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Australia Is "Going Down Under": "The Bubble Is About To Burst", RBS Warns
Thanks to a variety of idiosyncratic political crises and country-specific stumbling blocks, Brazil, Turkey, Malaysia, and to a lesser extent Russia, have received the lion’s share of coverage when it comes to assessing the EM damage wrought by the comically bad combination of slumping commodities prices, depressed Chinese demand, slowing global trade, and a “surprise” yuan devaluation.
Put simply, the intractable political stalemate in Brazil, the civil war in Turkey, the 1MDB scandal in Malaysia (and the fact that the country was at the center of the 1998 meltdown), and the hit Russia has taken from depressed crude prices mean that if you want to pen a story about emerging market chaos, those four countries have plenty to offer in terms of going beyond the generic “falling commodities + a decelerating China = bad news for EM” narrative.
But just because other vulnerable countries aren’t beset with ethnic violence and/or street protests doesn’t mean they too aren’t facing crises due to falling commodity prices and the slowdown of the Chinese growth machine.
One such country is Australia, which in some respects is an emerging market dressed up like a developed economy, and which of course has suffered mightily from the commodities carnage and China’s transition away from an investment-led growth model.
Out with a fresh look at the risks facing Australia is RBS’ Alberto Gallo. Notable excerpts are presented below.
* * *
From RBS
Australia has become a commodity focused economy, with an increasing exposure to China. For the past decades, Australia has been buoyed by the rapid Chinese expansion, which outpaced the rest of the world. Australia benefited from China’s strong demand for commodities given its investment-led growth model. China is Australia’s top export destination and 59% of those exports are in iron-ore. But as China struggles to manage its ongoing credit crunch and continues its shift to consumption-led growth Australia’s economy is likely to be hurt by lower demand for commodities.

The economy is slowing due to external headwinds. Last quarter, Australian GDP grew at just 0.2% QoQ, its lowest level in the last three years (and below the market consensus of 0.4%). According to the Australian Bureau of Statistics (ABS) the growth rate was driven by higher domestic demand, while lower exports and a declining mining industry continue to present headwinds. Mining’s gross value-added to GDP fell by - 0.3% QoQ in Q2. Despite Reserve Bank of Australia (RBA) governor, Glenn Stevens, citing lower growth as potentially a “feature of the post financial crisis world” meaning that “potential growth is a bit lower”, Australia’s slowing economy is more than just a victim of the post financial crisis world, in our view. Rising unemployment coupled with soaring house prices and vulnerabilities in the commodity and construction sectors are all cause for concern.
Unemployment is rising, and could increase further, given the high proportion of employment in the vulnerable mining and construction sectors. Unemployment is at 6.2%, just shy of the ten year high of 6.3%. Although the number itself is not worryingly high, unemployment has been rising for the last three years, and is likely to continue in our view. Mining and commodity sectors employ 4.5% of the workforce. With lower demand for commodities from China, unemployment in these sectors could rise. Also, unemployment may rise in the construction sector (8.9% of workforce) given vulnerabilities in the housing market, as we explain below.

There are domestic headwinds, too. The housing market is vulnerable, with overvalued properties and over-levered households. House prices in Australia have risen by 22% in the last three years (according to the Australian Residential Property Price Index), with property prices in Sydney overtaking those in London. House prices have risen faster than both disposable income and inflation in recent years, with the gap between growth in house prices and household income closing by over 40% in the last three years.

If unemployment continues to rise, due to losses in mining and construction, the house price bubble could pop. Rising unemployment in the mining industry, due to its exposure to a slowing China, will create risks in the property market; house prices are likely to fall as the newly unemployed could be forced to sell.
The RBA has less dry powder now. The central bank has cut rates twice this year, from 2.25% in March to 2% now. As the domestic economy slows, accommodative policy is needed to encourage investment, particularly in non-mining sectors, to boost growth and create jobs. However, with rates already at 2%, there is much less headroom for monetary easing to offset a downturn in Australia.
The worst is yet to come, in our view.
* * *
So summarizing in the simplest possible terms: slowing demand for commodities leads to rising unemployment which means trouble for overleveraged households and that's bad news for the country's housing bubble. Meanwhile, the RBA is running out of ammo.
If ever there were a bearish narrative that's easy to grasp, surely that's it.
Of course thanks to the ascension of Malcolm Turnbull, Australia may have a secret weapon...

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America is next >> http://bit.ly/1KogtGi
From the perspective of an Aussie scientist working in the USA for the last decade, it's simply sad what this Government is doing. I was in Sydney recently and the internet speeds are 3rd world. Cutting NICTA funding completely is so incredibly shortsighted, and the cuts to CSIRO are harsh indeed. There's a saying over here that when Governments need to make cuts, the easiest areas to hit politically are universities/science and prisons. Seems the Abbott Government buys into the former big time. They have no idea what damage this does, from destroying R&D capabilities that takes years of investment to build, to sending signals to potential top overseas recruits that Australia is not a place to pursue a cutting edge career in science. I think I can hear the sound of scientists in Australia working on their CVs from here. It's all very sad...
"with rates already at 2%, there is much less headroom for monetary easing to offset a downturn in Australia."
But, but, but, isn't that EIGHT Fed Hikes away?
As an Australian I would just like to say that I bloody well hope the housing market collapses. There is no property in Australia that is worth more than $100K on a supply/demand scale. The fact that the average house price is $600K shows just how over-valued the market is.
So the sooner I can build a house on a virgin block for $75K, just like my parents did, the better.
Funny how quiet Jim Rogers has been lately. Not burning many calories on the "supercycle" lately I bet.
I do think that there's's more Time and Price to the Downside for the S&P500.
1987 lasted 61 trading days, 2011 took 66 trading days. Currently, 2015 takes 56 trading days.
Price also suggests a Lower Low will be seen in OCT: specific dates are OCT 8-10, OCT 16-19 and OCT 29-NOV 1 to expect a short term change in Trend.
http://tripstrading.com/2015/10/03/sp500-1987-vs-2011-vs-2015-pattern-of...
