Post election: Australian economy not travelling too well?

bunsen burner

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#26
Shaitan said:
I really, really dislike the situation as i don't think it is as common as you believe it to be.
Been under a rock for the last three year? Housing boom go over your head?

I'll grant you that in some cases, yes, such a situation exists and economic management would have been of some (hopefully not all) importance to those when voting in the election.
?????

So what is your theory as to why Howard won like he did? Economy/housing boom/interest rates was the single most telling factor in the election.

Bizarre. I do understand this concept (It's far too simple not to understand and is rather dull),
Seems you didn't yesterday:

"But people, or at least i do, struggle to fathom how it (the election result) can be based solely on economic-self interest."

Yes, truely bizzare.

but i also understand that there are many below the poverty line, on whom the economy would have little to no affect by adjusting interest rate levels and so forth.
So you choose to acknowledge the minority whilst not being able to see where the majority are coming from.

Those people need to be looked after and supported as well.
Low unemployment, low inflation. What more do you want? Free milk and bread?

Not everybody is thinking 'Gee, i hope I/R levels stay relatively low so i can invest in my second property, and my children can profit from that'.
Who said everyone was? Starting to try to change the argument and twist it around.

Many are hoping for a way out of their predicament such as impoverishment and yes some economic factors - like more employment.
Not the govt's job to spoonfeed people. Low unemployment and low inflation along with a good social security and health systems is pretty good.

You seem to be straying from the point though - yes we know these people exist but more people like the ones I descibed exist and majority wins out. If the majority were the battlers you talk about and voted in Latham, I would understand why. But the majority aren't like that. You don't seem to be able to accept that middle class people don't think like battlers.

Ahh, but in a democracy, shouldn't everybody's voice be heard, not just the majority?
Err, no. What drugs have you been taking? Not everyone can be satisfied. No such thing as a Eutopia. Everytime someone gets a bigger piece of the economy pie it's at the expense of someone else.

You are pretty much accusing me of not looking at the 'bigger picture' and you think i cannot understand why people would want I/R levels low.
I'm accusing you of not understanding why many average Australians hold their security and hence interest rates and economic management as the number one priority.

Quite funny really, you are doing the exact same as my saying you do not take into account those who cannot benefit from strong economic management, other than rising employment.
No, just you making incorrect assumptions. I have never said that some people are not disadvantaged by the strong economy and have never said that people are wrong for voting ALP if they are in this situation. You on the other hand have made it quite clear that you can't understand why people voted Howard. For some reason you think people with the new middle class mentality should vote with a battler mentality. Now that's something I can't comprehend.


Love the punch line. Your entire argument is a bitter one, refusing to actually consider my opinion.
Who's bitter? You're the one whining that people are f***ed because the voted for the benefit of themselves rather than for the benefit of battlers. I've considered your opinion and it's f***ed.

Errr.... Yes, of course i cannot comprehend those who think differently to me [/sarcasm].
Think you better check yourself:

"But people, or at least i do, struggle to fathom how it (the election result) can be based solely on economic-self interest."


And just one more thing: You want people to stop voting for their self interest and vote for someone else's self interest (i.e. battlers). Do you not realise how ridiculous your argument is?

The fact i believe is that, many people who would have voted in Howard on strong economic management (which as i've said is quite justified) would have already been quite well off if they're considering an investment with a secondary home... Did they really need that extra $10,000 a year? A lot of people are business-corporate folk already earning quite a large sum of money.
The middle classes' self interest is to limit interest rates so they are better off. The battlers' self interest is to maximise benefits and social security so they are better off.

It's a bit rich you expecting one group forego their self interest for the sake of the other group.

I also find it interesting you seem to think i had a different stance on the election, given i told you in my first or second post that i'm currently in the 'family position' and am purchasing a house with a very restricted budget.
Clearly you have a different stance otherwise you would have no problem understanding many Australian's predicament.


Ouch. SO let me get this straight, law enforcement, well-being and the health of citizens isn't of upmost importance to a government?
Not aplicable. They weren't election issues.

That's what i cannot understand, as i put it in my original post - Why do people put the economy ahead of basic values, such as, education and health.
1. Human nature is to look after #1 first
2. When people get something that is desirable (in this case growth, wealth, and security) they don't want to let it go easily.
3. Latham didn't offer anything much better, if at all.

