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The unbalanced economy and household savings

October 23rd, 2010 · Greg Atkinson · 43 Comments

Over the last few weeks most of the financial media have once again managed to draw the wrong conclusions on a range of issues from Australian dollar to the strength of the Australian economy.  Talk of the so called two speed economy seems to be back in vogue whereas I believe we should be focused on and worried by, the unbalanced nature of the Australian economy.

The Australian stock market is not soaring and most Australian small businesses are not enjoying a golden age of growth and high profits.  According to a recent media release from the Australian Bureau of Statistics (ABS), the number of actively trading businesses in 2008/2009 actually fell by 1%.

Now this may not seem like much to worry about, but if the economy is truly booming then why have the number of businesses across the nation fallen? Shouldn’t continued population growth be creating more businesses?

Some “experts” tell us that the rise of the Australian dollar versus the U.S dollar is due to the strength of the Australian economy, but what they fail to mention is it more of a case of the USD falling, rather than the AUD rising.  The Japanese Yen (JPY) and Canadian dollar (CAD)  for example have also both strengthened significantly against the USD this year.

Without doubt commodities exports have kept money flowing into the economy and have resulted in Australia’s Terms of Trade bouncing back much more strongly than I expected.  But I am not entirely sure this is a good thing since it only reinforces the “resources” mentality in Australia.

Australia has enjoyed a decade or more of solid economic growth but the downside to this is that many people don’ t expect that growth to ever end. People continue to take out bigger home loans to buy bigger houses, the Government seems intent on spending more and wasting more of taxpayers money and the view of many economists, market watches and financial journalists is that the good times will be around for years to come.

But how good are the good times actually? We might all feel richer and spend more freely than a generation ago, but are we really better off? Well if you look at the Household savings ratio the answer is no.

Australian Household Savings Ratio


(Source: Australian Bureau of Statistics)

As can be clearly seen from the graph above, the household savings ratio in Australia has been in long term decline. Simply put, households are saving less but spending more.

Over the last few years the level of household savings has increased, but this could be just a short term aberration as a result of the global financial crisis rather than the long term trend reversing.

I am not suggesting that the household savings ratio is an accurate way to track the growth or decline of net wealth or that it takes into account all household assets. Like all economic indicators it has plenty of limitations.

In addition the Australian Bureau of Statistics makes this comment about the ratio:

“The Household saving ratio does not take into account capital gains and losses as these are not considered to be part of Household disposable income. Thus a period of high asset price inflation (e.g rising house prices) will not directly influence the Household saving ratio. When considering the “wealth effect” it is possible that consumption in current quarters will rise on the basis of strong gains in the value of assets and in this situation saving will fall, all else being equal.”

Source: Australian Bureau of Statistics – Household savings ratio

Since house prices are not directly factored into the savings ratio many people will say that the measure is not accurate because it leaves out what in most cases, is the largest single household asset.

But since the cash generated from the sale of property would be included into house savings, property assets are indirectly included on a long term basis into the ratio.  In other word, if you sold your home and made a tidy profit then your household savings would increase.

What the ratio does suggest to me is that there is an enormous amount of stored wealth locked up in housing which is why banks call it equity and are happy to let you spend it. (which in turn will probably extend the duration of your loan and helps the banks rake in more profit)

You could view the household savings ratio in two ways.  On one hand you could simply dismiss it as an inaccurate measure because it doesn’t take into account periods of rising house prices or on the other hand, you could wonder why household savings have been in long term decline.

For me it is just another indication of how the Australian economy has become dangerously unbalanced. The nation’s economic future appears to depend on rising house prices and commodities exports with the latter very dependent on how the Chinese economy fares.

The optimistic view is that there is little to worry about apart from inflation and how to keep growth under control.  The pessimistic view is that the foundations of the Australian economy are lined up like dominoes and if the Chinese domino was the topple over, the rest would follow in quick succession.

I believe the economy is stuck in the middle of the optimistic and pessimistic views somewhere.  I feel both views have merit and as such I have a foot in both camps, or more precisely, I don’t know which outcome is the most likely so I am hedging my bets.

What I do know is that the Australian economy is becoming more unbalanced as the mining sector become stronger and home prices keep rising.  Compared to a generation ago consumers spend more, save less and households are willing to take on bigger mortgages so they can buy bigger homes.

