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Is the Australian economy really booming?

April 5th, 2010 · Greg Atkinson · 57 Comments

According to many major news outlets and financial commentators in Australia, the recent trade data released by the Australian Bureau of Statistics (ABS) is proof  that the Australian economy is “booming”.  The Reserve Bank also seems to think the nation is in the midst of a boom and the amazing Ken Henry (of where is my tax report fame) reckons Australia will enjoy a “golden age” for decades.

Australia’s leading economists also believe that the Chinese economic miracle will shower our nation with treasures for many years to come so it appears we can all relax. We just need to keep a lid on inflation, but never fear, the RBA Governor stands ready to crank up interest rates even further.

Hooray For Rudd & Swan’s cunning plan to simply spend on anything! Sure the nation went from having funds in the bank to now owing billions of dollars, but as a result we have new school halls, thousands of homes now have imported insulation in their ceilings and we will have a new broadband network sometime in the next decade that will rival internet speeds in Fiji. (but unlike Fiji, our access to the internet will be controlled by Conroy’s mystery filter)

Sadly we won’t be getting a high speed rail link like Vietnam, we are not exploring nuclear power as a means to get us off fossil fuels like Indonesia and we import wind turbines from India for our wind power facilities, but what the heck? We have COLA’s! (covered outdoor learning areas)

Yes Australia has taken the simple roof over and an outdoor area and made into an expensive facility that is now required for any well respected school! Our Asian neighbours must be in awe of these engineering wonders!

But I have wandered off subject so let me get back to Australia’s February 2010 trade data. Firstly since our economy is apparently booming you would expect our exports to be going up and be exceeding our imports in dollar terms..right?

But this is not what is happening according to the data supplied by the ABS via website.  So let’s look at some of the information provide by the ABS and see what is actually happening. (warning to journalists: these graphs contain numbers and require some understanding of mathematics)

A good place to start is by studying Australia’s export of goods since this includes both hard & soft commodities. (i.e. stuff we dig up, pump out or grow)

Australian Exports – Goods (Feb 2010)

abs-goods-exports-feb-10

Well our exports appear to be slowly coming back up to early 2008 levels but they are not at what I would call at “boom” levels.  I also don’t expect to see Australia’s export of goods get anywhere near the peak of 2008 for some year as our iron ore exports in particular are likely to drop back in terms of volume if the big miners keep prices so ridiculously high.

BHP Billiton, Rio Tinto and Vale might all be enjoying their current price setting power for iron ore and other commodities but the wheel will turn, and if prices stay high or keep going higher, demand will slip.

In fact the big mining companies in my view will present a risk to the global economic recovery if they continue to push for high commodities prices. They are also annoying not only China but the European Union as well, and therefore are making some powerful enemies.

Now let’s look at the other side of the coin and see what Australia’s goods imports are doing.

Australian Imports – Goods (Feb 2010)

abs-goods-imports-feb-10

Well as the chart shows above  goods imports are also recovering, but at a faster rate that exports and this I would suggest is not a good sign at all.

Over the next few years Australia is likely to import even more goods in dollar terms thanks to demand from areas such the mining sector and telecommunications. (i.e especially the NBN)

But some people will say that I am not looking at the boom in Australian services exports, so let’s have a look at those now.

Australian Exports – Services (Feb 2010)

abs-services-exports-feb-10

Overall the export of services from Australia have held up well over the last few years, but certainly the growth has slowed since early 2008.  The two big drivers of growth in this area have been tourism and education services and as most people would know, our exports in these areas have struggling of late.

So I would not be relying on exports in services to push the Australian economy to dizzying new heights, in fact it is quite possible exports in this area will see little growth in the years ahead and may even start to fall back somewhat.

Australian Imports – Services (Feb 2010)

abs-services-imports-feb-10

Imports of services into Australia on the other hand tumbled as a result of the global fall in trade but have since recovered strongly, much more strongly than services exports.

Although services imports and exports only make up around 20%  of Australia’s overall trade numbers, it is interesting to note that the only trade area that appears to be booming is imported services.

Many economists dismiss the latest trade data as merely a short term abnormality and say that when higher commodities prices kick in later this year then all will be well.  I reckon they are wrong and here’s why.

Firstly, higher commodities prices are likely to hurt demand and so I think many people are not taking into account how higher commodities prices may turn around and hurt the recovery of the global economy.

