It's the economy, stupid!

 
  don_dunstan Dr Beeching

Location: Adelaide proud
Australia's current account deficit is getting progressively worse... the measure grew from $11.7 billion in the March quarter to $13.5 for the latest June quarter. Australia exports everything we possibly can, digging it out of the ground or growing it, we've sold our national gas reserves to try and finance our lifestyle and we still can't manage to get our trade deficit down... hopeless. Look to the corrupt economic basket cases of Brazil or Argentina if you want to see our future.

Meanwhile Scotty Morrison continues his war on unions with the CFMEU in his sights for complete de-registration. This war I really don't understand - when he was treasurer he constantly whinged about how Aussie workers needed to go to their bosses and demand wage rises for the good of the country (so the tax revenue increases). But now as Prime Minister he's decided that any form of unionisation is bad news and he's going to take up the cudgel from where Johnny Howard put it down...

Talk about mixed messages?

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  Valvegear Oliver Bullied, CME

Location: Richmond Vic
Meanwhile Scotty Morrison continues his war on unions with the CFMEU in his sights for complete de-registration.
"don_dunstan"
It's an unwinnable war, and he'd be better off attempting to bring some semblance of sense into government instead of having it looking like an out of control kindergarten.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Australia's current account deficit is getting progressively worse... the measure grew from $11.7 billion in the March quarter to $13.5 for the latest June quarter. Australia exports everything we possibly can, digging it out of the ground or growing it, we've sold our national gas reserves to try and finance our lifestyle and we still can't manage to get our trade deficit down... hopeless. Look to the corrupt economic basket cases of Brazil or Argentina if you want to see our future.

don_dunstan
Hi Don,
You do know that Australia has run a perpetual deficit since, like since forever apart a few boom periods.

The deficit keeps the dollar low which retains much of our export markets and when we have been in surplus, job losses from manufacturing and other export sectors were at their peak.

The important number is not the actual, but rather % of GDP, as actual will rise with population and this doesn't mean its getting worse.
  arctic Deputy Commissioner

Location: Zurich
Australia's current account deficit is getting progressively worse... the measure grew from $11.7 billion in the March quarter to $13.5 for the latest June quarter. Australia exports everything we possibly can, digging it out of the ground or growing it, we've sold our national gas reserves to try and finance our lifestyle and we still can't manage to get our trade deficit down... hopeless. Look to the corrupt economic basket cases of Brazil or Argentina if you want to see our future.
Hi Don,
You do know that Australia has run a perpetual deficit since, like since forever apart a few boom periods.

The deficit keeps the dollar low which retains much of our export markets and when we have been in surplus, job losses from manufacturing and other export sectors were at their peak.

The important number is not the actual, but rather % of GDP, as actual will rise with population and this doesn't mean its getting worse.
RTT_Rules
Also, we seem to be confusing "trade deficit" with "current account deficit". AIUI these are measures of two different but related things.

For reference here is Australia`s and Argentina`s trade performance in the last 12 months:




cheers
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Also, we seem to be confusing "trade deficit" with "current account deficit". AIUI these are measures of two different but related things.

For reference here is Australia`s and Argentina`s trade performance in the last 12 months:




cheers
arctic
Appreciate that feedback, correction and clarification Arctic.
(Your turn Don or should it be Don, tu turno )

Longterm trend for Balance of trade seems to be healthy and in surplus so we are selling more than we buy
https://tradingeconomics.com/australia/balance-of-trade


Current account also improving

  don_dunstan Dr Beeching

Location: Adelaide proud
Appreciate that feedback, correction and clarification Arctic.
(Your turn Don or should it be Don, tu turno )
RTT_Rules
We only achieve a trade surplus because we do some very odd things like sell our gas to Japan for less than it costs to get it out of the ground and bring in 350,000 or so foreign students to study in our education system... I can't actually find any statistics on how many are using this simply as a pathway to residency but let's face it if PR wasn't at the end of the tunnel there would probably be significantly fewer coming. We aren't the education powerhouse that we used to be - there's only four Aussie universities in the top 100 global research institutions now, they're too busy being degree/residency factories to bother researching anything anymore.