The nation is selling off commodities at a record rate and at record prices, unemployment is low, immigration high and if we believe the Government and the RBA we have never had it so good.

Perhaps the right decisions will be made by policy makers and global events will unfold in Australia’s favour, in that case the Australian economy may gradually become re-balanced or simply thrive as it is – maybe a balanced economy is for whimps?

Are we enjoying a period of unparalleled wealth creation in Australia that will continue for a decade or more, or are the wrong decisions being made by policy makers that will have dire consequences later?

I do not pretend to have the answer to this question, nor am I suggesting that I am drawing the right conclusions from the economic indicators I look at.  My aim is simply to make people think and flag some of the risks out there for investors.

Maybe I have become too pessimistic over the last few months, or maybe I am onto something?  I will let readers be the judge so please jump in and tell me what you think.

43 responses so far ↓

  • 1 Biker // Oct 23, 2010 at 1:22 pm

    “People continue to take out bigger home loans to buy bigger houses…”

    No, that has slowed to a mere trickle. Aussies accustomed to upgrading every five years have probably held for 7 – 8 now.
    This market is on hold… .

    And, as far as small business, I can think of at least twenty suffering right now, due to slowed construction locally. This number is conservative. It may well be closer to a hundred.

    Your general point is strong. We have an unbalanced economy.
    To some extent, we always have had. When I was a kid it was Wheat ‘n’ Sheep. And I accept that, ironically, we’ve diversified as manufacturing declined, due to wage/cost issues. What may happen next is a continued decline in construction, tourism and overseas student intake… all three declines incredibly damaging to our already ‘unbalanced’ economy… and reinforcing the ‘dual economy’ paradigm…

    If I’m right here… and the RBA factors in these three hits, there’ll be no rate rise on Melbourne Cup Day. If I’m wrong, watch the RBA scramble to address the(ir) damage early in 2011~ πŸ˜€

  • 2 Ned S // Oct 23, 2010 at 4:16 pm

    I’ve been thinking VERY seriously about locking half of my cash into a term deposit. For two reasons:

    * In case the RBA stuff ‘it’ up again and have to crash rates! and

    * I’m seeing a significant enough correction in Brisbane housing that I’m being tempted to start looking – But commonsense is saying Keep your powder DRY for at least 12 months!!! πŸ™‚

  • 3 Ned S // Oct 23, 2010 at 5:48 pm

    The equity locked up in housing? Well yes, one can tap it by selling but when one does, someone else gets a debt of course. So in a lot of ways the RBA is correct when they say house price increases as such don’t add to the national wealth. Unless they are sold to foreign investors perhaps? And except as in so far as the increases make people feel wealthier and they are happy to spend I guess.

    We also have $1 trillion locked up in superannuation that we didn’t have a generation ago Greg. Not sure that is a great thing personally but it is fact regardless. And I’d imagine a fair bit of that is earmarked to pay down debt that people might still have going into retirement?

    You’re ‘hedged’ – Yep, me too! πŸ™‚

  • 4 Biker // Oct 24, 2010 at 8:38 am

    The Super aspect is a good point, Ned. As you say, we’re hedged.

    “…in a lot of ways the RBA is correct when they say house price increases as such don’t add to the national wealth.”

    In a pure sense, we can agree on this. But conversely, if prices fall and construction slows, it affects scores of businesses… then jobs… then the tax base… then welfare.
    If realty really does comprise over 25% of Oz GDP, then the RBA and government have to figure in the consequences of a soft vs hard landing!~

    So the RBA is right to be worried that we could join the Bubble Club and perhaps some in Melbourne and Sydney have already done so. Mulling over Ellis’ definition of a bubble, we’ve concluded that her wording might have been more precise than it is:

    “…buying an asset just because you are expecting the price to rise in the future, well that is actually the academic definition of a bubble…”

    Had she said, instead:

    “…buying an asset just because you are expecting the price to rise NEXT YEAR, well that is actually the academic definition of a bubble…”

    If investors really are buying million plus rental homes in Sydney with the expectation of a quick capital gain, they’re
    in high risk territory… .

