Depression next decade?

[priceboy]

I would like some opinions on the future of the Australian Economy next decade.

After reading the "rich dad, poor dad series", I stumbled across Robert Kiyosaki's latest book "prophecy". He predicts a severe depression coming to America and australia next decade as a result of the baby boomers retiring and pulling their money from stocks.

I told a mate who works on the stock market this and he told me to buy a book called "the great bubble boom" by harry s. dent. Harry S. Dent predicts a depression in 2010 that will last for 13 years, and it will be devistating. Up to 50% falls in property prices.

After reading all the doom and gloom and not really believing it but still a little cautious, I was looking at the Business Council of Australia's website and it has future predictions for Australia with a massive section titled "2010-2017, WIPEOUT, THE YEARS AUSTRALIA IS GOING TO WANT TO FORGET". Finally I look up BIS Shrapnel's website and it predicts that our "golden age" is now over and we have a nasty recession coming.

I would really love to get some feedback on this. What people think and how it will affect property especially in St Kilda and Gold coast (because that is where my properties are!).

 

[tony100]

Priceboy,

Harry Dent, in his previous book, "The Roaring 2000s Australian Edition", had this to say:
Australia had a baby boom before and after world war Two that
was nearly as large as the massive American baby boom, but
your county did not have anywhere near the baby bust after 1961
that the US and many other countries had. Therefore, your
economic growth, like that of the US, will continue to be strong
into 2008 and 2009 and the decline to follow will be minimal
compared to the great bust I am predicting for the States from
2009 to 2022.

Page 8 of the same book clearly shows, in graph form, the difference in birth rates between Australia and the States.

The way I see, if these enonomists are right and we are headed for trouble from 2010, we should go at it even harder over the next five years to build a bigger nest egg.


Tony

 

[bert1234]

Best course of action

Gday

Interesting thread

I will be reading up to learn more.

More importantly what should we be doing to prepare ourselves for such an
event if it does occur????

Best regards

B

 

[quiggles]

To begin with, you should check comparative assumptions.

The US catching a cold will not even necessarily make us sneeze, depending on our trade links at that stage. As for our own fundamentals, the Australian Government has decided to take action now by setting up the Federation Fund which may well turn into a super boost for listed stocks and commercial properties. We are about to become a creditor nation, thanks to 25 odd years of surpluses from both the Hawke-Keating and Howard Governments. Finally, our population is larger than ever and super contributions will have more going in than coming out in the 'disaster years' as baby boomers who contributed at 3-9% for less than half their working lifetimes withdraw, but the current working population is paying in at 12% compounding.

This panic is pretty overdone - the first of the boomers (depending on definitions) turned 60 this year and have probably been retired for 5 years - where was the devastating crash, the money flooding out of the markets? Money did go out, as property took off, but it's flowing back in, too.

I'm just going to continue working my plan - if the crash comes, I'll be ready and if it doesn't, I'll be set. Let's go.

 

[Merovingian]

To begin with, you should check comparative assumptions.

The US catching a cold will not even necessarily make us sneeze, depending on our trade links at that stage. As for our own fundamentals, the Australian Government has decided to take action now by setting up the Federation Fund which may well turn into a super boost for listed stocks and commercial properties. We are about to become a creditor nation, thanks to 25 odd years of surpluses from both the Hawke-Keating and Howard Governments. Finally, our population is larger than ever and super contributions will have more going in than coming out in the 'disaster years' as baby boomers who contributed at 3-9% for less than half their working lifetimes withdraw, but the current working population is paying in at 12% compounding.

This panic is pretty overdone - the first of the boomers (depending on definitions) turned 60 this year and have probably been retired for 5 years - where was the devastating crash, the money flooding out of the markets? Money did go out, as property took off, but it's flowing back in, too.

I'm just going to continue working my plan - if the crash comes, I'll be ready and if it doesn't, I'll be set. Let's go.

I seem to agree with you quiggles.

I am no economist, and I perhaps only have a minute understanding of the subject, but I don't see money disappearing. Basically, if the Boomers begin pulling money from super, investments, et cetera, then it has to go somewhere, doesn't it? So, they would start spending, and this money would hence be re-circulated...

Just my views — please correct me if I don't understand something, or am missing something obvious.

 

[Oscar]

Hey priceboy, you could die a slow death thinking about all the doom and gloom from someone else's crystal ball gazing.

