and information do, they democratise privilege’, taking what was once enjoyed only by the elite and making it available to more and more people’

    The real gem from Rupert is here:

    ‘one benefit of growing up poor and struggling to make good is that you are probably better prepared for the competition in a global economy, and you have a sense of optimism that you don’t lose when you suffer a setback or two’

    Boy oh boy! Note, use of the word ‘probably’.
    What Rupert is really trying to say may sound more like this:

    ‘I really could not cope with the thought of going from truffle and Moet to a can of baked beans. There are better out there than I’.
    Correct! Rupert commenting on the ‘poor’ is like Julie Bishop shopping at Targe’. Funny.

  19. oftenbark@17.

    My mum was a catholic and my father was a protestant.

    You can imagine how their marriage went down in working class Glasgow.

    I think that was the genesis of what was to become a very dysfunctional family!

    However, the good thing is, we all survived with our sense of humour intact, despite many ups and downs.


  20. “Rudd’s mob have been carefully orchestrating the onset of a recession for months.”

    What a ridiculous thing to say!

    I pretty much agree with your post Reb. The timing of the Reserve Bank of Australia’s interest rate cuts and the federal government’s economic stimulus package may turn out to be just right in order to avoid a recession (or at least avoid a serious one). We’ll still have to wait and see though…

  21. Adrian, oddly I agree on this occasion. Therefore you may be wrong.

    We have spent years in current account deficit.

    The idea that we meet more encouragement to go out and shop for more consumer goods, put them on the credit card, pay fro them some other time is bizarre.

    Consumerism need to be moderated, not encouraged.

    I’m happy to give pensioners more, for the economy, as bribes or for any other excuse. But the idea that they have to go out and spend it now, for the sake of the national economy, is stupid.

  22. And I still think that the additional money for the first homw buyers grant could have been better spent. I think it was almost enough to install a water tank in every metropolitan home.

    This would have produced about the same level of economic activity, but would have produced a far more responisible social outcome.

  23. “Nah stuff the confidence and tell the consumers the way it really is.”

    The reality is (don’t you love that “the reality is” preface to what I’m about to say, it gives it heaps of credibility). But I digress…

    “The reality is…”

    – Interest rates are dropping bit time.

    – House prices are still falling, despite the enahnacments to the FHOG.

    This means it’s an attractive time for first home buyers to enter the market. As I mentioned to a real estate agent the other day – everybody still needs a roof over their head. As far as I’m concerned, I’d rather be paying my own mortgage off than flushing rent money down the toilet.

    I don’t recommend that anyone buy anything they cant afford.

    However if you do want to buy a plasma TV, now is actually quite a good time to buy one. They have dropped in price dramatically, so much so that you can buy a top of the range model for less than $4000. You can throw in a Sony Blu Ray player for $300.

    With the weakening Aussie dollar, these prices may not last.

    The only thing that Australians need to worry about is job security. And as I mentioned above, I had no problem finding work when unemployment was 11%!!

    It’s just that some people just don’t want to work unless it’s the profession of their choice.

    During my entire working life – some 25 years – I’ve only ever been on the dole once – for a period of 3 months, and by the time I had filled out all the crap paperwork and received my first two or three payments, I had already found another job.

    All these people that are predicting that the world is going to collapse because, god forbid, unemployment might reach 6% next year, are being nothing less than irresponsible doomsayers.

  24. Actually,

    Let me put in another way, regarding “confidence”.

    The first indicator that confidence has returned to the market, will be reflected in the share market.

    However everyone (economists) will be too nervous to call it a “return to confidence” until such time as a consistent pattern emerges. This may take 12-18 months, by which time it will start to trickle through to the economy.

    Business confidence will then start to pick up (within say 6 months), start employing people (another 6 months) and then people feel confident about spending money again within (6 -12 months).

    Which means it could take 3 to 4 years for people to realise that things are starting to pick up after the initial starting point in the market.

    Those who are in the market at the beginning of the upturn are the ones who will benefit most.

    Of course picking the bottom of the market is the key, which no one can predict with any great accuracy, however there are an increasing number of people saying that we are either at the bottom of the market, or very close to it, and I believe that once the US, China and Australia’s stimulus packages kick in – that will be the beginning of the turnaround.

    I’m prepared to wager a chocolate freddo on it.

  25. ‘Carefully orchestrating the onset of a recession’ was clumsily worded. I meant they have been carefully preparing Australians for a recession, not actively working to create one.

  26. Ken

    I understood what you meant , but it took me a few times of re reading it to abosorb what you meant.

  27. I greatly admire your candid reply Reb. Good on you mate.

    Whilst I do not agree with the conspiratorial notion that Rudd and Swan ‘orchestrated’ a recession, I’m certain they were both privy to the impending credit crunch and it’s flow on effect.

    Consumerism (credit) did indeed need to be moderated, one way or another. I trust our schools are or soon will, as a matter of urgency, teach the youth of this nation the basics of ‘credit’, ‘assets’, appreciating assets, depreciating assets,’ interest’ in practical application and investment.

    Tom, the ‘water tank’ notion is a noble one. However, I keep coming back to the apparent philosophical shift of the Labor Party in regard to public housing, a shift which defies explanation.
    The housing grants per se may have the desired effect of stimulating the building industry. However, that alone does not lower the high rents being paid by some who can least afford those high rents, nor does it add greatly to the available housing stock.
    In theory, subsidised housing for the well-off does nothing to stabilise house prices, or rents, nor does it increase housing stock to the required level.
    A large public housing building project would IMHO easily make available more rental properties, increase stock/ properties for sale, stabilise prices, inject money into the building industry creating employment and so on.
    Makes good social and economic sense to me.
    Let’s not forget who benefits most from the awarding of housing grants.