  • 5 Greg Atkinson // Oct 24, 2010 at 9:41 am

    Hi Biker, my comments about housing were made in regards to the long term trend (20+ years) whereas what is happening now may very well be a short term adjustment only.

    But we have been waiting for the housing market to cool so maybe that is finally happening?

    Ned thanks for mentioning Superannuation. Superannuation has been around for quite a while now and so it doesn’t look like it is making a big impact on household savings. Perhaps it’s impact is being offset by such things as reverse mortgages?

    I also think many people factor in their superannuation and that gives them the confidence (perhaps unwarranted) to spend up big while they are working.

    The reason I did not mention superannuation is because it is a benefit largely paid by employers so it doesn’t significantly affect a households ability to save.

    On a similar point, more Australians own stocks and managed funds etc now than a generation ago but again, these assets are liquidated at some point so this money would flow into the household savings ratio at some stage.

  • 6 Biker // Oct 24, 2010 at 10:25 am

    “But we have been waiting for the housing market to cool so maybe that is finally happening?”

    Well, the long-term trends hint that every now-and-then property plateaus. Those trends also show that a major rise follows these flat periods. As Don suggests, history repeats itself until it doesn’t(!) so there’s no guarantee that we’ll see a property boom in 2011-2013… but we may… . πŸ˜‰

    More and more fiscal conservatives like me are sal-packing their Super. When the laws permitted us to, we salary-packaged 75% of our pre-tax dollars into Super. We say that Super is not an asset; rather it’s a vehicle for a range of assets, but it has been an incredibly powerful engine for our asset growth!~ πŸ˜€

  • 7 Ned S // Oct 24, 2010 at 11:27 am

    The point that Ellis didn’t raise was that long term one has to expect everything to go up Biker. Simply because the RBA targets inflation. So investing in the expectation of the price of something increasing would hardly mean one has a bubble. And that’s only the case for ‘untalented’ investors who don’t hope to do better than inflation perhaps? I thought it was a damn stupid definition to be honest.

    Agree that any significant declines in property prices will have to be fought of course. Even in countries where the economy doesn’t seem as highly reliant on housing as ours, that’s been the case. Indicates the degree to which our economy is unbalanced as Greg says. No short term fixes for it that I can see. But one would be foolish to not recognise the risk. And as Greg has also said before, our plan seems to be that Asia will do well and we’ll bask in the glory based on minerals exports to the region. With there being a potentially worrying absence of any Plan B being in evidence. πŸ™‚

    As Biker mentions, education looks like taking a hit with the high dollar. That’s a more important one than a lot of people realise I suspect.

  • 8 Biker Pete // Oct 24, 2010 at 2:04 pm

    “…education looks like taking a hit with the high dollar…”

    Must admit I’m uniformed about most capitals, but along with some recent policy changes, it _will_ hit Melbourne, Sydney and Perth. We figure this may knock Perth rentals around somewhat.

    Never had any students as tenants (they probably can’t afford our stuff) but the first of our recent (six years) building projects was designed to take up to five: five large bedrooms, each with telephone, TV and internet access; and three nice bathrooms. We scored bigtime when the grano worker mis-measured and poured the pad much larger than the plan specified. Builders just created a larger house when they finally realised his mistake!!~ You could live in the guest room.

    That house is now valued at 2.5 times our total 2005 costs.
    (And we could have bought the whole street, dammit!)

  • 9 Futureproof // Oct 24, 2010 at 3:43 pm

    In my book, ever increasing utility bills are like an extra 1% monthly increase on the mortage. A sweeping generalisation I know, but even with our interest rates as they are, you at least know what your mortgage payments are going to be. You can factor in an increase, and you can add more each week/F/N/month. However, with utility bills, the variation from quarter to quarter can be extreme. On my most recent electricity bill (complete with carbon emissions line graph), I used less electricity than last quarter, but paid significantly more. I know what the mortage payments are, but I can’t factor in the utility payments. I have turned into a lightswitch nazi. Thus, household available income is being eroded by ALP/Green fascism in regards to billing us into the 13th century.

  • 10 Ned S // Oct 24, 2010 at 5:39 pm

    A young lady overseas once said to me You white fellahs are crazy – You even pay money to go to the toilet! With that privilege now costing about 1% of my before tax annual income, I see her point! But suspect my lady would see it as ‘Money well spent’? πŸ™‚

    Not at all sure about the rest of our rates and electricity and water and insurance charges though Futureproof. In many ways I suspect we are being dudded by Big Brother providing services that I’d much rather see as optional.

