From BS, Julia Gillard joins the cavalcade of officials seeking to boost the Australian dollar:
“We can still be a country that manufactures things. But we’re going to have to do it differently…The dollar is likely to stay high for some period of time.”
…”The competitive disadvantage of the high Aussie dollar is obvious but we can still manufacture things, provided we’re at the forefront of innovation and quality,” Ms Gillard said.
Sorry, our manufacturing can’t compete with this dollar. That’s why we’re seeing this:
That’s a nearly three year ceaseless recession in the manufacturing PMI which pretty much coincides with the dollar rising above 90 cents:
Of course, some of the manufacturing weakness will be because of the softness in housing and related sectors. But let’s not kid ourselves, we’re not going to restore manufacturing capacity without a lower currency.
The Gillard jobs package is laughable in the face of this challenge.
innovation and quality when spoken in Australia means lower wages and cheap imported labor, more deregulation of labor laws and an increasing poverty gap. Welcome to 2013.
Gillard’s manufacturing mantra is “We will be a high skill, high wage manufacturing country”. I kid you not.
No politician wants the AUD to tank on their watch, particularly not in an election year.
Well it is going to happen on someone’s watch fairly soon.
This little flurry we are powering though now is very reminiscent of a lawnmower running out – air to fuel mix changes, the engine revs harder and then cuts (cue mining investment, rate cuts having no traction, consumers not picking up sentiment etc).
When it does cut we are going to find a domestic economic which isnt globally competitive on a single basis apart from mining (maybe a bit of agriculture).
And at that point we have (oldies but goodies):-
Debt to disposable income circa 145%
Great structural current account issues
a ludicrously overpriced real estate sector (affecting the cost of any given economic input).
High wage costs (globally)
Gullard is a fool. Why would the PM come out jawboning up the AUD when surely even the 10 watt thinking processes of the ALParatchiks must have some credible economists about (they do – I know some – and anyone knowing anything about the AMWU would know they have some very serious thoughts about it) who know that what she is saying is a motherhood statement (yes we do need to do things better and have innovation etc) covering conceptual spurious rubbish.
Just looking at the comments has me wondering if she (and her backers) have completely run out of ideas, and are just propping bodies at the parapets for appearances sake. There aint no substance to it thats for sure.
Gunna, they ran out of ideas years circa Keating.
The problem is political interests are short term. Economic interests long term. Somewhat of a permanent disconnect at the best of times, particularly when political interests are focussed on re-election.
A low AUD would mean high cost fuel at the bowser and increased costs on all imported goods. Electoral suicide.
“years ago” – mod can you fix pls?
3d1k – keeping the AUD anywhere near where it is is economic suicide
I was responding to your questioning of Gillard’s jawboning the AUD…
Gunna: Aussie don’t care about economic suicide until they lose their job. Right up to that moment the strong AUD is all upside. It means cheap overseas holidays, and great shopping online. Nothing more.
one thing more – cheap petrol
Lorax, I agree with what you say – they dont give a rats.
Which is going to make that adjustment process a cracker (with a society of people who have no idea of what a recession is)
Gunna,
There are a whole lot of Aussies who do know very well what a real recession is.
Petrol was cheaper before the mining and commodity boom when the AUD was worth 50c.
Petrol was very expensive in mid 2008 when the AUD first flirted with USD parity.
Petrol was cheaper in early 2009 when the AUD crashed to 60c.
Petrol today is more expensive than its been since 2008.
Please stop lying about petrol prices.
Gunna: Yep, its gonna be ugly, and we have nothing to fall back on.
I was thinking the same thing about petrol it’s always been cheap in Australia, regardless of the exchange rate.
Even Keating ran out of real ideas and started on all that cultural BS that is now running rampant and destroying our freedom of speech. I hope he has the wisdom to now regret it.
A low AUD would mean high cost fuel at the bowser
Bullshit.
The last time the AUD was weak (early 2009) petrol was cheaper.
Historical petrol prices 1986 to 2011:
http://www.oesr.qld.gov.au/products/tables/petrol-avg-retail-price-type-bris/index.php
The AUD is a commodity currency. It almost always rises and falls with commodity prices including oil.
“The AUD is a commodity currency. It almost always rises and falls with commodity prices including oil.”
If we engineer the dollar down in a high oil environment one would expect higher cost at the bowser. If global demand for oil tanks and geopolitical risk subsides, oil may indeed decrease – however that is not the situation at present nor does it appear to be in the immediate future.
Early 2009 oil was sub USD40.
5 year chart of oil price in AUD:
http://www.indexmundi.com/commodities/?commodity=crude-oil-brent&months=60¤cy=aud
Compare it with a 5 year chart of AUDUSD. They pretty much follow the same pattern. Peak in mid 2008, trough in early 2009, rising together from 2009-2010, then levelling off 2011 until today.
Please take your lies elsewhere.
I am not arguing from an historical perspective, rather from a real world ‘in the present time’ perspective.