Ha – you do realise you cant eat Kiwi, baby Kangaroo or Koala! Why not stick with the Aussie seafood, and branch out to try crocodile, kangaroo, Emu and camel if you want…
Poor bastards down even have any guns to fend off the Squid either.
Australians do not want to use firearms to solve political problems. We have more guns now than before the gun laws were implmented: http://www.dailymail.co.uk/news/article-3227090/Australia-home-3-MILLION...
Any Australian over the age of 18 can join a rifle club and purchase a rifle. The key to our gun laws are that you can purchase a firearm as a tool. If you are a competition shooter then you can purchase any array of competition firearms. If you are a security guard you can purchase semi-auto handguns, if you're a pest-controller you can purchase semi-auto long guns. If you live on the land you can purchase blot repeater centrefires. You simply need to demonstrate that you have a practical use for your firearms.
Saying you want them to fend off the squid is retarded and will be rejected.
Please stop the moronic propaganda that Australia has no guns. We have the most we've ever had.
If anything you should be looking at our gun laws as having minimal impact on gun violence. We have more guns than ever yet we have no mass shootings... So obviously it is not the guns that are killing people.
Let the squid have what it wants. You think shooting at it with your pea-shooter is going to do anything? go to Syria moron. They think that guns solve problems there. Fucking morons.
I own a .223 rifle for the express purpose of shooting foxes and feral cats/dogs. And that it what I will only ever use it for.
Thanks. That explains then, in addition to having no Constitution and/or Bill of Rights, why your Government is so mean-spirited and oppressive on its people whilst being nothing more than a vassal to The US iwrt foreign policy and The UK for everything else. Australia can't even get along with its neighbours because of its attitudes of "Superiority" and general arogance. Which explains why it's largest neighbour, Indonesia, now provides Visa-free entry to most developed countries EXCEPT Australia, its largest source for inbound tourism.
And you can't even play cricket......
I can't wait for Australian property prices to collapse and wipe the supercilious smile off of your faces. Mind you, that might also happen on Saturday at Twickenham?
You still watch cricket despite the rampant match fixing? Please don't me you think it's real... That would be hilarious!
What is the common factor with those visa-free nations to Indonesia? They have very little interaction with Indonesia. If you had to relate with Indonesia on a daily basis you would understand. It's all pantomine. Indonesia is 100% corrupt, and whenever they feel like the kickbacks from Australia are not high enough, they chuck a sad. It happens like clockwork.
Thanks for providing the perfect illustration of what I described as neo-colonial attitudes.
Indonesia, just in case you hadn't realised, is a SOVEREIGN State not an Australian Colony and it can do WTF it likes to do. You, dear Aussies, have to live with it, they are your largest neighbour.
And live with 'it' we do.
You're talking about something you have no idea about. So your comments are meaningless. When you actually try to trade with an Indonesian come back and give a presentation to the class.
You are just compounding your idiocy. I actually did business all over Asia for 40 years. I am married to an Indonesian and live in Indonesia, so please don't be so patronising. Another perfect illustration of arogance and neo-colonial attitudes.
I never had problems doing business anywhere in Asia, perhaps because I was able to demonstrate cultutal sensitivity and treated all my partners with respect? In Indonesia, my business partners, mostly ethnic Chinese, were amongst the most trustworthy and relaibel anywhere. Once concluded, deals didn't really even really need contracts and were always honoured in full. And just to anticipate your next ignorant response, no I was never once asked to pay any bribes in any Asian country.
We are talking Indonesia specifically, not Asia generally. What business did you conduct in Indonesia?
Incidentally, the issue is Guns. And in these days of increasingly oppressive Governments and Police States, it is fortunate that the Bill of Rights (specifically The Second Amendment) confers the right to all citizens to be armed.
Wait. youlive in Indonesia. I didn't know that they had that second amendment too. How many firearms do you own in Indonesia? How many do your Indonesian in-laws own?
Walk us through the process you went through to purchase your Indonesian firearms.
The issue of Guns in general compares to The freedom of The US. And in The US I have an impressive collection. Indonesia does, like Australia, have restrictions on gun ownership. Unfortunately.
Haha - finally a decent fight on this boring site.
And good to see the aussies out tonight.
MrP i'd upvote you but i remember this site when you could JUNK someone and cant be arsed withh this new crap
Anyway this dumb pom will be crying into his salad bowl after the rugby tonight.
Cricket...LOL
Incorrect. The Supreme Court even acknolwedge that people have the right to self-defense even without hte 2nd Amendment. The 2nd is there to prevent social distortion people like yourself from trying to take over.
"The Second Amendment) confers the right to all citizens to be armed."
Not to be nit-picky, but most folks have the misconception that the Bill of Rights assigns rights to people.
Actually, the Constitution recognizes the Creator endowed NATURAL rights of the people and the Bill of Rights simply specifies certain of those rights that the government is enjoined not to violate (“infringe” if you will).
Unfortunately nowadays, most of our representatives consider themselves to be rulers and the Constitution to be an impediment to what they believe is higher modern sensibilities so we continue to get all manner of interpretations, regulations and rulings that far exceed those allowed to the government in the Constitution.
http://constitutioncenter.org/interactive-constitution/amendments/amendment-ix
Ethnic chinese do not equate to the native Muslim Indonesian. They are totally different. When you've dealt with native Indonesians come back and educate the class.
It's like saying, South Africa is great to do business with, but I've only ever dealt with the Afrikaners. It's a childish argument. Totally misleading. But it may sound convincing to people who have no idea what the difference between an Afrikaner and a Zulu is, or the difference between a Sino-Indonesian and a Javan is.
So you didn't really need contracts, but you paid a lot of money in legal fees to get them drawn up didn't you. But that was just for fun wasn't it? Save it for the fools buddy. You're talking shit.
Further evidence of your ignorance and arogance. Let me see if I understand you correctly. In Australia, to its great credit a Nation of immigrants, only white Anglo-Saxon Autralians are real Australians? All others who live in and contribute towards the development of the country are not really Australian? This typifies the attitudes of neo-Colonianists and I can fully understand why you have not been succesful doing business in Indonesia. If you need some lessons I still do consulting work to keep me busy but I doubt you would be able to afford my rates.