    Any comments on this course of action?

  28. And hallelujah..thank you Oftenbark and your comment is worth repeating.

    ~~~In theory, subsidised housing for the well-off does nothing to stabilise house prices, or rents, nor does it increase housing stock to the required level.
    A large public housing building project would IMHO easily make available more rental properties, increase stock/ properties for sale, stabilise prices, inject money into the building industry creating employment and so on~~~

    Kiddies, it all boils down to competition. Why do you think that the cost of so called ‘affordable housing’ now means in the mid to low $300,000’s in all capital cities and most regional centres. Couldn’t be something to do with no competition could it?

    You start with the lowest common denominator aka public housing and ‘affordable housing’ must therefore compete with this lowest common denominator. Take away the competition (aka public housing), add in no deposit housing loans..Bob’s yer uncle, ‘low cost’ $250g house suddenly becomes a $400g (umm) low cost house.

  29. My only issue with “public housing” estates is that they inevitably become slums.

    Look at Macquarie Fields in Sydney.

    It was meant to be this fabulous “affordable” yet “village like” public housing estate and now it’s like a fricken war zone.

    I’m sorry, but in my (not so) humble opinion, government funded housing estates for the less fortunate simply create slums. And all the social problems that go with them. Unemployment, poverty, drugs, alcohol abuse and domestic violence.

  30. Great discussion people, must be when I find myself mostly agreeing with Tom.

    Trouble is reb, as the recent Victorian report iterated, urban sprawl is growing future slums anyway at a greater cost to the country and environment.

    Some of the most desirable housing areas now were once public housing estates, so this works both ways.

    The public housing stimulus idea with Tom’s environmental stimulus on top sounds like a winner to me.

  31. You’re right reb. Developing housing estates for low income earners and welfare recipients is a failed policy. Another example of a poverty trap. Someone tell me of this type of development that hasn’t become some form of slum within a decade, or so.

    Experience has shown that integration with the wider community is important, so rental subsidies, purchase of properties scattered throughout is better.

    A few billion would buy and install a lot of water tanks, make them out of Australian steel, locally manufactured, and installed by crews. Plenty of employment in this approach. Plenty of social benefit too.

  32. Reb. With due respect, nobody has mentioned ‘public housing estates’. No need for such estates.

    Here in WA most public housing projects of which I am aware are single storey dwellings blended into suburbia, inner and outer city, where the state government has purchased 2 adjoining properties of 5th to quarter acre size which may have housed up to 10 people, demolished the existing houses and built rental properties which may now house, for argument sake, up to 32 people or more in 16 individual home units, all single storey.
    The upside is that more people are housed on this land, the down side is the increase in traffic on roads within the inner city area.
    My ‘bitch’ is that too few of these developments took place during the time of the State Labor government’s reign, which in turn inflated prices of private residences to an ever unaffordable level, prices which are now crashing for other (obvious) reasons.

  33. Tom. What was most successful was public housing such as War Service Homes which were scattered within a housing estate. This meant that the family..and especially the children could not be singled out as low income earners.

    I am thinking of when I was at Canterbury Girls’ High and you could always tell the poor kids as their socks were dyed a shade brighter blue. It was just a pair of socks, but these kids suffered as a result.

  34. Another upside to blending public housing into existing inner and outer city existing developments is that all necessary infrastructure is in place, which is to say, roads, sewer connected blocks, power, water, gas, phone, are all in place.

  35. Adrian:

    “Some of the most desirable housing areas now were once public housing estates, so this works both ways”

    True. But only if they were located in areas which could predictably become “affluent” with population growth. For example; suburbs that are located in close proximity to the CBD and on public transport routes such as Redfern, Alexandria and Surry Hills in Sydney.

  36. oh and Wooloomoolloo in Sydney too. Which used to a be a hell hole.

  37. Local share market is up 4.4% !!!

  38. Australian shares surged in sync with markets across the region as investors took heart from plans by President-elect Barack Obama to revive the US economy. Gains were widespread, led by energy stocks and banks.

    The benchmark S&P/ASX200 share index ended 4.1% higher, or 141.7 points, at 3631.6, while the All Ordinaries index added 3.7%, or 126.6, at 3553.8.

    The Australian dollar was recently trading at 65.13 US cents, up from Friday’s close of 64.45 US cents. It was also buying 60.35 yen and 51.00 euro cents.

    Asian markets also rallied, with Japan’s Nikkei 225 up 5.1% and Hong Kong’s Hang Seng jumping 7.5%.

    “I think we’re reverting to the point where our market is almost ahead of what’s going on in the overseas markets,” said Keith Thompson, private client adviser at Shadforth’s. “We’re leading them.”

    The incoming US president promised over the weekend to seek the largest infrastructure building in the US since the 1950s, spurring the sagging US economy.

    “The Dow is going to be up tonight and that’s what is going on,” Mr Thompson said. Dow futures were recently up 85 points, or 1%.

    “We’re still getting buying coming on.”

  39. Amazing, the US is now going on an infrastrucutre building spree to keep the economy moving. Just what our Government plans to do.

    Just think how much better both countries would have been if their previous governments had developed infrastrucutre instead of reducing taxes for the rich. The problem with reducing taxes every time you have a bit of money is that when the good times stop the governments income also declines rapidly and the money needs to come from somewhere.