  • 11 Greg Atkinson // Oct 24, 2010 at 6:15 pm

    Then of course the NBN will one day (?) roll into town and you will be connected to it even if you don’t want it.

    Futureproof your comment about utility prices is a very good one. It is indeed hard to plan when you don’t know what the Government will do next. (as the mining companies have already found out!)

    Let’s also not forget that the Greens have some pretty far-left/crazy ideas about taxation as well. They are in favour of using the tax system to redistribute wealth so that should make self funded retirees very nervous.

  • 12 Ned S // Oct 24, 2010 at 6:50 pm

    Almost mentioned the NBN Greg! But let it lie on the reasoning ‘Sufficient for the day is the evil thereof” … πŸ™‚

    “They are in favour of using the tax system to redistribute wealth so that should make self funded retirees very nervous” – ‘Reverse Boat People’ sums up my thoughts on that one mate!

  • 13 Ross T // Oct 24, 2010 at 9:01 pm

    A really unbalanced economy created by too much government controlled business piling up debt and heading for the inevitable correction. Basically the govt is muscling private business out with high spending. The US, UK and Europe are showing the fun to come. For example Spain has just terminated its solar subsidies after only 3 years – something our state govts are already signalling. The UK has pretended to slash public service jobs to justify a huge increase in spending (again – they never learn). As for the US they are doing their best to stuff our (and Brazils) economy with “3 wise monkey style” currency wars.
    Australia’s multi-layered taxes, environmental, native title, council and tax laws combined with banker’s insistence that you must put your house up as collateral make it extremely hard for any new business to risk a start-up. Add in the predicted wild-cat bank interest rate rises, inflation and tax increases and you can only say thank goodness the govt is stymied by independents’.

  • 14 Biker Pete // Oct 24, 2010 at 10:12 pm

    So much on which to pass comment… .

    First, my own snafu: “I’m uniformed about most capitals” Did I mean helmet, gloves and leathers, or did I mean ‘uninformed’?

    NBN: Having just spent the day burying 100m of Cat5, shielded in 13mm retic pipe, I figure I’ll now have fast wireless right around our property. Guests will have wireless access virtually everywhere. Already have two satellite dishes, so I figure NBN or no NBN, we may be as connected as we’ll ever be… .

    Utilities: We’re independent of most of them. Four more solar electrickery systems go up this week. They’d better not pull the WA subsidies. It would be a government changer in WA… .

    Insurance: We recently challenged our insurer and got over $400 in refund cheques. Recorded every phone (Skype) call, until they agreed our analysis was correct; a worthwhile exercise!~

    Surrendering Title? We keep titles… or pay them out.
    We’ve never once been requested to lodge our main title with a bank. I guess sufficient equity in every project is the key. What _is_ particularly annoying is to pay out a project and then learn that the bank has cross-secured that one against another project, without advising this was the case… .

    “Wait-a-bit; your bloke Bob said I’d just have to pay the $200 legals!”
    “Yeah, well Bob was wrong. Sorry about that!”
    “Well, I’d have paid out another project instead!”
    “Yeah, well, sorry about that.”
    (They will be when I pull my Super!~ πŸ˜€ )

  • 15 Greg Atkinson // Oct 25, 2010 at 11:30 am

    I have to admit that I am struggling to decide if Australia is really the super-lucky country or if we are heading like lemmings off an economic cliff.

    Is our central bank really that much smarter than other central banks? They reckon they are, but the RBA also failed to spot the GFC coming and in truth the mining sector saved us from a nasty recession, not such much the RBA.

    Maybe in a decades time we will be discussing how Australia managed to waste the best years of the mining boom? Will we end up with an NBN that cost more than expected and is used less than expected? Will we have failed to improve our rail network and instead have school halls that cannot be maintained because of budget cutbacks? Will our dependence on high immigration to stoke growth come back to haunt us if unemployment starts to rise?

  • 16 Biker Pete // Oct 25, 2010 at 2:11 pm

    We’re the Lucky Country, Greg! And yes, much of that is down to resources, rather than governments or reserve banks.