What century do you think this is troll? No, not 1915 dumb-dumb, the door is wide open any country to trade. Who gives a fuck about people with chips on their shoulder?
"Neocolonial", hahaha! ... what are you, like 12, and just squeezed your first pimple?
Probably something he read in the Javanese Post, or the Jakarta Times. He's turning native. To be expected though.
Just a point of information, in further demonstration of your intimate knowledge and understanding of Indonesia, there are no such media as "The Javanese Post" or "The Jakarta Times". Your total lack of knowledge of this country does explain why you have not been successful trying to do business in Indonesia. Together, of course, with your general attitude of superiority.
I made them up. It was a joke.
people with chips on their shoulders
Kinda like you?
Roger that Roger....And don't call me Shirley..
While you're being so honest, you won't mind telling everyone how you counsel any foreigners to only exchange their money at certain places (I bet you personally go with your guests to exchange their cash to Rupiah).
So Afrikaners are the same as Zulus. Sino-Indonesians are the same as Javanese. Got it.
If you've read any of my past posts (and can read my profile pic) you will know that I want any and all people to come to Australia. But you are not going to ever tell me that a black American is the same as a White American. Or that a sino-Fijian is the same as a Polynesian Fijian. Keep talking to the fools who believe that stuff.
It thinks Australia doesn't have a constitution. :D
And bill 'O rights ... yeah well ... that works great in the US.
Utter horseshit, I don't believe a word. One of my best mates gets his custom truck bodies built in that shit pile, and his descriptions of the corruption are laughable. Didn't get asked to pay a bribe once. Bullshit fuckface.
i learned long ago that all western countries are just as corrupt as eastern ones.
They used to be a lot more discrete about it about back then .
Now, they barely try to hide it.
Dunno about your "western country" but at least here the police ties to organised crime are at a high level, not at a level where street punks answer directly to flat foot beat cops.
This might come as a surprise to you, but other than going to Bali occasionally, most people here would barely know Indonesia even exists. Having to "live with it" is like, "What? Indo who? ... that's a country right?". That's about how hard it is to "live with" Indonesia.
New Zealand ... now there's a proper bunch of trouble-makers.
Oi , who are you calling trouble ? :-)
Edit: Oh I get it : you're talking about the ones that you want to send back to us.
Seems fair enough to me; in a small population like ours they will be marked men the minute they step off the plane.
We'll handle it.
Send some of that uncut H over to Christmas Island ; that'll sort 'em.
Nah, we don't mind the naturalized variety, but compared to Indos, kiwis are a lot more trouble, which is to say, none at all, and mostly revolves around the pronunciation of "sux" ;-D
Yawn
They tried to play hardball and ended beef imports. We found a new market for the meat within 2 weeks then their prices rocketed and they came back begging for supply. Indonesia is the bitch in this relationship.
What amazes me is they have a guy as Prez who claims to be a savvy business man, and then goes and does that.
What a bloody fool.
"Let the squid have what it wants"
You don't have kids do you?
Lol "you have no constitution". That was hilarious. Seriously how retarded are you?
Tosser
Pack your bags and head off to Syria.
I hear they have plenty of guns over there. Big ones too. Therefore, using retard logic, Syria must be a paradise.
Shucks, let’s find some common ground here, like hunting and varmints.
We’re using .375 H&H Magnum for hunting brown bear way up north here..
What are y’all using for sniping them co-ala’s down there?
..must be pretty aggravating them things eating up all that good mint chew.
:- )
..and who doesn't love Quantas, anyway???
I'm not sure what they use. I do know they cull them sometimes. But w don't have koalas in Western Australia so I have little experience with them.
We have a plague of feral cats, dogs, foxes,and rabbits here, which are totally raping the native fauna.
The biggest ferals people take on here are water buffalo and camels. They are much bigger than a bear. http://www.abc.net.au/news/2015-08-22/arnhem-land-djulk-rangers-ambitiou...
They even hunt them in helicopters. Any idea what that rifle is in the 1st gif?
I thought cane toads had already conquested Oz years ago. There are still people there?
Seems like the .375 is a little small. Maybe when you come down under you'll advance to the big boy guns.
Glad to see that people can still own firearms in OZ...it's just too bad that they have to jump through justification hoops to get them. It's probably coming to America if the Mohammedan-in-Chief gets his way. Truly free men and women don't have to jump through no fuckin' hoops...but we ain't free so much any more.
"Advance to the big boy guns”
Do you mean like the one I use to shoot these…. ????
http://i.imgur.com/AK0BUwZ.jpg
The back of the bolt and the receiver in the video says Ruger M77 to me, it comes chambered for a variety of high velocity rounds.
What about the 1st gif? You can see the barrel and part of the stock with iron sights.
The knurling on the forestock and receiver/barrel joint says same rifle.
http://gundata.org/data/guns/Ruger-M77-Hawkeye-All-Weather-3bb2f00cfffbd6559a8a6178dfe1b0e8a-thumb-0-0.png
(you likely need a high resolution display to see that knurl pattern)
..and it's the sling mount sticking out of the bottom of the stock.
No. The very first gif (moving picture) of them hunting from the chopper. You briefly see the barrel of a rifle in the top right of the screen with iron sights. What is that one?
Oh, that one..
Looks like the business end of an M-14.
Nature can get pretty aggressive down under.
Even the little things can get out of hand.
https://www.youtube.com/watch?v=zWVw-j8eYSk
Solution?
https://www.youtube.com/watch?v=kuBPL81DbLU
What would the paperwork be like to get a permit for one of these down there?
Oh my! Mouse wars.
too much paperwork. The mice plague would consume itself before you even found out what forms you have to fill in!
"Tosser"
That's why your bowlers can't win games isn't it?
Australian penal colonists had better genes than American indentured servants. That's my conclusion...
Stay out of debt by committing crimes is the take home lesson?