It is no good having a low rate of inflation, a low current account deficit, a stable dollar and low-medium interest rate levels, if there is increasing crime (due to lack of education and health) which promotes things such as drug use etc, which all have a negative impact on our society. You cannot simply turn a blind eye to this kind of stuff, as it is prevalent to many suburbs in Melbourne. And if such a situation exists, well it is almost impossible to have good employment growth, unless of course, one hour working per week for mum or dad in the garden (brushing up the area so their clients can come to see them at home) categorises you as an employed person.
Now you're just babbling sh it.
 

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Bomaz_Magic

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#27
How interesting it is to see people discussing politics and yet really have no real understanding of what they are talking about. Firstly, whoever said Hward was going to retire, keep dreaming, it is a well known fact his hero is Menzies and he wishes to emulate his feats and win 6 times, secondly, Costello doesn't have the numbers to win the leadership. Secondly, Bunsen Burner you're wrong and Shaitans rights, those people with housing properties are not the one's who win govt. election it is the middle class proffesionals (white collar workers), evidenced by the whoile election being geared towards them and the party who best represented their needs and desireswas elected (not that Howard was going to lose as govt is never voted out when the economy is doing well). Thirldy, BB you are right concerning Howards win - solely the economy, terrorism was 2001 not 2004. Finally, the states have no impact on the economy, they have no impact on anything, infact the only purpose they have is to provide a check on govt - just look at the trends the oppn almost always control the states.
Thought I'd clear up a few things for you all cheers.
Also the economic growth figures weren't actually too bad still within the RBA target rate.
 

finders

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#28
For all you deluded Howard/Costello arse lickers ALL these economists wont be wrong! As I said at the start of this thread lets see how they handle a REAL downturn in the economy.

Recession around the corner warns Garnaut
By Shane Wright
December 3, 2004 - 5:24PM

One of the nation's most eminent academic economists today warned that Australia was in for a repeat of the early 1990s recession on the back of soaring debt and over-optimistic consumers.

Ross Garnaut, a former adviser to the Hawke government in the 1980s, said Australia's spiralling current account deficit was a symptom of major fundamental problems within the economy.

And he said conditions now being championed by the government and economists were the same as those in the 1880s, 1920s and late 1980s - ahead of major economic downturns.
Professor Garnaut used a lecture at the Australian National University to highlight the problems the country faced even though it was now into its 14th year of uninterrupted growth.

He said the recent boom had been built upon reforms in the 1980s, stellar consumer confidence, debt, house price appreciation and the strong growth of the Chinese economy.

But at the same time, exports had stagnated for the past three years with the current account deficit now at 6.5 per cent of GDP, while the government was reform-weary.

Advertisement
AdvertisementUnless some very favourable conditions for Australia continued, the current economic boom would have to end.

"It has now entered a period of vulnerability," he said.

"The large expansion of domestic consumption and housing investment over the past several years, and the immediate expenditure of windfall increases in the public revenues from exceptional export prices, have raised expenditures and relative costs to levels that will turn out to be sustainable only in the most favourable circumstances."
Prof Garnaut said some unusual circumstances, including record terms of trade and historically low global interest rates, had helped underpin Australia's recent economic achievements.

But they would not last.

He warned that the two hardest hit areas would be Australia's two largest cities.

"The easing of private consumption and housing investment would be concentrated disproportionately in Sydney and Melbourne," he said.

Prof Garnaut said the federal government, rather than wait on the Reserve Bank to raise interest rates, had to boost substantially its Budget surpluses.

"It would help if fiscal policy were now tightened considerably," he said.

"It would have been better done much earlier, but now is better than later.

"But if fiscal adjustment were small or long delayed, and domestic demand growth and non-tradeables inflation continued near recent levels, for all its risks to a debt-ridden household economy, monetary tightening may still be necessary to contain vulnerability to extreme international market response."

Opposition trade spokesman Simon Crean said Prof Garnaut's comments only confirmed Labor's complaints that the government had taken its eye off exports.

He said it was obvious the government had no policies to boost exports and reduce the current account deficit.

"The government is too complacent, too sanguine," he said.

"They have got their trade policy all wrong, and it's showing in our huge current account deficit and growing net foreign debt."

- AAP
 

bunsen burner

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#29
Bomaz_Magic said:
How interesting it is to see people discussing politics and yet really have no real understanding of what they are talking about.
You have a career ahead of you in comedy, especially considering you're only about 15.
 

kirky

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#31
Interesting, Finders - no response from those on the right. And why, because we are living on borrowed time. Highest personal debt to income ever and CAD going the wrong way.