Hypothetically speaking, the AUD tanks tomorrow, oil will still be around USD90…that ain’t gonna change just for us.
Petrol will cost more at the bowser until commensurate decline in oil price.
Clearly no-one from either side of politics (or the RBA) is going to attempt any kind of measure to weaken the dollar. So “engineering down the dollar” ain’t gonna happen.
If the dollar falls it will almost certainly fall in tandem with the price of crude, so there will be no shock at the bowser. If history is any guide, petrol might even be cheaper.
But hey, lets say there’s a sudden Australia-only economic crisis, the RBA slashes rates to zero on Tuesday, and the dollar tanks to 80c. Will that mean a 25% increase in petrol prices? No, because a large chunk of the price at the pump is taxes, refining costs, transport costs, wholesale and retail margins. At worst I reckon you’d see a 15% increase at the bowser, and many households would still be better off because their mortgage repayments would have halved.
So again, please, quit it with the petrol price scaremongering. I know its your job, but some honesty occasionally would be nice.
Lol. So you see potential for 15% increase?
Let me see, average Perth metro price ($1.46) would increase by nearly 0.22c, not a huge amount, but trickling through the entire economy, not insignificant.
Anyway, we agree, under the scenario described petrol price would increase at the bowser.
You guys need to switch to LPG.
The country has tonnes of the stuff, we will be creamed in global markets soon because of the US shale situation, meaning it should be going cheap at home.
Plus it would be a nice easy populist gesture from TestosterTone to make sure it is a touch cheaper for citizens of this great nation of hours.
Fuck this. I’m not paid to come here and slug it out with professional PR people. I have better things to do with my time!
Gunna: All my cars have been diesel since 2005. Its actually cheaper here than petrol, and I get 50% more grunt and 30% better fuel economy.
Not exactly gracious….
Isn’t Gillard is the Prime Minister of Western Sydney for another 5 days? Why is she jawboning the AUD?
When will the pain end!
We all die one day! I hope pain will end after that. Julia, not for you , I guess!
Let’s just keep it simple shall we? The only thing between Gillard and her new job on the back bench is this bloke in the pic.
http://www.theaustralian.com.au/national-affairs/desperate-caucus-seeks-stability-as-labor-ministers-plea-for-unity/story-fn59niix-1226580711551
The AWU has strongest representation in what sector? Manufacturing.
Gillard in Caucus and ALP in general are bleeding votes. To help manufacturing, Gillard cannot control the AUD but she can do a bit of “managing expectations” of , in particular , AWU members to help stem the bleeding.
What to do?
“…”The competitive disadvantage of the high Aussie dollar is obvious but we can still manufacture things, provided we’re at the forefront of INNOVATION AND QUALITY,”
Blame the bosses.
“provided we’re at the forefront of INNOVATION AND QUALITY”
Well that’s her of the hook then.
As you noted the other day, GSM, the AWU connection also ties in with the sudden concern re 457s. All part of a ‘stir the troops’ fear campaign directed toward foreign workers stealing Ozzie jobs. Low, very low. FFS. McTernan’s an import!
Probably thought it would go down well in Rooty Hill too – oops, someone forgot there is a large multicultural population there, many who eventually came via 457 or have family 457 – also total neglect to mention that nearly 25% of 457s are in the health sector: doctors and nurses.
If foreign sourced workers are such an offence to the Labor Party an obvious spot to start is across the pond – I think I read recently some 250,000 or so.
And just when you thought it was smooth running with the 457 and Labor interest in Australian jobs, what is ALP position, if any, on the widespread practice in finance, IT and telecommunications of closing down Australian backoffice operations and relocating to cheaper climes.
It seems journalists either unable or unwilling to ask pertinent questions.
Blame the bosses.
As a champion of the free market, who else do you suggest is at fault for our horrendously run businesses ?
Seriously you have never run a business nor worked outside of a protected workshop have you? Have you ever put your money on the line to earn a quid & pay employees & get through good & bad times? Have you ever had to flog the family assets to keep the wolves at bay or to pay your loyal employees? Do you clock out of your office as easily as you clock in knowing that some other prick is going to pay your wage anyway, whether you actually produce any useful products for the day? Do you personally provide the flexible family friendly workforce & work environment every day? Do you ever risk your daily wage to put the key in the door not knowing what might happen in the next day or week or month or year? Its hard out there for people who are putting their family money on the line & trying to hold it together for their employees. Some of the spruikers on MB have no idea how hard it is to run a small business. People are bleeding out there & you lot are bullshitting on about bosses or some bullshit capitalist concept as if it was a lever or a choice or some stupid political decision to be made. Small business people are genuinely trying to make a buck or 2 & mostly want to employ their loyal employees with little complication. Running a small business in Australia is a crock of bulldust. Small business in so many sectors of the Australian economy are busting their arse & they are bleeding big time. Not tomorrow not next week but right now! MB spruikers need to seriously get out to Rooty Hill & find out what is actually going on? Ask Justin the contractor in Adelaide who is losing his shirt & trying to pay his employees, he’s trying to collect a miserable $55K from some punk property developer who has gone bust. For most on MB $55K is probably one big short on the CBA, if its isn’t it should be, if thats not the great Aussie Ponzi I’ll go the next Pope! Yes he has run a business on the back of the great big Aussie Ponzi Property Boom, but who warned him of that 20 years ago when he went in to small business & took the risks of employees etc on? There is a really big disconnect between Big & Small in this country right now. Big is big business, big government, big unions, big whatever, big political connections & big influence. Big is protected, they are TBTF & are all OK, they can squeal & everyone comes a running with a great wad of cash. Small is bleeding big time & no-one gives a rats arse ’cause their vote doesn’t look like it counts. But the small guys add up & eventually they hit back. Look after your non risky someone else pays job, ’cause soon it could be crumbling around you!