To me its a wash whether its better to have been founded by penal colonists (Oz) or religious fanatics (USSA)
Where do you suppose Britain sent its prisoners BEFORE Australia, hmmm?
um .... er ... USA? :D
The amazing thing is most Americans don't even seem to know that.
Australians do not want to use firearms to solve political problems. We have more guns now than before the gun laws were implmented: ""
What a fucking lie. You can't even defend yourself in your own home as "your" guns are owned by the Crown (criminal gang).
So get down on your knees and bootlick that cunt that's on your money.
She owns your piss hole. And you will do just what they say
Enjoy your beat-down and get ready to be have your borders open again to every filty rag head in Asia.
How is that a lie? My gun is in my firearm cabinet.
You do realise that the immigration restrictions are imposed on Australia by Britain right? This is done to prevent Australia from developing a domestic economy. Low population ensures that Australian raw material producers are totally dependent on the export market.
If Australia opens her borders (as the USA did in the early 1900s), then we will recieve a massive population boost which, in turn, will allow us to fund and consume our own resources, on our own terms. No more borrowing from British and American oligarchs, no more foreign ownership of our industrial, agricultural, and mining businesses.
So bring on those 'rag-heads'. We've got plenty of space for them.
But this is probably way too of an advanced concept for someone as foul mouthed as you.
This is incorrect, all bringing in foreigners with different customs will do is distort the labor pool and push down wages.
Who is Hulk Bogan?
"Australians do not want to use firearms to solve political problems"
Really? For starters you speak for yourself. Next, your government does use "firearms to solve political problems" and that should bother the fuck out of you and if it don't you probably had you Muzzie seamstress sew a zipper in the back of your panties. Sooner or later all governments turn their weapons inwards, you tardmates are no exception.
I sound like broken record but jim jeffries sums it up best on u tube.
That's (gun) bullshit. As things there get worse & worse...and they drop that ridiculous $2+ million permanent visa price, watch their Bureau of Statistics put out more and more grim reports on all the black & brownskins making up the population by 2050 or so.
They'll drop their immigration reqts.... don't be bashful, get on over.
Yeah, because big tough Muricans' have really showed them the way to fight back right. I must have missed the epic gun battles on Wall Street and bloody firefights at local foreclosure proceedings. I also must have missed that day where a group of well armed patriots stormed the Goldman building to liberate our stolen billions. I guess I was too drunk on all those days. Please fill in the details.
Goddam right
Why always schools - cant those fuckknuckles get down to the goldman building?
Max is Gona get mad. Sorry couldn't resist --- and oh yeah -- bitchez!
other than having japan beckon to our very demands regarding the korean peninsula, australia is in between a rock and hard place having to cross the 'asian pivot' axis in order not to become another 'em'?
china says we like your outer-bank pacific geography and our willing to cut a deal, with japan closer to following austrailia devastating austere geopolitical dilemma
afterall, isn't australia a puppet of usa hegemony crippled by jap/us fx...[?]
interesting how my memory brings me back to the asian financial crisis of 1998 [1997-99] and china wasn't tied to a fixed currency. the em's all got trashed having short-medium term debt obligations. china hadn't a thing to worry about because its external debt was mostly long term and had a fantastin cushion to absorb any internal shocks.
this is another reason why china is going to cut the FX currency pillaging of western colonialist still living in the 20th century.
god bless the 'gramm-leach-bliley act' {glba}!
It's all good as long as they don't prick my prick, then it's eyes wide open and i'm wonderin, i'm wonderin....knowin that I need ya to save me.
I have a stupid question. "Emerging" markets - got it. How long does a country stay on the Emerging Markets list before it graduates to a, oh I don't know - 1st world market, 2nd world market, just a market? Is there a probationary period, semi-annual performance reviews, etc? Finally - who makes this shit up?!?
EMs are, I believe, categorized by countries whose primary export is raw materials. Australia has pretty much been that. From the article:
China is Australia’s top export destination and 59% of those exports are in iron-ore.
An Emerging Market is a country that is ripe for looting by the Banksters. After a variable but short period, such countries are converted into Failed States by a suitable controlled demolition.
The aud/usd is probably going to the 60aud/usd level within the next 3-6 months.
I was an Aussie bull, but have subsequently changed my stance.
Who knows, the macro corporate importers could load up though?
I'd rather be caught on the wrong side of the last 20% of this trade, then the new 80% side of this trade ;-)
If the RBA drops rates lower, It's going to be carnage, knowing the asymmetrical nature of the Australian bond market.
House prices in Perth,WA,have been in a huge bubble for decades.The crash will be epic...
When I visited my friend there in 2008 her $235k house was valued at over $1.4 million just outside of Sydney. She had no clue about those tings since she was working her butt off at her job.
She evaluated it, sold that house for $1.38 million in 8 days! and grabbed a nice three-bedroom condo near Darling Harbor surrounded by fantastic Chinese and other restaurants and lots to do. She pocketed the difference putting it aside for her retirement and also bought some nice things from the Perth Mint with a portion of it.
Hard to believe the median house price there is over $600k.
House prices in Perth are already on the skids with workers from the mines and supporting business nodes heading back to their home states. Rents are off by 15-20% in the areas I monitor which is a major issue for the leveraged
http://www.smh.com.au/federal-politics/political-news/australian-housing...
The sound of reason. Nice link and quote.
If the RBA drops rates with the aud/usd hovering around "70", all hell is going to break loose.
Reminds me of when the Japs bought Hawaii in the late 80's----early 90's. ha ....<
The conclusion is fair but the analysis a bit light on.
The mining boom has provided income to many professionals in the big cities: lawyers, accountants, financiers, engineers, project managers, public servants, etc, and they spend money locally producing more jobs. The collapse of the mining boom will impact many other parts of our economy.
It has already cost Australia dear in USD. But because the AUD has fallen almost 40%, the residual mining income translated into AUD has not dropped a lot, so can claim it hasn't shaved a lot off GDP -- when GDP is expressed in AUD. But Australia's real world income and buying ability has dropped greatly.
Prices in capital city property markets have been pushed up big time by wealthy Chinese buyers, and in the last 18 months the declining AUD relative to RMB has kept those prices up. That decline in AUD/RMB has also helped with Chinese tourism, particularly given the RMB has been relatively stable re USD.