  40. Shane,

    Also imagine how much money the US government would have if they hadn’t squandered it all in Iraq!

  41. A note of caution from Henry Ergas on in frastructure spending:

    Lesson 3: Trying to spend your way out of recessions is a mug’s game.

    When the economy slows, government outlays increase due to higher welfare payments while tax revenues diminish. This fiscal weakening cushions the extent and effect of the slow-down. Governments can try to augment this “automatic stabiliser” by a further, discretionary, weakening in their fiscal position, through increased outlays, lower taxes, or both.

    It is debatable whether such discretionary fiscal policy is desirable. As the eminent macroeconomist John Taylor recently noted, the evidence is mixed as to whether discretionary fiscal stimulus works, and if so, when, how and by how much. But even if it is desirable, the ’80s showed that approaches centred on increased outlays can be both ineffectual and inefficient.

    Ultimately, the greatest difficulty with poor-quality public expenditure is that it is difficult to reverse. Concentrated benefits and diffuse costs create a political economy as resilient as it is toxic. As that political economy plays itself out, deficits prove more durable than they ought to be, and eliminating those deficits comes at a higher-than-desirable cost in terms of increased taxes.

    If a discretionary fiscal stimulus is required, it is consequently far better delivered through general cuts in taxes than through targeted increases in outlays. Rather than once-off bonuses, the tax cuts should be locked in for a sufficiently lengthy period to genuinely stimulate consumption and encourage initiative. And if they can be designed to reduce the most severe distortions in the tax system – distortions particularly pronounced at the bottom and top of the income distribution – so much the better…

  42. Tony of South Yarra

    The problem with tax cuts is that they reduce the amount of revenue a government receives to provide even the most basic of services like health and defence.

    It is very hard for a government to give tax cuts and then a few years later re introduce them, no matter what the original proposal.

    We already have massive distortions at the top of income distribution as those at the top use trusts and many other taxation reduction systems to effectivelty pay virtually no income tax at all. It is only those who cannot afford the massive outlays to accountants to run these systems who pay their fair share of tax. Bearing in mind that the thousands upon thousands of dollars these accountants charge for their taxation minimisation schemes for the mega wealthy are tax deductible as well.

    I find it amazing that as an economy slows we suggest to reduce taxes which will effect the government for life.

  43. True. But only if they were located in areas which could predictably become “affluent” with population growth.

    Not so Reb. There is no way that the War Service Homes of Wattle Park could have anyway near have been considered future areas of ‘affluence’.

    Reb you need to imagine the times.

  44. What a sad/strange society when we have to spend our money to (ie help the Gerry Harveys of this world make more profit) to survive the problems that the Gerry Harveys of this world have created (eg extended credit to people who can’t afford it).

    …and with all due respect, sreb, talking up the conomy won’t make the boogey men go away. Someone above (Tony, I think) mentioned those with jobs won’t notice any change – I might remind you all that The Great Depression came the year AFTER the Wall Street Crash in 1929…

    …2008 is different – we have never been here before…ignoring what is happening is the worst thing you can do…

    …and sreb, I’m sure JMc was a little surprised to hear you say that no-one predicted this was going to happen – I bet there’s a few posts on Blogocracy – from non- economists – pretty close the mark…how quickly we forget…

    …luckily The Minister and I shifted our super in January (what a good guess)…we’ve been retired for three years now…but there are many people we know starting to suffer…as I posted a few days ago…The Minister and I might have to go job hunting soon – we’ll register with Centrelink of course…plenty of work out there “if you want it” – I’m only 61, Tony, but lots of work experience…

    Alan Kohler has an interesting article today titled Fade to Grey:$pd20081208-M4RA5?OpenDocument&src=kgb

  45. Hi TB, I remember raising the issue at Matt’s and George’s blogs just over two years ago but did not identify the trigger and when it became apparent the US fed through a lot of money at it that more or less went down the gurgler.

    To me the subprime crisis effect is comparible to the Magnetar event in 1998 that has affected our weather patterns and it will take more than a few months or possibly years for the economic climate to stabilise.

    I’m glad you prepared for the storm too.

  46. 36. reb | December 8, 2008 at 4:05 pm

    True. But only if they were located in areas which could predictably become “affluent” with population growth.

    There was no predictability about it reb. Those estates were built purely on the cheap cost of the land at the time. If it was known they were to become effluent (sic) suburbs then those estates would have been sold off to developers.

    And don’t knock the old Woolloomooloo , a stomping ground of mine since the early 70’s and whose effluent (sic) in a large part is due to the Navy. In fact the Woolloomooloo Bay Hotel went upmarket to get rid of the pussers who had frequented the place since time immemorial.

  47. G’day scaper, January this year was the worst drop in 2008 our daily records are as follows. Note the deceptive rally on 22/23/24 – still not enough to bring it out of the red – its been fluctuating ever since but this was the lowest month – my guess is that if you missed pulling out in January and listened to the “you’ve gotta stay in for the long term” brigade throughout February then you are in trouble if you are retired or retiring

    Tues 01/01/08 No Trade 
    Wed 02/01/08 +13.10
    Thurs 03/01/08 -61.50
    Fri 04/01/08 +12.77
    Mon 07/01/08 -145.00
    Tues 08/01/08 -34.70
    Wed 09/01/08 -46.20
    Thurs 09/01/08 -12.20
    Fri 10/01/08 -92.90
    Mon 13/01/08 -13.46
    Tues 14/01/08 -21.10
    Wed 15/01/08 -149.00
    Thurs 16/01/08 -13.80
    Fri 17/01/08 -57.59
    Mon 20/01/08 -168.46
    Tues 21/01/08 -408.90
    Wed 22/01/08 +225.00
    Thurs 23/01/08 +160.20
    Fri 24/01/08 +280.50
    Mon 27/01/08 No Trade 
    Tues 28/01/08 -131.80
    Wed 29/01/08 -89.20
    Thurs +31.70

    Month of January 2008 -722.55

  48. I think Fuelwatch, Grocerychoice and Bankswitch are much better ideas than spending 10 billion dollars on consumer goods.

