Very interesting presentation with some good source info.
http://www.youtube.com/watch?v=cB5ihHGsm2o&feature=em-uploademail
http://www.youtube.com/watch?v=cB5ihHGsm2o&feature=em-uploademail
The Fall of Australia- Coming Catastrophes in the Australian Economy
- Thread starter Makalakumu
- Start date
I watched his rant on Scandinavia and didn't realise that Maka had posted this crap as well. There is no way I could watch 40 minutes of his bulls#1t, 4 minutes was enough to show it was heading down the same path as before. Our National debt has gone up over the past five years thanks to two things. Firstly the greedy money sucking leeches from Lehman Bros. causing a world wide financial collapse and a socialist Labor party in government. If you look at Australian political history you will see the same pattern as our Coalition parties get the economy straight, with some pain, and the Labor Party gets back in and stuffs it up again.
As to his rant about States. He obviously doesn't understand our "Federalism" system of government and the powers that are given to the Federal Government and the residual powers that are retained by the State Governments.
He also talks about the high personal debt levels in Australia. Well one simple explanation is that we are a country of home owners and he median price of a house or even unit in our cities is over $500K. You buy a house with 10% to 20% deposit so young families buying a home are borrowing $400 to $500K to buy a house. Older people looking to their retirement are buying rental properties at the same ballpark price so yes, we have high per capita private borrowing. I don't know if he rounded on credit card debt but yes that can be high too. We probably have $5K to $10K per month on our own credit card but because we pay it off each month it is interest free borrowing. It doesn't mean the country is going broke.
So if I could paraphrase the words of one of your fellow countrymen ... "The reports of Australia's impending demise have been greatly exaggerated".
:asian:
As to his rant about States. He obviously doesn't understand our "Federalism" system of government and the powers that are given to the Federal Government and the residual powers that are retained by the State Governments.
He also talks about the high personal debt levels in Australia. Well one simple explanation is that we are a country of home owners and he median price of a house or even unit in our cities is over $500K. You buy a house with 10% to 20% deposit so young families buying a home are borrowing $400 to $500K to buy a house. Older people looking to their retirement are buying rental properties at the same ballpark price so yes, we have high per capita private borrowing. I don't know if he rounded on credit card debt but yes that can be high too. We probably have $5K to $10K per month on our own credit card but because we pay it off each month it is interest free borrowing. It doesn't mean the country is going broke.
So if I could paraphrase the words of one of your fellow countrymen ... "The reports of Australia's impending demise have been greatly exaggerated".
:asian:
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You are really disagreeing with his assessment either. Imagine that the Banksters just have their way with your economy. Imagine that your government forces interest rates ooklower than the market demands. The future isn't pretty...
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Sorry, I meant to say "aren't disagreeing" this phone doesn't allow editing.
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I wish this world was all connected and globalized...
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Wasn't
Good grief, I must enjoy self administered pain. I went back for another 10 minutes. I started off where I learned that a huge percentage of Australians are living in poverty, 21% to be precise. Then I looked for the ABS figures ... 12.8%!! So how come the difference? Well Australia's figures weren't good enough for Stefan so he applied the UK method of calculating poverty and :Voila: spectacular difference. The reason you can't do that is that the Government provides other benefits to low income earners. You can't really compare apples and sheep. (Even Stefan uses the correct figure on his sheet at the end of that segment ... oops.) But all that said, Australia's poverty problem is on par with most first world countries, much better than the US and light years ahead of a lot of the poorer nations.
Then we get to business confidence. That always drops when we have a Labor government but Stefan even chooses to go back 12 months to get his figures. What he neglects to mention is that 84% of businesses said they would be employing more or maintaining their workforce over the next 12 months. When you take into account that historically most new businesses fail anyway, the statistic could actually be a positive that more people are trying to set up their own business.
