Bugger, now Australia is getting affected -world economy
Discussion
pilchardthecat said:
Misses the point. Almost all of those exports are raw materials, which China needs to build things to sell to the Americans.
China's mercantilist strategy places them at the mercy of American consumerism, and they will suffer for it. Australia is one step lower in the supply chain, and is even more vulnerable.
But also a bit more robust, as Americans will always want to buy crap, and whether it's made in China, Brazil, America or Timbuktu it's going to require the same inputs. China's mercantilist strategy places them at the mercy of American consumerism, and they will suffer for it. Australia is one step lower in the supply chain, and is even more vulnerable.
HundredthIdiot said:
Reading recent Australian coverage of the property market is awfully reminiscent of Ireland circa 2006.
I fear the correction will be severe.
I suppose the main difference being that Australia has control over its interest rates, and kept them relatively high (compared to EuroLand) during the boom time, so will be better able to steer its way through difficult times.I fear the correction will be severe.
fido said:
I suppose the main difference being that Australia has control over its interest rates, and kept them relatively high (compared to EuroLand) during the boom time, so will be better able to steer its way through difficult times.
Traditionally, Australia has kept higher interest rates than the rest of the western world to get fund managers to deposit money in Australia. And it has to be significantly higher to overcome the risk of currency fluctuations for those to leave their money there.pilchardthecat said:
Pommygranite said:
We're a good 3-5 from a bust. There's a shed load of cash about, large amounts of cash savings with many having paid down debt and literally thousands of resources jobs.
Ignore the. Panic, it's just the newspapers,unless you live east then you're screwed
http://www.perthnow.com.au/news/wa-threat-to-split...
"There is not an understanding on the east coast how significant the growth of the WA economy is," he said.
"The WA economy is growing at quite a different pace than Australia as a whole and to some extent the strength of the WA economy is concealing the true weakness of the national economy.
"One statistic proves that.
"In the last 12 months there were 50,000 new jobs created in WA.
"China is now Australia's No.1 trading partner (but) WA produces 73 per cent of all of Australia's exports to China.
"To put it in another context, exports from WA to China are about half of the value of all of the USA's exports to China."
Misses the point. Almost all of those exports are raw materials, which China needs to build things to sell to the Americans.Ignore the. Panic, it's just the newspapers,unless you live east then you're screwed
http://www.perthnow.com.au/news/wa-threat-to-split...
"There is not an understanding on the east coast how significant the growth of the WA economy is," he said.
"The WA economy is growing at quite a different pace than Australia as a whole and to some extent the strength of the WA economy is concealing the true weakness of the national economy.
"One statistic proves that.
"In the last 12 months there were 50,000 new jobs created in WA.
"China is now Australia's No.1 trading partner (but) WA produces 73 per cent of all of Australia's exports to China.
"To put it in another context, exports from WA to China are about half of the value of all of the USA's exports to China."
China's mercantilist strategy places them at the mercy of American consumerism, and they will suffer for it. Australia is one step lower in the supply chain, and is even more vulnerable.
Pommygranite said:
pilchardthecat said:
Pommygranite said:
We're a good 3-5 from a bust. There's a shed load of cash about, large amounts of cash savings with many having paid down debt and literally thousands of resources jobs.
Ignore the. Panic, it's just the newspapers,unless you live east then you're screwed
http://www.perthnow.com.au/news/wa-threat-to-split...
"There is not an understanding on the east coast how significant the growth of the WA economy is," he said.
"The WA economy is growing at quite a different pace than Australia as a whole and to some extent the strength of the WA economy is concealing the true weakness of the national economy.
"One statistic proves that.
"In the last 12 months there were 50,000 new jobs created in WA.
"China is now Australia's No.1 trading partner (but) WA produces 73 per cent of all of Australia's exports to China.
"To put it in another context, exports from WA to China are about half of the value of all of the USA's exports to China."
Misses the point. Almost all of those exports are raw materials, which China needs to build things to sell to the Americans.Ignore the. Panic, it's just the newspapers,unless you live east then you're screwed
http://www.perthnow.com.au/news/wa-threat-to-split...
