Digging in the Dirt

Yesterday Rio Tinto (who I always thought was a Brasilian footballer) announced that it was cutting 14,000 jobs worldwide, with the number to be slashed in Australia yet to be determined.

And the unemployment rate in Australia is now 4.4% – as 15,600 jobs were lost in November. John Edwards of HSBC says:

This is not a report which suggests the Australian economy is tanking.

So that suggests that we should not be too concerned about this at all. In my industry (insurance) a lot of contractors are not getting contract renewal at the moment, but as most are here on 457 visas, that will not affect the unemployment rate – and I suspect that a lot of the losses in finance will be people on 457’s. They will just pack up and head off to their home countries. I wonder if the Aussies overseas will do the same , that is, return to Australia to look for work.

Also, as everyone realises that this is not a local problem, that the whole world economy is suffering at the moment, I reckon that the federal government will not be blamed for the rise in unemployment. Well, everyone but Turnbull will see the real picture. I am sure that Malcolm will be blaming it all on Rudd and Swan.

And have you heard the latest joke in Sydney?

What is the definition of optimism?

Working in the financial industry and ironing 5 shirts on Sunday night.

joni

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44 Responses

  1. Joni. How is the shoulder? Did you receive the pic?

  2. Yes min – I did get the pic, just that things are so hectic around here at the moment.

    The shoulder is not good, and the op is planned for tomorrow afternoon. So my posts maybe a little erotic erratic for a few days – combination of one handed typing and the drugs.

  3. That’s ok..just as long as you are ok (or ish). Was just thinking of you. We’re off to Cairns at the light of dawn tomorrow and back early next week.

    Now this is true and something that I hadn’t thought of. How do 457 Visas effect the employment/unemployment rate? Are they added to the stats or aren’t they?

  4. “a combination of one hand a handful of drugs”

    That strikes me as a recipe for erotic posts….!

    But please spare us…

  5. Julia Gillard today:

    “Given the global financial crisis, and all of its consequences, including for this country, this unemployment rate of 4.4 per cent is welcome news.”

    Yes, I know, clearly what she’s trying to say is things could have been worse. The trouble is, they will be. One can’t help wondering whether the predicted six percent unemployment will be as welcome.

    A senior economist at Westpac, Anthony Thompson, says it is a modest rise but it signals the start of a more rapid deterioration of the jobs market.

    “We think the unemployment rate will be heading up to 6 per cent by the end of the year,” he said.

    .

  6. On topic,

    (not so) Avuncular Jockey Hockey is already blaming the Rudd government for the financial crisis, the global meltdown, the prospect of rising unemployment, and the fact that geraniums seem to flowering late this season.

    I, on the other hand remain optimistic. The outgoing CEO of Westpac, as well as a number of ther economists are saying that the Labor government is doing an excellent job of managing the fiscal crisis.

    We are yet to see the ful impact of the US’s stumulus package, and once they bail out the car industry, I believe we’ll begin to see a turnaround.

    However this may not be reflected locally until mid to late 2009.

    Look at this way:

    Interest rates are falling to record lows

    Property prices are still falling

    People are re-entering the property market.

    Business confidence is improving

    The only concern, is the ability to hold one’s job. If you can do this for the next 12 months, things are actually looking pretty bloody sweet.

    We’ve just calculated that we’ll save five years off our home loan with the interest rate decreases to date.

  7. Tony,

    When I arrived in Australia in 1992, unemployment was almost 12%.

    I had no problem finding working.

    As TB Queensland often says, even if unemployment reaches 6, 7, 8 or 9%, that still means more than 90% of people do have jobs.

  8. reb,

    I like your positive attitude and I hope you’re right.

    I just re-read what the westpac economist said: he’s predicting six precent by the end of this year – in other words, this month. Who knows – by the end of next year it might be 12% again.

    And while it’s good that you had no trouble finding a job at 12% unemployment, it isn’t realistic to expect that everyone else who wants a job will get one if the jobs no longer exist.

  9. I think that a consideration is where the jobs might disappear from. Bye bye ITs, bye bye financial section (already shafted by off shore deployments). I have a feeling that p/t female employment won’t be as effected as this was cut to the bone last year.

    Ah well, if worse comes to worst you can always join the navy ;-)) **Note to newbies, I’m a military mum.

  10. I think the strategy of the Liberals is not to blame the economic downturn on the Rudd Government but to imply that they made the situation worse that it could have been.

  11. If that is the strategy of the opposition it does not seem to be working (see the polls). Additionally Australia seems to be coping better than most other countries at the moment – which means that it is even harder for the opposition to try and imply that Labor is making it worse.

    I suspect that the public is saying to themselves: This crisis is caused by bankers, Turnbull was a banker – therefore who should be blamed? Those that caused the fire (bankers) or those who are trying to contain the blaze (Labor).