Imagine what would happen in the Chinese stopped buying our iron ore; if they used their power to ban Australian study or restrict tourism? The whole model would tip on its head - we'd look much more like Argentina's trade chart. This is why people like Tunbull had to kowtow to the Chinese Communist Party, they're in fear of what would happen if the Chinese decided to arbitrarily change their policies towards us.
  arctic Deputy Commissioner

Location: Zurich
Appreciate that feedback, correction and clarification Arctic.
(Your turn Don or should it be Don, tu turno )
We only achieve a trade surplus because we do some very odd things like sell our gas to Japan for less than it costs to get it out of the ground and bring in 350,000 or so foreign students to study in our education system... I can't actually find any statistics on how many are using this simply as a pathway to residency but let's face it if PR wasn't at the end of the tunnel there would probably be significantly fewer coming. We aren't the education powerhouse that we used to be - there's only four Aussie universities in the top 100 global research institutions now, they're too busy being degree/residency factories to bother researching anything anymore.

Imagine what would happen in the Chinese stopped buying our iron ore; if they used their power to ban Australian study or restrict tourism? The whole model would tip on its head - we'd look much more like Argentina's trade chart. This is why people like Tunbull had to kowtow to the Chinese Communist Party, they're in fear of what would happen if the Chinese decided to arbitrarily change their policies towards us.
don_dunstan
To be fair, you originally said we had a trade deficit, which we don`t at present - irrespective of the cause.
  don_dunstan Dr Beeching

Location: Adelaide proud
To be fair, you originally said we had a trade deficit, which we don`t at present - irrespective of the cause.
arctic
Yeah in the second half of what I was saying I did get the two confused. It's CAD not trade.

Money is still shovelling off-shore though - what is the cause?
  don_dunstan Dr Beeching

Location: Adelaide proud
Correct me if I'm wrong but a deteriorating CAD (as we have) is connected to -
  • Domestic consumption including housing and construction being funded by off-shore borrowings
  • Very low rates of household savings in Australia
  • Very high rates of consumption and borrowing domestically in Australia.
Meaning we're basically borrowing off-shore to fund our lifestyle. So trade surplus/deficit isn't as relevant if our offshore liabilities are increasing at the odd-$14 billion a quarter? Also the thing that concerns me is that if our currency does tank it's going to be all the much harder to pay back this blossoming debt, isn't it.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Appreciate that feedback, correction and clarification Arctic.
(Your turn Don or should it be Don, tu turno )
We only achieve a trade surplus because we do some very odd things like sell our gas to Japan for less than it costs to get it out of the ground and bring in 350,000 or so foreign students to study in our education system... I can't actually find any statistics on how many are using this simply as a pathway to residency but let's face it if PR wasn't at the end of the tunnel there would probably be significantly fewer coming. We aren't the education powerhouse that we used to be - there's only four Aussie universities in the top 100 global research institutions now, they're too busy being degree/residency factories to bother researching anything anymore.

Imagine what would happen in the Chinese stopped buying our iron ore; if they used their power to ban Australian study or restrict tourism? The whole model would tip on its head - we'd look much more like Argentina's trade chart. This is why people like Tunbull had to kowtow to the Chinese Communist Party, they're in fear of what would happen if the Chinese decided to arbitrarily change their policies towards us.
don_dunstan
So your saying, despite selling the gas for a lower than market rate, we still have a surplus, which means in the future the is only likely to get better and chances of getting worse are minimal.

Australia takes in X many PR's a year. At least if they come from Uni students and 457/482, they have at least a 2 year history in this country, there is more likely going to be successful immigration.

China has a growing standard of Education, however it lacks breath in its teacher and it lacks transparency and open access. Reading a report in China's universities recently, this is a major reason students in Asia are NOT using China. Western standards and ways of doing things are still considered aspiration and considering the very low number of foreign students actually stay on in Australia. Your concerns are unfounded.

China won't stop buying the ore, you cannot be a world power if you source your raw materials from more expensive options than your opposition. Chinese students currently make up around 23% of total students, so our foreign student intact won't collapse, even if they don't come. Remember the Indian blockage, how did they go?
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
To be fair, you originally said we had a trade deficit, which we don`t at present - irrespective of the cause.
Yeah in the second half of what I was saying I did get the two confused. It's CAD not trade.

Money is still shovelling off-shore though - what is the cause?
don_dunstan
TD or CAD, the graphs don't reflect your concern.

I posted CAD as % of GDP, the more accurate measure of a trend of performance, not the actual number.

Below is the actual number, since 2002, its pretty much steady as she goes, which supports graph above why the % of GDP trend is becoming more favorable.

Again nothing to see here!