Secondly, higher commodities prices hurt the Australian economy as well as consumers and businesses end up paying more for a whole range of imported goods and even for our own resources, as utility companies have to pay higher prices for coal and natural gas for example.

But perhaps the negative balance of trade numbers are simply a short term trend as many experts suggest. If so this should be easy to spot when we look at how the trade numbers have been moving over the last few years.

Balance of Trade as % of GDP (Australia vs selected nations)

abs-trade-balances-dec-09

Now can anyone spot anything on the chart above that suggests Australia’s balance of trade is suddenly going to improve later this year or even get into positive territory any time soon?

Where is the boom? Since when do we classify an economic “golden age” as a being a period where a nation imports more than it exports, while racking up household and public sector debt?

Australia now has the dubious honour of having a wider gap between imports and exports than the United States, and despite all the media bashing the Japanese economy receives, it is still a star performer when it comes to export earnings.

So it looks like it is Kevin Rudd, Wayne Swan, Glenn Stevens, Ken Henry and most of the financial media and economic commentators  are against yours truly. They see underlying strength in the Australian economy, and I see underlying weakness.  They are counting on a commodities boom to pay down debt and deliver more good times in the years ahead, whereas I see Australia’s reliance on commodities exports as being a problem.

We can’t all be right, but I reckon later this year we should be able to see who is reading the tea leaves better.


57 responses so far ↓

  • 1 Anon // Apr 5, 2010 at 7:23 pm

    That Balance of Trade chart is damning. Just about sums up where Australia is headed. Look at Japan, didn’t know its Balance of Trade (%GDP) numbers were that strong.
    Australia is worse than the UK!!
    Great post, thanks 😉

    Not advice, just chatter, see a financial adviser for decisions and advice.

  • 2 Greg Atkinson // Apr 5, 2010 at 7:57 pm

    Anon the last chart amazed me and was posted on the ABS website, but none of the financial media seems to have latched onto it. As for Japan, yes the export numbers are pretty strong and the only real problem I have with the economy is Government spending/debt. However I reckon the Japanese economy can be tweaked back into shape over the next decade…it is far from a lost cause.

  • 3 Anon // Apr 5, 2010 at 9:05 pm

    The more we dig, the worse this is looking Greg. I don’t see many positives from here…uncertainty galore…Altho uncertainty is a constant, this is too much for me to handle ;).
    If our markets are heading the way of the Nikkei (lets pray that doesn’t happen) it would be emotionally taxing and counter productive to fight the tide in a down trending market for likely negative returns.

    Sobering words, but I guess its being realistic.

    Not advice, just chatter, see a financial adviser for decisions and advice.

  • 4 Greg Atkinson // Apr 5, 2010 at 10:50 pm

    Anon the crazy thing is that the digging (and pumping) is increasingly being done by foreign owned companies. In addition, as our mining sector grows, it continues to draw on imported goods and services, therefore I wonder how beneficial the sector really is in terms of balance of trade.

    Instead of throwing money into the air, I argued a year or so ago that Australia should have set up a fund in order to take a stake in our own mining projects. In that way some of the profits could have been used to fund future infrastructure projects etc. Oh well…another missed opportunity.

    Anyway I wonder what % of mining equipment and infrastructure is actually manufactured in Australia vs how much is imported? That would be an interesting piece of information to get our hands on.

  • 5 Ralph // Apr 6, 2010 at 11:36 am

    All very true, Greg. The scale of waste that is justified in the name of ‘saving’ the economy is incredible. Who cares that a COLA cost $1m and the home insulation program was a rort – it ‘saved’ us! We should be grateful. Between the new mining boom and soaring house prices, it’s all a resource-based, low value-add economy like Australia could ask for.

    There is underlying weakness aplenty for those who choose to look. But it’s in the interests of K Rudd, Goose, Stevo, Henry and co to talk up the economy and emphasise the sunny skies. Nobody wants to believe otherwise. It’s all about confidence! Who needs economic fundamentals when you have confidence?

  • 6 Greg Atkinson // Apr 6, 2010 at 12:01 pm

    Ralph I have just been reading about the partnership between Bill Gates and Toshiba to develop travelling-wave-reactors. (TWR’s) Now this probably did not get much coverage in Australia, but got plenty in Japan because TWR’s could be a way to make nuclear power plants quicker, cheaper and safer to build & operate.