As the Chinese economic deterioration progresses, there will likely be a slowdown in the growth rate of its outbound tourism and thirst for overseas property, which would further hit Australia. It is unclear the effect of further declines in the RMB on Australian tourism, property prices, etc since that depends on whether the AUD also continues to decline.
The situation is propped up a bit by the rate at which we are selling off the farm and most other assets, providing a once off capital inflow to be consumed while ownership of productive assets moves offshore and must then be paid for indefinitely.
Not to worry. We have national and state governments keen to see a lot more wind turbines erected, which of course we have to import, thus finding a good use for any FX we can eke out, and this despite the fact that electricity consumption from the national grid is actually declining, so we are adding duplicative capital stock that consumers have to pay for, mainly to benefit foreign investors. Meanwhile our new left wing government masquerading as conservative under Turnbull is busily looking to import more muslims and bribe more tin pot governments in pursuit of UN seats.
I was really surprised by the gangs of Muslim yutes hanging around Bondi Beach when I was there last time. It almost did not look safe after sunset.
In the last few hours we have had a police employee shot dead by what was apparently a yute imported from Iraq http://www.dailymail.co.uk/news/article-3258253/Gunman-police-headquarte...
Civilized societies underestimate the impact of a lesser civilized group coming into their territory [Romans and German Barbarians, for example]. A good descritpion of the unfortunate end results and downfall of society as a result is written by Will and Ariel Durant in several of their history books esp The Lessons from History, orig published in 1968. I highly recommend it if you haven't had a chance to read it. Very thin (about 100 pp) book but packed with valuable insights.
Sad to see what's happenign to Australia. Politicians there are as out of touch with their people as Germany+Sweden and USA.
http://www.amazon.com/The-Lessons-History-Will-Durant/dp/143914995X
"mining construction boom" ;-)
The mining boom hardly even got started so far.
It was almost all foreign investment that paid for the numerous major mine and infrastructure construction phases, from 2009 through 2014, and foreign pockets is where any losses in revenue will be felt from a major commodities price collapse.
But the production phase investment in that period was to buy 25 years of production, and that has just started and that's the part where Australia's govts, and WA and QLD in particular, will actually start to make serious money.
Which will be used to ... service the debt. :D
Overly optimistic. The Australian government certainly thinks a mining boom occurred over the last decade. Read the Australian Treasury papers.
Not just Australia but all major minerals exporters have over invested in capacity (it's really the same big companies operating in all those countries) just as China has over-invested in production capacity for steel, concrete, ship building and lots of other things that consume large volumes of minerals and energy.
Mining capacity will continue to increase in Australia and elsewhere as projects currently underway come online. But there is no additional demand for them, just falling demand because China already has more than enough ghost cities and empty apartments. We all know commodity prices in USD have fallen dramatically and when you add further excess supply, price will decline even more.
Some of the losses will fall on overseas investors but not all. State governments earn royalties on sales, usually set as a fixed amount per ton. Royalties received depend on the volume shipped, which is going to be much less for the next decade than everyone, includuing those governments, was anticipating a few years ago. If price drops enough it will force some royalties to be renegotiated down because the alternative simply becomes that the operators lose money on every ton they ship, so they stop shipping and the state gets nothing. Federal government take is through company taxes on profit. When profits drop, the tax take does also, which the government has already told us is adding to its budget problems.
I don't expect Australia to implode and most other countries have their own problems which may be worse in their own way. But the next 10 years are likely to be tough for Australia.
I basically agree with all you said, except that investment is not production. Mining investment takes a long time to develop into production and what is being called a mining boom was primarily mining construction and pre-existing developments or expansion capability setup already for just such a price opportunity.
The other thing is grades, scale and distance to market, plus continuous reliable delivery matters in mineral adn energy commodity supply, and that is where Australia has a huge advantage in downturns. The countries that have those features continue to produce and supply when all the other marginal producers close and go away. Australia just shrinks to more productive grades and orebodies and mothballs the rest. It's how our companies got so big, progressive continuous growth even in downturns. The fact is we can produce in bulk at low cost for years when we have to (if debt was properly managed). And demand does not go away, it just rationalizes then starts to come back. Never think of it as a one way street (down), it rarely is.
The fact is Asia is loaded with aspirational people, and if one cohort of a large population is bankrupted and on the skids, another cohort will be recruited into the desire-aspiration machinery, and off we'll go again into higher demand and credit. Asia is more than China, and I don't do optimistic btw.
optumistuc for Kiwi readers lol
I'm surprised that Canada isn't mentioned in the same breath here. The two countries are pretty similar.
Have you looked at that bounce in usd/cad? My guess is the cad/aud differential has a lot to do with geography.
When you divide/triangulate [leg out] usd/cad, aud/usd and the cross aud/cad, you get some pretty overbought figures.
The carry premium in aud/usd before the payrolls numbers probably played a roll. I don't trade usd/cad, but if I did, I'd probably short it in London on Sunday.
And they don't have any guns to protect their PM stash!
We dont have many lakes for boating accidents either, but in my state I think we do have the highest break and enter rates for domestic homes
>>>in my state I think we do have the highest break and enter rates for domestic homes.
Based on the experience of friends living in Adelaide and Sydney apartments, residential B&E seems to be 1) damn common and 2) not taken at all seriously by the police. Just kids havin' fun.
Financialsense news hour interview with Duncan:
http://www.financialsensenewshour.com/broadcast/insider/fsn2015-0812-dun...
wait, urban property prices in major cities can be affected by unemployment from an industry, mining, that's usually 10,000 miles away from cities? what?
I didn't know miners lived in urban cities, how the fuck do they even commute to and from work? in private jets? or are there major mining operations right outside Sydney?
In some cases people at remote locations do commute, but not on a daily basis, rather for weeks at a time.
However, that's not the main issue. It is the flow of mining revenue to all the service providers (lawyers, accountants, financiers, engineers, etc) and governments located in the big cities. That is slowing down with the mining boom.
