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Some sleight of hand there- they try and play down the government debt because it's low, but omitted the fact that 4 years ago it used to be zero and now is gr

by brc 15y ago

Some sleight of hand there- they try and play down the government debt because it's low, but omitted the fact that 4 years ago it used to be zero and now is growing faster than Ireland did before it went bust. This is happening because of a spending/taxes deficit that is at 2.5% and growing - all while in the middle of a cyclical boom underpinned by a chinese credit bubble that has skyrocketed demand for iron ore and metallurgical coal. Not many people know this, but Australia is basically the Saudi Arabia of high-grade coal and high grade Iron Ore. They also omitted the fact that personal debt - ie debt owed by people rather than the government is also one of the highest in the world. Australian also homes usually take out the top spots in the 'most unaffordable' list. They also omitted the fact that the workforce has gone from being one of the most free back to a much higher regulated workforce, and as a result productivity has dropped precariously and strike action has exploded. There is no mention in the article of what is termed 'the two speed economy' where manufacturing firms are struggling and retail businesses are closing their doors, mostly because of the high debt load servicing the unaffordable property market and because of diffculty competing against international imports (ie Amazon et al) caused by a strong currency and a very regulated labor market which drives up the cost of keeping stores open. Yes, the economy has been strong as a result of being underpinned by selling resources to fast-growing nations like China and India. So I agree with the central thesis that there is much to be proud of, but this type of preening article is a warning that people might start to get complacent and over-prescribe success to perfect management rather than being at the right point in the cyclical trend. The truth is the country is starting to behave like a 3rd generation family who inherets the hard work of the 1st and 2nd generation but isn't prepared to make the sacrifices that made it so. Crikey is a partisan website - not sure of the US equivalent but it's pretty hard left. It's where you go to confirm your beliefs rather than to get a balanced view.

tankenmate 15y ago
When it comes to personal debt Credit Suisse would beg to differ with you, their latest wealth figures have Australians handily richer per capita than every other country in the world bar Switzerland. As far as shop fronts are concerned; I live in the UK at the moment, the average town centre here has 25% of shop fonts boarded up, in some towns that figure exceeds 55%. In Australia you might get isolated areas where you get lots of boarded up shops due to local economic factors but you don't get a complete country wide phenomenon like the UK. Property prices in Australia are due to people wanting to live in big properties. Again in some places in Europe I have seen the equivalent of two up two down terrace houses of less than 100m2 in size converted into 4 separate flats. I think you could easily argue that Australians are spending their wealth on a better lifestyle. A fairly wise decision when you remember that you can't take it with you.
- weeksie 15y ago
  Property prices in Australia are a result of Aussies selling each other properties to generate wealth, financed by loans they can't afford. Private debt in Oz has been insane since the mid 2000s and has only gotten worse. The economy is fine at the moment, but as soon as China steps back in any real way things are going to get ugly.
  - jbarham 15y ago
    Having moved from California to Australia a year ago, I'm amazed that Australians deny that there is a property bubble. Anecdotally, in the neighborhood I'm living in, it costs at least twice as much to buy a house as to rent. I live in a lower middle-class suburb in Melbourne, and a couple of weeks ago a two-bedroom, one-bathroom house up the block sold for $600,000. Keep in mind too that mortgage interest rates in Australia are higher than they are in the U.S. (7% vs. 5%) and they don't have long-term fixed interest mortgages. The amount of debt home buyers are taking on is insane. Needless to say I'm renting and waiting for the bubble to pop.
    - hartror 15y ago
      A good % of me and my friends are all sitting on our hands and waiting as well. We're all about the same age as our parents were when they got their first house (late 20s early 30s). The prices are nuts, at least the market has flattened out of late, but with the population growth rates we are seeing around the country the pressure for housing isn't likely to lift any time soon.
      - robryan 15y ago
        Yeah I don't see an end to it, if you want to be around and work in the inner city there only a reasonable distance away you can buy before it becomes prohibitive. The majority of that land is either already in use or running up $300,000+ just for a regular block of land.
        15y ago
nl 15y ago
FFS, mate! They also don't mention we (I'm Australian) lost the Ashes. That's not the point - they are saying we talk about the bad things all the time, and fail to take a step back and look at how good we have it. To address your points: they try and play down the government debt because it's low, but omitted the fact that 4 years ago it used to be zero and now is growing faster than Ireland did before it went bust. Well, no.. they specifically talk about government debt. They point out it is lower than almost any other developed country. I don't understand your point about "it growing faster than Ireland" - yes, there is currently a deficit budget (which means borrowing is occurring). I've never heard "it is growing faster than Ireland did when it went bust" argument before, but it doesn't make much sense to me. The Australian economy is much, much bigger than the Irish economy, and the Irish debt crisis was caused when the Irish government suddenly took over billions in private banks debt, not by government borrowing. They also omitted the fact that personal debt - ie debt owed by people rather than the government is also one of the highest in the world. This is true, but is misses the point that Australian savings are also at record levels [1]. People are choosing to keep debt while saving money. Australian also homes usually take out the top spots in the 'most unaffordable' list. This is true, but at the same time is one of the things that has driven household assets to the highest in the world. [2][3] They also omitted the fact that the workforce has gone from being one of the most free back to a much higher regulated workforce, and as a result productivity has dropped precariously and strike action has exploded. That's a very political statement that I disagree with, but I don't think the argument would be useful here. There is no mention in the article of what is termed 'the two speed economy' where manufacturing firms are struggling and retail businesses are closing their doors The "two-speed economy" and Dutch Disease is the biggest challenge facing the Australian economy over the next few years. But that wasn't the point of this article. [1] http://www.theaustralian.com.au/business/opinion/household-thrift-is-making-a-welcome-return/story-e6frg9r6-1226138127945 http://www.theaustralian.com.au/business/opinion/household-t... [2] http://www.smartcompany.com.au/wealth/20100429-average-wealth-climbs-as-households-play-it-smart.html http://www.smartcompany.com.au/wealth/20100429-average-wealt... [3] http://www.beesnees.com.au/thebuzz/2011/11/landlords-in-a-growth-industry-as-australian-wealth-2nd-highest-in-world/ http://www.beesnees.com.au/thebuzz/2011/11/landlords-in-a-gr...
- sdiwakar 15y ago
ghc 15y ago
Australia is not the Saudia Arabia of high grade (Anthracite) coal. The United States has triple the amount of proven high grade coal reserves and is also a larger coal producer than Australia. Don't get me wrong, Australia has a lot of coal, but the USA, Russia and China all have much larger reserves of all but the lowest grade brown (lignite) coal.