BB - Howard has had 8 years of economic growth which followed 6 years of economic growth under Hawke/Keating.

Ramjet - precisely what crisis were we having in 1996? Certainly, wasn't one of an economic nature. CPI was on its way down, interest rates were on their way down, CAD was on its way down. Perhaps, it was inability that we didn't like Keating because he called people names?
 

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#32
bunsen burner said:
More bellyaches. You're on a roll. Don't stop now, keep them gags coming.
Possibly the comback of the century here and although I am a funy bloke it is sad to see that you have no real response as you cannot argue with fact, perhaps you should read a few books to further your poor level of understanding concerning economics and politics, as I have even though I have a very strong understanding, because I like to have things called FACTS not just inuendo and rhetoric I've heard from people who manipulate my opinion, like yourself.
 

medusala

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#33
finders said:
Ross Garnaut, a former adviser to the Hawke government in the 1980s, said Australia's spiralling current account deficit was a symptom of major fundamental problems within the economy.

- AAP
you put the wrong bit in bold.
 

bunsen burner

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#34
Bomaz_Magic said:
Possibly the comback of the century here and although I am a funy bloke it is sad to see that you have no real response as you cannot argue with fact, perhaps you should read a few books to further your poor level of understanding concerning economics and politics, as I have even though I have a very strong understanding, because I like to have things called FACTS not just inuendo and rhetoric I've heard from people who manipulate my opinion, like yourself.
You're so laughable you don't deserve a proper reply. You're trying to pass off your opinions as fact. You are trying to say that there isn't a lot of average families that are geared like in the scenario I offered. How can you keep a straight face?
 

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#36
bomaz said:
How interesting it is to see people discussing politics and yet really have no real understanding of what they are talking about. Firstly, whoever said Hward was going to retire, keep dreaming, it is a well known fact his hero is Menzies and he wishes to emulate his feats and win 6 times, secondly, Costello doesn't have the numbers to win the leadership. Secondly, Bunsen Burner you're wrong and Shaitans rights, those people with housing properties are not the one's who win govt. election it is the middle class proffesionals (white collar workers), evidenced by the whoile election being geared towards them and the party who best represented their needs and desireswas elected (not that Howard was going to lose as govt is never voted out when the economy is doing well). Thirldy, BB you are right concerning Howards win - solely the economy, terrorism was 2001 not 2004. Finally, the states have no impact on the economy, they have no impact on anything, infact the only purpose they have is to provide a check on govt - just look at the trends the oppn almost always control the states.
Thought I'd clear up a few things for you all cheers.
Also the economic growth figures weren't actually too bad still within the RBA target rate.
The amazing thing is that in your whole ramble you failed to post a single fact or the slightest evidence of what you are saying.

BTW, you can't deny that Ross Garnaut's ideas helped fix the CAD. Shame it took down the entire economy with it. Ah well.
 

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#37
bunsen burner said:
No. The economy is still in ok shape. No reason to panic or stick the boot in yet. Under either Govt, if IR go much above 10%, I'll be having a whinge.
If interest rates hit 10%, most Australians will be having a bit more than simply a 'whinge". Most will be up sh*t creek without a paddle - as they are much higher in debt than they were in the 80's and 90's. I reckon the shyt will hit the fan when interest rates hit 8.5 - 9%.
 

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#38
hoss said:
If interest rates hit 10%, most Australians will be having a bit more than simply a 'whinge". Most will be up sh*t creek without a paddle - as they are much higher in debt than they were in the 80's and 90's. I reckon the shyt will hit the fan when interest rates hit 8.5 - 9%.
What likelihood is there of rates going up to 10%? None.
 

hoss

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#39
Tim56 said:
What likelihood is there of rates going up to 10%? None.
I agree Timbo. BB suggested he'd be whinging if rates hit 10%. I'm simply suggesting it would be a lot worse than that if they did hit 10%.

We'll never ever see the interest rates of 18% that we've seen in the past (regardless of what party is in power), and I can't see rates hitting 10% in the immediate future either.
 

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#40
Tim56 said:
The amazing thing is that in your whole ramble you failed to post a single fact or the slightest evidence of what you are saying.