    Virtually no-one saw the GFC coming. (Daily Reckoning did, however! Luck? Well it saved our Super!) Not only did the RBA _not_ see the GFC coming, they were raising interest rates as it cartwheeled in…! πŸ˜€

    I’ve no doubt that your final paragraph is prophetic*. We will rue the wasted boom.

    * Not sure I understand your final comment.

  • 17 Greg Atkinson // Oct 25, 2010 at 2:52 pm

    I did not understand my last comment either, so I have edited it to make sense πŸ™‚

  • 18 Greg Atkinson // Oct 25, 2010 at 3:18 pm

    P.S Michael Pascoe seems to be worried about Australia’s obsession with resources as well as per his article today: Goodbye to the regional financial hub

    Maybe Singapore never received Rudd’s memo about the evils of capitalism?

  • 19 Biker // Oct 25, 2010 at 9:47 pm

    “Michael Pascoe seems to be worried about Australia’s obsession with resources…”

    Well, Jeez, aren’t we all, Greg?!~ πŸ˜€

    On paper, solutions are easy, tending to start with the phrase: “They should… ”

    My old dad eventually tired of that gambit. Every time his (large) family visited the farm, one-or-another of us would initiate a “Why doncha…?” His answer was to (re)delegate the suggestion back to the ‘suggester’. The issue is that to change the current situation, private risk capital (not government intervention) is required. But risk capital is just that.

    It’s all well-and-good to respond that Aussies can overcome the high-labour-cost issues, by outsourcing, or building factories abroad, but if it was such a safe bet, more of us would be doing it.

    Over seventy percent of what goes into houses we build is Aussie-made… made by Australians, in Australia. It’s great to see a brilliant new soakwell design, superior to all before it, being made in Oz… and the manufacturer cannot churn them out fast enough!

    That old song “Do what you do do well…” comes to mind… . πŸ™‚

  • 20 Vince L // Oct 27, 2010 at 9:28 am

    The SGX/ASX deal says a lot about Australia’s economy. Our stock exchange, in a nation of 20 million people and abundant resources is going to be effectively taken over by Singapore, a nation of around 5 million with no significant natural resources.

  • 21 Greg Atkinson // Oct 27, 2010 at 12:13 pm

    Biker, the question is, who owns the companies who supply the products to the housing sector? In any case, we soon fill our houses with plenty of imports.

    Vince, the SGX/ASX is just another example where Australia is being outflanked. Our manufacturing sector is shrinking, tourism is in trouble, we don’t really do much hi-tech stuff and so that basically leaves us with….mining and farming.

  • 22 Biker // Oct 27, 2010 at 2:19 pm

    Well, we buy land from an Aussie developer, build with a WA company, employ all Aussie-owned companies for trades… and most of what we use _is_ made in Oz. we’re supporting Australia’s diversified economy… .

    My point is that this mysterious ‘they’ who need to fix the imbalance is you and me. My dad’s response was logical. If you want something to happen, _you_ make it happen.

    I guess you could argue that by bringing the imbalance to the world’s attention, one is doing something about it… .*

    * But it probably isn’t enough.

  • 23 Greg Atkinson // Oct 28, 2010 at 1:22 pm

    Interesting article today in The Australian: Aussie consumer debt on the rise – study

    Seems interest rates might be on the way up but people still want to shop till they drop.

    Biker: As for the imbalance in the economy, I put much of the blame on governments state and federal. I don’t think the average person can do a lot to kick start the tech sector or move money away from housing for example. The easy policy approach for years has been to watch house prices go up and ride the commodities boom…diversification was put in the too hard basket and is still there today.

  • 24 Biker // Oct 29, 2010 at 1:51 pm

    “I don’t think the average person can do a lot to kick start the tech sector…”

    The average person doesn’t think a great deal about these things.
    Never implied that either of us is average… . πŸ˜‰

    But what if Noyce, Moore, Grove, Berners-Lee, Wozniak or Jobs had believed themselves ‘average’, powerless, unable to influence the future? (Would our Tall Poppy Syndrome have stunted their growth, I wonder?!~~)

    “…or move money away from housing for example…”

    Why would we bother? It’s many Aussies’ greatest store of wealth!~ Construction is our third largest industry. Why fool with that? πŸ˜€

    ‘Blaming’ really doesn’t cut it. If our wages are high, too high to make production feasible, that also has some benefits to Australians. Some might prefer that governments take a greater hand (as in China!) but I doubt we’d willingly exchange what we have for what they have (yet!) πŸ˜‰

  • 25 Biker // Nov 7, 2010 at 9:47 pm

    With Chuck jumping the gun, it will be interesting to see how bank shares fare, with key players in three parties determined to regulate the banks. Even more interesting if collusion _is_ proven. Wonder how all this will play out?

