Down And Out In Down Under

Tyler Durden's picture

For all the talk China's economic problems are getting (and yes, its official PMI came just slightly ahead of expectations on Saturday printing at 50.8 with consensus looking for 50.0: after all the Politburo can't give the impression of an out of control stall), the real action continues to unfold in its primary derivative economy, that of Australia, and particularly its "China-feeder" resource space, which is a far more accurate indicator of the true demand picture in China than manipulated data out of Beijing.  What is going on there, for those who have not been paying attention, is in one word, a disaster.

CLSA's Damien Kestel summarizes, "As noted in recent weeks it has been happy days for investors enjoying the highs on the S&P 500 and associated rallies across Germany, the UK, Japan and elsewhere. But that joy is a world away from the pain that has been inflicted on the majority of resource related equities and their investors. The AS39 Index on Bloomberg includes 87 mid and (now) small cap Australian resource companies. It has been smashed – just like many of its constituents. From early 2011 it has fallen >65% to now sit at GFC levels while there are plenty of examples of stocks that not so long ago had mkt caps of $800m that are now $50m. The evidence of pain in the resources space is everywhere but probably none more so than in Western Australia, the “engine room of Australia”.

Kestel goes on to compile a page of quotes from "conversations over the past week with friends and associates in the Perth mining game and it brought back memories of the Asian Crisis, Tech bust and of course the GFC."

  • “We’re seeing a much sharper contraction in the Australian economy than we’d anticipated four or five months ago”. Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.
     
  • “We’ve still got a lot of construction under way or committed and there’s a lot of activity that will go on for the next three years or so. I think where the question mark comes in my mind is, well, what will follow those projects?”. Western Australia’s Premier, Colin Barnett
     
  • “Perth has the highest population per capita of self made millionaires in the world”. Extract from a list of fun facts on Western Australia. I dare say there are a few less after the recent carnage in mining stocks.
     
  • The current feeling on St George’s Terrace (Perth’s main business street) amongst brokers and miners is that today is worse than the GFC ever was. It’s 100% pain out there” Perth mining investor
     
  • “I was at the Mines and Money conference in Hong Kong recently. They should really call it Mines and No-Money because no one has any and no one wants to give it to them” Mining CEO
     
  • “By 10am, the Fitness First gym in the city is packed full of brokers who’ve had a gutful of sitting at their desk doing nothing – salary cuts are starting and next it will be jobs” Perth broker
     
  • “Oh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ….. liquidity has completely disappeared” Perth broker
     
  • “Private equity firms are gearing up for a multi-billion-dollar push into the mining sector, with a wave of proposed asset sales by the big miners, a shortage of competing buyers and the funding headaches faced by smaller companies paving the way for a rise in deals”. The Australian

So, bargain-basement purchasing opportunity, or just the beginning of a secular shift and much more pain to come, as the China "paradigm" finally cracks?

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InvalidID's picture

 

 First I'll start by saying yes, the Chinese do have guns, idiot. (Ok, the idiot wasn't called for just yet) They don't have many but rural people are allowed to own bolt action rifles and shotguns and the like. More important than that, there's a lot of guns manufactured in China and a pretty hot black market over there.

 Will the Chinese rise up in a violent burst to over throw the government? I doubt it. Protest in the streets? Maybe if they are hungry enough, but not likely in the near future. So how then could the Chinese peasant collapse the nation and over throw the regime?

 Same way we hear people talking of starving the beast here in the states. If people simply stopped doing what they were 'suppose' to do and worked outside the system China would be toast, same as any nation. Being as they have a strong black market already, and if there weren't any jobs because of a global meltdown... It's not that hard to add up, I'm sure even someones as cock sure as yourself can do it.

 It's likely China's answer to this would be war. They'd do the same as many nations before them and try to drum up some nationalist pride (Senkaku Islands.. hmmm Incursions into India... very interesting)

 Without a quick win this would deplete much of China's reserves, starve and anger the people, and piss of the folks in China that do have guns... The military...

 

 Even with small meaningless wins like the Senkaka reserves would be burned up for no real gain other than nationalist ferver, which would quickly die when hunger set in.

FeralSerf's picture

America's been printing oil for some time now.  Their FRNs have been traded for plenty of oil.  If China can convince the world that the yuan is a suitable replacement for the USD as the world's reserve currency then, yes, they can print oil.

mkkby's picture

Bingo! 

Yes, oil is printed.  However, one additional requirement is being able to protect your oil investment through military power.  The natives generally don't like being under the boot of kings and princes.

Creepy Lurker's picture

So you think it will only be about 6 months? My big worry has been that the reset could go on for a long time..

mkkby's picture

LOL, it's been 6 months away since 1971 or so, depending on who you ask.

caribbeanbarry's picture

Last I was in Oz in 2001, the exchange was 2 Aud to 1 USD.  I was living the high life on my Fed Fiats.  I also know many Aussies that work aboard Super Yachts.  The last few years they have be bitchin about the weakness back in Oz of their USD demominated salaries.  It seems that may change soon forcing more Aussies to go off shore to earn a good living.  Sad, it's a wonderful country.  I also recently saw on ZH that for $5 million, you can get a provisional citizenship in Oz, so long as you invest the 5 mil in Oz.  I wonder what Simon Black thinks of this offer...