  12. Tony

    You are quoting a Westpac Economist ?.

    Economists only 8 months ago predicted $200 a barrel for oil, and 10% Interest Rates by the end of this year. Now they predict between $35 and $75 for oil with some prediciton the official cash rate could go to 2.75%When will people ever wake up to the fact that economists are reactionary and constatntly change their minds.

    Why on earth would anyone believe an economist. If companies planned their operation on the predictions of an economist no wonder they are in the sh!t.

  13. “to imply that they made the situation worse that it could have been.”

    Well i’s true isn’t it! Just imagine how low the interest rates would have been, given we all know that interest rates are always lower under Liberal governments.

    Look how much better off we would be if Rudd hadn’t gauranteed bank deposits. Allbull reckons he should have limited it to $100 000 so that anyone with a million would have to bust it into 10 seperate deposits in 10 different banks. Now that would have been a much better approach. Funy how the MSM never asks about that strategy.

    As for giving money to pensioners, all that will do is cause a run on cat food. Better to give it as tax cuts so the rich would benefit and the natural order could be reinforced.

    I know there are many more examples but space is limited.

  14. Nature. Cat food is far too expensive. Just check the price per kg.

    I honestly don’t get any blame game happening, just the Libs running around like chooks when they should be putting forward alternatives. As a journo suggested..it’s all happening next year. That Turnbull will use the holiday break to formulate new and exciting policies. Well..he’s only had a year to come up with ‘new and exciting’…but one shouldn’t rush a Turnbull.

  15. Unfortunately my prediction is 12% to 15% unemployment by this time next year…

    …quite frankly I have never seen such awful signs in the global economy…Canada is now in recession…thier government also “talked it up”…then apparently said “oh! bugger, it tell the truth…”

    …BTW, its amazing how people will deal with the truth rather than BS…

    …its like trying to stop an economic steam roller with a peanut…and as we all know there is nothing more painful than squashed nuts…

    …JMc and I have always said at least five years to recover…this is the lull before the storm…

    …you will recall my son in law lost his job…(yes, it were Rio T! but he’s got a job there until March, 300+ have gone)..he will sign a two year contract with a mining/civil engineering project company tomorrow (starts 5th January)…but he has to set up his own company and work as a contractor to get the work…(worked as a contractor before but didn’t need a company – ie PTY.)

    …expect to see more of this, as businesses offload conditions of employment responsibility onto ordinary employees…plus public liability and professional indemnity risk…

    …we have a lot of undoing to do from The Coward Years..!

    …imagine what next year would be like with Workchoices Mk II in place?

    …and some of us predicted, the economic (mining) boom would not last forever…guess what!
    ……………………………
    I have only ever been out of work for six weeks – it was awful – in 1979 – we had two kids a mortgage and two dollars in the bank (seriously!) – I mowed over the last dollar in my pocket on the Friday! (still got it laminated/framed in my study) when The Labour Exchange (Centrelink) rang to tell me I had a job interview on Monday – I had been a service manager – motor mechanics were earning $180 a week – at the interview (for Safety Officer) I said I’d work for $90! They paid me $220 and I gained a business mentor…and a new career…

    …but I will never forget the feeling of helplessness or worthlessness being out of work – if it happens to people you know – be very gentle and supportive…it will never be forgotten…

    ………………………………………

    …a Recession is when you know someone out of work – a depression is when YOU are out of work!

  16. Why on earth would anyone believe an economist. If companies planned their operation on the predictions of an economist no wonder they are in the sh!t.

    There we have a once well-regarded university degree – and subsequent profession – re-rated by shane – to junk.

    Besides, isn’t his guess as good as anyone’s? 🙂

  17. And if the proof is ever needed that WorkChoices was THE reason for the downfall of the Howard government, Possum has found it.

    Look at this Pollytics piece long and hard old guard of the Coalition (that means you NM, PC and JB).

    I really have trouble imagining what the current industrial and financial landscape would have been like if the Howard government had been reelected. Yes I know unemployment would have been lower, I have no doubt of that (and Neil boasting), but the cost would have been horrendous as an army of working poor is loosed onto Australia.

    And no Bromwyn Bishop, having a job, a job no matter how low the pay, conditions or human cost, is not always better than having no job.

  18. Tony

    The well regarded university degree is junk. A degree does not make you correct. My guess is as good as anyones. I told my customers over the last 8 months that rates would start going down by the end of this year and I don’t have a degree.

    If business listened to Economists they would have locked in rates at 3% above what they are now for fear of them increasing more and would have locked in oil at $145 a barrel for fear it would go to $200. Fantsatic economic strategy there from the Degree holders.

  19. TB. Am thinking that if it’s anything similar to the 80’s then we’ll all be out on the street.

    Compare % household debt in the last recession to today’s % household debt.