Property prices have also had a lot of support from Chinese buyers. A slowdown in the Chinese economy is also likely to affect that demand.
Oh shit NO! Just like in California? Don't those Chinese ever think about anyone but themselves?
In WA there are hundreds - thousands of workers flying to work every day to the North of the State, they fly to the site works 3-4 weeks on then fly back for a week or so off. Most of the major operations are 600 -1000K+ from Perth
as long as they beat those limey fucks tomorrow, then they can piss off... i have alot of $ on that match
Of course Australia will win, England is toast.
Agreed. The England team is a lot like the 2007 All Blacks side, with stupid haircuts and arrogant self interests. Aussie have received NO press here in NZ which is bizarre. Aussie has a good side and I'll be astonished if they lose to the poms.
I don't know what to say, I'm kinda torn.:)
It doesn't matter who wins or loses as long as it keeps the sheeple entertained and their minds off of all the important stuff.
i like squids baked nice crunchy in hot oil with terrible hot sauce. or in paella.
and yes, you have to beat the shit out of the squid, before you bake it.
Looks like the fucking pieces of shit got the guns just in time, too. That's the main thing in the US, I think. We've had the luxury of watching others get fucked up the ass and know what to expect from our cum belching overlords.
Australia Sleepwalking into a Recession
http://newworldorderwatchblog.blogspot.com.au/2015/04/australia-is-sleep...
Australia will still have a future because it has commodities. America has commodities too but the one we have the most of they don't want us to develop, use or sell and our oil reserves are depleted to hell and back or we wouldn't be importing 7 million barrels a day after 10 years of the shale "miracle" that is catastophic debt.
America grew into a powerhouse as gushing verticle wells were everywhere, now we import oil in massive quantities and the government doesn't want us burning coal so what will we be building or selling in the future?
this can only mean one thing....stawks up...wish i was a stalk "investor"..
No I won't get mad but I would point out that Malaysia was not the pivotal country in the 1997 crisis it was Thailand.
Max
http://www.macrobusiness.com.au/2013/02/the-history-of-australian-proper...
https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=20WA
Oz's nominal GDP is at the slowest rate since 2011-12, 2008-09, 1990, and the early 1960s.
https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=20X8
As of Feb, the U rate was higher than during the recession of 2008-09.
The implication is for a 35-50% decline for Oz real estate in the next 3-5 years with price and debt/asset deflation.
Bank failures, bailouts, bail-ins, ZIRP, NIRP, and QEternity at an unprecedented scale worldwide is a certainty.
The end game continues . . .
All these central bankster bubbles. A race on who's going to blow first.
Japan insanely printing.
Australia = U.S.' biggest Aircraft Carrier.
Exports account for about 20% of Australian GDP and 60% of that are commodities. So about 12% of GDP is commodities exports, which isn't as much as people think. But the productivity gained from the commodity boom was squandered offshore and largely wasted.
The main issue is the housing market where valuations are off the charts. But the government knows that to prop up the property ponzi, they will have to keep importing more and more immigrants and encourage more and more foreign investors in pumping up prices because the local population can't alone prop up this ridiculous market.
http://www.dailytelegraph.com.au/realestate/news/property-prices-in-once...
Australian's have never had their cities bombed, women raped and men slaughtered on mass......
That would explain the arrogance of its dumb citizens......
They hold a cold can in the hand and moan and groan non stop about the political leaders they just voted for, and then they look at the stupid valuation of their homes they simply say 'no worries'.
The non stop invasion of immigrants explains why when you get into a peak hour CBD train in Melbourne the occupants are now 99% Indian and Asian
The 'No worries' governments of many years went full retard to immigrate its way to prosperity.....
Good luck Australia.....your gonna need it.
You live in Melbourne?
Yes.
Soooo by your logic, being bombed, raped and salughtered helps a population avoid being arrogant. Good to know!
There are lots of Indians and Asians about so you better get used to it mate, doesnt matter what country you live in.
And if you want to talk about what you call "the non stop invasion of immigrants" you may have heard about a little place called Europe, currently undergoing their own issues with millions of immigrants. If you dont like it in Australia I suggest you find somewhere more conducive to your racially homogneous views.
Collapse in Australia could be epic once it starts. Housing debt is just one facet of the huge debt mountain Australia has accumulated. Finance constitutes a significant percentage of 'economic activity' and property makes up 60% of all national assets (UK is 20% and US is around 15% I believe). The four major banks have loan books that would soon be under stress in a downturn.
As regards the rugby Australia will run England off the park if England's set peices fail.
The future of Australia looks bleak as its “leaders”take their orders from the USA and Israel and the UK, the largest Power led destruction Cults of the World and as they prepare for another “leadership”challenge from the femme fatale, the total incompetence of management is almost complete.
However, it is more likely that after the coming Global Leadership Collapse (GLC) which will bring great pain for many, that Western Australia is geographically and with commoditiies of demand – copper and iron ore, well placed for an immediate recovery.
The World's future lies along the UT +8 hours time line from Vladivostok to Perth. China is and will continue to build the global high speed train infrastructure systems and will source materials from Perth (and elsewhere). Financial services will be delivered from Hong Kong, Shanghai and Singapore replacing the USA and the UK . Air travel will be severly reduced. This is the 100+ year infrastructure project that had to happen. Air travel today, unless you have your own jet, is nothing more than the slaver ships of the 17th Century, inhumane and pure torture.
Australia's Eastern states will wither on the vine and enter long term depression and industry will demand a strong competent leadership for Western Australia, exactly opposite from the eagerly corrupted self-serving drunks and incompetents of today.
The USA is in a state of maximum contraction or, IOW it has reached Maximum Entropy and is / has alienated the rest of the World with its destruction and hypocracy exports. It is over and its TBTF crime syndicates will disband and the skills will move into Asia.
http://verbewarp.blogspot.com.au/2013/04/to-be-or-not-to-be.html
Asian are entering Australia now through immigration en masse, which is great as the food standards have increased exponentially. And they bring their own money. The White Race will become a minority in just another generation and humanity will enter a Epoch of Prosperity, Civility and Peace for a change.