"There is not an understanding on the east coast how significant the growth of the WA economy is," he said.
"The WA economy is growing at quite a different pace than Australia as a whole and to some extent the strength of the WA economy is concealing the true weakness of the national economy.
"One statistic proves that.
"In the last 12 months there were 50,000 new jobs created in WA.
"China is now Australia's No.1 trading partner (but) WA produces 73 per cent of all of Australia's exports to China.
"To put it in another context, exports from WA to China are about half of the value of all of the USA's exports to China."
China's mercantilist strategy places them at the mercy of American consumerism, and they will suffer for it. Australia is one step lower in the supply chain, and is even more vulnerable.
pilchardthecat said:
Just wait till their housing crash kicks off properly
this is just a small side effect of the chinese mercantilist over-capacity bubble beginning to burst
I do think a price correction is overdue. this is just a small side effect of the chinese mercantilist over-capacity bubble beginning to burst
We were sitting on cash (earning 6%) and renting for less than the interest but sadly my wife was desperate for a house so we brought last month.
4 bedrooms, modest house = Aus$1.1m or £700K
Mortgage at 6% (thankfully very small).
I knew in the big picture it was a lousy commercial deal but hey ho.
Oh, you should see the cost of tradesmen as well, a plumber came out to tap a downpipe for a washing machine, 30 minutes work, $240 bill. (£150).
RichardD said:
Having to endure a trip through a shopping centre the blatency of the "made in China" tags on garments that were being sold for AUD100 + too was another 
to my Yorkshire'ness...
First time I worked in Australia, some 15 years ago or more, I bought my wife a 'Genuine Australian Souvenir', from a 'Traditional Australian Souvenir Shop' in Perth. to my Yorkshire'ness...Upon further inspection after unwrapping, it turned out to have a 'Made In China' tag sewn into the seam.
Reading with interest regarding the mining, ans the fact that China is buying raw materials.
Raw materials represent the greatest mark up, there is nothing cheaper than the raw materials, and if there is a way to increase it's value, then the Chinese are the ones to exploit that with their huge, and relatively cheap labour force.
It isn't just Australia that supplies China with raw materials, there are many African countries who depend heavily on China's need for the minerals in the ground.
That brings me onto the next point, I guess that China will exhaust as much of the outside worlds minerals as it can, to a point where it will then develop her own mineral extraction, by that time minerals will be depleted in the outside world, and China will hold the trump cards.
vette
Raw materials represent the greatest mark up, there is nothing cheaper than the raw materials, and if there is a way to increase it's value, then the Chinese are the ones to exploit that with their huge, and relatively cheap labour force.
It isn't just Australia that supplies China with raw materials, there are many African countries who depend heavily on China's need for the minerals in the ground.
That brings me onto the next point, I guess that China will exhaust as much of the outside worlds minerals as it can, to a point where it will then develop her own mineral extraction, by that time minerals will be depleted in the outside world, and China will hold the trump cards.
vette
robm3 said:
Pommygranite said:
pilchardthecat said:
Pommygranite said:
We're a good 3-5 from a bust. There's a shed load of cash about, large amounts of cash savings with many having paid down debt and literally thousands of resources jobs.
Ignore the. Panic, it's just the newspapers,unless you live east then you're screwed
...
"China is now Australia's No.1 trading partner (but) WA produces 73 per cent of all of Australia's exports to China.
"To put it in another context, exports from WA to China are about half of the value of all of the USA's exports to China."
Misses the point. Almost all of those exports are raw materials, which China needs to build things to sell to the Americans.Ignore the. Panic, it's just the newspapers,unless you live east then you're screwed
...
"China is now Australia's No.1 trading partner (but) WA produces 73 per cent of all of Australia's exports to China.
"To put it in another context, exports from WA to China are about half of the value of all of the USA's exports to China."
China's mercantilist strategy places them at the mercy of American consumerism, and they will suffer for it. Australia is one step lower in the supply chain, and is even more vulnerable.