He goes on to say that low interest rates are causing the property bubble because the Government is pushing interest rates down to save interest on its own huge debt. That is bollocks. Firstly we don't have a huge debt and because Australia has a AAA credit rating the government borrows money at a low rate anyway. Domestic interest rates are much higher than say the US. I can find housing interest rates at 2% and that is tax deductible! Our interest rates are as low as 5% and not tax deductible. Our interest rates have been adjusted down to allow housing affordability and they will rise again when the economy picks up. The other reason he is wrong on the bubble bit is that he cites business failures as being one of the main reasons the property values will collapse. One of the big drivers of business failures over the past few years is the fact that the property market did correct. Another thing Stefan chose to ignore is that Australia's population is growing at about 1.5% annually, 60% overseas immigrants. That is the equivalent of one new city the size of Canberra, or Darwin, each year. Where does Stefan think they will live? In tent cities?
There are some interesting opinions of Stefan on the Internet and none of then seem to give him credibility. :asian:
Then we get to business confidence. That always drops when we have a Labor government but Stefan even chooses to go back 12 months to get his figures. What he neglects to mention is that 84% of businesses said they would be employing more or maintaining their workforce over the next 12 months. When you take into account that historically most new businesses fail anyway, the statistic could actually be a positive that more people are trying to set up their own business.
He goes on to say that low interest rates are causing the property bubble because the Government is pushing interest rates down to save interest on its own huge debt. That is bollocks. Firstly we don't have a huge debt and because Australia has a AAA credit rating the government borrows money at a low rate anyway. Domestic interest rates are much higher than say the US. I can find housing interest rates at 2% and that is tax deductible! Our interest rates are as low as 5% and not tax deductible. Our interest rates have been adjusted down to allow housing affordability and they will rise again when the economy picks up. The other reason he is wrong on the bubble bit is that he cites business failures as being one of the main reasons the property values will collapse. One of the big drivers of business failures over the past few years is the fact that the property market did correct. Another thing Stefan chose to ignore is that Australia's population is growing at about 1.5% annually, 60% overseas immigrants. That is the equivalent of one new city the size of Canberra, or Darwin, each year. Where does Stefan think they will live? In tent cities?
There are some interesting opinions of Stefan on the Internet and none of then seem to give him credibility. :asian:
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What will happen when interest rates rise?
When are they going to rise and to what level?
This graph shows the relationship between our cash rate and our home loan rates which they call 'the standard variable rate'. Usually you negotiate a deal with the bank that closes the gap to about 1.5%.
http://www.infochoice.com.au/news/history-of-interest-rate-movements/22007/6/2
Currently our cash rate is 3%.
The Reserve uses interest rates to help keep inflation in the 2% to 3% range. If inflation takes off so will interest rates, but so will wages and property values. We had an unfortunate example of that back in the late 80s earlly 90s that caused a lot of grief and caused them to modify our financial system to make sure that doesn't happen that way again.
US interest rates are about 0%. They have nowhere to go but up. Just because the US economy is stuffed and affecting other economies adversely, doesn't mean that well regulated economies like Australia and Scandinavia are about to go down the drain. But in reality the US economy is showing signs that is has hit the bottom and hopefully is looking at recovery. My prediction ... interest rates will not rise until the US economy takes off.
Just a simple question. Why would you take the word of a blogger, from Canada, with no financial credentials and no credibility over respected and experienced economists from Australia who advise our Reserve Bank? :asian:
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I don't subscribe to your opinion. Low interest rates are an indicator that an economy is struggling. The private economy is quite separate from Government borrowing. Governments usually borrow to fund infrastructure, nothing to do with keeping interest rates low. Depending on their credit rating, Governments can borrow at very low rates anytime. If they borrow to pay for wages or handouts, recurrent expenditure, then they will go down the drain very quickly. The people who are ignorant of your 'fact' are probably more right than you, because in is in fact, not 'fact'.