  • 26 Greg Atkinson // Nov 8, 2010 at 3:28 pm

    I see bank shares were not popular today so it seems the miners and banks are both in the firing line these days. Not a good sign for the ASX All Ords or S&P/ASX 200.

    Then we have former blue chips companies like Telstra and Qantas in the doldrums as well. No wonder we can get above 5000.

  • 27 Biker // Nov 8, 2010 at 3:40 pm

    The chips are down.

    And when you factor in the steady fall of construction-dependent players, it doesn’t look all that positive:

  • 28 Ned S // Nov 9, 2010 at 12:41 am

    Stocks are still down about 30% off their peak? Housing could correct by something a bit less is my hunch? Recessions happen. We’ve all been there and done them. Though they aren’t nice at the time … GO ASIA!!! πŸ˜€

  • 29 Greg Atkinson // Nov 9, 2010 at 9:32 am

    Ned let’s also not forget we now have the Treasury’s optimistic forecasts falling apart as we type.

    As Sinclair Davidson wrote in The Australia today:

    “Treasury has a long and miserable history of poor forecasting.”

    See: There’s a hole in the budget, dear Henry

    Indeed they have, but that doesn’t stop Ken Henry running making speeches praising himself and his department.

    I think the guy spent too much time near Rudd’s super-sized ego.

  • 30 Ned S // Nov 9, 2010 at 10:52 am

    Not that I especially feel like trying to say anything else negative, but there is a G20 meeting coming up soon that has the potential to turn nasty and not a lot of potential to resolve anything unless some pretty big vested interest players really can come up with some consensus and damn good ideas. And my hopes for the latter are not high?

  • 31 Biker // Nov 9, 2010 at 1:38 pm

    “…come up with some consensus and damn good ideas…”

    Well, let’s start by increasing Chuck’s $16.1 million annual salary. Running a high-risk bank like CBA has to be worth double that!~ πŸ˜€

    Bet the other CEOs are ra-a-l-l-phhhhh-i-n-g… . πŸ˜‰

  • 32 Ned S // Nov 10, 2010 at 9:51 pm

    It’s SIR ra-a-l-l-phhhhh to the likes of us Biker.

    I’m getting positively schizophrenic over this economy. On one hand the fundamentals seem kangaroo Edward (as you say). And on the other I read another multi-billion $ LNG project has just been approved for Happy Knackers. (Which is a bit of the country I got a unhappy email from a mate asking if anyone knew of any work going round back in late 2008 or so when the alumina related mob he was working for laid him off.)

    Some stability would be nice. And I really don’t believe we are going to get it until the USD ceases to be in the artificial position of being the world’s very major reserve currency???

  • 33 Biker // Nov 11, 2010 at 4:29 pm

    Agreed, it’s a very confused global situation, Ned.

    What a time for the US to fool up, as China looms large on the horizon.

    I’d be offshore right now, trolling for toothies, but the wind is too high!!~ πŸ™

  • 34 Ned S // Nov 11, 2010 at 10:29 pm

    “What a time for the US to fool up, as China looms large on the horizon” – Yes, they timed it ‘to perfection’ alright. Because, despite my doubts about the fundamental integrity of the US, I’ve certainly got some about China as well!

    Almost like the US took their cue from the European’s playbook back in 1914 isn’t it? We are big, we are strong, we are tough – We rule the world; No-one can ever be better or smarter than us! (Unless we find some incredibly stupid way to shoot ourselves in the foot!!!)

  • 35 Ned S // Nov 11, 2010 at 11:55 pm

    And when it comes right down to it Biker – They did screw up – And I’m yet to ever hear of anyone successfully managing to poke the poo back in the pony? With the rest of us back in the pony trap getting to go along for the ride as the proverbial keeps splashing out! πŸ˜€

  • 36 Biker // Nov 12, 2010 at 12:15 am

    ‘Horses’ bottoms’ was the term we used to describe those unfortunate images which weren’t all that well composed, back in the sixties, Ned.

    Clearly, any extreme, capitalism or socialism, spells disaster. We’ve seen the US exceed that extreme. Sheer utter greed, rewarded by the system.

    One of our sons recently applied for a job with the Oz banking system: $80K per annum, with a _bonus_ of $80K p.a. What has been learned from the US experience, I wonder? The capacity of banks, to double one’s income, at will, is incomprehensible to us. Our kids make far more than that, freelancing, but when an annual bonus equals the annual wage, WTF is happening to us? Where is that extra $80K coming from? From Oz families on $70K p.a., that’s where… .

    Canadians everywhere, at present. I’m totally outnumbered by rellies… and three sheets to the wind: chardonnay, verdelho and shiraz. πŸ˜€

  • 37 Ned S // Nov 12, 2010 at 1:00 am

    “WTF is happening to us? Where is that extra $80K coming from? From Oz families on $70K p.a.” – And less Biker. While I’m not planning on leaving, it does remain a retirement option.

    I’ve always quite liked the Canucks I’ve met – But if one of them you know is really giving you the peevies, I’ve found that asking them “How can any nation that has a dead leaf as it’s national emblem hope to be taken seriously?” tends to quieten them down – Momentarily at least. Though must admit I’ve not used it on them when they were in numbers; Or armed; Or accompanied by their pet grizzly bears? πŸ˜‰

    ‘Course I could tell you my real favourite yarn that really shuts them up – But Greg might object to me telling such stories on his site! πŸ˜€

  • 38 Biker // Nov 14, 2010 at 11:32 am

    β€œHow can any nation that has a dead leaf as its national emblem hope to be taken seriously?”

    Rest assured I’ll keep that handy for any future occasion, Ned!~

  • 39 Ned S // Nov 14, 2010 at 9:55 pm

    The one that genuinely seems to gall them more than any other, is to tell a joke that could in any way suggest that their economy could be in any way inferior to that of the US Biker … Though such jokes have gotten considerably more difficult to carry off convincingly these days perhaps? πŸ™‚ πŸ˜‰

  • 40 Biker // Nov 16, 2010 at 9:50 am

    Their buck is a little ahead of ours, Ned! (As they reassured me last night… .) πŸ˜€

  • 41 Ned S // Nov 16, 2010 at 5:48 pm

    Last time I looked, the Loonie and Ozbuck were both giving the USD a fright. With their economy being considerably more dependent on the ongoing financial well being of the US than ours. Ask them how they think the US might be faring in 10, 15 or 20 years perhaps? πŸ˜‰

  • 42 Biker Pete // Nov 16, 2010 at 6:15 pm

    I think they share our perceptions of the US, Ned. Nice people: my brother-in-law and sister-in-law. Both retired, pre-60, on 60% of their last annual salaries, for life(!) No means tests, so they can also receive all kinds of other benefits and pensions, including the COAP.

    Not too many bears growling on DRA these daze, mate. Steve’s buying an apartment (after Xmas takes out Sydneysiders) and Shoes is also hot to set up a SMSF rental. Word is rents will rise 7% annually here 2011-2013. Not entirely beyond the realms of possibility, although prior to the GFC, they only rose 6% annually. No increase(s) at all during 2009 – 2010.

    Our latest project (3X2X2) has been entered in the Master Builders’ Association competition, the third of ours to be nominated in recent years. Major compliment to the missus, who completely redesigned a very standard 4X2X2 plan. Being three-bedroom, it may stand a good chance of winning… .

  • 43 Greg Atkinson // Feb 21, 2011 at 2:57 pm

    Interesting to see a major company CEO agreeing with what I have been saying for a long time in regards to the Australian economy being unbalanced. According to this article in the Australian: BlueScope loss deepens, O’Malley points to destructive resources boom the BlueScope CEO’s says:

    β€œIt’s a tough time to be a manufacturer in Australia, in fact a very tough time,” he said. β€œThis economy needs to be more than just a one-trick pony.”


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