Which way is the economy heading?

[Player]

Hold the phone....

Rio Tinto report massive half yearly profit today on the News.

Mining boom back on!! yay. Hahaha

(not holding breath)

You are exposed to the business coal face every day, Marc. You of all people should know that things are just dandy.

We have come out of a GFC somewhat unscathed thanks to selling the dirt we dig to China. The coat tails of China are now shortening and they will have property over-supply issues also into the future as they have now. I have read that Li Ka Shing has sold off significant Chinese holdings.

http://www.forbes.com/sites/gordonc...n-buffett-has-just-sold-off-his-china-assets/



In this unscathed emergence from the (first) GFC we have blown a surplus and created a deficit. Mining investment and infrastructure companies (the big employers during the mining boom set-up phase) have added to our unemployment rates rising.

http://www.businessspectator.com.au...il&utm_content=852156&utm_campaign=pm&modapt=


The cheap money we are seeing may get cheaper yet. I have a somewhat uneasy feeling..............

 

[The Fence]

Drop LVR's and anything about to cost $$.

Keep the cash handy.

At least that's what we have done during this opportunity.

Live a little...

 

[Intrinsic_Value]

Hold the phone....

Rio Tinto report massive half yearly profit today on the News.

Mining boom back on!! yay.

(not holding breath)

people need to be so very careful in extrapolating a 'wider event' based on specific individual circumstances.

I don't know what it is with the programing of human beings, that they are 'generally' wired to this (extrapolate the micro into the macro).

 

[Intrinsic_Value]

]


The cheap money we are seeing may get cheaper yet. I have a somewhat uneasy feeling..............

and with VERY good reason. You are not the only seasoned investor that is feeling uneasy.

The pathway is not clear at the moment.

 

[Intrinsic_Value]

Drop LVR's and anything about to cost $$.

Keep the cash handy.

At least that's what we have done during this opportunity.

Live a little...

Agree with second point totally. Should have some separate cash handy.

In regards to LVR, well it depends on the level.

To hedge against LVR increased the fixed loan duration time. The 5 year fixed is looking good.

Reasonable LVR (ie none of these excessive 90% LVR over a large portfolio, a single 90% LVR against a single property might be ok for high income earners) coupled with a blend of variable and 5yr fixed (if holding multiple properties) I think is ok.

But there are plenty of smart somersofters on this. I am nothing special in this regard.

 

[Spades]

The vision, I suspect, is of a mine worked entirely by robots and operated from an air-conditioned office in Perth.

Ha i envision that as well,though operated from Perth?Maybe to start with and then outsourced and remotely operated overseas

 

[dexx]

I think the economy overall is in for a rough ride ahead. Dutch Disease has meant that our manufacturing sector has shrunk to near nothing. Governments have increased spending to match the bountiful income from the mining boom rather than squirreling some away. Increases in job creation have been absorbed by high immigration. As the resource boom cools, unemployment will rise sharply.

 

[sanj]

Manufacturing is still the 6th highest employing industry and top 4 I think in terms of revenue created so although it has certainly contracted a fair bit it is a long way away from being near nothing imo

 

[Trippy]

Manufacturing is still the 6th highest employing industry and top 4 I think in terms of revenue created so although it has certainly contracted a fair bit it is a long way away from being near nothing imo

In the sixties manufacturing contributed to GDP in the order of approx 25%. It is now well under 10%. With the advent of outsourcing overseas, robotic technology, the rising value of the dollar and other general technological advances manufacturing in Australia is bound to decline further in future years. We will always have manufacturing, but the days of this industry providing large scale employment are doomed. Look to Victoria to see them impact from the demise of the car manufacturing industries. Nothing will replace these losses on a similar scale. Manufacturing is dead in this country, it should be universally accepted. The real question is what will replace it and what employment opportunities will be available for the hordes of retrenched workers...

 

[plusnq]

In the sixties manufacturing contributed to GDP in the order of approx 25%. It is now well under 10%. With the advent of outsourcing overseas, robotic technology, the rising value of the dollar and other general technological advances manufacturing in Australia is bound to decline further in future years. We will always have manufacturing, but the days of this industry providing large scale employment are doomed. Look to Victoria to see them impact from the demise of the car manufacturing industries. Nothing will replace these losses on a similar scale. Manufacturing is dead in this country, it should be universally accepted. The real question is what will replace it and what employment opportunities will be available for the hordes of retrenched workers...

People used to replace people in newly created jobs. Now people are made redundant and replaced by technology. I was reading the other day about a McDonalds trial that is using kiosk ordering systems to take orders. If you can afford to replace a minimum wage $4.50 ph worker with kiosks then it is a bit scary for the middle class and knowledge workers who will be at real risk of irrelevance.