So for Australia, the future looks great and secure; just need to endure the pain of being pioneers for a few short years, bUt most of the orignal folks were brought here in chains, their superior 'of the wild' genes will supply this with courage and without hesitation; so not a problem, mite.
Whatever, getting rid of the shackles of slavery; that is, our jailors of our state of Stockholm Syndrome, called “leadership” - we will lift our heads and hearts so to meet the future challenges with great delight; our Providence and Destiny, at last. Then Australia will end being an over-taxed slave colony and playground for naughty schoolboys and be able to mature as a Society. Just give us time to put out the garbage...
ah-huh, ... OK ...
Almost no one lives in WA outside of Perth, and few regional towns. The place is mostly saudi-arabia levels of hot dry desert (and full of camels too) and the reason fly-in-fly-out occurs is because few people want to live there. They take their money earned back to where they really live, on the east coast.
https://upload.wikimedia.org/wikipedia/commons/thumb/f/f4/Australian_Ene...
There are two giant mining states in Australia (and a couple of smaller ones), WA and Queensland, and they have been swapping back and forth who's the biggest for decades now. And now that Iron ore is finally getting off its glue-sniffing bums-rush of credit driven boom, the larger mining producer state will probably become Queensland once again.
The vast bulk of exports from Australia comes from the east, and the vast bulk of imports from the world go to the east coast.
So if you think for one second that eastern Australia, where the bulk of people in Australia live, and also much prefer to live adn work is going to be "dying on the vine", from here on:
1. You have no idea what you're talking about.
2. You're totally delusional.
"wither on the vine"
not
"dying on the vine"
Thank you
:-)
Yeah, OK, I see how that changes everything now. lol
LOL, yes softer language makes all the difference.
Most mining operations are rapidly tooling for automation in all their aspects which include trucking, trains, transport, port operations as well s the actual mining functions.
This means that the mining industry will not remain and major employer in the future sense; anywhere.
The reason for Western Australia is well placed is that it share the same time zone as Beijing Shanghai (+/-), Hong Kong, KL, Singapore. It is these centres that have the skill sets and orientations towards the necessary management for the construction, design and financing of Global High Speed Rail Infrastructures, with China leading this innitiation and this Push.
It also means that the convenience of the same time zone is a priority and major advantage to this enterprise, which has already begun. Being able to talk and communicate with all interested Parties within the same timeline carries considerable weight.
Perth, having few people as you point out, will be easily able to cope without having to import workers from overseas and other Australian states. Of course, specialists will come to Perth. Perth is a beautiful and clean attractive city and a great place to bring up children; it has the best Societal values of any City in Australia.
Of course, other states will contribute to this enterprise as well, but Coal is dead and hence why I used ther term "wither". And naturally, there are the agricultural industries and their exports.
I cannot fathom the logic of your apparent dislike of this agenda as it has already begun.
I hope this helps with your considerations. But just in case you don't get the message, let me say that I believe that Australia has an extremely positive future, and will play a major role in future Global events, and should not be viewed as a nation that is going down the tubes.
Ho hum
I must add that as the USA contracts and meets it Entropic moment – albeit by its own crass behaviours, China is expanding its areas of influence and trade; IOW reducing its entropy. Don't expect China to follow the USA – Yes there will be some trade losses, as the USA collapses – but China is off-setting this to some degree by currency arrangements and trade aggreements with Russia, the BRIICS and other nations – rapidly. This is being met with great merit by emerging Nations. And then there is the rest of the USA debt that it still retains...
http://verbewarp.blogspot.com.au/2013/04/to-be-or-not-to-be.html
The USA is trying to impose the TPP and its cousin agreements onto nations by force; these are not trade agreements as they represent adjudication by the USA alone; The are nought but agreements to become an official vassal state to be raped and pillaged by the USA at whim; aka neo-colonization.
The collapse that is now here, is a leadership crisis, that is to say, that those who have created these crisises do not have the basic intelligence, nor will, to fix the problems – yet demand to remain in command to rule (loot).
The leadership of China and Russia are running their nations responsibly and professionally. There is no doubt that there are many problems in both nations, however, it is the character and attitude of government that is the difference. In the USA we see only screams of “kill”,”execute”, “war”, “bomb”, etc., while looting at the highest areas abounds with the highest of priorities. Obama lost his last chance of legitimacy at the UN, and hence that of the USA.
"Say Goodnight Dick.
Goodnight Dick"
Thank you Nostradamus.
Mate, your a dickhead and a racist.
Please explain on what grounds that you accuse me of being a racist.
Thank you
Interesting that you accept that you are a dickhead but have a problem with being called a racist.
Apart from your general tone your more specific observation that " The White Race will become a minority in just another generation and humanity will enter a Epoch of Prosperity, Civility and Peace for a change." suggests you have no awareness of history and that its due to "the white race" we dont have civility, prosperity or peace. You handily ignore that Asian nations are just as racist as any other. The Chinese hate the Japanese and vice versa, the Koreans hate them too, The Vietnamese hate the Laotians, the Thais hate the Cambodians there are literally dozens of inter and intra country hatreds all through asia. Let Alone India, a country so profoundly screwed up it has an entrenched in its society a caste system so that within it there are hatreds and injustices between social classes which they wont even begin to confront and so you get the rape of young women as punishment because their sister ran off with a married man from a different caste. Or perhaps Africa with its massacres, its child soldiers and tribal rivalries which have been going on since time immemorial. In actual fact by most metrics we are living in the most peaceful and prosperous time for the most number of people in the history of the world, which isnt a white person thing, its a global development thing. So you can have your stupid opinions about the role of a particular ethnicity but lets not pretend you have even the slightest basis in fact for anything you are saying.
I asked you to explain on what grounds that you accuse me of being a racist.
It is clear that you disagree with my opinion and therefore you call me a rascist. This makes you a bogan by definition. OK
enjoy your misery.
I have directly identified your racist claim which you do not refute. And clearly you do not have any idea what a bogan is either. Your incredibly vocal for someone so ignorant.