Low interest rates stimulating economic bubbles is a fact. Governments holding down interest rates to borrow happens all of the time. That's one of the functions of central banking. It's a simple and well established relationship. It also has simple and well established problems attached to it. Why would Australia be able to avoid those problems?
Now, I'm not saying it won't or can't. Perhaps the way Oz manages it's public debt and interest rates is more sustainable than other places. You are right about the US being stuffed. This place is a mad house.
Also, isn't the Aussie dollar pegged to the US? I thought you guys had to keep your inflation targets close to the USD otherwise your dollar would rise too fast in relation to the US and this would make Aussie exports uncompetitive?
If this is the case, the US monetary policy is going to have huge ramifications for your economy.
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I don't. Stef is simply repeating what many other well respected economists are saying. There are several schools of economics. Some are more favorable toward centrally managed economics and some are very pessimistic. So far, the pessimistic ones have been proven correct in spades. They are the only ones who predicted the housing crash and monetary crisis of 2008, for example.
Check out the Austrian School and the Mises Institute. Stef is pulling source material from them.
Checked them. They are hardly main stream and are certainly not well known in Australia. Perhaps you could provide a list of the 'respected economists' that Stefan is quoting, and their credentials regarding the Australian economy.
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Rothbard, Woods, Mises, Murphey, Keen, etc. All of these guys have lots to say about economy and monetary policy play out.
Mainstream is relative. Most mainstream economists are Keynsian and wrong about everything. These are the guys who say silly things like spend spend spend even when the wheels are coming off the bubbles. Governments like Keynsians though because they provide the economic theory that allows them to hold down interest rates, run up debts, bail out banks, and blow huge bubbles in the economy.
Incorrect on several counts. I am a post-Cambridge School Neo-Keynsian and I challenge you to a duel and, in a shocking breach of protocol, I elect that we shall use katana regardless of your preferred weapon choice. Hope you've been practising ...
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Incorrect on several counts. I am a post-Cambridge School Neo-Keynsian and I challenge you to a duel and, in a shocking breach of protocol, I elect that we shall use katana regardless of your preferred weapon choice. Hope you've been practising ...
It's fitting that Lew Rockwell should be my Katana of Liberty. Lol.
The Many Collapses of Keynsianism.
http://lewrockwell.com/rockwell/many-collapses-of-keynesianism189.html
Ultimately, once you look at the totality of the picture and the way this monetary feeds government, it becomes apparent that Keynsianism is the economics of State power. Whether we are talking about a wellfare state or global empire or both, this economic theory is what makes those things possible.
Is it good? Surely not in the case funding empires or blowing economic bubbles. Perhaps you could argue that it helps maintain the wellfare state? The results of that are clearly negative as well. More troubling is the effect that Keynsianism has on state power. The corporate classes are drawn to government like moths to a flame. For example, Banksters love Keynsianism because it allows the financial class to turn the money spigots on themselves, removing moral hazard. Now, there is no bet too risky.
The end result is that these sociopaths blow themselves up in power mad frenzies...and than it takes the rest of us with them.
Now, compare this to what would happen with a real gold standard. This "barbaric metal" would reverse so much of this in a short amount of time. People and corporations would actually be incentivized to capitalize rather than dip their fingers into bankster cesspools of debt. Interest rates would fluctuate depending on market demand, preventing the deleterious effect of artificially low debt excusing government borrowing friendly rates.
I'd love to watch my money increase in value over time and I'd love to watch my children get richer than myself.
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Rothbard's good ...
Tom Woods? Couldn't find any of his economic credentials ...
Mises? Not sure how he is a credible economist when discussing Australia in 2014. The guy has been dead for forty years!
And that has been shown by Denmark and others to be false.
Murphey? I presume you mean Bob Murphy, not the Murphy of 'Murphy's Law' fame. I couldn't find anything relevant except that he too is linked to the Mises organisation. Hardly independent and absolutely nothing to do with Australia.
Keen? Well, we are getting closer but ...
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