Unfortunately he misses the point that this is actually hugely damaging for China - continued investment in even more overcapacity will just make things worse unless and until they have suffiecient domestic demand/consumption. They already have thousands of dormant industrial sites, factories working at half capacity, ghost towns, etc. Meanwhile they have a housing bubble of gargantuan proportions, runaway wage inflation, growing wage disputes, and their competetiveness is therefore dropping. China is facing the perfect storm, and the Aussies are hanging off their shirt tails.
robm3 said:
I do think a price correction is overdue.
We were sitting on cash (earning 6%) and renting for less than the interest but sadly my wife was desperate for a house so we brought last month.
4 bedrooms, modest house = Aus$1.1m or £700K
Mortgage at 6% (thankfully very small).
I knew in the big picture it was a lousy commercial deal but hey ho.
Oh, you should see the cost of tradesmen as well, a plumber came out to tap a downpipe for a washing machine, 30 minutes work, $240 bill. (£150).
I think it's horribly overpriced in reality, though I do understand the market economy is at work.We were sitting on cash (earning 6%) and renting for less than the interest but sadly my wife was desperate for a house so we brought last month.
4 bedrooms, modest house = Aus$1.1m or £700K
Mortgage at 6% (thankfully very small).
I knew in the big picture it was a lousy commercial deal but hey ho.
Oh, you should see the cost of tradesmen as well, a plumber came out to tap a downpipe for a washing machine, 30 minutes work, $240 bill. (£150).
But two points I'd like to make.
Flying into Melbourne the other day it kind of struck me how ridiculous the house prices are, nice place or not, it really is the arse end of the world and in the middle of nowhere - yet house prices more expensive than most places in the world.
Secondly, I rent, simply because I don't understand the economics of buying a house here. I pay $1500 per month for a $600k+ house, and to be honest I probably pay a bit more than some other properties in the area. Realistically a mortgage would have me paying double that, most of it going in interest and in a housing market almost certain to stagnate if not, collapse.
thehawk said:
robm3 said:
I do think a price correction is overdue.
We were sitting on cash (earning 6%) and renting for less than the interest but sadly my wife was desperate for a house so we brought last month.
4 bedrooms, modest house = Aus$1.1m or £700K
Mortgage at 6% (thankfully very small).
I knew in the big picture it was a lousy commercial deal but hey ho.
Oh, you should see the cost of tradesmen as well, a plumber came out to tap a downpipe for a washing machine, 30 minutes work, $240 bill. (£150).
I think it's horribly overpriced in reality, though I do understand the market economy is at work.We were sitting on cash (earning 6%) and renting for less than the interest but sadly my wife was desperate for a house so we brought last month.
4 bedrooms, modest house = Aus$1.1m or £700K
Mortgage at 6% (thankfully very small).
I knew in the big picture it was a lousy commercial deal but hey ho.
Oh, you should see the cost of tradesmen as well, a plumber came out to tap a downpipe for a washing machine, 30 minutes work, $240 bill. (£150).
But two points I'd like to make.
Flying into Melbourne the other day it kind of struck me how ridiculous the house prices are, nice place or not, it really is the arse end of the world and in the middle of nowhere - yet house prices more expensive than most places in the world.
Secondly, I rent, simply because I don't understand the economics of buying a house here. I pay $1500 per month for a $600k+ house, and to be honest I probably pay a bit more than some other properties in the area. Realistically a mortgage would have me paying double that, most of it going in interest and in a housing market almost certain to stagnate if not, collapse.
The reason rents are below mortgage cost is due to negative gearing for tax benefits - i.e offset losses against income, becomes cost neutral or even profitable and retain an easily covered expense.
anonymous said:
[redacted]
Well it's also true and there's a huge amount being pumped into a rather tiny population so that wealth and investment spreads far and wide.Not sure what your point is Tonker about the comparison to the uk?
Our total federal budget is $370b so $500b is rather a lot and with the vast majority of it coming from WA with a total population of 2.3m that's a rather stellar outcome.
Tonker, you're a smart chap but are you giving educated views or just a finger in the air guess based on what you know about the uk?
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