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Danger Down Under — A Brief Look At Australia's Trade Flows

Tyler Durden's picture




 

Submitted by Shane Obata of Tha Business Blog

Global growth forecasts are falling and the risk of deflation is rising. As a result, countries that are dependent on commodity exports are especially vulnerable. Australia relies on exports to China. If prices fall and China slows down then Australia will be in big trouble.

Unbalanced trade flows…

Australia exports “primary products” and imports “elaborated transformed manufactures” :

If commodity prices continue to fall then so will the value of Australia’s exports.

A China derivative…

China is Australia’s biggest two-way trading partner:

 

If its economy weakens then Australian trade will suffer.

Reliant on commodities…

The majority of Australia’s exports are “Minerals & Fuels.” :

Australia’s most important mineral is Iron ore; it made up 22.6% of its exports 2013-14:

Moreover, 8 of its top 10 exports are commodities:

If the world continues to move towards deflation then Australia’s economy and currency will come under pressure.

Expensive imports…

Australia imports a lot of petroleum:

It also imports a lot of elaborate manufactures such as passenger motor vehicles and computers:

 

On one hand, if oil prices continue to fall then Australia should benefit. On the other hand, if its currency continues to depreciate then import prices will increase.

That’s all folks!

Australia’s economy is inextricably linked to commodities and to China. If global debt continues to rise and Chinese demand falls then the “land down under” may enter the #DangerZone.

 

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Wed, 03/11/2015 - 21:59 | 5880142 ZerOhead
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No problem... they can make up the gap by exporting koala meat to the Chinese...

Thu, 03/12/2015 - 03:10 | 5880589 Zero Point
Zero Point's picture

I'm sure we'll be fine. The robust US manufacturing sector can pick up the slack.

Forward ho!

Wed, 03/11/2015 - 22:02 | 5880147 A Lunatic
A Lunatic's picture

Just rename Australia 'Fema Camp 32' and import away.......

Wed, 03/11/2015 - 22:01 | 5880149 Freddie
Freddie's picture

https://www.youtube.com/watch?v=PmiDb-8zF34

The Wiggles - Tie Me Kangaroo Down Sport

I never knew this song was about killing Kangas - Aussie wankers.  

I like Aussies but the accent and also Kiwi accents would drive me up a wall.  The whole Steve Irwin thing was pretty grating too.  His daughter has a half Aussie half American accent like her mum.  Less grating.

Wed, 03/11/2015 - 23:19 | 5880333 Jimbodude
Jimbodude's picture

That's one advantage you Seppo's have is that you will never get to hear how irritating your stupid yankee drawl is to a non yank.

Thu, 03/12/2015 - 01:44 | 5880515 Some Bloke
Some Bloke's picture

No worries Freddie, you've probably got some great American songs about killing Arabs or droning same or napalming Asians.

 

Thu, 03/12/2015 - 01:51 | 5880528 Some Bloke
Some Bloke's picture

And Youtube "US Forces" by Midnight Oil, arsenuts.  Truer now than it was 30 years ago, when it was written.

"US Forces give the nod, it's a setback for YOUR country..."

Decided - and bought to you - by the eminently not corrupt US politicians.

Thu, 03/12/2015 - 05:09 | 5880677 conscious being
conscious being's picture

SB, popular music is a psy-op, making the search for meaning there a dubious enterprise at best.

Thu, 03/12/2015 - 03:51 | 5880633 Aussiekiwi
Aussiekiwi's picture

We don'y have an accent, only Americans and foreigners have accents.

Thu, 03/12/2015 - 04:53 | 5880662 Nexus789
Nexus789's picture

No less grating than some US accents. 

Wed, 03/11/2015 - 22:01 | 5880150 battlestargalactica
battlestargalactica's picture

Australian Flows? Sounds like we are talking about kangaroo menstrual cycles here

Wed, 03/11/2015 - 22:05 | 5880163 Salah
Salah's picture

Only 24 million Aussies, spread out on an entire continent, with 5 major metros, and 4 major sub-metros; not as big as California or Texas. They can produce virtually everything they need and then some, and are committed to keeping the parasite classes to a minimum (unlike the USA).  Australia won't be suffering for long.

Wed, 03/11/2015 - 22:39 | 5880250 Freedumb
Freedumb's picture

Most of that continent is the most uninhabitable desert imaginable

Wed, 03/11/2015 - 23:38 | 5880362 mrpxsytin
mrpxsytin's picture

Really moron? Then why was every single part of this continent split into hundreds of tribal countries before White settlement?