    These TWR’s can also be built on a much smaller scale that existing reactors and therefore could be ideal for emerging markets. The aim is to get the first one going around 2014. (before the NBN will probably touch Sydney)

    What are we doing in Australia…developing clean coal technology?! (well actually only some of it)

    The chances we will be stuck in 20 years time with a resource (coal) that will be treated much like tobacco smoking today.

    But never fear, we will keep shipping iron ore overseas and then buy it back at a premium via white-goods, cars, aircraft, ships, steel etc.

  • 7 Ned S // Apr 6, 2010 at 5:10 pm

    Can’t compete when we have/want the standard of living we do – A higher one even. Except by selling off the farm that I can see.

    When might we decide it’s a good time to learn to compete? Only when we’ve run out of farm to sell is my guess.

    And if for any reason our “spare” “farm” isn’t looking to be in particular demand at any time in the interim, we’ll happily undercut ourselves rather than bring forward the moment when we have to learn to compete. IMO? … 🙂

  • 8 Anon // Apr 6, 2010 at 6:02 pm

    Good posts, everybody. You are dead right about confidence Ralph…underlying fundamentals do seem meaningless atm.

    Hope you had a happy and safe easter too Ralph!

  • 9 Ralph // Apr 7, 2010 at 9:47 am

    Thanks, Anon.

    It’s just too easy to mine coal, iron ore, uranium etc and ship it off to whoever wants it. Just like it’s too easy to continue to base the economy around high real estate prices and the flow-on effects of that. Tough decisions to diversify the economy require courage and our current batch of political leaders have none of that.

    Greg, that was interesting story about nuclear reactors in Japan. Australia seems to have very little appetite for any deviation from the well-worn path of mining our resources only to pay more to buy them back again. Dutch disease is well and truly here. It’s ironic that Aus has come out of the GFC smelling like roses (allegedly) but we’re less diversified than ever and more dependent on fewer trading partners than ever. I’m not sure I’d call that a comprehensive win – perhaps more like a falling over the line strategy.

    But we have confidence! And confidence seems to be the winning card right now. Until the day it runs out.

  • 10 Greg Atkinson // Apr 7, 2010 at 7:51 pm

    Ralph, I could be just overly cautious but to me all this “Australia is booming” talk sounds like Groupthink in action. It seems most people don’t question any of the underlying assumptions being made.

    According to the prevailing wisdom – commodities prices can only head up, demand for commodities can only head up and our population and wealth can only head up.

    Mmm..I also recall when the wise heads were tipping oil to be at $200 USD a barrel in 2008!

    Will be interesting to see where we are at the end of the year. I will either be a legend in my own lunch box, or a total flop as usual 🙂

  • 11 Anon // Apr 7, 2010 at 9:15 pm

    “According to the prevailing wisdom – commodities prices can only head up, demand for commodities can only head up and our population and wealth can only head up.”

    I think commodities look stretched and they’ve lost all logic in relation to their LME stockpiles, personally I wouldn’t invest in them. But I guess one could argue commodities will be a store of wealth for countries fleeing debased currencies? The more money seriously indebted countries print (which is likely to continue occurring over the decade) the more people will seek real assets like gold, silver and commodities. So the more unstable fiat money becomes the more investment demand will occur for commodities.
    However, a serious prolonged USD strengthening would obviously kill that idea, at least for a short period of time.
    Interesting times ahead.

    Not advice, just chatter, see a financial adviser for decisions and advice.

  • 12 Niko // Apr 9, 2010 at 4:18 pm

    “Anyway I wonder what % of mining equipment and infrastructure is actually manufactured in Australia vs how much is imported?”

    Anecdotal observation, the next door neighbor worked at Caterpillar in Melbourne and was layed off. Apparently all they did was re-stamp the badges from vehicles made in India and passed them off as Australian made. Go figure.

  • 13 Greg Atkinson // Apr 9, 2010 at 4:52 pm

    Niko I found the answer to my questions on a U.S website: http://www.buyusa.gov/australia/en/mining.html

    “The market size for mining equipment is in excess of US$5 billion and the industry imports 70 percent of its equipment. Australia is the second-largest export market, behind Canada, for U.S.-manufactured mining equipment.”

    Well there you have it, we import 70% of our mining equipment!

  • 14 Senator13 // Apr 11, 2010 at 11:03 am

    That is a pretty poor stat. Our key industry that we are backing to continue to boom and we can’t even build our own equipment.