+100 I tried, for over a year, to find some sensible small business opportunities in Australia but the game is rigged against small business in Australia and I mean rigged.
I’m back to investing in the US, at least the market here makes sense and the business risk is not completely one sided as it seems to be in Australia.
I remember one company, that was technically bankrupt (IMHO), where several employees were demanding that I create some sort of trust account for large employee redundancy packages, the company absolutely needed to be downsized, so only a fool would accept this demand. Needless to say I didn’t proceed with that opportunity and it folded within 6 months. I can only assume that big redundancy checks are more important to these guys then is a stable job at a profitable company.
No wonder the polls dont favor her. She has lost the plot……
“Julia Gillard joins the cavalcade of officials seeking to boost the Australian dollar:”
Sorry HnH, I think you missed it by a country mile. Gillard is seeking to protect her skin.
I don’t think she was “boosting” anything.
Paraphrased: “the high dollar will be around for a while, so business will have to adapt or die”. I don’t wish to sound like a hard-core, free-market Darwinist, but I agree with the sentiment. The adjustment won’t be pretty, but the alternative is potentially worse, because it’s easier for a government to let a business fail due to outside circumstances than it is for a government to deliberately kill a business by pulling the plug. Consequently, there’s a real risk that industry support will become entrenched in the long term.
Ironically, the PM sounds far better than the opposition, who recently floated a massive, centrally-planned, government-run project to populate the north.
Actually through not addressing the dollar it becomes inevitable that individual sectors will be bailed out directly which seems far more damaging to the capitalist project in the long run.
Well it is highly likely that it will be a TestosterTone fronted Torynuff outfit which will do the deciding on that score.
The same outfit that are currently banging on (also one suspects for appearances sake, lest they are popping the same economic unreality pills as the ALParatchiks) about a balanced budget, while resurrecting the ghost of Menzies with a populate the North push. Should be a hoot.
True, but like most developed countries, we live in a hybrid socialist/capitalist economy, so that’s what happens. The real issue is how it’s done. On that score, I think Labor has a better track record than the coalition. The Libs just hand money to wealthy people who don’t need it.
Ahhh the comedy continues. Yet again we have alleged representatives of the people across the board from Julia Gillard and the AWU who ignore the people they are supposed to represent.
China Bob has posted some of the best information regarding greenfield start-up ventures and takeovers of exisiting corpses in Australia we are likely to hear of or lucky enough to read and it falls on deaf ears.
Quite honestly these people who are born into the roles of political servitude are acting like dictators. What is the tenure of a dictator? How long have many of our senators and parliamentarians had the grace of tenure?- 20 -30 years.
GET RID OF THEM
Bob Brown was pushing this into his retirement.
I tend to agree with some of the posts here that the Labor (LIBOR) Party are grandstanding to the presstitute media desperate for coverage.
Closer to the election it will be good to see an expose on the AWU and Paul Howes and just where his money is coming from. How close are the links to Arbib and the NSW Labor rot.
I’m sure when Tony the Mad Monk gets his turn the squeals will be a lot louder!
If things are tough now (and they are) for Joe 6 pack – they will be a lot F&$%#@ tougher when the Libs get control.
Most of the continual crap we have to read & listen to from the Media is totally Media driven –
Having said ALL that -a Pox on them all!
It’s like Juliar tried to please everyone, and so pleased no one.
If she’d stood by the no big Australia thing I reckon she’d win this election.
But then property probably would have crashed, and the parasitic pigs would be on to her and crucifying her, unlike what’s happening now.
As if to confound everyone, the AUD has dropped tonight, now below US 102 cents….caught in the ebbing tide…
That’s because I closed my sell trades to ensure a drop and help the aussie economy along. Now at least we are nearly as competitive as the yanks. Just a bit of Aussie QE should do the trick. (that thought may cause a bit of angst among the crowd)
Still way off. Median salaries in Australia plus small market and shipping costs make it impossible to competewith anyone. It is a pity because there are producers (food industry particularly) which are innovative and quality oriented. But there is a price limit that people are willing to pay and Australia crossed it years ago.