If I listened to all the experts in 1998, 1999 and 2000 telling me how silly I was borrowing to invest in property (financial advisor's, accountants, economists via the printed media, friends) I'd be light years from where I am now. Funny how those same people were then telling me what a great idea PI was in 2003!

Anyone making predictions out to 2017 economically is in dreamland and years ago would have been burnt at the stake.

Focus on making money now and control your own future.

 

[nomadic]

I'm wondering if China attacks Taiwan what effect this may have on the world economy. I'm guessing they probably won't consider doing this until after the Olymics (which commence at 8pm on the 08/08/08).
If this does happen it seems the USA have said they will back Taiwan although i'm sure they'll be weighing up the downside to this with Nth Korea an ally of China and them also making hostile noises about nuking the USA. But then this may be pre-empted by the USA attacking Nth Korea first in which case China will probably be supporting Nth Korea. Either way, if China, Nth Korea, Taiwan and the USA do go to war, would Australia get involved and would this also cause China to import more resources from us to service their war machine. Or will Australia (being an ally of the USA) place an embargo on our exports to China which will hurt our economy. Will unemployment increase as a result and how would this affect inflation and interest rates?

 

[Aceyducey]

Star Trek and the Jetsons have proven more accurate in predicting the future than economists, historians and other multi-degreed people.

The present is all you can know for certain and control. Play the ball, not the next season.

Cheers,

Aceyducey

PS: Nomadic, there will be no war between China and Taiwan. China, unlike the west, takes the long view and knows that Taiwan will rejoin it - the only unknown is when. North Korea is NOT a Chinese ally in any material way - and is extremely unreliable anyway.

 

[thefirstbruce]

Star Trek and the Jetsons have proven more accurate in predicting the future than economists, historians and other multi-degreed people.

Cheers,

Aceyducey

I presume that includes the economists you know Acey..

 

[willair]

Finally I look up BIS Shrapnel's website and it predicts that our "golden age" is now over and we have a nasty recession coming.

I would really love to get some feedback on this. What people think and how it will affect property especially in St Kilda and Gold coast (because that is where my properties are!).

Price boy,
i know nothing about the prices in St Kilda,but on the Gold Coast
it just slows in one area then somewhere else catches up.
i dont see any recessions in property on the gold coast
for a long time,sure you always have your desperate
have too sell yesterday sales but they are few are far apart.
good luck
willair.

 

[quoll]

I would like some opinions on the future of the Australian Economy next decade.

G'day priceboy

I've been thinking on the same subject for the last week, looking at a new business so thinking about scenarios and what if's.

The baby boomers retirement is a good example, what will happen? History tells us that most of them will quickly spend the money they receive. So there should be a good dose of cash going into travel, cars, house stuff, over the next 10 years.

Also depends on imigration, the Gov could increase imigration which would help increase the number of younger Australians, which would help offset the aging pop.

The real questions:
How do I prepare for the future?
What can we do to maximise net worth?
Capital loss minimisation strategies?

My answers:
Reduce non deductable debt. PPOR mortgage
Reduce business debt. Higher risk.
Increase Res IP's people still need to live somewhere.
Stock market - concentrate on sectors that will be influenced by the changes that happen.

Cheers
quoll

 

[leapyeah]

Fear sells books.

 

[Lplate]

IMHO gurus are the ultimate recyclers.

There is a bloke called Foot (an Economics Professor, Toronto Univ) who co-authored stuff referring to boomers in Canada (Boom, Bust and Echo published 1996). I think some gurus are still catching up with this earlier book, however a later book is:

Title: Boom, Bust & Echo: Profiting from the Demographic Shift in the 21st Century
Publisher: Stoddart
ISBN: 0-7737-6208-6
Date of Publication: Spring 2001

Given the very wide age bracket for the boomer cohort (1945 to 1966), the ultimate improbability factor for some of the predictions (especially those stretched by gurus) must be several billion to the nth and counting.......

Depending on your area of interest, there are many factors to be taken into account, including demographics.

To me, forecasting stages of economic cycles, using demographics or not, is a bit like forecasting rain - it will happen one day, you just have to wait. Maybe this is why forecasters are more accurate with the benefit of hindsight.

LPlate

 

[Macca]

And in keeping with the idea that economists are only right about the same as an average guess, there is an article in todays SMH on this topic

Our ageing problem may be diminishing
By Ross Gittins
July 25, 2005


MONDAY COMMENT

So much in economics is so hard to predict that it's tempting for economists to regard population projections as easy-peasy. Our demographic future is pretty much set in concrete for the next 20 or 30 years isn't it?