  49. Why Neil?

  50. Why Neil?
    50. TB Queensland

    TB, I think they are all useless. How spending money on consumer goods will create jobs is beyond me. Most stuff is made overseas anyway. The stuff we do make here like cars are made from imported components.

    i think the money will just leave the country.

    The only things that we make here where the money will stay in the country are wine and beer.

  51. TB, don’t rely on the predictions of Kohler. At best his track record is 50%. Why the ABC continues his employment remains a mystery.

    Sorry to hear you are re-entering the job market at your age and in such difficult times.

    A question – when you are re-employed and again entitled to 9% employer super contribution, will you direct that to cash, balanced, Australian Shares, International Shares or what?

    TOSY, I take it you understand that Ergas was a senior adviser to the Howard Government and is now in the business of throwing mud at every opportunity.

  52. TOSY, I take it you understand that Ergas was a senior adviser to the Howard Government and is now in the business of throwing mud at every opportunity.

    Yes, but surely that doesn’t disqualify his arguments. What do you make of them?

  53. TOSY – what do i make of them? To quote Ergas

    “It is debatable whether such discretionary fiscal policy is desirable.”

    Fiscal policy is debatable. Sure is. Hard to disagree with Ergas’ position here, mainly because he doesn’t actually have one. But he has built a back door – the first lesson in economics and politics for that matter..

    Let’s go on:

    “As the eminent macroeconomist John Taylor recently noted, the evidence is mixed as to whether discretionary fiscal stimulus works, and if so, when, how and by how much.

    The evidence is ‘mixed’ to use Erhas’ own words. Another back door perhaps?

    Ergas then goes on to adopt what only can be described as an ideological position, the same as that advanced by McCain in the US election. That is ‘tax cuts’ are the be all and end all. And I am sure that the rich will applaud.

    Like all economists, Ergas is driven by an ideological position. My concern is that he doesn’t realise it. Nevertheless I am heartened that this ‘free market’ mantra will (hopefully) be deposited into the historical dustbin and governments of all persuasions realise that simplistic solutions to complex problems just aren’t possible.

  54. As I listen to the latest ABC news, the Opposition is now saying that the best way to go was (and is) to cut personal income tax.

    It seems that it worked in the US! Lol.

    Talk about dumb.

    It seems that Ergas’ influence hasn’t waned. At least Soon will be pleased.

  55. Reb

    You’ve been smoking some funny stuff again haven’t you. I’ve got to admit you had me fooled there for a while.

  56. On the way home from work this morning, I heard on newsradio that we should be buying up over Xmas to help the economy.

    I got home and turned on the radio, I hear that in the US, Obama is not going to repeat the spend, spend, spend to assist the economy mantra of recent times. The president elect is going to put money into infrastructure… ” to implement the largest public works program in decades. The mammoth program of infrastructure projects, such as bridge and road repairs, is intended to create 2.5 million jobs by 2011″ (Washington Post).

    Shouldn’t we be doing similar?

    Nature 5 @ 56 As I listen to the latest ABC news, the Opposition is now saying that the best way to go was (and is) to cut personal income tax.

    Typical, the opposition are showing who and what they stand for. The ones who benefit most from tax cuts are the wealthy elites.

  57. I got home and turned on the radio, I hear that in the US, Obama is not going to repeat the spend, spend, spend to assist the economy mantra of recent times
    58. kittylitter | December 9, 2008 at 2:46 am

    Kittpooo- unfortunately this is exactly what the retards running our country are about to do.

    After blowing the surplus that the Libs handed Labor, what are Labor going to do next???

    I think the next trick the ALP have up their sleeves is to increase unemployment.

  58. And just what would have a Liberal government done differently Neil?

    And just how would they have continued to have record surpluses when all their world economic boom revenue dried up? Oh I know continue their policy of telling everyone they’ve never had it so good as they lose their jobs, their houses and their standard of living.

    …and too much more to shoot you down with as you really do live in an alternate wingnut universe.

    Oh and by the way Neil for the last poll of the year. Labor through the roof, the opposition in the cellar, Rudd in the stratosphere and Turnbull in the mud with open talk of Hockey taking over sometime next year.

  59. #58. kittylitter | December 9, 2008 at 2:46 am

    Typical, the opposition are showing who and what they stand for. The ones who benefit most from tax cuts are the wealthy elites.

    Good rebuff to this proposal on the ABC last night.

    Basically as you state tax cuts invariably favour the wealthy and upper middle class who don’t spend it or spend the windfall overseas. Tax cuts also trickle in over a relatively long time frame which is useless as the quick stimulus currently needed. Also tax cuts are more or less in for the very long term as it’s a brave government that attempts to take them away at some future date when it really needs the revenue.

    So in other words a stupid suggestion by Turnbull who shows yet again why his approval rating has plummeted.