    That’s like someone having access to their own Uranium supplies and not using Nuclear power… Oh wait, that’s us too…

  • 15 Greg Atkinson // Apr 12, 2010 at 8:34 am

    Senator the 70% figure surprised me, I thought it was have been around 40%. This makes some of the claims about how much mining pumps into our economy a little suspect.

    The next number I will look for is what percentage of mining services we import. I hope that figure is quite low!

  • 16 Firebug // May 7, 2010 at 12:38 am

    Haven’t been to your site for a while, it’s good to read your article

    Your commentaries on Aussie economy and politics are certainly interesting read, keep it up!

    The way we’re going here, you will probably want to stay in Japan longer than you think

  • 17 Greg Atkinson // May 7, 2010 at 8:28 am

    Hi Firebug, thanks for the comment. I think the Government back in Australia might manage to create it’s own self inflicted economic crisis if it keeps spending and wasting money. But perhaps Rudd won’t be around much longer?

  • 18 Firebug // May 7, 2010 at 8:58 am

    I doubt it that Rudd wouldn’t make it the second term. But it seems his fear of losing power is very strong hence the spend our way out of trouble approach.

    This is funny because quite a few people said to me ALP would mess up the economy when Rudd got in. I said at the time to give the benefit of doubt. Well, what they’ve done so far is telling.

    What are your current thoughts on Aus interest rates trend please? My understanding from reading your posts is that you don’t think it would much higher from here, did I get it right?

  • 19 Greg Atkinson // May 7, 2010 at 10:48 am

    Firebug I reckon rates are already too high but that does not mean the RBA won’t raise them again. We now have a nasty situation where the stock market is down, the global economy is fragile but house prices in Australia are out of control and inflation is becoming a problem.

    So the RBA now really has a tough job. If they believe their job is to deflate asset bubbles then they need to raise rates again to try and cool the housing market, but clearly this is going to cause problems in other areas of the economy.

    The painful truth is that Australia may actually need a recession to re-balance the economy. Few people will dare mention this especially politicians, but the longer the economy remains out of balance the more painful the re-balancing will be when it does take place.

  • 20 Firebug // May 8, 2010 at 12:45 pm

    Thanks Greg.

    Well it seems that there is now talks of interest rate cut again, see how it goes

  • 21 Greg Atkinson // May 21, 2010 at 5:47 pm

    Firebug interest rates look to be on hold for now. But will the next move be up or down?

  • 22 Ned S // Jun 9, 2010 at 4:01 am

    If the economy (well those of NSW and QLD anyway) don’t boom, then no-one can say it’s Kev’s fault for failing to redistribute “the loot”:

    http://www.theaustralian.com.au/politics/state-budgets-flush-with-3bn-from-kevin-rudd/story-e6frgczf-1225877246302

    (I’d rather see the laggards encouraged to get their costs under control myself?)

  • 23 Greg Atkinson // Aug 4, 2010 at 5:53 pm

    Well Australia’s trade surplus is doing better than I expected see: http://www.theaustralian.com.au/business/markets/trade-surplus-soars-to-a-record-35bn-thanks-to-mining-exports/story-e6frg926-1225901091077

    Maybe this is good news..or maybe it isn’t. Could it be that when the G-20 stimulus spending fades we will see Oz exports fall sharply?

  • 24 Premium Finance // Aug 9, 2010 at 12:49 pm

    I am not sure how long the Australian economy will be booming , I am bit concerned about the property market which it in my opinion its getting ridiculous with houses prices going through the roof it reminds me of Europe such places like Ireland who had similar boom in there economy and far too many loans were taking out of the banks for the property sector and all of sudden it imploded

  • 25 Greg Atkinson // Aug 9, 2010 at 3:35 pm

    It’s a real mixed bag at the moment. New home loans have slumped, retail trade numbers are weak but business confidence seems to be picking up and exports are booming. I don’t see any property price collapse on the horizon but a correction seems to be very possible.

  • 26 Biker // Aug 9, 2010 at 6:14 pm

    When building slows but the population grows
    it won’t be too bad, I suppose… . 🙂

  • 27 Plornt // Aug 9, 2010 at 10:16 pm

    Biker what would your strategy be IF the housing market crashed.
    Would you target buying foreclosures or would you go for high quality?
    Cheers

    All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
    Be sure to seek and take personal professional advice from someone familiar with your circumstances and needs.