You've not seen this map have you: http://www.mappery.com/maps/Australia-Aboriginal-Tribes-Map.mediumthumb.jpg

Extract head from rectum moron. 

Thu, 03/12/2015 - 00:09 | 5880404 CapnJackDaniel
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Yeah that only works when you have have *not* 24 million people trying to live a western lifestyle mate

Thu, 03/12/2015 - 00:14 | 5880414 mrpxsytin
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A western lifestyle... you mean like the lifestyle in Detroit? 

Thu, 03/12/2015 - 00:44 | 5880439 BringOnTheAsteroid
BringOnTheAsteroid's picture

Before you start spouting about how under-populated Australia is I suggest you do a flight from Sydney to Kuala Lumpur. I have never been so shocked (EVER) after seeing my country for what it really is. A barren, inhospitable landscape excepting for a tiny fringe around it's coast. Barren and inhospitable is almost too big a compliment. A fucking moonscape that makes a salt flat look like an oasis might describe it better. After 5 minutes of flight the suburbs are replaced by country/rural properties. 15 minutes more and there is NOTHING but a rancid mix of salt, sand and red dirt for another 4 HOURS. Uninhabited and unihabitable. The only thing I saw were two mining outposts until we hit the coast over Exmouth. 

We, like all other countries will continue to breed like fucking rabbits or maintain the flood of immigrants (who breed like rabbits) until the ecosystem degrades and dies.

We really are dumb naked apes. There's just nothing in our collective mindsets to prevent the destruction. We're largely the equivalent of unthinking bacteria in an agar plate that multiples until the food is gone.

We can't see it now, christians and muslims especially, but in decades (maybe centuries, no idea) to come it will be a crime to have more than 2 children.

Thu, 03/12/2015 - 00:49 | 5880453 farmerbraun
farmerbraun's picture

Yeah sure , but that is not actually a problem. Sounds pretty self- regulating to me.

Thu, 03/12/2015 - 01:03 | 5880471 mrpxsytin
mrpxsytin's picture

I have driven many thousands of km through this country. Something you won't see from 30000ft are the millions of human sized (and bigger) mammals (kangaroos, cows, sheep, goats, donkeys, camels, etc) that inhabit the so called 'uninhabitable' parts of the country. 

So what you're saying is that you are so feebleminded that you cannot perform at the same level of an animal. And many of these animals are not even native species. 

Stay in Sydney, you'll be safe and comfortable there. Let the big boys do the hard stuff.

Thu, 03/12/2015 - 03:49 | 5880629 Aussiekiwi
Aussiekiwi's picture

I was out in it today, did not see squat, perhaps the wild life were all inside sitting in front of the air con and I was the only silly bugger roasting my nuts out there today.

Thu, 03/12/2015 - 06:49 | 5880753 Curiously_Crazy
Curiously_Crazy's picture

Nope. Not the only one :)

Thu, 03/12/2015 - 18:30 | 5883352 BringOnTheAsteroid
BringOnTheAsteroid's picture

You are full of shit.

Thu, 03/12/2015 - 01:05 | 5880472 Wild Theories
Wild Theories's picture

hairless apes, we be hairless apes, we have shame and wear clothes so we are not naked see

Thu, 03/12/2015 - 03:25 | 5880601 savagegoose
savagegoose's picture

too truly appreciate its vast emptiness trying riding a greyhound bus from perth to sydney, non stop. and realizing the few signs of population you actually see, is because the busses pass thru town to deliver mail and pick people up! so you are actually seeing a concentrated  view. i did go from adelaide to darwin non stop, and that broke my brain. so many hours of flat dessolate horizon  as a view, and when you wake up for  the only escape, slumber, the scenery hasn't changed 1 little bit.

 

Thu, 03/12/2015 - 03:19 | 5880593 Zero Point
Zero Point's picture

Lol. Freedumb and others that seem to think this is true. We'll keep the vast, uninhabited tropical areas that are lush and have abundant water, as our little secret.

Thu, 03/12/2015 - 03:45 | 5880627 Aussiekiwi
Aussiekiwi's picture

I was out in it today, yeah, desolate and hot. glad to be back in my place with the air con on, crocodile dundee is welcome to the wijderness.

Thu, 03/12/2015 - 04:55 | 5880663 Nexus789
Nexus789's picture

A country for hard men and women.