  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Correct me if I'm wrong but a deteriorating CAD (as we have) is connected to -
  • Domestic consumption including housing and construction being funded by off-shore borrowings
  • Very low rates of household savings in Australia
  • Very high rates of consumption and borrowing domestically in Australia.
Meaning we're basically borrowing off-shore to fund our lifestyle. So trade surplus/deficit isn't as relevant if our offshore liabilities are increasing at the odd-$14 billion a quarter? Also the thing that concerns me is that if our currency does tank it's going to be all the much harder to pay back this blossoming debt, isn't it.
don_dunstan
No its not deteriorating
- Always has been funded from off-shore
- Always had very low household savings
- Yep, nothing new here

Note: its not increasing at $14B a Qtr, please save me some time and check your references first.

If our currency goes down, it makes us more competitive, so we sell more, more income (hell, our weapons export income has risen 10 fold in recent years), more money to pay our bills. Yes interest is in USD, but interest rates are hardly earth shattering. We have been here before, with a lower $.
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
....If our currency goes down, it makes us more competitive, so we sell more, more income (hell, our weapons export income has risen 10 fold in recent years), more money to pay our bills. Yes interest is in USD, but interest rates are hardly earth shattering. We have been here before, with a lower $....


A declining currency makes exporters more competitive. For the rest of us schmucks it makes life more expensive, given we rely so heavily on imports. RBA modelling says as the cost of imported goods rise, we substitute cheaper items over time, meaning our living standards decline.

No more Bang and Olufsen for  us!

The banks have recently demonstrated the RBAs limited control over market rates. Since we rely on capital from os, we are vulnerable to wholesale money prices, which are trending up.

Having abandoned our manufacturing industries in favour of buying and selling houses to each other, the clever country now faces a few issues. Stagnant wages, high personal indebtedness, and ingrained consumption patterns.

Even msm recognises the smashed avo era is probably over.

https://www.smh.com.au/money/planning-and-budgeting/meet-generation-careful-how-gen-z-is-saving-hard-and-avoiding-debt-20180828-p5007q.html
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
Globalisation has had its day, better brace for the backlash.

Steve Bannon predicts, its only a matter of time before those who have been suffering in the name of globalisation turn against the people who've been inflicting it on them.
don_dunstan
I wasn’t surprised to see you post this, however the world has seen it all before. 80 years ago, it was the international Jewish-Communist conspiracy to blame.

The rhetoric’s the same as are the people beguiled by simple 'solutions'.  

Bannon & Co won’t be hurt by a recession there. These people fundamentally believe in survival of the fittest. Their financial backers didn’t get rich by keeping locals in well-paying jobs with good conditions.

Australia is not the USA and a trade war will hurt our economy and primarily agriculture far more and for what, some dubious Make Australia Great Again slogan.
  don_dunstan Dr Beeching

Location: Adelaide proud
Note: its not increasing at $14B a Qtr, please save me some time and check your references first.
RTT_Rules
What did the latest quarter say? I'm not your research assistant.

And are you writing these long posts at work again? Honestly, you have an Indian HR department that are looking for excuses to replace you a cheaper Indian and you give them ammunition like that.

I often picture you back in this country incredibly bitter that you're unable to find work and not eligible for Centrelink, complaining about all the things that everyone else has been as if you've just discovered that market economics is a double-edged sword.
  don_dunstan Dr Beeching

Location: Adelaide proud
I wasn’t surprised to see you post this, however the world has seen it all before. 80 years ago, it was the international Jewish-Communist conspiracy to blame.

The rhetoric’s the same as are the people beguiled by simple 'solutions'.  
Groundrelay
There's some endemic problems with Australia's economy that are not being solved (or even close being solved) by our current crop of politicians; in fact they do everything they can to deny there's a problem. Witness Scott Morrison as Treasurer telling Australians that they needed to go to their collective bosses and demand pay-rises for the sake of balancing the Commonwealth budget, then as soon as he's Prime Minister he wants to abolish any militant unionism. Go figure.

Bannon wasn't talking about a revolution as such, he's talking about Australians wholesale abandonment of mainstream political parties to elect some wild card from the pack - like President Trump.
Bannon & Co won’t be hurt by a recession there. These people fundamentally believe in survival of the fittest. Their financial backers didn’t get rich by keeping locals in well-paying jobs with good conditions. Australia is not the USA and a trade war will hurt our economy and primarily agriculture far more and for what, some dubious Make Australia Great Again slogan.
Groundrelay
There's no evidence that a trade war will necessarily be bad; it might force us to re-diversify away from agricultural and mining as we once were.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Globalisation has had its day, better brace for the backlash.