  • 28 Biker // Aug 10, 2010 at 4:38 pm

    Good question, Plornt.

    Let’s presume all our rentals were full, as at present.

    We’d do _nothing._

    We’d keep well over a mil in offsets.

    We’d keep our cash in the bank.

    We’d pass the properties on to the kids (Who don’t need them, but they’d certainly be accepted… .)

    We’d drop rents if necessary, but our homes represent good value, so we’d be competitive.

    Negative Equity is a toothless bogeyman, but it doesn’t apply to us anyway. We can easily pay all debt out with our Super.

    You may have misunderstood my past references to our circumstances as ‘comfortable’. We’ve been doing this steadily for 32 years now. I should probably rephrase that to ‘we’re _very_ comfortable.’ I ride motorcycles through choice, not poverty. 😀

  • 29 Biker // Aug 10, 2010 at 5:02 pm

    To be honest, we haven’t given the question much thought.
    We have so much property I’m not sure we want or need more.

    We’re still chasing that elusive bargain ‘holiday home’ in the northern hemisphere… without success. We found no bargains, looking for six months, last year… .

    IF a crash occurred here in Oz, I’d probably try to pick up a bargain in FNQ… and/or a holiday home on WA’s north coast.

    Frankly, I don’t think we’ll get the opportunity. 😀

  • 30 Plornt // Aug 10, 2010 at 5:31 pm

    Thanks Biker, and yes IF

  • 31 Ned S // Aug 10, 2010 at 5:49 pm

    I think you’ve got to aim at setting yourself up for retirement Plornt. So for me that involves figuring out what you want them for in your retirement.

    If the plan is to hold until death then you’ll be focused on potential rental returns. But if you see yourself selling them off then the capital gain potential is more important?

  • 32 Ned S // Aug 10, 2010 at 7:47 pm

    Where would you actually like to holiday in WA’s summer Biker? That Nova Scotia joint you mentioned sounded quite OK to me? Then again there are worse pastimes than panning a line of gold in a Mexican creek – You’re getting older mate! You need a plan here bro … 🙂

  • 33 Biker // Aug 10, 2010 at 8:37 pm

    Well, the plan is six months living in the NH each year, Ned.
    Must show you some of our longer rides on youtube!~ 😉

    Nova Scotia? Beautiful four months each year. Cold-to-freezing for six. Yes, three of four of those majestic homes were bargains, but the downside was too much for my little Canadian refugee! The white place with the turret, by the sea, on six acres, was breathtaking… but Digby Neck is pretty exposed in winter. Great harbour for a yacht, though… !

    Mexico? Fantastic holiday. Missus reminds me we’d swelter for four months every year… and gets nervous when I talk about beach homes there… . We’ll go again next year. East coast next time… .

    WA experiences very dry heat in late Dec – February… and we holiday between Augusta and Broome every year. We do a two-week 1000km ‘wine loop’ every two years, with friends.
    A 7000km round trip on a bike, to Broome, is an escape from winter in June, if we’re not NH-ing.

    Summer in WA? A dozen destinations: Exmouth, Shark Bay, Kalbarri, Busselton, Margaret River, Hamelin Bay, Augusta, Palm Beach, Rottnest Island, the Abrolhos…. all great coastal locations. Having grown up right on the banks of Perth’s Swan River, I know its course all the way to the sea: kayaking, yachting and boating since I was a kid, I could spend all summer on that river. At Rottnest Island we anchored in the bay for a week and never went ashore. Likewise in Shark Bay… ten days-at-a-time… . All uninhabited islands… .

    Life she’s good, mate!~ 😀

  • 34 Plornt // Aug 10, 2010 at 9:41 pm

    Thanks Ned, thats another thing to think about, retirement.

  • 35 Biker // Aug 10, 2010 at 10:03 pm

    “Doesn’t sound like you especially need a particular NH place then Biker?”

    The missus’ view precisely.

    Being an escapologist, I have a different view.
    But in terms of the economics, you’re both right…

    The real gem, in NS, was a four-acre lot with harbours on both sides, in Lunenberg. Even had a nice old two-storey home.
    (Shocking interior design, but liveable.) $350K the lot.
    We looked at subdivision (cheap) but it turned out that there were 1.5 acre lots nearby, with water frontages, for $250K, anyway. Fantastic town.