NidStyles's picture

They let that government take control of everything and disarm them, so of course they are all going to get screwed.

Tinky's picture

One less shrimp on the barbie tonight, eh?

natty light's picture

North Dakota in a few years.

Gringo Viejo's picture

So come on down mate

and we'll put some top ramen on the barbie for ya.

lj_nissen's picture

"The mining business is capital intensive and extraordinarily cyclical." - Rick Rule

IridiumRebel's picture

"Crikey, mates! Today we are on a search for the wiley investor....let's see what we can flush out from the river beds"

Navymugsy's picture

That was fucking hillarious! Is the crocodile hunter still dead?

IridiumRebel's picture

I thought no one would get it. I do believe Mr. Irwin is still dead.

DEATH BY STINGRAY

 

 

 

{cue heavy badass metal guitar riff}

 

GMadScientist's picture

"We've found woily, and we've found investahs, but we just kant seem to foind any woily investahs."

Monedas's picture

Ya mean Australobitch PM is not going forward with her 25% windfall profit tax on gold miners ?   LOL

Herd Redirection Committee's picture

Alternatively you could have referred to her as that Raging Ginger _______ (fill in the blank)

Temporalist's picture

This is missing something about the reality for people on the ground in Australia that everything is extremely expensive.  I expect a dramatic deflationary problem there which will subsequently (of course) be addressed by relaxed rates and QEazy money from bansktercrats. 

Unfortunately for them their own unemployment issue will get worse because immigrants are flooding in, from Europe (Ireland, Greece, Portugal) the Middle East and the Far East (which is where they are closest to).

 

The Per Capita Income of Perth is 4th highest in the world (last I heard; not just self made millionaires) but the same point is illustrated.

 

There is going to be another "Tax" on miners I'm sure which will fix everything.

 

Incidentally the housing bubble there only leaked a little air since 2006 and has remained inflated so it still looks dangerously close to popping.

 

The ridiculous construction explosion, for a small population, is a reminer of Dubai and their ongoing construction related financing issues. 

 

This all with the socialist government cherry on top (from a populace that extols individualism and self sustainability - quite the dichotomy) this can't go well.

 

Edit:  And I forgot to mention their young population cannot get enough of American Television and Celebrity as they watch all the most popular US shows there.  The "Consumer Sheep to the Slaugher" trend is alive and well in AU.  Muppets are born every minute.

Fred123's picture

I suggest the good folks of Australia keep out the darker skinned peoples or your beautiful city of Perth will look like Detroit in 20 years.

Temporalist's picture

All you do is race bait you are pile of shit

Fred123's picture

Pathetic reply son. Been to America lately? Specifically our once mighty industrial cities? How about France? England? Didn't think so. Take off your blinders sonny....

Temporalist's picture

You know far less than you think you do; typical of a douchebag tool like you. 

Anusocracy's picture

You are correct.

Crappy economic and cultural mindsets have no racial boundaries.

Fred123's picture

Your reply shows exactly what you do know.

garypaul's picture

Agreed about the decay in the cities, but do non-whites represent the cause or just a symptom? Anyway, great non-thinking on your part: just blame 'darkies'.

BTW.London was famous for it's poverty sections long before any dark people got there.

GMadScientist's picture

Ssshh...if pikers like that National Front Cunt above ever understand it isn't powerless darkies they need to fear so much as the rats for which they are codependent lapdogs then they'll unleash that angst on "The City" like they should.

mkkby's picture

There's no need to be racist, or to try to explain why one city or another has changed.  Simply CITE ONE EXAMPLE of a black society that has been successful and civil.

Anywhere in Africa?  Nope.  Any city or even neighborhood in the US.  No again.  Haiti, Puerto Rico??  No.

Are there any famous black scientists or engineers?

In western societies they have a free living and education.  Do they better themselves with all that free time?  Are they filling up libraries and cultural centers, starting businesses... or are they committing crimes and hurting others/themselves?

I don't hate anyone.  There are good people of every race.

NidStyles's picture

What you think Sumaria and Egypt were filled with nonexistant white people? You kids are so damn stupid these days.

There are actually a lot of famous Black Scientists and Engineers. This is what I mean, you children do not even know basic history that is available all over the internet.

 

 

TheMeatTrapper's picture

There is a difference between poverty and social fragmentation. In the Great Depression, people were dirt poor but they still attended church, sought work and valued self reliance. We were a nation of Europeans. Our idea of different cultures meant English, Irish, German, Italian, etc.

With the multiculturalization of America, our social mores, cultural values and self respect have disintegrated. There's a much bigger difference between Germans and Somali's than Germans and Irish. 

The parasites have infected the host to the point that there is no longer a difference between the descendents of Scoth Irish immigrants and those 200 years removed from living in the stone age. 