  60. the surplus that the Libs handed Labor

    You make it sound like “the surplus” was placed on a silver platter, and, with towel on arm, respectfully deposited into the other mob’s hands.

    It wasn’t like that at all. “The surplus” and the government itself had to be prised from their miserable hands. Hundreds of millions of dollars (public money) they spent in the last years in office, trying to cling to power.

    They also make it sound like it was a LIBERAL PARTY surplus, which it wasn’t at all. Australia’s money, not the Liberals’. Never the Liberals.

  61. 62. Caney | December 9, 2008 at 7:43 am
    “You make it sound like “the surplus” was placed on a silver platter, and, with towel on arm, respectfully deposited into the other mob’s hands.”

    Of course it wasn’t – the surplus was the result of Swanny “doing the hard yards” and “staying ahead of the curve” earlier this year so that we would have a buffer against the tough times blah blah blah.

    Anyway, apparently we will be out of the woods soon cause recipients of the pension bonus are going to spend up big at Harvey Norman for Christmas (you know – the people struggling to make ends meet that have bills and food to pay for).

  62. All of the indicators I’m seeing lead me to believe that 2009 is going to be much harder than most people think for our economy. Two examples from today’s news:

    When the federal government think about revenues for their coffers they thing ‘mining’ and ‘banking’ and both seem to have exhausted their ‘goodwill’.

    China demands big cuts in iron ore prices

    CHINA, the world’s largest iron ore consumer, may ask Rio Tinto and rivals to accept an 82 per cent price cut for the raw material after steel prices plunged, an industry official said.

    “Iron ore prices should keep pace with steel prices, which have fallen to the 1994 level,” said Shan Shanghua, general secretary of the China Iron and Steel Association. “We are asking for a big drop in iron ore prices.”

    Mr Shan also confirmed that Chinese steel mills wanted to bring forward the start of annual supply contracts by three months to January 1 as demand slowed. The mills could delay taking deliveries of the ore because of high stockpiles, he said.

    “If the Chinese steel mills are considering it, then they are really feeling the pinch of these low steel prices and the high ore price differential,” said Mark Pervan, senior commodity strategist at ANZ.

    Big banks ignored loan risk warning,25197,24766297-5013404,00.html

    AUSTRALIA’S biggest banks were “relaxed” about the high number of mortgage defaults in western Sydney and “sanguine” about the quality of secured housing stock, according to Reserve Bank accounts of confidential meetings with the lenders.

    Despite warnings from regulators to be more careful when lending money, the big banks persevered with low-document loans and high loan-to-value ratios – even as the number of customers in arrears increased – to see off competition from smaller lenders.

    While their rivals might once have taken the biggest risks and therefore had the highest arrears rates, the big banks tried to ride the property boom to build their market share.

    As a result, one of the big five banks recently conceded it had a substantially higher arrears rate than normal, as regulators warned the number of problem housing loans nationwide could triple.

    Documents obtained by The Australian using Freedom of Information laws give a new insight into the attitude of banks and regulators when customers began defaulting on their loans, first because of rising interest rates and then because of the global economic crisis.

    The regulators have long been worried that increased competition, and a decline in lending standards, would have dire consequences. Australian Prudential Regulation Authority chairman John Laker even gave a speech in June last year insisting he was not crying wolf when he demanded lenders be careful.

    But the big banks took even greater risks with non-standard loans in the last six months of last year – ignoring the sub-prime crisis in the US and rising interest rates at home – to compete with other lenders. But as the rate of customers in arrears rose, the banks appeared unconcerned.

  63. I think Malcolm Turnbull has no idea. Tax cuts give nothing to pensioners or those who are not paying income tax.

    As previously stated by others above Tax Cuts always favour the wealthy and we saw this year after year by the previous government.

    It is much better to leave taxes the way they are and then give refunds or relief to the lower income earners by way of other types of assitance. This way the income to the government remains stable and any assitance goes to those on the lower income thresholds.

    Only people like Neil seem to miss the point.

  64. Sadly, the resources boom just like the housing and consumer spending booms are coming to an abrupt end. Ian Verrander is spot on, in my opinion.

    The resources boom that fuelled prosperity is now a bust

    … It is now almost certain that the record coal prices negotiated last year by Australia’s big exporters were a one-off that may not be repeated for years, if ever.

    Coal prices are typically negotiated annually and last year’s negotiations – which resulted in a trebling in the price for hard coking coal – coincided with massive flooding in the Bowen Basin, which reduced supply.

    Most analysts predict a massive cut in prices this year as China slashes steel production, with Merrill Lynch predicting a cut from $US300 a tonne down to $US125.

    Worst affected will be those with the biggest debt burdens. Consider the affect on our two big resource groups, BHP Billiton and Rio Tinto, both of which are reeling from a general commodity price downturn.

    A fortnight ago, BHP was offering 3.4 of its shares for every Rio share. But if market reaction is anything to go by, BHP’s decision to pull the offer has been more than vindicated.

    The stock of both companies has taken a hammering. But Rio, yesterday closing at $32.08, now sits only marginally above parity with BHP’s $27.22. The reason? Rio has huge amounts of debt while BHP is relatively ungeared.

    Another casualty of the plunging commodity price cycle is Wesfarmers, the conglomerate that pushed ahead with a $19 billion buy-out of Coles just as the credit crisis began to bite 15 months ago.

    When his private equity partners all walked, Richard Goyder at Wesfarmers decided to go it alone.