  20. The building industry in Brisbane has not experienced a slow down at all…hectic as usual.

    I’ve got over three months of work on the books and will be employing at least seven new guys in the new year.

    Actually the worst period I’ve had in business was last June I think…ten day with no work but was able to farm my guys out to other builders until I hustled up some more work.

    I learnt a little from that experience…that marketing should never be ignored, even when most of the work is landed in my lap it is best to persist and create more jobs to handle the overspill.

    If business worked a bit harder and did not get greedy in these times it could put on at least one extra person then we could get through this unemployment thing which in turn would assist in stimulating the economy which produces higher tax receipts.

    Economists are like palm readers to me.

  21. scaper

    100% spot on I reckon.

    TB

    When did Australia last have 12 to 15% unemployment ?

  22. Tony (#8)

    Don’t most financial types deal mainly in financial years? I believe he’s predicting 6% by 3 June 2009, not 31 Dec 2008….

  23. Adrian

    I read polly’s post twice and still do not understand a word of it. Sadistics is too hard for my fragile little brain to cope with.

  24. “Economists are like palm readers to me.”

    or “rear view mirrors”

  25. Simply put what he has found is a direct irrefutable correlation between those working in the retail industry last year who were by far the worse off under WorkChoices, and a swing for the Labor government at the election.

    What confuses that article is that previously Possum also found a direct link between people just entering the old age bracket (65+ years old) and a swing to Labor and a swing away from Labor for those who had kids aged between 0-4 for the first time, and he integrates that data into this piece.

    All this is very bad for the Liberals.

    It means they have lost Howard’s battlers for a long time to come and just as bad, most of the population entering the 65+ age group are strong ALP voters pushing out the entrenched old people Liberal supporters who are dying.

    So the two biggest blocks of demographics are moving towards the ALP and will be there for a long time whilst the only hope for the Libs are the young parents who have a while to go to make up the numbers to help them.

  26. #22 bacchus

    You could be right on that point, although it’s not possible to tell from his quotes in the article.

  27. joni,

    shorter polly (the other one) – the more retail/hospitality workers in the elecorate the greater the swing to the ALP.

    My interpretation of this – the higher number of retail/hospitality workers in the electorate the higher the chances that the voters knew someone who lost wages/conditions due to WC. It is those sectors that studies showed were worst hit. ie despite what Howard et al were telling us about WC the lived experience of the electorate was different and they voted accordingly.

  28. Adrian,

    It’s impossible to know exactly why electors voted the way they did. This study is hardly “irrefutable” evidence of anything – even though workchoices was no doubt a motivating factor for many. The author himself offers this qualification in closing the article:

    Ordinarily this would be hard to believe – but the power of Workchoices might have been a little bit more powerful than even the union movement is suggesting when it came to getting the ALP elected. It might be worth some deeper research.

  29. As a swinging voter the reasons I voted labor this time at the last election were…

    1: Workchoices Mark I and II…I could see this economic correction coming and had concerns that the workers would be put in an untenable position.

    2: Nuclear reactors and the plan to create a waste dump in the Northern Territory.

    3: Infrastructure…the lack of new works and I was very concerned that our quality of life will be affected and that if it continued we would have no chance of rectifying the situation in the future.

  30. scaper

    I am a swinging voter as well and I voted based solely on your No 1. as it would effect everything in our country.

  31. 19. Min

    Min, I just hope the government doesn’t run out of money before the rest of us do!

    21. shaneinqld

    Relevancy, shane? This type of economic tsunami (thank you for the term, Mr Custard) has only hit us once…and I hadn’t even been thought about then…

    …there’s a couple of graphs in this paper that shows peaks and troughs if your interested…

    http://www.melbourneinstitute.com/wp/wp1997n24.pdf

    …as I said, worst I had ever seen…I entered the workforce in 1963 and retired in 2005 (what’s that…45 years?)

  32. 31

    And that paper explains underemployment, in many ways a more important figure than unemployment and a figure that was not very good under the previous government.

    It is a figure I’m going to be keeping an eye on with the current government as well. If Rudd cannot close the underemployment gap even if unemployment rises then I will consider he has failed the country.

  33. TB and Adrian:

    You shouldn’t take much notice of anything in that paper: it was written by one of those economist charlatans. 😉

  34. 32. Adrian of Nowra

    A lot of people will be outside the scope of “unemployed” with many types of arrangement in place – encouraged by JWH & The Private School Bullies – but Rudd & Co didn’t help by reducing ABS funding – at such a critical time!