Steve Bannon predicts, its only a matter of time before those who have been suffering in the name of globalisation turn against the people who've been inflicting it on them.
I wasn’t surprised to see you post this, however the world has seen it all before. 80 years ago, it was the international Jewish-Communist conspiracy to blame.

The rhetoric’s the same as are the people beguiled by simple 'solutions'.  

Bannon & Co won’t be hurt by a recession there. These people fundamentally believe in survival of the fittest. Their financial backers didn’t get rich by keeping locals in well-paying jobs with good conditions.

Australia is not the USA and a trade war will hurt our economy and primarily agriculture far more and for what, some dubious Make Australia Great Again slogan.
Groundrelay
I remember in the 80's we blamed the Kiwi's for stealing our jobs and working "inhumane" hours. Remember the evil wide comb issue for shearing. Could you imagine today a wider shearers tool making national headlines and causing national disruption?

Same $hit different nationality
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
There's no evidence that a trade war will necessarily be bad; it might force us to re-diversify away from agricultural and mining as we once were.
don_dunstan
Might be worth having a look at the GDP trends by industry
  don_dunstan Dr Beeching

Location: Adelaide proud
I remember in the 80's we blamed the Kiwi's for stealing our jobs and working "inhumane" hours. Remember the evil wide comb issue for shearing. Could you imagine today a wider shearers tool making national headlines and causing national disruption?

Same $hit different nationality
RTT_Rules
The Indian who is going to replace you is justifying his taking your job by telling his work colleagues the same thing right now - you're obsolete, sunshine - clean out your desk.

How you gunna feel at that exact moment I wonder... "Oh well, he's right - off to early unplanned retirement in Australia".
  don_dunstan Dr Beeching

Location: Adelaide proud
There's no evidence that a trade war will necessarily be bad; it might force us to re-diversify away from agricultural and mining as we once were.
Might be worth having a look at the GDP trends by industry
RTT_Rules
It's even more informative about the immanent demise our our debt-fuelled orgy and government supported real-estate scheme.

The main "industries" are often full government-funded or supported - we're talking "health and allied health", "education (including selling visas)", "public safety and administration" - those things alone are almost 20% not including other things supported or subsidised by the government.

Rents are six and a half percent of GDP and they've been going down in many capital cities, sitting back and collecting money from real estate isn't as lucrative as it used to be.

Real estate services, finance, insurance and construction - those four factors (combined) are 29.6% of our economy... Wow! Just wait till the housing bust continues for another 12 months across the eastern seaboard, do you reckon there'll be anyone left standing at all or will the wave of unemployed agents, mortgage brokers, building workers etc etc all be queuing at Centrelink?

Where's the diversity in our economy that will carry us through the recession caused by the cops busting in our debt-fuelled orgy?

Incidentally I don't want to cite where I found those GDP figures - I want to hear about how your Indian HR manager went crook about your using company time to search for these things when they're obviously nothing to do with your job.
  don_dunstan Dr Beeching

Location: Adelaide proud
No more Bang and Olufsen for  us!
locojoe67
No more bloody ANYTHING for us - look around your house and imagine the cost of anything fully imported and most things "packed from local and imported ingredients" doubling in price if the AU$ slumped to post millennial lows - at one point I recall the Aussie Battler scraping US$0.47 and Howard saying "yeah but look how the pool of unemployed is being soaked up (indeed it was). But think of your average household item like toothpaste (Made in EU), washing powder (Taiwan), dish washing liquid (Indonesia) - just three random things that I can think of which will go through the roof at the supermarket when the AU$ finally reflects our real national value (ie: nil).

Now we can make things like washing powder here again if we have to, it's just that it became uneconomical and we outsourced it because -
  • We have the highest gas and electricity prices in the world
  • We have some of the highest cost of living factors in the world because of our world-beating real-estate and rents; the United States is far cheaper place to set up a business because they have a genuinely competitive gas and electricity industry and places like Texas have relatively cheap housing. We should take a leaf out of the industrial revival of the US south.
  • We have policies unfriendly to industry.

Hey, if China really cracks a fruity and decides to remove us completely from their supply chains what can we do other than set some others up with what's left of the Anglosphere or the "free-world" whomever that ends up being outside the China bloc. Bannon said the other night that Trump is well aware of the possibility that they might have to go as far as removing the Chinese completely from their supply chains and vice versa - obviously they've thought it through.

We'd survive of that I'm certain - it wouldn't be a crisis in the same way that we were blockaded by the Japanese during the war.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
The Indian who is going to replace you is justifying his taking your job by telling his work colleagues the same thing right now - you're obsolete, sunshine - clean out your desk.

