yes, we manufacture very little here so the cost of everything will head up as soon as the dollar weakens. Fuel costs will push thru into transport costs, aviation, cars, components for locally built cars, computers, tv's, clothing, you name it. Why everyone wishes so badly to pay more for everything is to me quite a curious thing about australian culture.
Australia facing a recession in 2014? Economist says RBA needs rates cut of 1.25%!
- Thread starter Peter 14.7
- Start date
yes, we manufacture very little here so the cost of everything will head up as soon as the dollar weakens. Fuel costs will push thru into transport costs, aviation, cars, components for locally built cars, computers, tv's, clothing, you name it. Why everyone wishes so badly to pay more for everything is to me quite a curious thing about australian culture.
amen Ausprop - kudos.
imported inflation is impossible to control as evidenced by the early 2000s ramping up of IRs.
imported inflation is impossible to control as evidenced by the early 2000s ramping up of IRs.
I disagree with this. We had a very low AUD in 2001 to 2003, getting below 50 US cents. Annual CPI during this time was largely in between 2 & 3 % as per the RBA website. Today's environment for retailers and service providers to push up prices is much more benign and problematic than it was in the early naughties.
Cash rate in November 2001 was 4.5%. In Nov 2003 it was 5%. It Nov 2005 it was 5.5%. Is 1% increase in the cash rate over 4 years ramping?
Can't recall mortgage and business interest rates, but I suspect they closely followed the cash rate more than they do today.
I can't think of a reason why the doubling of the cost of everything would have little or no effect on CPI? Tho the move to 50c from memory was not sudden so would have incremented over many years. I suspect 2001'ish till recently coincided with China's export of deflation which is generally considered to be over. In fact there could be a double whammy lookign forward, higher imported goods prices combined with a weaker AUD = double trouble.
But even that is over to a large extent ... I know of at least nearly 200 people shed from three local coal mines in the last 2 months. That doesn't even include the knock-on effect of associated businesses.
Id love a bit of inflation. Some productivity growth wouldnt go astray either.
If you adjust for automatic stabilisers Australia has run a tighter fiscal policy than the US and UK over the past couple of years - that leaves plenty of room to move (as the article suggests)
I do miss economic debates.
If you adjust for automatic stabilisers Australia has run a tighter fiscal policy than the US and UK over the past couple of years - that leaves plenty of room to move (as the article suggests)
I do miss economic debates.
Someone's dreaming (or smoking something) 
- there are too many factors pointing to sustained growth not a recession (sure there may be some pain out there) but that is nothing compared to the US or the Eurozone. Our major trading partners in Asia/China are growing at a sustained rate of 8% or more pa. Their middle class (which is generating demand for all our minerals/resources) is growing at the rate of 1 Sydney per annum. Housing construction (ie bubble) forms <10% of GDP compared to some other countries where prices fell by 40% and housing oversupply was 30% of GDP
This is not my opinion but gleamed from a senior economist at which bank who was a presenter at a recent conference which I had attended.
- there are too many factors pointing to sustained growth not a recession (sure there may be some pain out there) but that is nothing compared to the US or the Eurozone. Our major trading partners in Asia/China are growing at a sustained rate of 8% or more pa. Their middle class (which is generating demand for all our minerals/resources) is growing at the rate of 1 Sydney per annum. Housing construction (ie bubble) forms <10% of GDP compared to some other countries where prices fell by 40% and housing oversupply was 30% of GDP This is not my opinion but gleamed from a senior economist at which bank who was a presenter at a recent conference which I had attended.
If this were actually true, we wouldn't have EBay, or EOFY sales, or Boxing Day sales, or Easter sales, or endless donkeys asking for a quote over the phone, or "we will beat any price" statements painted on shop fronts, or $2 shops, or people going on shopping trips to Bali and haggling with the locals for a silver necklace/ring, and...and so on.
There is a street in West End with maybe 20% resi,80% comm property and all the resi properties are rented,where 3 out of every 5 comm property that i walk past each morning have several for lease signs out the front and some have been there for several months and sort of with a sommeliers familiarity that tells you 3 things all the businessess have gone bust,or moved down too the port of Brisbane,or as the floor levels for high rise multi units change every six months and all the old warehouses
will be high rise multi unit high rise within 5 years,imho in QLD real estate activity ceases rapidily during this part of the cycle,all you need now is the dollar to drop and i just can't see that happening within the next six months,then interest rates start the slow climb skywards as they will..
will be high rise multi unit high rise within 5 years,imho in QLD real estate activity ceases rapidily during this part of the cycle,all you need now is the dollar to drop and i just can't see that happening within the next six months,then interest rates start the slow climb skywards as they will..
I am with the disagree camp.
Yes, if the $ drops fuel will go up yes. But it $ goes to 80c then we are around 20% cheaper world wide for grain, wool, meat, coal, etc..
And if fuel goes up and stays up explorers will be encouraged to dig locally and off shore as it will be competitive. Cheap fuel is not a good thing. Bali fuel is 45c a litre. Not much good with no investment. have you tired the roads there!
Also the last bir rise made us all abandon the guzzlers for more efficient cars and use public transport more.
Overall the fundamentals of food, shelter are available in AUS so lower AUS will not affect these.
A lower $ will be a good thing Imo.
Regards Peter 14.7
Makes you wonder when you see Mr Swan talking this morning on how great Australia is in the face of the real world,but what he never tells anyone Australia only makes up less the 3% of the Worlds "GDP",And we have banged this country up to debt levels never seen before in our entire history,any poor bugger trying to make money on money on interest would be thinking the only way now is take all your money out of fixed terms and hammer the ASX, as everybody may see..imho..
What are you talking about? Debt was higher as a % of GDP 20 years ago.
Totally agree Peter, Manufacturing and Agriculture still make up 30% of our GDP, outside of the mineral commodities market the high $ is hurting.
ps A drop in the $ petrol goes up, an rise in the $ petrol goes up!
Maybe he was referring to the high levels of private debt we have.
but again, that only reduces discretionary spending and reduces on-shore deposits.
considering we have an issue with #1 and now, apparently, not #2, i hardly see that being a weigh-in factor.
When we have good times like the mining boom the governments spend like there is no tommorow.So now AUSTRALIA is coming of this boom the ALP have made some huge spends so it will be interesting to see how they will reduce this spending
I suspect considering there is a election next year. They will tell us lot of porkies.
I suspect considering there is a election next year. They will tell us lot of porkies.
With the ABS September quarter GDP figures in it now puts Victoria and Tasmania officially in recession, with both states experiencing at least two consecutive quarters of negative growth.
Western Australia rose by 2.3% over the quarter. New South Wales (+0.1%) and the ACT (+0.6%) also managed moderate growth. State final demand fell in Victoria (-0.2%), Queensland (-1.6%), South Australia (-3.2%), Tasmania (-1.5%) and the Northern Territory (-2.9%)
With the mining boom winding down we can now expect to see WA falling?
Western Australia rose by 2.3% over the quarter. New South Wales (+0.1%) and the ACT (+0.6%) also managed moderate growth. State final demand fell in Victoria (-0.2%), Queensland (-1.6%), South Australia (-3.2%), Tasmania (-1.5%) and the Northern Territory (-2.9%)
With the mining boom winding down we can now expect to see WA falling?
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