    As the credit storm worsened throughout this year, Goyder became the living embodiment of the two-tiered nature of our economy.

    His debt-laden tilt at Coles was offset by the huge income he was receiving from coal.

    With export mines in Curragh near Rockhampton (coking coal for steel) and Muswellbrook (thermal coal for power), it was coal that was servicing the huge debt burden used to purchase Coles.

  65. The ‘surplus’ is an estimate calculated and printed in the Budget Papers. It did not and does not exist in hard cold dollars. It was and is simply an ‘estimate’ of the difference between the predicted income and the predicted expenditure.

    Because governments need to plan, the ‘estimates’ of income and expenditure extend beyond the current year – they have Forward Estimates. The Liberal’s ‘Forward Estimates’ predicted a surplus. So did Labor’s Forward Estimates.

    Forward estimates of revenue are principally affected by projected growth in economic parameters which have changed dramatically due to the GFC. Labor’s Forward Estimates will be shown to be optimistic. And if the Liberals were in government, there would be little difference.

    The Budget will undoubtedly be in deficit because the income projections will fall short by a considerable margin and the predicted expenditure will also be above the estimate. The notion that Labor is spending the Liberal’s surplus is simplistic in the extreme.

  66. With export mines in Curragh near Rockhampton (coking coal for steel) 66. John McPhilbin

    …was one of my major clients, JMc and its near Blackwater quite a “few” kilometres away from Rocky, I’m afraid…

  67. Merill Lynch CEO asks for 15mill bonus even though the company almost went bankrupt.

    If this doesn’t show how we got into this mess then nothing will.

    He should be sacked immediately.

  68. Adrian @47

    Sorry for the confusion. I wasn’t “knocking” Woolloomooloo.

    I used to hang around there too – especially the Tilbury and the obligatory pie and peas at Harry’s at 5am in the morning.

    The point I was trying to make, is that it has been transformed from a lower class housing commission slum to a rather affluent area, largely in part to its close location to the city, waterfront location and redevelopment of those waterfront pubs and the pier…

  69. Aparently less international tourists are visiting Oz but more Kiwis are visiting.

    The Kiwis I know that are visiting have moved here permanently to earn a better wage and have no intention of returning.

  70. “open talk of Hockey taking over sometime next year.”

    Bloody hell! I nearly splattered my espresso coffee over the keyboard when I read that one..!

    Just what the Liberal party needs; their own version of Kim Beazley albeit with added indignation, ignorance and venom.

    Who knows, it’s worth a shot. What’s the alternative? Christopher Pyne?


  71. I think Malcolm Turnbull has no idea. Tax cuts give nothing to pensioners or those who are not paying income tax. As usual I agree with you Shane.

    In spite of the idiotic comment from Tony Abbott (how unusual!) about pensioners wasting the handout on playing the pokies, the vast majority of old age pensioners are frugal. Agreed, when Dad was alive Mum and Dad used to have an occasional flutter – Dad played 1cent on 1 line so that his dollar could last 1/2 an hour ;-))

    But this is the same Tony Abbott who was screaming blue murder about how was he to manage on the lowly wages of a member of the Opposition.

    Also, there was a recent comment about how pensioners pay no tax. Not so, they USED TO pay no tax but since the introduction of the GST they pay tax. Hence the reason for the $500 (I think it was) handout from Howard. This was supposed to be compensation for pensioners. I would like to see the stats. Does even this current handout compensate pensioners for having to pay the GST?

    Rudd has always promised an overhaul of the pension system. This can’t come quickly enough.

    But back to your comment Shane. Prior to the election and since, when tax cuts versus increases in the old age pension have been polled, increases to the pension have won hands down.

  72. Shane @71

    My parents live in NZ. I speak to them on a fortnighly basis. The country is an absolute shambles – much worse than Australia.

    They’ve had their property on the market for over a year now. In one of the nice areas for $1.3m.

    They’s just accepted on offer of $890,000. That’s a huge drop. Unfortunately they are in a position where the had to sell.

    Interest rates have just dropped by 1%, however they are still around 8 – 9%. People are fleeing the country in droves, I think 1000 per week was the last figure I read. Most permanently as you mention.

    It costs my mum and dad $80 to visit the doctor in NZ, no medicare there like here. So often they will not go unless it’s really serious. And as others have mentioned the minimum wage is lower there than here.

    I’ve been encouraging my parents to move here – mostly for the healthcare, but it’s a big move at their age, so I can’t see it happening.

    But NZ for all intents and purposes is a f**ked country, socially and economically. Unless you like lamb. Which is about all it’s got going for it.

  73. Min:

    “this is the same Tony Abbott who was screaming blue murder about how was he to manage on the lowly wages of a member of the Opposition.”

    Tony’s “lowly” wages equates to $120,000 per annum (plus expenses of course)

    It really is beyond me how he manages to get by…

  74. thoughts exactly. Joe Hockey as Leader of the Opposition, choke choke. Perhaps some Libs are thinking of a reincarnation of the Sunrise Show?

    Hockey ‘might be’ a replacement for Julie. Hockey lost me when he refused to go to Rudd’s daughter’s wedding..some things are more important the politics, such as friendship. And just because JWH told him not to go..weak as p***.

    Chris Pyne, junior version of Philip Ruddock.

    And sigh…Petro is retiring. I can’t see much talent in the ranks.

  75. reb

    It is a tradgedy that can be seated back to the complete deregulation of the workplace a number of years ago. Wages have been reduced dramatically for the majority of workers while upper management made ridiculous salaries.