by brc 15y ago

tankenmate 15y ago

When it comes to personal debt Credit Suisse would beg to differ with you, their latest wealth figures have Australians handily richer per capita than every other country in the world bar Switzerland. As far as shop fronts are concerned; I live in the UK at the moment, the average town centre here has 25% of shop fonts boarded up, in some towns that figure exceeds 55%. In Australia you might get isolated areas where you get lots of boarded up shops due to local economic factors but you don't get a complete country wide phenomenon like the UK. Property prices in Australia are due to people wanting to live in big properties. Again in some places in Europe I have seen the equivalent of two up two down terrace houses of less than 100m2 in size converted into 4 separate flats. I think you could easily argue that Australians are spending their wealth on a better lifestyle. A fairly wise decision when you remember that you can't take it with you.

weeksie 15y ago
Property prices in Australia are a result of Aussies selling each other properties to generate wealth, financed by loans they can't afford. Private debt in Oz has been insane since the mid 2000s and has only gotten worse. The economy is fine at the moment, but as soon as China steps back in any real way things are going to get ugly.
- jbarham 15y ago
  Having moved from California to Australia a year ago, I'm amazed that Australians deny that there is a property bubble. Anecdotally, in the neighborhood I'm living in, it costs at least twice as much to buy a house as to rent. I live in a lower middle-class suburb in Melbourne, and a couple of weeks ago a two-bedroom, one-bathroom house up the block sold for $600,000. Keep in mind too that mortgage interest rates in Australia are higher than they are in the U.S. (7% vs. 5%) and they don't have long-term fixed interest mortgages. The amount of debt home buyers are taking on is insane. Needless to say I'm renting and waiting for the bubble to pop.
  - hartror 15y ago
    A good % of me and my friends are all sitting on our hands and waiting as well. We're all about the same age as our parents were when they got their first house (late 20s early 30s). The prices are nuts, at least the market has flattened out of late, but with the population growth rates we are seeing around the country the pressure for housing isn't likely to lift any time soon.
    - robryan 15y ago
      Yeah I don't see an end to it, if you want to be around and work in the inner city there only a reasonable distance away you can buy before it becomes prohibitive. The majority of that land is either already in use or running up $300,000+ just for a regular block of land.
      - 15y ago

nl 15y ago

FFS, mate! They also don't mention we (I'm Australian) lost the Ashes. That's not the point - they are saying we talk about the bad things all the time, and fail to take a step back and look at how good we have it. To address your points: they try and play down the government debt because it's low, but omitted the fact that 4 years ago it used to be zero and now is growing faster than Ireland did before it went bust. Well, no.. they specifically talk about government debt. They point out it is lower than almost any other developed country. I don't understand your point about "it growing faster than Ireland" - yes, there is currently a deficit budget (which means borrowing is occurring). I've never heard "it is growing faster than Ireland did when it went bust" argument before, but it doesn't make much sense to me. The Australian economy is much, much bigger than the Irish economy, and the Irish debt crisis was caused when the Irish government suddenly took over billions in private banks debt, not by government borrowing. They also omitted the fact that personal debt - ie debt owed by people rather than the government is also one of the highest in the world. This is true, but is misses the point that Australian savings are also at record levels [1]. People are choosing to keep debt while saving money. Australian also homes usually take out the top spots in the 'most unaffordable' list. This is true, but at the same time is one of the things that has driven household assets to the highest in the world. [2][3] They also omitted the fact that the workforce has gone from being one of the most free back to a much higher regulated workforce, and as a result productivity has dropped precariously and strike action has exploded. That's a very political statement that I disagree with, but I don't think the argument would be useful here. There is no mention in the article of what is termed 'the two speed economy' where manufacturing firms are struggling and retail businesses are closing their doors The "two-speed economy" and Dutch Disease is the biggest challenge facing the Australian economy over the next few years. But that wasn't the point of this article. [1] http://www.theaustralian.com.au/business/opinion/household-thrift-is-making-a-welcome-return/story-e6frg9r6-1226138127945 http://www.theaustralian.com.au/business/opinion/household-t... [2] http://www.smartcompany.com.au/wealth/20100429-average-wealth-climbs-as-households-play-it-smart.html http://www.smartcompany.com.au/wealth/20100429-average-wealt... [3] http://www.beesnees.com.au/thebuzz/2011/11/landlords-in-a-growth-industry-as-australian-wealth-2nd-highest-in-world/ http://www.beesnees.com.au/thebuzz/2011/11/landlords-in-a-gr...

sdiwakar 15y ago

ghc 15y ago

Australia is not the Saudia Arabia of high grade (Anthracite) coal. The United States has triple the amount of proven high grade coal reserves and is also a larger coal producer than Australia. Don't get me wrong, Australia has a lot of coal, but the USA, Russia and China all have much larger reserves of all but the lowest grade brown (lignite) coal.