BTW, you can't deny that Ross Garnaut's ideas helped fix the CAD. Shame it took down the entire economy with it. Ah well.
Why because you say its not a fact all of a sudden you are the foremost western authorities on facts. What so its not a fact Howard wishes to emulate his hero, Sir Robert Menzies, or that blue collar workers win govts. elections hence the shift by the ALP under Hawke and Keating in the 90's to appeal to these voters or that a figure of 3% for the years eco. growth isn't bad (or are you one of those tools that bagged the figures and half an hour after they were released realised that they weren't too bad - evidenced by the initial decrease in the $AUD and than sudden appreciation).
 

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#41
kirky said:
Ramjet - precisely what crisis were we having in 1996? Certainly, wasn't one of an economic nature. CPI was on its way down, interest rates were on their way down, CAD was on its way down. Perhaps, it was inability that we didn't like Keating because he called people names?
96 billion in debt, costing close on 6 billion /yr just in interest... economy twice downgraded from AAA rating... unemployment still at over 8% (i already acknowledged hawke and keating having lowered it from over 10)... real wage increase of just 2% in 13 years of ALP govt while CPI was on the rampage... i could go on and on. great to hear it seems you suffered little during this period but for many (most?) people, it was tough going. i dont for a minute suggest all these failures were entirely the fault of the govt's of the day, nor do i suggest the recovery has been due solely to howard/costello but i will not, as you have done, simply gloss over what happened until '96 and the results since.
 

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#42
medusala said:
you put the wrong bit in bold.
So heres some more good news for the economy - btw not from the ALP.
No wonder Howard and Costello are getting a trifle nervous even telling parents to put away that credit card for Xmas and just give some looove. What a ******* joke god help us when the s*** hits the fan in the not too distant future.

Behind the facade of our miracle economy
December 6, 2004


The debt-financed veneer of suburban prosperity will not last, writes Geoff Strong.

The woman was in her late 20s or early 30s, well spoken and well dressed - an unlikely image of a beggar, but begging was what she was doing. Equally unexpected was the location; not the Bourke Street Mall or Swanston Walk but a Shell service station among the bright new homes of Mill Park in Melbourne's north.

Here, to the backdrop of dreams that give the impression of being realised, she was walking along the line of folks who had stopped to fill their cars asking for money.

There was quite a queue because petrol had just fallen below $1 a litre for the first time in a while. Her pitch was not that she was homeless or that she needed food for hungry kids - it was that she needed fuel for a hungry car. The car, a 20-year-old Ford LTD, was a battlermobile - big and reliable but with the thirsty burble of a V8 under the bonnet.

She scraped together about $4, enough, she said, to get home. Was she simply caught short as she said, or was it a sign of something else - an image of things to come?
We were told last week that Australians are now in debt to record levels and we owe about $1.63 for every dollar we earn. Our savings are at record low levels and the money lent to us by our banks is, in turn, borrowed from overseas.

The houses I could see across the road from the service station, with their collonaded fronts, little turrets and fancy brickwork, were the architectural expression of nostalgia. There is little to be seen of the hard-edged forensic stainless steel and glass style favoured now in Melbourne's wealthier waterfront suburbs. Here people seem to want the reassurance of a time past: certainly stable and secure, but not unlike the set for a TV costume drama.

Over the past decade, financial institutions have been tempting us to borrow against the equity we have in our homes, based on perceived market value. Why wait to save, we have been told, when we can have new cars, overseas holidays, stainless steel kitchens, six-channel home theatres and wide-screen televisions. Those same wide screens open up to even greater delights, some of which did not even exist a decade ago. Most of them are imported and our weakness for them adds to the national debt.

Reserve Bank figures show that in 1992 household debt was 56 per cent of income. At the end of 2002 it was 125 per cent. Over that period the average mortgage went from $82,000 to $175,000. Over the same period income rose about 40 per cent and, at the same time, jobs became increasingly casual or part time and so less secure.
It was in outer suburbs such as Mill Park that people worried during the recent election campaign about how a possible interest rate rise would threaten prosperity. Yet because people on the outer suburban fringe are among the most reliant on the motor car, we now know higher petrol prices are having the impact of a de facto rate rise.

There is an interesting precedent for a glittering facade. Gregor Alexandrovich Potemkin was an 18th century Russian military leader, politician and lover to Empress Catherine the Great. His name comes down to us partly because of his construction of elaborate fake villages in the Ukraine and Crimea for Catherine to see during her royal tours. She was apparently unaware that the prosperity was a fake.

So are our suburbs a reflection of economic potemkinism?

Economist Peter Brain, who heads the National Institute of Economic and Industry Research, thinks it is a facade and thus unsustainable and liable to collapse.