The answer will probably require a social readjustment to the value of employment and so redistribution of wealth via taxes to avoid social chaos.

Some interesting thoughts here;

http://marshallbrain.com/robotic-nation.htm

Cheers

Shane

 

[joeExpat]

People used to replace people in newly created jobs. Now people are made redundant and replaced by technology. I was reading the other day about a McDonalds trial that is using kiosk ordering systems to take orders]

These are everywhere in Spain and used by most people at McDonald's, except tourists who are not used to them. They take orders in at least a dozen languages, better than your average counter sales person. Doesn't really help the Spanish unemployment problem though...

 

[MTR]

How's the economy going?

Unemployment jumps - 10 year high
Not I wanted to hear last night.

http://www.smh.com.au/business/the-...to-more-than-10year-high-20140807-101a9n.html

 

[BayView]

Unemployment jumps - 10 year high
Not I wanted to hear last night.

http://www.smh.com.au/business/the-...to-more-than-10year-high-20140807-101a9n.html

Add to that the myriad of "jobs" where folks are working only a handful of hours per week, and the real figure would be a fair chunk higher, actually.

 

[MTR]

Caltex chopping 300 contract jobs.

 

[plusnq]

These are everywhere in Spain and used by most people at McDonald's, except tourists who are not used to them. They take orders in at least a dozen languages, better than your average counter sales person. Doesn't really help the Spanish unemployment problem though...

This is going to be a problem that will become more global in nature. If it is economic to place robots in place of people in economies with high unemployment or low wage structures then what jobs are there for the entitled middle class in countries like Australia. Extend the trend into transportation ( long haul first) , knowledge based work (GP's, university lecturers, customer service, etc etc) and there will be a lot of unemployed and underemployed people. I think maybe there will be a social swing towards wealth taxes over certain multiples of average income to fund social program's for those who will be almost unemployable. Our whole way of thinking may be challenged regarding social structures and the value of work and money. Given the acknowledged limited resources of the planet maybe it won't be a bad thing in the long run, but I doing have much faith in people managing the transition well in the short term. People like to hang onto their status quo.

 

[Spades]

Add to that the myriad of "jobs" where folks are working only a handful of hours per week, and the real figure would be a fair chunk higher, actually.

+1

10 cha cha cha

 

[Trippy]

This is going to be a problem that will become more global in nature. If it is economic to place robots in place of people in economies with high unemployment or low wage structures then what jobs are there for the entitled middle class in countries like Australia....

Some 47 per cent of jobs in industrialized nations like Australia are at risk of redundancy as automation outstrips job creation, according to an Australian professor involved in a British study. See link to ABC video on Robots replacing our workforce:

http://www.abc.net.au/7.30/content/2014/s4014292.htm

Already we see this in our manufacturing and mining industries. I have been drumming into my son now for some time to get into robotics as a career path. He is a whiz on computers (as most kids are now) and robotics should see him with ample career opportunities through his working life (unlike the low skilled, uneducated employees getting the bullet in the car manufacturing industries, these guys are stuffed...).

Earlier this year, The Atlantic released a report, arguing that nearly half of current jobs in the United States could be replaced by robots within a decade or two:

http://www.theatlantic.com/business/archive/2014/01/what-jobs-will-the-robots-take/283239/

Our govt take no action on this changing work environment...god knows what they think all the lower skilled, lower educated members of Team Australia are supposed to do for work....

 

[plusnq]

I agree with you overall. I wonder how many robotic engineers we will need though.

 

[John_]

There is somersoft economy and real life aus economy.

Somersoft economy -

500k wages
10m super
20m shares
30m term deposit
50m in property


Aus economy

100k wage husband&wife
1 home loan
car loan
credit card debt





True story.

 

[marty998]

Went along to a forum this morning hosted by S&P with Stephen Koukoulas and a panel of the chief economists from the Big 4 Banks. Never been to the Ivy at 7am before lol.

The bloke from ANZ was concerned about low aggregate consumer demand growth of 1%. Quite interesting to hear their views on interest rates. General agreement that rates would be on hold for "a while". RBA unlikely to move before the US Fed because of the potential impact to the currency. None of them could understand the latest unemployment figure which was published by the ABS using a new (less rigorous) methodology. They were unflattering in their commentary of the government for cutting funding to the ABS. Quite blunt in saying it was a "stupid" and "dumb" decision.

Can't recall if it was the NAB guy or WBC's Bill Evans who said that Sydney and Melbourne house prices still have 20-30% to rise in the current cycle/near future, comparing the difference between interest rates and rental yields on a long term historical basis. Audible chuckles could be heard followed by lots of uncomfortable murmurs as 500 people came to the realisation that this means a $1m median in Sydney.