  35. TB Queensland | December 11, 2008 at 3:21 pm
    “Unfortunately my prediction is 12% to 15% unemployment by this time next year…”

    Well your ‘guess’ could be correct. I would be interested on what basis you make that prediction. Or is it not a ‘guess’? You will agree it is an extreme prediction. Could it be correct? Anything’s possible. But why the imprecision in the order of 20 to 25%

    “…quite frankly I have never seen such awful signs in the global economy”

    Care to list same? Apart from Canada going into recession. You might have added Japan, Iceland. the US or to add weight to your argument you might have simply said ‘most of the world’.

    “…you will recall my son in law lost his job”

    Terrible! But is this why Rio Tinto’s share price went up 7.5% today and about 20% for the week. Just askin? But I note he:

    “starts 5th January”

    You mean it’s not all doom and gloom? He was able to find new employment.

    He will have a ‘new’ job even though unemployment might reach 15%? He must have particular talents that Rio didn’t appreciate. Silly Rio.

    TB it seems clear to me that making predictions in this time of unknowns is just guesswork. Moreover, arguments are not helped by the lack of evidence that one puts on the table.

    Or is that about to happen?

  36. 33. Tony of South Yarra

    Yeah but the facts and stats it uses are real ABS stats. So just ignore what the charlatans say and look at the historical stats.

    34. TB Queensland

    The cut to the ABS is a worry but so far it appears they are still tracking underemployment (probably with a smaller sample). Will have to wait until the end of the financial year to see if underemployment has improved under Rudd.

  37. I think the predictions of economists are no better than the guesses we make here.

    I’d expect unemployment to rise to 7-8% next year, the middle management of many companies have only existed through good economic times. They don’t have experience in restructuring, downsizing (euphemisms for dismissing people that need to work).

    I note that real estate prices are predicted to decline by 10% next year, fair enough. I wonder whether there will be any cost/benefit analysis of the first home buyers grant.

    Extending that was a scandalous waste of our money. Dreamed up over a weekend, a reaction to the political imperative to announce something, anything. Shocking.

  38. I agree Tom.

    the predictions of economists are no better than getting financial advice from a taxi driver.

    However, some of the “better” financial advisers will actually admit that, and focus on how you can best protect your existing wealth, lower your taxation obligation and generate a post-retirement income over the longer term, by basically structuring your financial affairs in order to take advantage of as many government handouts as possible.

    These are usually the “fee for service” type advisers.

  39. 35. Nature 5

    Its a personal opinion, a guess as you rightly point out…

    …I’m sure most other readers could extrapolate that…

    …your questions expect answers that no-one knows…nobody – I mean nobody, can read the future…

  40. Terrible! But is this why Rio Tinto’s share price went up 7.5% today and about 20% for the week. Just askin? But I note he:
    “starts 5th January”

    My son-in-law has a two year contract that can be terminated with two weeks notice…he is still helping to find work for the three project schedulers that he supervised…

    There are another 340+ in his dept at Rio T who don’t have jobs…and the increase in share price simply indicates that shareholders are still all about making money at the expense of other people’s livelihood and families…rather than building a society for all – but I’ve worked for Rio and BHP as a consultant the management philosophies are “chalk and cheese” – I know who I prefer…long term…

    BTW welcome back ABBA – I had my suspicions earlier…are we male, female or hermaphrodite this time?

  41. Tom of Melbourne

    “I note that real estate prices are predicted to decline by 10% next year, fair enough”

    Steve Keen reckons house pries will fall 40% in the next two years. In fact he has bet a long walk up a very tall mountain on the outcome. I think he is talking crap but because he predicted the curent malaise, people are taking notice of him

    There are reports that on the Northside of Brisbane house prices have dropped 26% but that’s just ‘median’ price falls and it tells very little. Lies, damn lies and statistics.

    The US housing market was over supplied. In Australia there is still a shortage and demand is rising fuelled by immigration. Also in the US the Banks don’t pursue those who default on their mortgage. Here in Australia the banks wil pursue to the ends of the earth

    TB

    -“I mean nobody, can read the future”

    I’ll drink to that!

    As for Rio, the Board and senior management who rejected the BHP offer should be the first to face the chop. However, they will probably get a bonus because of a ‘successful’ downsize that drove the share price higher.

  42. Nature @ 41

    The US banks don’t pursue those who default on their mortgage is correct for the following reason.

    In the US a Home Loan is only secured by the house so if the Bank cannot get their loan cleared from the sale of the house then they lose the difference. They cannot pursue the borrowers.

    In Australia a Home Loan is secured not only by the home but also by any other assets past and future so if the Bank cannot get its loan cleared from the sale of the house then the borrowers are legally responsible for the remaining debt and this is where borrowers in Australia declare benkruptcy.

  43. Thanks for that Shane. It seems to me that is one aspect of the US banking system that needs to change. People should live up to their responsibilities and not just ‘walk’ when things get tough.

    And it should apply to much more than housing.

  44. Nature

    I agree, you get a loan you pay it back. However I do acknowledge that there are some times when the borrower has a just case.

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