Wed, 03/11/2015 - 23:34 | 5880355 mrpxsytin
mrpxsytin's picture

That's what I keep telling them. But it's probably hard for Amerikans who are so impoverished to comprehend the abundance of this country. And it's all there for the taking. All you gotta do is turn up.

Wed, 03/11/2015 - 23:45 | 5880370 fudge
fudge's picture

Make sure you tell them to bring a horse.

http://www.abc.net.au/radionational/programs/breakfast/fuel-security/527...

http://www.abc.net.au/7.30/content/2014/s4121593.htm

I find it hard to believe that Australians are fucking stupid enough to think they'll be immune to any large scale collapse, but, once a sheep always a sheep I guess.

 

Thu, 03/12/2015 - 00:06 | 5880399 mrpxsytin
mrpxsytin's picture

That's because you don't understand the Aussie mindset.

You don't comprehend the essence of the phrase, "she'll be right, mate".

Thu, 03/12/2015 - 01:45 | 5880521 fudge
fudge's picture

An AusGovShill posting proof that Australians are fucking stupid, this one thinks that it might be the only Australian here and that another AU resident ( as opposed to citizen ) might not understand "she'll be right, mate".

You truly are a dickhead " mate ".

Thu, 03/12/2015 - 01:50 | 5880526 farmerbraun
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Looked like a bit of tongue in cheek to me

Thu, 03/12/2015 - 02:16 | 5880545 fudge
fudge's picture

.

Thu, 03/12/2015 - 03:42 | 5880625 Aussiekiwi
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Not really spread out, more clustered around the edges.

Wed, 03/11/2015 - 22:06 | 5880168 farmerunder
farmerunder's picture

no we don't have to worry, they can buy all our farms and cities, at least that way we dont have to have ww3 to sort it all out.

Wed, 03/11/2015 - 22:09 | 5880178 battlestargalactica
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May I recommend 'On the Beach' as required reading

Wed, 03/11/2015 - 22:11 | 5880186 mygameon
mygameon's picture

Great book. Shitty movie

Wed, 03/11/2015 - 23:04 | 5880297 farmerunder
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Thanks for that, just had a look on wickipedia, under the criticisms section of the books description, was commentary by the US govt stating there never was or never will be enough nuclear bombs to cause human extinction, for some funny reason I don't believe them. More likely they have a few more weapons than nukes anyway, biological, emp etc

Wed, 03/11/2015 - 23:22 | 5880337 battlestargalactica
battlestargalactica's picture

Cheers. Hell of a book, man. 'Alas, Babylon' is another one from that era. Sort of like the granddaddy of SHTF fiction.

Thu, 03/12/2015 - 03:41 | 5880623 Aussiekiwi
Aussiekiwi's picture

The are shooting for a one for one ratio.

Wed, 03/11/2015 - 23:12 | 5880318 Jafo
Jafo's picture

Ava Gardiner was reported to have said that Melbourne was the perfect place to make a movie about the end of the world.

Wed, 03/11/2015 - 23:34 | 5880352 farmerunder
farmerunder's picture

I think they got it pretty right when they shot the movie The Matrix in Sydney, if people arent slaves to their mortgages then I'll eat my hat. I would imagine Melbourne prices would be on par, now they wan to let people use their super as a deposit, madness.

Thu, 03/12/2015 - 03:33 | 5880613 Zero Point
Zero Point's picture

Yeah, the "unihabitable wasteland" of Australia is actually mostly in Sydney.

Thu, 03/12/2015 - 03:40 | 5880620 Aussiekiwi
Aussiekiwi's picture

Its one of those cities you either love or loathe.

Wed, 03/11/2015 - 23:20 | 5880331 MiTasol
MiTasol's picture

So depressing, far from his best. 

A Town Like Alice is a good read though .

Thu, 03/12/2015 - 01:20 | 5880489 OpenThePodBayDoorHAL
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Sorry, dude, change your avatar, I've been here waaaay longer especially under the previous name Falun Bong

Thu, 03/12/2015 - 08:48 | 5880982 MiTasol
MiTasol's picture

I'm sorry, I can't do that Dave.

Wed, 03/11/2015 - 22:18 | 5880208 farmerbraun
farmerbraun's picture

Nice research Shane. I'd love to see your analysis of the NZ situation ; it shouldn't take  five minutes , us being so small. :-)

Same exposure to commodities and China , the main difference being that it is mostly food commodities.

 NZ dollar is high ; bad for exports , but with the devaluation war going on,  that can only get worse especially when QE4 starts.