There is a reason why the Swedes have the most generous welfare, immigration and social safety net towards immigrants in the entire world, yet the "immigrants" they so generously attempted to save are now burning their cities down. 

The truth is not hidden, it's right out there in plain sight for those not in denial. 

 

NidStyles's picture

Welfarism is a part of Liberal ideology, which comes from Europe.

 

So uhh ya...

Freddie's picture

Look at the history if Christian Lebanese versus Islamic Lebanese in Australia.  The Christians have been in OZ for over 100 + years and are good folks.  The Muslims showed up in less than the last 20 years and have been major trouble, crime, etc.   BTW_ Danny Thomas in the USA was Christian Lebanese and found St. Jude's Childrens Medical hospital.  They have helped tens of thousands of children.

August's picture

Freddie's concise history of the Australian Lebanese is 100% correct.

"Skin color" per se is irrelevant.  There are two categories you want to avoid importing:  the genetically sub-par, and the culturally hostile. 

Draw your own conclusions.

NidStyles's picture

Welfarism promotes the worst in society by ensuring it's survival to the next generation and even promotes it's expansion. It doesn't have to be a particular race/color/creeed to be the worst of a society. It just has to be the most detrimental and society destroying portion.

 

That is the danger of Liberalism, as it's end conclusion of Welfarism. What you are doing is called a red-herring, where as you are distracting from the real problem of Welfarism with the symptom of cultural conflict and anti-social behaviors.

Fred123's picture

Take off your blinders boy.

Unpopular Truth's picture

Detroit's issue is the handouts that created an entitlement attitude.

Anusocracy's picture

Yes, and current so-called republican MI governor Snyder is trying to expand Medicaid coverage.

DosZap's picture

Yes, and current so-called republican MI governor Snyder is trying to expand Medicaid coverage.

 

THAT's nothing, just go to Benefits.gov, and see what FREE gifts are going to be bestowed/are being on illegals now.Sickening, and all we hear is SS/MC will run out in xxxx.and xxxx.STOP giving OUR payed for benefits away to non citizens you dicks!.

DosZap's picture

I suggest the good folks of Australia keep out the darker skinned peoples or your beautiful city of Perth will look like Detroit in 20 years.

 

 

The former PM of AU, had his stuff together on the Islamic demands for Sharia Law, and their requests to run their own affairs.Either live by OUR rules and laws, or we will deport your asses.Only smart leader left on that subject(look at Paris/Sweden/France/UK, all cesspools are going to be ISLAMISIZED, soon, and very soon.

NidStyles's picture

None of that would have happened had the Socialists not started feeding those people in the Middle-East for free. It encourages growth of failed societies, but Liberals are too ignorant to see the end results of their current actions, because of how pedantic/emotive and short sighted Liberalism as a Philosophy is.

Miffed Microbiologist's picture

We were in Sydney last Feb and was shocked at the prices. Place was absolutely booming however. Went to a department store to buy some clothes ( mr miffed lost his luggage) and I just had to ask the shopkeeper what the hell was going on. She said " oh, it's China...they want our minerals!" I was incredulous she seemed so blasé about the prices. She explained " oh we are putting up with that, its a necessary evil because this is a godsend for us. We were looking at a failure in our state pensions until all this happened. Now I'm secure that I'll have the money due me when I retire!" I figured there was no point in saying anything. Good luck lady.

Miffed;-)

PhilofOz's picture

Prices can be bloody high for a lot of items but it goes hand in hand with wages..... my wife works as a cleaner for four hours on a Saturday getting over $37 an hour, on Sunday over $47 an hour. Then throw in the 9% superannuation her employer puts away for her on top of these hourly rates and 100% wage workcover protection for first year. Unbelievable! Four years ago she was happy with her wage equal to around $1.20 an hour in the Philippines while her friends still pay huge amounts to get into the USA to earn $7.50 an hour with no other benefits whatsoever. No wonder Oz is the destination of choice for the third world if they can get here. Worth the big gamble to take a leaking fishing boat from Sri Lanka I guess.

q99x2's picture

The United States of America is not collapsing. The bankster take over version of corporate facism in the United States of America is failing.

The States must take back the Federal Government and prosecute the traitors and take over the banking and oil cartels.

Long live the revolution. Military leaders invited to lead.

Suisse's picture

No, I'm pretty sure it's collapsing. Been to most cities lately? 

NoTTD's picture

Most of us don't live in the cities, most of which, particularly in the north, are losing population.

Almost Solvent's picture

Yes, Dallas, Houston, Miami, Atlanta, etc. All looking good. You must be a northerner carpetbagger fuck.

NidStyles's picture

You mean the heavens of Liberal Utopia? Yeah think about that for a minute. ;-)

Fred123's picture

Don't worry, China has a history of recovering from economic downturns followed by an economic boom of 20-30 years.....hmmmmm that wasn't China was it?  ......China usually has a revolution followed by killing millions of their own people and squashing economic activity for decades......China is so screwed.

earleflorida's picture

other than Mao... china has carried itself quite admirably

Note: your history is sadly lacking accuracies