    My problem is that I end up wanting to buy in around 5% of the places we visit. What I’d like is a mooring in Lunenberg… as well as a beach villa on the Mexican Riviera. I could even go for an apartment on the Marne. Just too greedy, I guess… . 😉

  • 36 Ned S // Aug 10, 2010 at 10:08 pm

    Do you have a link on affordable solar stuff Biker – I reckon I can cash in on some town gas for cooking and HWS here but am very interested in solar for the rest?

  • 37 Ned S // Aug 10, 2010 at 10:11 pm

    “wanting to buy in around 5% of the places we visit” – It’s in your blood mate – I empathise!!! 😀

  • 38 Biker // Aug 10, 2010 at 10:29 pm

    The company we deal with is Down South Solar, Ned… but they’re WA-based. The first job was $9.5K, of which we paid $2.5K. It’s 1.5 kW: seven panels.

    The next one is going to cost us $4K. Eight panels, same inverter; 1.7 kW… but the cost to us is $4K. Still going ahead; great tenants… and I’ve promised, anyway…! 🙂

    Most of our rentals have piped-in LPG and solar HWSs.

    Our main property is pretty strange: House 1 has three fireplaces, including a $14K(!) Rayburn woodstove; and a 22-yo solar HWS. House 2 has bottled gas (big mistake!) and a woodstove. Because we have several acres of forest, including countless 20 – 60m trees, we have more than a lifetime of good timber, to generate heat, cook food, and heat water (via water jackets). We’ll need 5 kW of solar panels to run both houses and make a few thou annually in sales back to the grid @ 47c per unit.

    This will be our first year claiming depreciation on solar electricity panels on a rental. We’ll review the idea once we know how that goes… and after talking to the tenant… .

  • 39 Vince L // Aug 10, 2010 at 10:57 pm

    We will see how well the economy is doing if the Chinese economy falters. Not sure what the rest of you are talking about.

  • 40 Biker // Aug 11, 2010 at 9:01 am

    HaHa…!~ If your accommodation plan depends on China faltering, you may be renting for some time, Vince.

    Console yourself meanwhile, that despite some serious issues, Australia is better placed to ride out the storm than most of the planet. When China herself practises restraint… and tightens the reins a little… it’s an indication that the Chinese are very much aware of the global situation; and careful to avoid the kinds of excesses the US and Europe have actually _sponsored._

    “Not sure what the rest of you are talking about.”
    Well, you’re coming from a pretty negative place, so I can understand that… . 😉

  • 41 Greg Atkinson // Aug 11, 2010 at 9:42 am

    Hi all this is not a discussion thread regarding property. Can we stay on topic everyone? 🙂

    Please see the moderation rules. The threads soon fill up if we start talking about lifestyle choices etc and it slows down the site. Cheers.

  • 42 Biker // Aug 11, 2010 at 10:14 am

    Yes, you’re correct, Greg.

    Looking back, to see how we diverted to property, I noticed it started 6th April (Ralph); re-emerged 7th May (Greg); then bloomed 9th August (Premium Finance, Greg, Plornt).

    Plornt led me down the garden path, asking me what I’d do IF the property market crashed… . 😉

    And yes, the lifestyle stuff is interesting, but inappropriate here. Difficult to avoid when one is asked what one will do in any hypothetical situation…. . 🙂

    I note, however, that much of the dialogue centred around the unfolding energy crises… . 😀

  • 43 Plornt // Aug 11, 2010 at 10:58 am

    “I note, however, that much of the dialogue centred around the unfolding energy crises”

    Yes we can rationalize the relevance of the thread Biker lol.

  • 44 Ned S // Aug 11, 2010 at 11:41 am

    I see the CBA made a profit – So the super tax sword is being suggested. Remind me … How exactly are higher taxes good for the economy again? 🙂

  • 45 Plornt // Aug 11, 2010 at 11:57 am

    Did CBA do well? Haven’t been following am in relaxation mode 😉

    Is there a country you can live in that doesn’t require you to pay taxes?

  • 46 Greg Atkinson // Aug 11, 2010 at 12:24 pm

    Just trying to get us all back on subject since we all “drift” 🙂

  • 47 Ned S // Aug 11, 2010 at 12:27 pm

    $6.1 b profit has brought them to the attention of some politicians Plornt. I’m looking forward to the day when our pollies and public servants start coming up with ideas on how they can help our businesses be more profitable rather than on how they can their hands on the profits and spend them – That’ll be a cold day in Hades I guess! 🙂

    You’ve got a general interest in the Brit economy if I recall correctly (or the ERs at least) – You might want to check out this link? :

    http://www.marketoracle.co.uk/Article21739.html

  • 48 Ned S // Aug 11, 2010 at 12:31 pm

    I’ve been called a bit of a “drifter” in the past I’d guess? 🙂

  • 49 Plornt // Aug 11, 2010 at 12:44 pm

    lol Ned.