Wed, 03/11/2015 - 23:26 | 5880346 MiTasol
MiTasol's picture

Look at the Australian exports table for the '60s and you'll see that their agricultural exports have been supplanted by commodity (mineral) exports; the lucky country, stick a shovel in the ground, etc.

NZ didn't have such luck and has had to subsist on their agricultural exports, no so much wool these days but still similar to Aus in the '60s.  Completely different economies now.  If China stopped buying NZ's milk powder it would still be sold elsewhere.  Not so with Australian's iron ore.

Thu, 03/12/2015 - 00:53 | 5880458 farmerbraun
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Yeah but we are not making any money selling milk powder to the poor.
The average dairy farm will lose about a quarter of a million bucks this year.
Next year doesn't look a lot better.

Wed, 03/11/2015 - 23:06 | 5880303 Mentaliusanything
Mentaliusanything's picture

So in Essence Australia is "Up shit creek in a barbed wire canoe without a damned Paddle"

Strike me Pink cobber, most of us and I mean the vast majority have well over a Million Benny bucks equivalent in superannuation and housing. Now if that should devalue, Australians would go off like a Pork Chop in the summer sun.

But until then I will throw another 10 inch shrimp on the Barby as I suck on a cold tube waiting for the Fillet steak to get to medium Menstruation.

Thu, 03/12/2015 - 00:11 | 5880410 mrpxsytin
mrpxsytin's picture

I wonder how many Amerikans have seen a fillet steak and a 10inch prawn in the same place, let alone eaten them? Poor impoverished cretins.

Thu, 03/12/2015 - 03:37 | 5880618 Aussiekiwi
Aussiekiwi's picture

.

Wed, 03/11/2015 - 23:11 | 5880311 TheRideNeverEnds
TheRideNeverEnds's picture

First they suffer a humiliating defeat in The Great Emu War and now this?  

 

Dammit Australia; are you even trying?!

Thu, 03/12/2015 - 03:34 | 5880614 Aussiekiwi
Aussiekiwi's picture

Yeah, but the thing you need to understand about Emu's, is they are very fast, ok they may only be flightless birds, but they are very large flightless birds.....ok,........ I've got nothing.

Wed, 03/11/2015 - 23:12 | 5880315 QQQBall
QQQBall's picture

Chinese are ugly, ill-mannered and less than honest.  I agree, sell their roo meat to to Merikan FF restaurants

Wed, 03/11/2015 - 23:42 | 5880368 delacroix
delacroix's picture

wendy's got in a flap over that kangaroo meat years ago.  nowaday's it would be a big improvement over pink slime.

Thu, 03/12/2015 - 00:18 | 5880417 mrpxsytin
mrpxsytin's picture

Now if only Amerikans could afford to buy kangaroo meat. Oh, but to dream.

Thu, 03/12/2015 - 03:30 | 5880608 Aussiekiwi
Aussiekiwi's picture

Sell it to the Kiwis, just label it Possum meat.

Tue, 03/17/2015 - 15:34 | 5899377 Dame Ednas Possum
Dame Ednas Possum's picture

Oi...steady on!

Thu, 03/12/2015 - 01:23 | 5880493 leveler001
leveler001's picture

Mrpxsytin, wow you are a moron. You are the Australian type all us other anglos laugh at. Your country is just as doomed as all the rest. Massive environmental damage done already,  in the name of your shitty agriculture and industry. Have fun  desalinating the ground water. You idiots even managed to fuck up the great Barrier reef. Haha if you knew anything about ecology you would know that most of Australia is a desert which cannot be intensively developed, at least in the long term. And certainly not to the level of sustaining human life. Cute idea you guys had, but for all your ruggedness,  you will still end up starving and thirsty while aborigines laugh in your face. 

Thu, 03/12/2015 - 03:29 | 5880606 Aussiekiwi
Aussiekiwi's picture

Wow!!, chill out dude, yes you are right there is a lot of desert in Australia, fortunately that is where all the nasty mining takes place, a long way from civilization, not planned that way, that just happens to be where the resources are.

You don't know much about aborigines.

P.S, shucks, thanks for the ruggedness comment.

Thu, 03/12/2015 - 02:44 | 5880566 Cycling Fish
Cycling Fish's picture

Mr. Obata has obviously shorted the Australian dollar. The falling ozzie dollar is going to make life much easier for Australian tourism industries and Oz manufacturers.