"One of the problems of borrowing against home values is that values can fall, but the debt will not. House prices are static in most of Australia and have already started to fall in Sydney," he says. "We are borrowing overseas to fund consumption and leaving nothing to the next generations except debt. The next generations, X and Y, will have nothing to inherit."

So who will own the tracts of housing in a generation? Brain thinks that in 20 or 30 years, if we don't do something to stop the debt blow-out, much of our housing could be owned by overseas investors, the same sort of people who are lending money to the banks for us to borrow.

Begging at service stations might be more common by then.

Geoff Strong is a staff writer.
gstrong@theage.com.au
 

kirky

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#43
Tim56 said:
What likelihood is there of rates going up to 10%? None.
Do you have any idea? They don't need to go near 10% - an increase to 9% will be exactly the same as going to 17% was in the 80's and why? Because we have more personal debt and servicing as a % of our personal income in history.

Please explain, why all this crap from Costello re: using our credit card this year.....
 

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#44
finders said:
Behind the facade of our miracle economy
December 6, 2004


The debt-financed veneer of suburban prosperity will not last, writes Geoff Strong.


Geoff Strong is a staff writer.
gstrong@theage.com.au

Zero substantial analysis from Geoff. To even compare the Australian village to Russia under Catherine the Great is a joke. A couple of things good old Geoff doesnt point out. 1) over 30% of homes have no mortgage on them. Analysis by banks has shown the % of lenders at risk is quite low. Not only that but Australia would need a housing collapse on a massive scale to wipe ou the equity held by households. Bain is too smart by half when he says the next generation will have nothing to inherit.

http://www.smh.com.au/articles/2004...l?from=storylhs

The combined wealth of Australians has topped $5 trillion for the first time and doubled in the past seven years, thanks to a house price boom and surging sharemarket.

The new record in private wealth - $5000 billion - equates to about $250,000 for every man, woman and child in the country, compared with $126,000 in mid-1997.


Thats per person not per household. That would take one mighty housing crash to wipe out all that.
 

finders

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#45
Some more good news for the Rodent :D


Economy to nose dive in 2005: analyst
December 7, 2004 - 6:39PM

All good things must come to an end.

On that note, broker ABN AMRO's chief equity strategist Gerard Minack said the economy's golden run was out of puff, predicting a nose dive next year.

"After 14 years of plenty we are in for, not 14 years of famine, but I certainly think the curtain is about to come down on Australia's fantastic period of economic and market outperformance," he said.

With the cooling of the housing market, set against the backdrop of a bleak international outlook, Mr Minack said alarm bells were ringing.
"I am telling my clients that their main job next year is to lose as little money as they can. I will be startled if any of them make any money," he said.

"We will start to see the US weaken next year and that will have a huge impact on markets.

"Every indicator that worries me about America is now ringing even louder alarm bells here."

Mr Minack said there was already evidence of an economic downturn, with a drop in the retail sector and an unsteady housing market headlining the slump.

Advertisement
Advertisement"We have already seen it (a slowdown) with the surprising run of weak retail sales data because people have started to lift their saving rate because house prices have stopped going up," he said.

Mr Minack said after years of unprecedented growth the banks would be the hardest hit.

"I think at the epicentre of this unravelling will be the banks which will be in quite a lot of difficulty over the next three to four years, partly because there is a structural end to the growth cycle and partly because we have seen a huge drop in lending standards."

The end result would be extreme credit stress, Mr Minack said, explaining that working class Australian would be hit hardest.

"It's not Bellevue that's going to be in trouble, it's going to be Rooty Hill," he said.

Lashing out at the banks for lending increasingly large sums of money, Mr Minack said they should shoulder their share of the blame.

"The banks have greatly exacerbated their risks through their reckless behaviour," he said, adding that Australia was now facing an "asset-bubble".

With personal savings at record lows and personal debt at record highs, Mr Minack predicted the down turn would be drawn out over three to four "extremely painful" years.

"Next year will be about making sure your nest egg doesn't shrink too much and that means finding very defensive investment opportunities," he said.

However not all strategists subscribe to Mr Minack's "doom and gloom" outlook for 2005.

Colleague Craig Saalmann, credit strategist at ABN AMRO, said the market continued to look strong.

"Of the corporates out there, you look at Australia and you look globally, most of them have done very very well and the outlook for 2005 is still pretty supportive," he said.

"In fact, they are going to have a better year in 05 than 04."

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