  • 50 Biker // Aug 11, 2010 at 2:40 pm

    I’ve been called a bit of a “drifter” in the past I’d guess? 🙂

    Harder to hit a moving target, mate! 😉

  • 51 Ned S // Aug 11, 2010 at 4:34 pm

    Correction – $5.66 b net profit maybe. So what does a 1.83% fall in the All Ords mean? That it might be a good idea for our pollies to hold off salivating over their prospects of super taxes for a while? Or is it just our foreign financial friends playing their usual games? Like a lot, I’ve noticed the pattern that everytime the AUD hits about 0.9 USD, it seems about time for a dump.

  • 52 Greg Atkinson // Aug 12, 2010 at 9:52 am

    Amazing that anyone on the Government side would chastise the banks for making a pile of money since the Government’s policies sent money flowing towards the big four banks.

    First there was the deposit guarantee that helped them, and then there was extra grant for first home buyers.

    But alas only mining companies are accused of making “super” profits. Curious isn’t it?

    The Oz economy does seem to be out of sync at the moment. The banks and miners have been doing well, but most other sectors in the economy seem to have be struggling. Telstra and Qantas for example have not reported good numbers today and I think we will see a lot of CEO’s being very cautious about the outlook for the next 6 months or so.

  • 53 Plornt // Aug 12, 2010 at 11:19 am

    Thanks for the link Ned, just had a quick read. Britain looks good and as usual everyone was overly pessimistic!

    “The Oz economy does seem to be out of sync at the moment. The banks and miners have been doing well, but most other sectors in the economy seem to have be struggling. Telstra and Qantas for example have not reported good numbers today and I think we will see a lot of CEO’s being very cautious about the outlook for the next 6 months or so.”

    Yes Telstras results were poor, and I have exited quickly with a small loss and risk management kicked in (1.4% of total capital).

    All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
    Be sure to seek and take personal professional advice from someone familiar with your circumstances and needs.

  • 54 Traveller // Aug 12, 2010 at 8:57 pm

    “Amazing that anyone on the Government side would chastise the banks for making a pile of money since the Government’s policies sent money flowing towards the big four banks.”

    And what was Abbott’s second comment at Rooty Hill?!~

    Got him some rousing applause… probably because we all now know how much equity he has in his home… !~ 😉

  • 55 Greg Atkinson // Apr 8, 2011 at 8:47 am

    Well it has only taken a year but finally the mainstream media is starting to question if the Australian economy is really in such good shape. As I have been saying for a long time, the mining boom has distracted people’s attention from problems in other areas of the economy and now The Austrlaian has finally picked up on this: Mining hides flatlining economy

  • 56 Ned S // Apr 8, 2011 at 7:09 pm

    The WTO doesn’t like our productivity ‘growth’ either Greg:

    http://www.theaustralian.com.au/business/wto-raises-productivity-fears-australia-has-lost-appetitie-for-structural-reform/story-e6frg8zx-1226034310836

    Though overall it seems to like us well enough. For now anyway I guess.

    We continue to rely on Asia/India doing well pretty obviously. Plus there being no huge holdups on any of the anticipated mining investment.

    And the question of how much our housing may or may not correct seems to be becoming a very interesting point right now:

    http://www.news.com.au/money/buyer-retreat-spells-slump-in-home-prices/story-fn84fgcm-1226035067289

    Give it three more months and we just could have a reasonable idea if things are going to get challenging here or not maybe?

  • 57 Greg Atkinson // Apr 8, 2011 at 8:43 pm

    Yes I think the WTO generally likes the Oz economy Ned but I believe they were also big fans of the Irish economy for years so maybe their endorsement is not necessarily to get excited about 😉

    The lack of productivity growth is a bit of a worry as is the fall in exports to Europe and the U.S. so the WTO is probably right to be a touch cautious about where the Australian economy is heading.

    As for housing…well I thought the market would cool last year but maybe I was a year out since it does look like it’s cooling a touch now?

    But like you said, it will be a few more months before we know which was things are headed.

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