Well, no, it isn't. It's only three years or so since Treasury set out its projections for the ageing of the population - and the implications for the labour market and the federal budget - in the Intergenerational Report, but already they're looking ragged.

Full article here:

http://www.smh.com.au/news/business...-be-diminishing/2005/07/24/1122143727663.html

 

[Lplate]

And the federal Govt Ministers are adept at writing review/research scopes to suit their political purposes at the time.

Costello could get Treasury to 'prove' night is day with the right scope and if that didn't work he would have others re-visit the report prior to issue.

Anyhow, isn't that what political appointments and bonuses are all about - getting the 'independent' advice you wanted in the first place?

 

[MarkB]

The present is all you can know for certain and control. Play the ball, not the next season.

Acey, am mystified to hear you say that.

Everyone, yourself included, looks ahead to the “next season”.

The fact is that the future will look different from the past.

And energy is the key to the future.

Sustaining a Western civilisation such as we have today requires the cheap widespread availability of energy.

The availability of this energy then allows for the capability to supply the water, food, housing and other needs of the population PLUS all the wants of a high-tech information civilisation, regardless of the size of the population.

A reduced or non-existent supply of low cost and easily transportable energy makes it impossible to sustain a global or even national-level civilisation of this type, except in small enclaves.

So into the future we either need to provide effective energy substitutes that not only meet today's needs, but meet the needs of roughly a 4x increase in private vehicles and 8x increase in energy use over the next 50 years - which even existing energy sources cannot do.

The only part of this that is a prediction is the increase in energy needs.... (I love that little qualifier you've thrown in ) even if energy needs remain consistent with today, we'd need some major breakthroughs in energy generation and distribution to supply the same amount of energy in 50 years as we do today.

Thus it's inevitable there will be a major change in our civilisation - largely influenced by the up-and-coming states who wish the same standard of living we enjoy in countries like Australia.

The most significant question for our civilisation today is: can we provide cheap substitutes to fossil fuels in the time remaining before a collapse?

Personally I believe we can - but there will be a very painful transition and there won't be a single replacement energy technology - there'll be a number of different technologies working in conjunction with each other. This may well lead to smaller communities rather than huge cities, but I'll not explore that area in any depth right now (it's been intensely studied by town planners since the first oil shock).

Cheers,

Aceyducey

PS: The Chinese curse is: "may you live in interesting times" and frankly I reckon we do - but what time isn't interesting?

PPS: I can sign off with a 'Cheers', because my money's on the horses that will finish in the money.

My emphasis added - each of the bolded statements represents an expression of what the future will hold. Whether they are ot are not based on "facts" or known trends is irrelevant - you are still looking ahead to next season.


Care to explain this apparent hyprocricy?

Or should we do as you say, and not as you do?

Mark

 

[quoll]

Full article here:

http://www.smh.com.au/news/business/our-ageing-problem-may-be-diminishing/2005/07/24/1122143727663.html

Nice link Macca, the article was a good read.

So it seems like some people have listened had a think about their retirement income and decided to stay in the workforce, so we now have a workforce that is getting older, the birthrate hasn't dropped as expected, the immigration levels are higher than predicted.

If the country continues at this rate the outcome will be considerably better.

Cheers
quoll

 

[Tim]

Interesting thread, and a topic I have been thinking of myself lately. I have read RIch Dad's Prophecy and have started reading the Great Bubble Boom (which attempts to draw interesting parallels with the 1920's boom and bust based on technology with where we are today).

I would imagine that both books are probably accurate in identifying a significant influence by the baby boomers and the whole demographics of the wave of retireees etc, but as far as stating that this is going to lead to a depression and be catastrophic, I tend to think it is highly unpredictable.

Both books are positive in that they suggest to be aware and taken necessary action which can only be good advice in itself and lead to be people being more wealthy if they gain the necessary financial literacy and take appropriate action.

Tim

 

[4GH1RH]

You mean we *are* still here? I thought the world ended in 2000?

Damn, behind the times as usual.

 

[Aceyducey]

Care to explain this apparent hyprocricy?

Mark - lighten up a bit!

You're reading the words but totally missing the spirit.

Cheers,

Aceyducey

PS: Every human is a hypocrite. And there's nothing wrong with that so long as you realise it about yourself.