Thu, 03/12/2015 - 05:18 | 5880680 TheCosmicTaco
TheCosmicTaco's picture

Maybe.

Thu, 03/12/2015 - 02:45 | 5880567 Cycling Fish
Cycling Fish's picture

whoops double post

Thu, 03/12/2015 - 03:35 | 5880615 savagegoose
savagegoose's picture

correction mate, we dont have manufacturing industries.

 

 

Thu, 03/12/2015 - 04:21 | 5880646 farmerunder
farmerunder's picture

I agree, i have been trying to work out what we do have. The 2 big miners are 85% overseas owned, employ less than 2% of the popn. A residential housing bubble seems to be the biggest borrower. Tourism and farming have been knocked by the high dollar. Welfare is over 30% of the budget. Small business is told its the engine room but no one can afford the high wages. Sounds like a big mess to me.

Thu, 03/12/2015 - 07:28 | 5880790 savagegoose
savagegoose's picture

I think the biggest occupation here, is self servicing.

 

Thu, 03/12/2015 - 04:51 | 5880660 Peter Pan
Peter Pan's picture

Australia certainly has some imbalances in relation to overburdened home owners as well as trade and reliance on Chinese property buyers, but the fact remains that it still enjoys a great deal of freedom and the people are nowhere as stupid as Americans when it comes to politicians. Australians have shown a willingness to support one or more outside parties which end up having a balance of power. No such luck in the USA.

Tough times ahead though as Australia's dream run has gone on for too long.

Thu, 03/12/2015 - 05:10 | 5880672 TheCosmicTaco
TheCosmicTaco's picture

China is fucked. Big time.

Ergo, Australia is fucked

I am Australian.

Therefore, I am fucked too.

Yes. Thank you, you stinking Chicom pseudo-commie asshats with your $28 trillion credit bubble and 68 million empty concrete-shell dogbox apartments.

Thu, 03/12/2015 - 06:06 | 5880714 Brentonius
Brentonius's picture

China could pull a fast one on the world, They can take all the gold they have accumilated thanks to the price rigging and manipulation on gold prices by the west and create a gold backed Yuan. They are just waiting for the US dollar to pop and then they will pounce for the top spot. 

Everyone is printing because everyone knows its all going to come crashing down so the amount of debt accumilated doesnt matter. He who has the most physicall assets will reign supreme. Right now its just delaying the inevitable but there will be winners and losers. The losers being EUR and US

 

Thu, 03/12/2015 - 06:58 | 5880761 Monty Burns
Monty Burns's picture

Surely all those wonderful vibrants from Africa, Afghanistan and the Arab regions will save you? I read everywhere that they're all honest, law-abiding, productive and enterprising individuals.

Thu, 03/12/2015 - 05:33 | 5880694 TheCosmicTaco
TheCosmicTaco's picture

Many places will soon be fucked. Australia is far from unique. How about Canada? Brazil? All of SE Asia is in a massive bubble right now. Even basket cases like Indonesia and the PIs.

We are living in the world that Alan Greenspan created. Good old free money Al. The man who destroyed the world and shrugged it off with a " Who, me? "

 

Thu, 03/12/2015 - 05:50 | 5880702 Brentonius
Brentonius's picture

Err lets look at US balance of trade. You dont need to export more than you import. The US shows us so. God bless USA!

Thu, 03/12/2015 - 06:55 | 5880760 Monty Burns
Monty Burns's picture

"Deficits don't matter"

Dick Cheney (War criminal, chicken hawk and 9/11 enabler)

Thu, 03/12/2015 - 06:02 | 5880712 farmerunder
farmerunder's picture

no disputing the fact Aust is not alone, my view is that in places like china and india most of the people have never had a lot and wont notice a lot of change if world economic conditions decline, places like Aust, US and Europe have higher standards of living and expectations. These are not people who have the ability to adapt.

Thu, 03/12/2015 - 07:04 | 5880767 August
August's picture

You have to admit that it's a nice change of pace to bash a faux-economy other than the USA and the EU.

Thu, 03/12/2015 - 08:10 | 5880867 hedgiex
hedgiex's picture

Good Data. Hope thru some brillance and luck the Aussies turn it around. Not much of a financial economy that spins on its own. As of now, you sit pretty with long shorts on the A$.

Mon, 03/16/2015 - 22:34 | 5896578 Promethean
Promethean's picture

Australia's current high immigration (population ponzi) is also choking productivity.

http://www.macrobusiness.com.au/2015/03/gittins-high-immigration-chokes-...

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