    NZrs didn’t want to work for $10 an hour as it is a subsistence income so what did they do, imported workers instead of ensuring wages were fair. This is what haspens when the Government removes itself completely from the labour market and destroys the unions.

    Want to see it happening here then look no further than Telstra. No it doesn’t happen overnight it took NZ around 13 years but it happened as big business ruthlessy destroyed the middle class for their own short term greed.

    If deregulation is so good as preached by big business why are NZrs fleeing to Oz. NZ will be a country full of migrant workers earning a pittance.

    Just who are the Banks and Businesses going to sell their goods and services to as they have totally decimated the middle class who actually keep an economy going.

    I thank God that workchoices was thrown out in this country and hope that governments around the world wake up to the fact that pure capitalism eventually destroys a country from within.

  76. Oh and if you want to see another country turning to sh*t look no further than Ireland which was championed as an example of deregulation creating a utopian country for business and wealth.

    Look at it now, in a worse mess than most other countries in Europe.

  77. TB@68 – Not a pleasant thought at all for mining communities.

    Unemployment next year is likely to soar in a number of areas.

  78. shaneinqld

    A previous post that may interest you Shane

    Perspective: Why ‘Market Fundamentalism’ Has Failed

    Very little has been discussed about the origins of the current crisis in a larger economic framework. So, I went hunting for something that would offer an economic-political perspective and found an excellent article by a professor of economics in the US, which I think is excellent as and overview.

    Senior Scholar L. Randall Wray is a professor at the University of Missouri–Kansas City and director of research at the Center for Full Employment andPrice Stability. I think you will find his theory very insightful , thought provoking and most of all, more suitable that the outdated ‘free market model’. The theory he applies comes from the work of economist Hyman Minsky

  79. 53. Nature 5

    Bit of sarcasm on my part N5, I’ve no intention of applying for work – but I could get a Job Seekers Allowance at Centrelink just for looking, or doing a bit of volunteer work…worth about $10000 a year (a couple therefore, $20000…) – nice supplement if you have lost most of your super and are retired?

    As for the 9% “direction” for the next twelve months – cash…but then we follow the stock market daily (as per my earlier post) and we know what we earn daily too…as retirees I think “balnced is generally the bst option as it covers all threee asset classes.

    Re: AK, I really don’t follow anyone’s “predictions” – I tend to do my own research and reach my own conclusions – no chance I would trust anyone with my “hard earned” – luckily I’m fairly good (and also trained by a few really good managers on my way through my career) with the “strategy” stuff and The Minister is good at the “tactical”…I just like Kohler’s upfront, here it is, no BS, style

  80. John

    The article only serves to further support my argument the the Commonwealth Bank should never have been sold.

  81. TB – I’m pleased that your reference to returning to work was sarcasm.

    This is how a return to training by TB would look in practice–

    “Now where did I put that pen?” – Behind your ear.
    “Where’s my training manual?” – Under your arm.
    “This pen doesn’t work” – It’s a laser pointer.
    “Where’s the overhead projector?” It’s called power point, it’s inside your laptop.
    “Can you roneo off a few extra copies of the handouts?”

    Your training associate/assistant would probably be eligible for a carers allowance!

  82. Tom,

    You forgot…

    “has anyone got some coloured markers? They type that can write on overhead transparancies?”

  83. 83. Tom of Melbourne

    Roneo, roneo? How old are you, Tom?

    I’ll take that the way it was intended (I hope), Tom

    I could still show some of these young whippersnappers a thing or two! (Hang on where did I leave me two front teef?)

    As an aside I’ve always thought that PowerPoint was one of the best tools ever developed – its just a pity most presnters don’t know how to use it – particularly senior managers (who I used to train BTW) – they always want to cover the page in tiny print, and/or talk to the screen…

    …I have some very nice emails and letters (remember them?) from past learners…of many levels in business…

    …while we’re way off topic one of my other pet hates was Seminar presenters who just read their papers – bloody hell , the level of literacy at a professional seminar and they read at you like kindergarten kids – I always used a couple of slides (OHT or PP, Tom) and simply asked and accepted questions based on my paper…

  84. Just been in the car listening to 4BC – seems its now the Rabid Rightwing Radio – never heard so much nonsense…

    …the global recession has nothing to do with Queensland’s infrastructure program going into deficit next year – apparently…

  85. 84. reb

    Yeah, didn’t take you long to get on the band wagon, yer buggar!

  86. “worth about $10000 a year (a couple therefore, $20000…) – nice supplement if you have lost most of your super and are retired?”

    $20 000? Oh I suppose that would help with the Bar Tab at the gentle men’s club provided one wasn’t into gratuities.

    “no chance I would trust anyone with my “hard earned””

    Really! You mean you keep it under your bed? Not much interest to be earned that way.

  87. Sorry TB, I just couldn’t help myself…


  88. More of TB returning to work.

    “My rate is 12&6 an hour”
    “This plastic pencil is blunt. Anyone got a pencil sharpener?”
    “It’s hot here in Emerald, it must be over 100 degrees”
    “Last time I drove through here the speed limit said 60mph, now all the signs say 100!!”
    “Where’s the handle on this roneo?”
    Later …“This flash electrical roneo thing seems to be out of metho, me too”

  89. LOL Tom.

  90. What’s this “get TB week”?

    …and I always felt at home here!

    …a person has feelings, y’know…

    (Do roneos have handles?)