Their habitat consists of a weatherboard or brick-veneer dwelling and is characterised by an early-model Holden or Ford in the driveway surrounded by a group of males discussing why the carby is stuffed and the results of last night's footy (a primitive gladiator-like spectator sport enjoyed by most bogans).
The female of the species, while smaller in stature, is far more loud and aggressive than the male. While the males tend to be very friendly and congregate with other males, the females spend most of their time in supermarkets and shopping malls, using a shrill high-pitched call to discipline their children and contact other females.
Males and females rarely interact socially except during breeding season, which is otherwise known as Friday night. During this time, females are allowed to enter the male-dominated area known as "the pub" and display their impressive coloured plumage to a prospective mate.
Herein lies an intersting phenomenon. Males will often fight over a particularly attractive female and she will mate with only one male, while some less attractive females have been known to have several partners simultaneously.
Ahhhh. The wonders of nature. " (Indeed:-) Chris Franklin, Eric Bana as "Poita" on Fast Forward, most of Campbelltown. by Brad June 04, 2004
The weapon used at Port Arthur was confiscated during a Police raid on a Bikie club (NSW?),listed as destroyed,walked out of a police restricted area,and swam/flew down to a gunshop in Hobart,where unfortunately it was sold to martin bryant (later killed by a fellow prisoner?).Wouldn't the car-15 been in safer hands with the Bikies who keep their stuff locked up and secure?
The Crown loses control of a magazine fed SLR.
A Hobart gundealer sells the weapon to a potential maniac.
The law abiding Australian public has their guns confiscated legally by their elected
representatives.
What about this scenario? The victims at Port Arthur were saved by a man/woman
who had demonstrated competency and a high training standard so that he/she could
fill in for the role of first responder until the police arrived.They had a pistol and
returned fire,allowing the public to scatter for cover,buying time.
Sandyhook-Again a wacko with a car-15. What was his Mom thinking?
Couldn't one of the teachers had a carry permit?
Aurora,Colorado-Theatre shooting,nobody armed in the audience.How does someone
stroll into a theatre with a tactical shotgun? I smell a major lawsuit...
Always the same cry : Ban the guns,leave the very disturbed individuals alone.
What about this? Approve the training and arming of responsible members of the local
community.Put a measure of doubt into the perpetrators brain.
somewhere i read Bryant had been attending the Tavistock Institute prior to Port Arthur (brain washing), considering the fact George Bush was giving howard his orders at the time who knows what the real story was?
Bryant is still in gaol
http://www.news.com.au/national/umpqua-community-college-shooting-why-au...
A number of posts turned into slinging matches with some good points on both sides.
The reality is that neither the US nor Australia are the places they used to be thanks to the over use of debt.
Therefore, both nations are owned by the squid.
The cricket jokes were not that good.
Back in the 80s I had a kiwi friend who worked in the mines in northern WA. He did three months on, one month vacation in Perth and then back. At the end of the three months rotation they always had a massively drunken bbq. On one of these occasions things were wrapping up and he decided to take a leak on the bbq grill to cool it down. Someone gave him a nudge from behind and he landed dick first on the hot plate, and it stuck. I met him again after a few years and by that time the Paul Hogan "Throw another shrimp on the barbie" ads had come out. He said they caused him severe mental anguish just remembering that incident.
lol, great story
HA HA HA HA!!!!
I love it. KING hammered Aussies on Z/H.
I love the care free Aussies.
I'm an old fart, I guess. ha
I love the tropics, but also the outback.
Biliibongs and retards. Snaping freshies. ha
We have a bifurcated proprety market in Australia, not all capitals have performed as well as a country wide measure would indicate...
>> http://www.bullionbaron.com/2015/10/defining-housing-bubble.html <<
I love Aussies. Their beer brewing techniques fucking rock. BIAB and no chill. You will forever have a place in my heart.
.
children children... come come.. settle down.
RBS makes a nice little reporton why australia should collapse economicallyy, and i hope it does. Im in sydney, it will be so cool to see all those highly indebted clown clowns here get a dose of reality.
But RBS is missing the real story...... a collapse bought about rising unemployment can take years to unfold.... that wont happen. As in the the US there was a trigger to the housing crash in particular, and that was adjustable rate mortgages. Here in australia they dont exist. But what does hav potential to serve as a trigger is a BANKING COLLAPSE. Yes, those big 4 banks with off balance sheet transactions where the losses are parked , and which almost collapsed in 2008 will be the trigger.
So it wont be an adjustable rate mortage as a trigger, it wont be the RBA.. they will never raise rates. but it will be a credit crunch with the BANKS collapsing as the trigger imo that sets it all off.
MACQUARIE BANK will be the FIRST to collapse, followed by the ANZ(which will be bailed out)
This will be our "lehman moment" CBA, the biggest banks share proce topped ut at $96 and is now $71. next stop $62 which was its 2007 high. then $24, the 2009 low. Just watch the price fall to indicate a CRISIS
1. Australia isn't anything like an "EM country dresed up as a DM" one. That's a pretty ignorant comment.
2. Alberto Gallo has precisely zero expertise on Australia. I've been to plenty of meetings where he's been rolled in and I know first hand that he knows next to nothing about the economy there, so I'd basically discount all of that.
3. Sure, Australia is likely to experience a recession. It'll be the first in over 20 years. Big deal.
4. Bank loan books are actually pretty decent. You will find that of the major banks their housing lending books are in decent shape (huge percentage of the book is being paid off at faster than required pace). Profitability of them is high, and their multiples are relatively low (10x or so). Sure, they may reduce dividends inthe next couple of years but they are currently paying 6%. They'd stiull be attractive paying 4 or 5 imo.
5. Did they squander the gains of the commodities boom? Complex one, but in short I think its fair to say "yes".
6. The ccy has weakened significantly already. And tourism numbers have exploded. Education exports will increase as well withthe lower ccy. They'll get some gdp contraction but it won't be a spanish style implosion imo.
+1
who owns the motels, airlines, shops they go to when in Aust? Just follow those little white buses and see where they go time after time, dont think we are goingto get wealthy when they own all the businesses they visit.