How you gunna feel at that exact moment I wonder... "Oh well, he's right - off to early unplanned retirement in Australia".
don_dunstan
Welcome to the world's must dumb arsed comment (above).

I believe most older workers who have been made redundant would have had the exact same comment.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
There's no evidence that a trade war will necessarily be bad; it might force us to re-diversify away from agricultural and mining as we once were.
Might be worth having a look at the GDP trends by industry
It's even more informative about the immanent demise our our debt-fuelled orgy and government supported real-estate scheme.

The main "industries" are often full government-funded or supported - we're talking "health and allied health", "education (including selling visas)", "public safety and administration" - those things alone are almost 20% not including other things supported or subsidised by the government.

Rents are six and a half percent of GDP and they've been going down in many capital cities, sitting back and collecting money from real estate isn't as lucrative as it used to be.

Real estate services, finance, insurance and construction - those four factors (combined) are 29.6% of our economy... Wow! Just wait till the housing bust continues for another 12 months across the eastern seaboard, do you reckon there'll be anyone left standing at all or will the wave of unemployed agents, mortgage brokers, building workers etc etc all be queuing at Centrelink?

Where's the diversity in our economy that will carry us through the recession caused by the cops busting in our debt-fuelled orgy?

Incidentally I don't want to cite where I found those GDP figures - I want to hear about how your Indian HR manager went crook about your using company time to search for these things when they're obviously nothing to do with your job.
don_dunstan
Mmm, I remember the recession we had to have, I also remember the manufacturing and big industry leading the charge to lay people off. The car industry would have been the front runner.

Our diverse economy is one of the reasons why Australia didn't have a recession at the end of the mining boom, unlike many of our comparable counterparts, like Canada, USA, NZ etc.

You won't cite your sources, like you rarely do because when you do you often get caught out making 2 + 2 = 4444 in your conclusions.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
No more Bang and Olufsen for  us!
No more bloody ANYTHING for us - look around your house and imagine the cost of anything fully imported and most things "packed from local and imported ingredients" doubling in price if the AU$ slumped to post millennial lows - at one point I recall the Aussie Battler scraping US$0.47 and Howard saying "yeah but look how the pool of unemployed is being soaked up (indeed it was). But think of your average household item like toothpaste (Made in EU), washing powder (Taiwan), dish washing liquid (Indonesia) - just three random things that I can think of which will go through the roof at the supermarket when the AU$ finally reflects our real national value (ie: nil).

Now we can make things like washing powder here again if we have to, it's just that it became uneconomical and we outsourced it because -
  • We have the highest gas and electricity prices in the world
  • We have some of the highest cost of living factors in the world because of our world-beating real-estate and rents; the United States is far cheaper place to set up a business because they have a genuinely competitive gas and electricity industry and places like Texas have relatively cheap housing. We should take a leaf out of the industrial revival of the US south.
  • We have policies unfriendly to industry.

Hey, if China really cracks a fruity and decides to remove us completely from their supply chains what can we do other than set some others up with what's left of the Anglosphere or the "free-world" whomever that ends up being outside the China bloc. Bannon said the other night that Trump is well aware of the possibility that they might have to go as far as removing the Chinese completely from their supply chains and vice versa - obviously they've thought it through.

We'd survive of that I'm certain - it wouldn't be a crisis in the same way that we were blockaded by the Japanese during the war.
don_dunstan
Ok, lets look at common sense, not Donanomics.

Look around the house, ok, pick your wide screen TV. Yes it cost $A1000 and fully imported, like they have been for decades. Now when the dollar went from 75c to 50c, did they go up 33%? or even double as Don likes to quote, Nope! Of that $A1000, how much is Australian costs. ie Margin for retailer, logistics etc. Also note, that prices for same products in more higher cost economies often cost more, because the suppliers know you will pay.

Would China remove us from their supplier list, mmm. Sounds like Don has been following his name sake in USA. What is the balance of trade with China? So China could risk cutting their own supply chain, another dumb arsed act of stupidity comment, but in return risk loosing a major customer in retaliation that buys more than it sells.
  Valvegear Oliver Bullied, CME

Location: Richmond Vic
You won't cite your sources, like you rarely do because when you do you often get caught out making 2 + 2 = 4444 in your conclusions.
"RTT_Rules"
You're wasting your time; the only sources Don quotes come from between his ears. A couple of us just gave up asking him to provide evidence because one of two answers would come back: (a) go and look it up on Wikipedia  or (b) no indication that he'd even read what we asked.

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