  91. Re – 100 degrees, TB would say – “this thermometer is broken, it must be 100 outside, but it says it’s only 38.”

    Re mobile phones – “Where’s the rest of this mobile? There’s some of it missing. Mine is about the size of a house brick”

    As if you’re unfamiliar with roneos. I reckon you’d roneo your posts, and paste them to the screen of the device you’re looking at. Your dear, long suffering wife comes in, pats you on the head, and secretly completes the post for you while you’re emptying the incontinence bag.

    Perhaps that’s a bit harsh… maybe while you’re trying to fill up the vacuum cleaner with 2 stroke.

  92. TB

    I know how it feels… sometimes I feel it is pick on joni year at this place.

    # sweet caroline – wah wah waaaaaah #

  93. *TB, Just been in the car listening to 4BC – seems its now the Rabid Rightwing Radio – never heard so much nonsense…

    Jim ball(midnight to 5am). 4bc’s biggest joke on the listeners. That bloke can sure talk it up.

  94. Anyone know what Julie Bishop is on about in her regular ‘blog’ this week?

    I though the bank that the ‘Cth’ was or wasn’t considering was simply a pass through bank where the Cth borrowed and then the States borrowed the money from the Cth at the same rate as the Cth got it for. JB seems to be suggesting that people would be investing in the Cth’s bank rather than the other banks and this would somehow stuff things up. Also, I don’t see how this has anything to do with the frozen funds? Am I missing something or is Julie (or her ghost writer) as economically illiterate as I suspect she (or GW) is?

    Also, are those funds still frozen? I haven’t heard much whinging of late except from Malcom.

  95. Dave 55

    I don’t know what she is on about either, seems like waffle to me.

  96. Dave55, Understand that Julie Bishop studied at Harvard Business School for 8 weeks at a cost of $60 000. She understands these things even if she has no understanding of value for money. Lol.

    Rudd’s move on bank deposits was a political masterstroke. Most thought that money in the bank was totally and completely protected and when the truth emerged, panic was a real possibility. It has cost the government (to date at least) not a penny. BTW super funds can also freeze funds (but that’s just in the fine print) and few people understand that.

    The Opposition is desperately trying to paint the Government as economic incompetents but to date it is they who have egg on their faces. The polls reflect that.

    What the States want is to use the very, very good name of the Commonwealth to borrow. In much the same way that Local Government uses the States’ name to borrow funds for works.

    If you are big investmnent house you are more likely to lend to anational Government that a smaller state government.

    I should imagine that if the proposal goes ahead the State will lose some of its autonomy in much the same way that Local Government ceded its autonomy to the States who now have the power to approve or reject the applications.

    Further, schools, for example, who want to build swimming pools, assembly halls and the like also seek state backing because of the more favourable rates available. A downside to this approach is that the debt appears on the states’ balance sheets. I imagine Swan would want to avoid that downside.

  97. Spent a few minutes this morning with a fellow friend and broker who told me he had heard that the job losses at ANZ of 800 were only the beginning with the possibility of 5,000 being lost in the ANZ.

  98. Nature 5

    That was my understanding as well.

  99. Considering the ANZ are currently taking up to 15 working days to give a decision on a broker submitted home loan I wonder how long it will take after the cut backs.

  100. Mmmmmm……………..!

    Now this is a bit of a worry. I’ve been noticing this quite a bit of late.

    A few of our mid cap miners seem to be experiencing some strange high volume purchasing days on basically no news to report.

    Last week it was rumoured that Xstrata (Swiss based) was taking a position in Oz Minerals before it was put into its medically induced coma (trading halt), today we have news on Perilya (Chinese takeaway/takeover anyone ?) Rio already owned partially by the Chinese, Mid West Minerals (goneski).

    I think Labor are going to have a real bitch fight in the New Year with the Chinese on the one hand screwing us down on prices and volumes, sending share prices plummeting, and then all of a sudden popping up on various share registers at a quarter of the price.

    Hey Presto !……….Here’s a takeover offer. And we are going to offer you CASH.

    Especially with a number of our miners in no position to get into bidding wars due to too much debt already on the balance sheets. And besides the banks are not willing to lend to resource companies at the moment. So any rival offers will be heavily scrip based is my guess.

    2008 is the Chinese Year of the Rat and I’m starting to get whiff of one.

    So for what it’s worth I think our market might come alight next year via a lot of merger and acquisition activity.

    The real interest will lie in what Labor policy will be

  101. Walrus,

    I’m led to believe that next year will be ‘the year of the cow”.

    Maybe Julie Bishop will become the leader of the opposition after all?

  102. Reb

    Dont you talk about my Julie like that……………….or I’ll jump on a plane and hunt ya’ down like the darg you are…………………!

  103. Julie seems to have an effect on older hot blooded men…a fellow old school mate from Cranbrook absolutely foams at the mouth and other places at the mention of her.

    Is it the eyes or the body?

  104. Walrus,

    Let me guess – Julie in one of those vinyl nurses outfits???

  105. Oh Yes Reb……………………………………That’ll do nicely……………………………………….But dont forget the nylons………………………..Yummy !!!!!!!!!!!!!!

  106. “who’s been a naughty boy, then walrus?”

    “what is it this time? Running in the corridor?”

    “you’ll have to be sent to the naughty corner for that.”

    “but not before I bring out ‘the rectal probe’!!!”

  107. Gulp !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    I’m outa here………………………!

    *****************THIS THREAD IS NOW CLOSED******************

    ****************THANKYOU FOR YOUR COMMENTS*************

Comments are closed.

%d bloggers like this: