10 years of economic blunders are coming to a head

There’s a lot of eminent macro managers with invisible egg on their faces today. It’s invisible because, as we know, there is no accountability in Dumbstralia outside of MB. Nonetheless, it’s there, in great dripping omelettes of failure.

It began during the post-GFC period when the then Labor Government refused to acknowledge the structural challenge confronting Australia’s externally-funded economic model. Having acted decisively and appropriately during the GFC, afterwards Labor refused to remove bank guarantees and to undertake much needed financial architecture reform.

That left the RBA in charge. It did a pretty good job post-crisis of explaining to Australians that household debt was dangerously high at just over 100% of GDP. It hiked interest rates into the commodities boom and forced banks to raise deposits over offshore debt.

But, it also covered its own arse. Rather than admit Australia was lucky during the GFC, it inflamed a narrative of Australian exceptionalism, and fell madly in love with the China boom, extrapolating it 30 years into the future.

Thus it overcooked its rate rises and egged on a charging Australian dollar to “structurally adjust” Australia to “mining-led growth”. This afflicted the economy with a paralytic dose of Dutch disease that threw every non-mining tradable not bolted down into the sea, culminating in the collapse of the car industry.

What a fateful mistake it was. The RBA’s thirty year boom instead lasted for three. As the mining boom turned to mining bust in 2012, the RBA and Treasury panicked, suddenly forgot that they’d told households they had enough debt and instead instructed everyone to gamble on house prices, literally told them to do it.

Any first year economics student can tell you what you have to do to fix a boom that has priced-out an economy’s competitiveness.  You have to deflate your input costs and currency plus improve productivity. Over time, improving competitiveness works its magic and investment picks up. That drives jobs and demand and a virtuous cycle forms. It’s called a real exchange rate adjustment.

We did the opposite.  It took a lot of rate cuts and an unexpected influx if Chinese buyers, but eventually the RBA succeeded in forcing households to go property mad again. The new boom across 2013-15 took the form of wildly risky lending for investment loans, including crazy levels of interest-only schlock. It kept enough consumption running to partially offset the mining crash, drove input costs mad and prevented the currency from falling.

Meanwhile, governments changed. A revitalised Coalition set about Budget repair which it needed to do given that the Budget’s AAA rating still guaranteed the foreign borrowing now fueling the re-blowing housing bubble. Sadly, the Abbott Government did not understand the economy it was running. It brought class war to the job instead of structural reform targeting productivity and threatened to rip the away the very middle class welfare that supported all of that household debt. Needless to say, its polling collapsed.

And so, public borrowing mushroomed instead. Not usefully spent on infrastructure, nor made more efficient, just frittered away mostly on supporting demand. Governments changed again and we saw more waste. Throughout, all governments kept the foot on the immigration accelerator ensuring that the debt and house price frenzy could not stop.

Finally in 2015, as wages kept falling along with inflation and a chronically weak economy, monetary authorities realised they’d buggered it all up. They began begging markets for a lower currency and installing the very macroprudential tools to control household debt that they had scornfully dismissed just a year earlier.

But their bubble had taken on a life of its own now. A new Turnbull Government egged it on as well. They were forced to tighten again in 2017.

The final blundering arrived with the Turnbull Government’s first Budget. Rather than undertake productivity reform to repair the numbers it turned to fantasy growth assumptions to do it, ensuring that the sovereign rating will be stripped in due course as the numbers collapse.

Which brings us to today. Here we are barely one third of the way through the inevitable real exchange rate adjustment and our :

  • household debt imbalance is now nearly one third higher than when we were told it was dangerously high;
  • public balance sheet increasingly awash with red ink and on track for downgrade later this year raising external interest rates on the same great debt pile and
  • the economy barely has a pulse.

All of this just as we’re entering the final great washout of the commodities bust as iron ore and coking coal crash.

Let’s make no bones about it, 10 years of economic blunders are coming to a head. The five major drivers of GDP are stalling:

  • household consumption;
  • public consumption;
  • dwelling investment
  • business investment, and
  • net exports.

On the first, we’ve all seen retail’s woes. But it’s worse. Weak income and reliance on a gigantic bubble for savings is retarding household spending. Leading indicators are suggesting a first quarter annualised spend at 2%, well down on Q4. Moreover, as house prices stall, spending will slow even more. In 2011/12 when house prices were falling mildly, national household consumption fell under 1% for five quarters. We’re going back there. It will add roughly 0.3% to GDP over the next year.

On the second, federal and state budgets are going to inject some demand this year through infrastructure and simple spending adding 1% to GDP.

On the third, the dwelling construction boom has peaked or is about to and will begin to draw down at roughly -7% per annum and pulling roughly -0.3% out of GDP.

On the fourth, investment is still falling fast as it traces the mining bust and services are to slow too as broader demand wavers. It’s going to withdraw roughly 1% of GDP.

Last, net exports are going to subtract big from Q1 and Q2 this year but add strongly thereafter, adding a net 1% to GDP.

That all adds up to a stall speed economy, limping along along government largesse and net exports that add no local activity.

Now add the primary driver of income in the economy: the terms of trade. As iron ore and coking coal literally collapse so too do the terms of trade, withdrawing income and exacerbating all of the above. The collapse is destroying the Budget and the sovereign rating will be stripped this year.

Thus already weak domestic conditions are going to get much weaker:

Unemployment is going to rise, probably sharply. Rates are going to be cut. The ASX and Australia dollar are going to fall. All of this and no global shock. Quite a feat of economic mismanagement.

If you do not already have your dough parked offshore then do it. If you are long Aussie equity, get long bonds instead. If you are long property then visit your priest.

Australia is about to decouple completely from the global reflation. Get your money out.

We can help you with all of the above with the MB Fund launching July 1 2017 (it has passed compliance). Those pre-registered will be invited in a little earlier. Register your interest today (if you have not already):

David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. simpeltonMEMBER

    Couldn’t agree more. Spot on. Good to see your mojo is back. Patience is a virtue.

    • Surprised the migration blunder wasn’t mentioned. In fact this was the one thing Abbott did read right but he chose the wrong battle ground preferring refugees rather than high net worth migrants.

      • Immigration….. yes, that is a part of it.

        This bubble has been growing for so long that it had retarded a lot of people – being able to make easy money without effort cause people to be seduced by the Moron Side of the Force. Bright minds with engineering training may forget about their skills in favour of real estate trading – like the dude who appeared in one of the articles on this site the other day – and who knows how many more have been affected.

        The associated loss and damage are incalculable.

      • simpeltonMEMBER

        Immigration and more importantly, irresponsible and unaccountable bankers are the core of the problem. Ofcourse the politicians front run the policies, will have loaded up in housing knowing well they were going to pursue a big Australia (or Sydney and Melbourne) to counter the aging population problem when in fact, that advice comes indirectly from bank sponsors and just sheer incompetence and lack of knowledge about economic and monetary dynamics. Any thing that becomes imbalanced, naturally corrects so just a matter of time. Million dollar question is how it unwinds and over what time period.

      • You call it immigration blunder I call it civilisation suicide… but I am a loon that wonders about human nature, social costs and what has happened throughout history.

  2. – You forget to mention how one Howard & one Costello are responsible as well. They laid the foundation for this train wreck.

    • Jumping jack flash

      Indeed – they pork barrelled like none other and got everyone hooked on cheap credit by forcing down interest rates.

      Just following the US’ lead, of course.

      • – Howard & Costello were fortunate enough to “be around” when the resources boom occurred.

  3. Brilliant piece mate! May as well get Big Man Tyrone to read it or make a video of yourself reading it and hopefully it will go viral around the world. You may then get invited to talk on BBC News or Al Jazeera as an expert on the AUS economy.

    • I suspect the egg is already quite visible to the rest of the world who is patiently fattening up the turkey….er, I mean the lucky turkey!

  4. I think you have underestimated the suck on the economy from the increase in rates and the conversion push to p and I
    Think domestic demand lower retail sales hit even harder

  5. Too much income reliant on speculation in RE and the Casino and not on Wages e.g. no floor under it all…. acerbated by the fact that cramming down wages increases fashionable Casino metrics in burnishing speculative aspects of Casino players value, hence the rush by some wage earners into the RE speculation.

    Disheveled…. file under self licking ice cream cone thingy….

  6. verzijlMEMBER

    Poorly written article! No mention of impact of excessive immigration! This article has failed to mention why RBA interest rates rose and “egged on the rising dollar. All but 2 meeting minutes from the RBA justified rate rises due to rising housing / asset prices! House prices were driven by excessive demand from immigration. Immigration before the GFC gave us unaffordability circa 2004. And immigration since the GFC has caused massive economic distortions – while the rest world had zero interest rate Aust had high interest rates, carry over trade gave us the high dollar and negatively impacted on exporters of goods, services and local manufacturing and an oversupply of labour driving wage growth to zero for the last 10 years. Excessive immigration is an unfunded /unbudgetted $50b commitment per year (cw all tax revenues say $450b) and is causing most of economic problems we see today. Natural population growth needs a provision of $30b per year. Further immigrants over the last 10 years have had a median age of 45 on median wage of $56k don’t pay enough tax or super for their retirement. Immigration policy with a focus on the number of immigrants needs to be changed first, it is also the simplest to change and will have the most impact on government budgetary management.

      • Your comments are not funny anymore. Have something more constructive the problems are way bigger than your silly responses

      • verzijlMEMBER

        That “racial” response usually comes from those who don’t understand the math. The “racial” response towards me usually comes from a Caucasian – but in their ignorance of data and numbers they don’t realize the typical immigrant over the last 10 years was a 45 year old Englishman – a Caucasian! (ie “a white fella”). I am all about sustainability of living standards and the best way to quantify that is numbers.

  7. This question has probably been answered before but will the MB find take super $s?

  8. SweeperMEMBER

    Rudd and Swan responded pretty well to the GFC in the first stimulus imo. After that it was always going to go off the rails because the underlay is so rotten. This is primarily the fault of Paul Keating.
    We could have had an active fiscal policy/SWF, except that Keating had started an obsession with classical fiscal policy in the early 90s when as he admitted he inoculated all future Treasurers.
    Or an RBA led depreciation, except that the RBA & Treasury were still committed to Keatings flawed notion of a floating currency as determined by foreign CB’s.
    Or macroprudential at the outset, except that Stevens couldn’t conceive of doing anything other than moving the “price of credit” to target inflation. First started by Keating and Bernie Fraser.
    Or preventing capital inrush, except that Keating had left the gates permanently stuck open.
    Or control lending which had been let off the leash in the mid 80s, or move to non-mining traded goods which had been decimated by the removal of tariffs and overvalued currency etc. etc.
    It was always going to end this way because as Flawse says, the structure of the economy only allows one model. And Keating created the structure.

    • ErmingtonPlumbing

      Yes, this is what I think also, what do you think of Swanies Guardian piece, I posted below?

    • “Rudd and Swan responded pretty well to the GFC in the first stimulus imo”

      I’ll respectfully disagree. In a way they fundamentally did what Keating did in the first place. Instead of looking at the economy and taking on fundamental reform they decided to just speed up the debt train. Keating laid the foundation to make it possible but n this lot made that train go faster even than the morons Howard and Costello.
      Unless we reform the economy this spending by Rudd and Swan was always going to end up in the external account as imports and foreign debt which we have funded through asset sales to foreigners including mines businesses farms and HOUSES – which has helped make house prices too expensive for Aus young to buy.
      Other than that minor disagreement….well said!!!!

    • Keating established new levers for the Australian economy to operate, and gave it freedom to perform better (or worse) but one thing visible between 1992 and 1996 was he understood excesses needed to be curbed. Howard and Costello were the ones who steered the car towards the wall and planted the foot on the accelerator.

      In a way, Australia suffered from a Bismarckian curse.

      In the hands of capable operators, Prussia unified Germany. In the hands of an idiotic Kaiser Bill, Germany got pummelled in two world wars and Prussia was disbanded.

      In 1972, Australia had a front loading musket as an economy. Keating transformed it into a modern Australia rifle.

      Howard decided to go hunting with that rifle in Darling Harbour.

      Rudd and Gillard, well once again I was predicting what was happening, and MB was witness to that prescience, if not letting it sink in.

      They inherited the economy AND expectation of the electorate. 2007 was a good election to lose, and the ALP didn’t want to come in after 11 years in the wilderness, with the esteem of poor economic credentials, and have it blow up within 12 months, by a GFC dragging all and sundry with it.

      Sure, the economic reform Keating implemented enabled our woes, but he in all likelihood wouldn’t have allowed them to happen. Counter measures would likely have been introduced l.

      The Libs, well their raison d’etre is to enforce excesses so their mates can capitalise on them and then socialise the costs.

      • SweeperMEMBER

        “Keating established new levers for the Australian economy to operate, and gave it freedom to perform better”
        What new levers? Give me concrete examples. He removed the most important lever of managing the economy of a small open trading nation – the exchange rate.

        “Howard and Costello were the ones who steered the car towards the wall and planted the foot on the accelerator”.
        This is the journalist narrative. But the truth almost completely reverses. Post Keating governments have been operating within the parameters established by Keating. That’s why the outcomes have been so bad.

        Bismark is not a good example. Keating is the anti-Bismark. Bismark understood that you cannot take social cohesion for granted. Keating took social cohesion for granted.

        “Sure, the economic reform Keating implemented enabled our woes, but he in all likelihood wouldn’t have allowed them to happen. Counter measures would likely have been introduced.”
        He absolutely would have. He has shown no signs that he would have toned down his slash and burn shock therapy approach. On the contrary, every chance he gets he has campaigned for more of the same; whether it be NSW electricity privatisation, opposing Labors tax on the wealthy, supporting the Telstra sale, wanting more money to go to the Super casino, or … unbelievably the claim he “created” CBA. How do you create something you’ve disowned?

      • SweeperMEMBER

        Look I get that people like Keatings style and his vitriolic abuse directed at Peacock, Downer, Howard, Hewson etc. (played up for the soft-headed chattering class and the theatre goers in the press gallery)

        But at some point you have to do a sober post-mortem on this stuff. Separate the personal from the analytical even if it means reconsidering your priors.

      • “What new levers? Give me concrete examples. He removed the most important lever of managing the economy of a small open trading nation – the exchange rate.”

        When he did it, the exchange rate nearly halved, for most of the time is considered aboost to competitiveness, implying we had an uncompetitive exchange rate prior.

        He altered centralsied wage dertermination by the government.
        He implemented a raft of micoreconomic reform.
        He opened up the ability for individuals to access credit, WHICH is preceisely what I am talking about.

        Accessing credit has enabled a plethora of business aspirants, and for those who are young or have a lesser momory, was working well for most of the 80’s and 90’s.

        No one forced the bogan boomers to borrow en masse to bid higher and higher for the same stock of unproductive good. They made that election.

        Now if your argument is is “restrict something for everyone because of certain practintioners delvier bad outcomes” … would you be prepared to apply that same principle for Muslims, for example?

        If counter measures to restrict the attractiveness of credit being piled into housing, while remaining open to investment into productive assets, we’d be in a much better place, and something that couldn’t have been acheived even up to the Fraser government.

        However, I don’t blame the ability more than 3.5 times income.

        “This is the journalist narrative. But the truth almost completely reverses. Post Keating governments have been operating within the parameters established by Keating. That’s why the outcomes have been so bad.”

        Parameters are secular.

        The post- Keating governments failed not because of the parameters, but because they operated without Keating, Jones, Walsh, Dawkins, Kerin, Morris, Button.

        A Formula One car in the hands of Lewis Hamilton is a good thing, it in the hands of a drunk teenager not so much.

        I don’t blame the car.

        “Bismark is not a good example. Keating is the anti-Bismark. Bismark understood that you cannot take social cohesion for granted. Keating took social cohesion for granted.”

        He didn’t take it for granted. It was a very optimistic time back then.

        Our social cohesion is failing because of the stress placed by economic impairment.

        I don’t blame Margaret Court.

        “He absolutely would have. He has shown no signs that he would have toned down his slash and burn shock therapy approach. On the contrary, every chance he gets he has campaigned for more of the same; whether it be NSW electricity privatisation, opposing Labors tax on the wealthy, supporting the Telstra sale, wanting more money to go to the Super casino, or … unbelievably the claim he “created” CBA. How do you create something you’ve disowned?”

        The CSL has operated better as a privatised entity than it did as a publci owned entity, and is extremely unlikely it would have delivered the same return to government as shareholders, nor delivered the same product.. is but one example.

        Banks deal with fiat, something ordained by government. Now banks running out of control, a compromised government would do that sure.

        I don’t blame fiat.

      • SweeperMEMBER

        16% net foreign debt when Hawke/Keating were elected (all officially held) v > 60% today says the currency has been overvalued on avg v pre-float.

        Micro-economic reform? Meaning? Don’t use nebulous journalist euphemisms.

        Access to credit. Yeah because we need more of that. How can you read this blog and think more credit has been a success?
        Secondly the shift from commercial lending to household occurred before Howard immediately after the early 90s recession when commercial lending blew up. It was always going to happen once Keating let the debt machine out of the box. Plus it’s the way it’s been funded offshore due to Keating which has compounded the problem.

      • “Accessing credit has enabled a plethora of business aspirants, and for those who are young or have a lesser momory, was working well for most of the 80’s and 90’s.”

        Sorry RP. No it wasn’t. It was in the process of cementing in place a distorted economy flourishing on debt rather than production and was indeed the pre-cursor to what we now have. This has been a process. It’s been a very long continuous process that NOBODY wanted to stop.
        The whole era has been characterised by interest rates severely negative RAT. Nobody forced anyone to go into debt? Maybe but we did create the conditions where if you didn’t go into debt you were pretty much destined for the poor house. The exception to this was that if you were in most productive sectors you were going to be so stripped of your income that any debt would kill you.
        This is entrneched from a long long time ago. That’s why there is no magic monetary switch to fix this despite the opinion held by 90 odd percent of commenters. There is no fiscal switch like the much touted infrastructure baloney.

      • “Look I get that people like Keatings style and his vitriolic abuse directed at Peacock, Downer, Howard, Hewson etc. (played up for the soft-headed chattering class and the theatre goers in the press gallery)

        But at some point you have to do a sober post-mortem on this stuff. Seperate the personal from the analytical even if it means reconsidering your priors.”

        I have, I always do.

        Look, if I want to get from A to B faster, I build a faster car.

        A faster car albeit is more dangerous, particularly in the hands of those that can’t handle it.

        I don’t blame the car.

        Kaiser Bill couldn’t handle a Bismarckian Realpolitik.

        Lesser governments post 1996….

      • “Access to credit. Yeah because we need more of that. How can you read this blog and think more credit has been a success?”

        Because credit is secular.

        Accessing credit to create a solar power company, nano-robotics for medical treatments, R&D for biological treatment to make waste water clean.

        is different from accessing credit to bid higher prices on the same housing stock.

        It isn’t a fault of credit, but a fault of choices and economic incentives.

        “Secondly the shift from commercial lending to household occurred before Howard immediately after the early 90s recession when commercial lending blew up.”

        Basel II rules yes, but it still isn’t about the principle of allowing genuine debtors finding it easier to access credit that before.

        “It was always going to happen once Keating let the debt machine out of the box. Plus it’s the way it’s been funded offshore due to Keating which has compounded the problem.”

        Part of his super reforms was to make funding acessible onshore.

        Again, this is a case of incentives, or lack therefore that see fund managers buy the ASX8 every month…. no the principle of where savings can potentially be sourced.

      • “Sorry RP. No it wasn’t. It was in the process of cementing in place a distorted economy flourishing on debt rather than production and was indeed the pre-cursor to what we now have. This has been a process. It’s been a very long continuous process that NOBODY wanted to stop.
        The whole era has been characterised by interest rates severely negative RAT. Nobody forced anyone to go into debt? Maybe but we did create the conditions where if you didn’t go into debt you were pretty much destined for the poor house. The exception to this was that if you were in most productive sectors you were going to be so stripped of your income that any debt would kill you.”

        All you’re saying is that negative RAT channelled debt where it shouldn’t… or wouldn’t have gone with effectively priced rates.

        Now, we did obey a mechanism somewhat that did price rates properly.. for a while…. that’s why we hear about 17% interest rates in Keatings time…..

        Howar’d locked standard variabel below the OCR a decade earlier remember?

        Friedmans fantasy enabled OCR at 2-5% whilst we’re getting 15% p.a. house price incerases and 20% p.a. share price increases.

        However, in that time…..

        Austal did a lot of good things
        CSL did a lot of good things.

        I understand where lesser minds are coming from….”If we had restriocted credit, we wouldn’t have had this credit bubble”.

        Well, by that principle we’d rescognise have Muslim migration into the west as a mistake. But that seems to have got a certain brain dead PM aspirant in trouble recently.

        “This is entrneched from a long long time ago. That’s why there is no magic monetary switch to fix this despite the opinion held by 90 odd percent of commenters. There is no fiscal switch like the much touted infrastructure baloney.”

        Neither will locking away credit. Hoarding surplus for surplus’ sake does not accomplish anything. That surplus has to funnel its way into something productive.

      • SweeperMEMBER

        Your counter argument rests upon 2 patently wrong propositions:
        1. That there would have been any material difference to Howard if Keating had of somehow stayed in office until 2007. There wouldn’t have been because there was nothing left to sell, to wreck.
        &
        2. That there is some sort of benevolent unfettered market economy which is immune from being gamed by the ruling class and can work for the common good.
        There isn’t. If you unleash market forces you wreck things for the vast bulk of the population. Once upon a time Labor understood this.
        You are laughably wrong on both counts.

      • nexus789MEMBER

        Keating and the follow on clowns started the ground work for the rent seeking and financialised economy that we have today. Its implosion will be interesting to watch. Once the housing casino collapses there won’t be much left.

      • SweeperMEMBER

        Tell that to RP. He doesn’t get that removing restrictions on a system which creates bubbles, corruption, unemployment and inequality actually leads to bubbles, corruption, unemployment and inequality.

        Oh unless an LNP government does it.

      • Ooooh… the natives are restless today – !!!

        Ummm…. Fiat… we were supposed to get Bancor [core feature] and instead we got USD as reserve [Tribute]. This was not an economic decision, but a political one, based on in part an ideological bent. Now with Bancor we were supposed to get little bubbles here and there, but they would pop without taking whole nations or the world with them. Instead what we got was US corporations going the full retard and started looting not only their employees, but consumers too, then they put a saddle on the Government itself and went on a trail ride telling everyone else to bootstrap or pay your own way…. save themselves.

        Disheveled…. worst part about it…. they put the Chicago school in charge of it and weaponized both finance and the monetary system… got them coming and going with with IR brackets and soverign bonds high jinks.

  9. Question – back in the days when the AUD was around 50c we had the RBA doing two things to ensure it didn’t drop too much further…raised interest rates and bought AUD. Any opinions on how far the RBA is willing to let the AUD fall before interfering?

    • George we can ponder that without finding any answer i think. The dollar falling will look, to the average Aus, like a failure of economic policy given the BS the population has been fed about strong economy, strong banks, we’re leading the world tripe. So if i was to hazard a guess I’d reckon they’d try to intervene around 60. Now we are NOT a sovereign nation. So the FED will have a fair bit of influence. If the FED offers ‘free’ swaps (as per last time) then we can expect significant intervention. If the FED doesn’t offer ‘free swaps’ then the RBA could be quickly overwhelmed. Note the FED might REQUIRE the RBA to intervene.
      As/if the A$ falls Inflation will come from the tradable sector. In past times the RBA have been very sensitive about inflation. This time if TSHTF we can expect them to ‘look through’ inflation because to do anything else would smash the economy. So they will be VERY hesitant to try much IR rise.
      All in all it looks very much A$ down but that assumes the FED and ECB haven’t turned the printing presses up to superspeed at the same time.

    • DominicMEMBER

      Contrary to what you read pretty often on various economics threads reducing the exchange rate doesn’t make you richer as a country (it makes you poorer). It’s very simple: If one A$1 buys you US$1 one minute and then the next minute it buys you US$0.50 are you richer or poorer? How the exporters benefit is irrelevant (except to them). The country, as a whole, doesn’t benefit as their purchasing power is debased.

      A materially weaker currency is potentially very inflationary but a weaker currency can also cheapen up property in real terms (while supporting nominal prices to a degree) and address other imbalances so policy makers will be faced with a real conundrum.

      • However, high interest rates makes us poorer into the future. While lower make us live more within our means which appears to be poorer, but I think the 2 are quite different.

        High dollar was just another opportunity to pork barrel the electorate via the aspirant class.

  10. SmartDipStick

    Australia :
    Magnificant success story of good economic and financial management of last ten (20 and 30) years to be justifiably admired. Now we have responsible wage growth, muted inflation, stable and low unemployment, a more balanced/diversified economy with ~ 60% reliance on services and less so on China, beautiful housing and building construction industries and returns over the last ten years, etc, etc, etc.

    This has caused our share market to behave in a rationally priced manner – it is reasonably priced for the future. The same is definitely not the case for Europe and USA.

    Australian share market is dirt cheap compared to the foreign markets in Europe and USA especially – these are bubbles, at really explosive valuations and risk, and expected to burst shortly. I would be a strong seller of these very over-bought, over-valued and over-bullish foreign markets and switch into Australian shares.

    It’s a matter of relative valuations and outlook. Lets not let economic and political ideology get in the way of the facts – it’s never about being ‘right’, but about making money in investments. You’ll make tons of it by:

    SELLING : Over-valued, over-bullish, over-bought American and European shares [ they are now at all-time highs !!!! ]
    BUYING : Relatively cheap Australian shares [ they remain yet ~12 % below their all time highs, but face more balanced outlook profiles ]

    Sell high, buy low … it’s the way this game works, not the other way around … what’s wrong with you?

    Cheers

    • simpeltonMEMBER

      Hahahahahahahaha….No!

      You stay on your soap box mate. How much do you own in property? Spruik on, spruik on.

      • SmartDipStick

        Mate, called the Australian Share Market a “Major Buy” [ those were my words ] three days ago hereon … go and check.

        Nothing about spruiking … it’s about making money.

      • ErmingtonPlumbing

        Yes, that’s a major part of our problem.
        To much focus on “making money”, not enough on earning it.

      • SmartDipStick

        With some people, it’s a case of both, and more : Neither making nor earning money, and posting absolute rubbish comments that add no value at all.

    • verzijlMEMBER

      Magnificent success story for who? You have not mentioned Australia now has the highest private debt ever (120+%) 2nd highest in the OECD, You have not mentioned the $800b or 60% GDP backlog in new public infrastructure. That if delivered would make Oz government debt100+%GDP. Living standards have fallen for the average Australian Joe! Home ownership is falling fast and people spend more on accommodation than the 1990’s The list goes on!

      • SmartDipStick

        It’s been a magnificent success story compared to many many nations around the world. That’s the correct way to look at it – not in terms of it has ‘affected negatively some sectors of the population here’ – all systems negatively affect some sections of the population. Cheers and good luck.
        [ PS: Employ intellect to Make Money, not only to engage in rants!!! ]

      • SoMPLSBoyMEMBER

        “Magnificent success story for who?”
        FIRE but most notably, the lenders who have completely captured both our elected officials and the populous alike. They have succeeded in selling the nation on the oldest trick in the financial book: borrow ‘our’ money and you too can be rich. Borrow more and you can be ‘richer’.
        It might seem to work for awhile, but it’s always been a highwire act. As if a clever ‘shortcut’ to thrift, patience and linear wealth building, the enormous propaganda machine sponsored by the lenders whispered lie after lie into the ears of those who happily accepted the message as it was what they wanted to hear:

        “We’re different. We’re special. We’re immune. We have the secret”. Now, there is no other recognized pathway unless it involves a bank credit product- P & I, IO, reverse mortgages, margin, intergenerational shared equity, equity release etc.

        We’re now, collectively, enjoying the psychological benefits of an enormous and artificial ‘wealth’, but our actions reveal that the underlying debt will never be reconciled as the secured assets, temporarily bid into the stratosphere are now descending.

    • Even StevenMEMBER

      I agree our share market is – reasonably – rationally priced given the appalling fixed interest yields on offer.

      But the outlook for the economy sounds far too sanguine in your analysis. While Australian shares may do ‘ok’ in local currency terms, there’s a good chance the AUD will fall. This in effect becomes a loss when assessed on a global basis. Better to focus on AUD exposed domestic shares if you want to do that.

      • SmartDipStick

        It’s CHEAPLY priced relative INTERNATIONAL MARKETS … and reasonably priced relative to outlook. That’s the point here = why therefore buy USA / Europe as the MB fund is poised to do , at the expense of Australian shares … why ??? These two foreign markets are at all-time highs, in over-bought/over-bullish/over-valued BUBBLE territory [ it’s tantamount to buying Sydney/Melbourne property – MB refuses to do that in property here, but will do something VERY similar in shares in USA /Europe…what’s up – have a consistent approach to valuation-based treatment of alternative assets … get real, in other words ]

      • CraftsmanMEMBER

        SmartDipStick what you are saying makes sense. I guess buying international shares with the AUD almost certainly going to head down is just a stronger current to go down. I think staying 30% in VAS is fine for the reasons you describe. Lets not forget Japan stock market has never really recovered from the 80s. Australia could end up just like that.

      • SmartDipStick

        Craftsman,

        No, Australia WILL NOT end up like Japan did. Japan’s problem was one of stagflation that met with completely inappropriate economic and financial stimulus programs. Now, the whole world is [ and has been for the last EIGHT years ] so eager to stimulate growth via monetary and fiscal policies. The acceptability thereof is firmly established now. So, it wont happen in Australia – period. Cheers

    • UrbanWastelandMEMBER

      Holy shit! Until the last couple of lines, I thought this was brilliant Reusa-style satire.

    • Mate,

      Oz is upside down not only geographically,it is upside down economically too. This country was left as a safe haven for rich people from the northern hemisphere in case peasants dig up their pitchforks. This time that didn’t happen, which means Oz is going down.

    • Over a third of the ASX is FIRE Dippy. That ain’t a happy, stable market, and if you believe that then you are better off investing in their raw material, flats.

  11. reusachtigeMEMBER

    Yawn. Are you guys the new Chris Sauce / Daily Reckoning or Gary Turner from Canadia? We’ve heard it all before, like from that loser Stan Keen who sold up 15 years ago and had to leave Aus due to extreme shame. Yet the boom booms upwards. This is just #fakenews & #alternativefacts from a share spruiking service!!! Youse all do it. “Property to die in 2017, buy our shares!!!”

  12. Well brave call, I’d wager a walk to Kosciuszko that you’re just as wrong as Steve Keen was, and what’s more you’re wrong for exactly the same reasons that he was wrong. As much as Steve claims to understand currency flow it’s clear to any experienced 4xtrader that he is clueless his tools/methodology have zero predictive value, zero value short term, zero value over the medium term and you guessed it zero value over the long term.

    • “Well brave call, I’d wager a walk to Kosciuszko that you’re just as wrong as Steve Keen was, and what’s more you’re wrong for exactly the same reasons that he was wrong.”

      I think you’re right.

      Any chance of a big housing crash in NSW just went out the window with the FHB stamp duty changes yesterday. You’re going to have a LOT of local buyers for apartments now, which will stop prices from ever falling too far. MB never predicted this (and to be fair, who could?)

      The irony is that Reusa has been right all along. Where is the Reusa fund? :p

      • Yeah it’s a nice narrative, but to have real value the narrative needs error bounds over a defined time frame. Steve has rightly called the Inflection points in Mortgage debt as impacting House price acceleration, but he has missed out on a host of other factors which play an equal if not larger role in the equation.
        In the end analysis I’m of the opinion that it’s not about Australia, not at all about Australia we’re the tail thinking that we wag the dog. When the major economies (outside of China) finally find their feet we’ll see where the hot money flows and as for Australia’s dreams…well that’ll be all she wrote…the fat lady will have sung!

      • The thing about successful investing is that it’s much more about being right for Right for six years and wrong for six months than right for six months and wrong for six years. There’s no doubt about it that being wrong for six months can erase all your gains BUT that’s precisely why the correct timing of a downturn is so valuable. It’s useless information to know that on average we’ll have one downturn every 5 to 7 years but not know with any degree of precision when. If that’s the best you can do than you should really keep your mouth shut, because you’ve added no value to a casual observation of the business cycle.
        Even if we assume that Steve is right and that Sydney RE prices retreat by 40% over the next 10 years, will that be valuable investing information for anyone that didn’t buy a house in 2008/9/10/11? Nope, truth is they just missed out on the easiest money they’ll ever make.

      • @Smart….

        A forex trader is probably the last person one should get advice from on monetary matters, massive bias conformation dilemma.

    • Relevant StakeholderMEMBER

      You completely ignore the political situation, if a continued rise in house prices occurs there will be generation of young bereft of hope.

  13. You just get the 6th sense that things are about to go very pear shaped. It has been a miracle that we have held up up for as long as what we have – with the circus of a government in control in recent years.

  14. ErmingtonPlumbing

    Our current reality begins and comes out of the early 80s by my reckoning.

    https://www.theguardian.com/commentisfree/2017/apr/06/australian-labor-led-centre-left-parties-into-neoliberalism-can-they-lead-it-out

    But co-conspirator Wane Swan, feels labelling Labor “Neoliberal” is unfair, in his counter piece below.

    https://www.google.com.au/amp/s/amp.theguardian.com/commentisfree/2017/may/14/the-hawke-keating-agenda-was-laborism-not-neoliberalism-and-is-still-a-guiding-light

    “If Hawke and Keating were simple merchants of neoliberalism, they wouldn’t have reinstated Medicare, nor introduced a capital gains tax to rein in the excesses of the financial sector. They would never have established a more progressive income tax schedule across the board. They wouldn’t have struck the Accords with trade unions to help bring down unemployment and deliver a social wage, which included greater funding for health, education, childcare and welfare for those who the market might otherwise have left behind.”

    Just because an oil company gives a little money to some charitable NGO, doesn’t mean their business model is “on the right path.”

    I would especially like to hear Skips and Sweepers view on the above links,….or anybody else’s.

    • You can see it in figures in this paper on the history of unemployment in Australia.
      http://percapita.org.au/research/unemployment-policy-australia/

      A good accompanying video is Blyth’s ‘Global Trumpism’.
      https://youtu.be/Bkm2Vfj42FY

      Between the two of them you see how the social contract was changed to give too much power to capital over labour.
      This has never been explained clearly to the punters.
      They know that something isn’t right, but they can’t put their finger on it.

      That piece by Wayne Swann is bulls**t of the highest order.

      edit: I’d also add that capital has also suffered due to the favoring of rent-seeking over productive investment. See Hudson’s ‘Killing the Host’, or for a more Australian flavor, Cameron Murray’s ‘Game of Mates’.

    • EP I’ll have a go at it piece by piece
      “”Our current reality begins and comes out of the early 80s by my reckoning”
      Nope our problems began somewhere back in the mid 50’s. By 1959 we were running CAD’s funded by debt but also, more importantly, selling off the future of our children in the way of every resource asset and business we could sell. We had stopped saving and being prudent. We had stopped caring about what happened to much of our successful productive efficient industry. We never got it back!
      Twenty five years later along came Keating spurred on by a madness of economic theory that said you bloody ripper bewdy we can fund excessive lifestyles with more and more debt forever and we don’t have to give a rat’s arse about what that does to the planet or the future of the planet’s children. By Keating’s time the whole mess could not be held together. Without unlimited speculative money coming in as borrowings and purchasing assets the low interest rate and concurrent CAD trick could not be held together. Keating was faced with fundamental reform of the structure of the economy or unleashing this new form of insanity. He went with the debt forever insanity. We were warned by John Stone et al (and a few other lone voices in the wilderness 🙂 ) what would happen.
      The future has arrived and, economically, it looks exactly like those critical of the Keating so-called “reforms” predicted it would look like.

      • SweeperMEMBER

        Exactly it’s exactly as Stone predicted where control has been surrendered and the currency has become a speculators toy.

    • SweeperMEMBER

      Footsore actually posted that a couple of weeks ago, with a health warning.
      Just as well, because I could feel my blood pressure rising as I read it.
      btw the comments to Swans article are great. Nobody buys his revisionism. Journalists and lawyerish politicians forget that most readers/voters are more interested in policy than they are. Because they don’t live in the Canberra cocoon and actually feel the impact of the policies. Plus most readers unlike journalists deal with something called *details* in their day to day jobs and understand why they matter. And how irrelevant some over broad over simplifying under graduate history of politics grand narrative really is.
      Anyway I’m not going to punish myself on a Friday by reading Swan’s stupid apologia again.
      This was my response to Footsore at the time:

      I’m reading it thinking; what is your counter argument?
      It’s just journalist cliche and nebulous nothingnesses like “opening up the economy”.
      wtf does that even mean. This country has always been a trading nation. Was it not so under imperial preference. Do these people care.
      I try to reduce it to the nuts and bolts, and not surprisingly can only find 4 of them:
      1. Progressive tax; factually wrong. Keating gave the rich one of the biggest if not the biggest tax cuts in Australia’s history, coupled it with a huge cut in the corporate rate and with dividend imputation.
      2. CGT regime: ok true. However pre-CGT when the ATO actually had teeth. It took a brave taxpayer to actually report that income received was of a capital nature. Plus Swan forgets that the discount only replaced indexation introduced by Hawke/Keating with an early 80’s inflation rate in mind.
      3. Accord: factually wrong again. The accord was not implemented to boost employment. It was implemented to control wage claims and inflation. It directly weakened the industrial power of the union movement, on the false claim that what they gave up in wages would be made up in a “social wage”. This didn’t happen.
      4. Medicare. Ok, however it’s irrelevant. Because as Friedman pointed out all the time. The only way to cut spending over the long period is to cut taxes. Keatings low tax fixation is the genesis of Turnbulls wanting to trim Medicare today under the guise of budget responsibility.

      I could list the whole neoliberal program (and have done repeatedly). Swan just isn’t credible because he is too dug in.
      Genuine labourists at the time criticized Keating on the grounds it was an abandonment of Labourism. Keating doesn’t even deny it was a neoliberal program. He just thinks it was beneficial.

    • (replying to EP’s request for comment not Sweeper’s excellent treatise posted while I was writing)

      The blanket use of the term ‘neoliberal’ for everything that is wrong is just a sign of unthinking bullshit coming up. The rot had set in long before the so-called neoliberals arrived on the scene. In economics faculties in teh late 1960’s they were already preaching that we didn’t have to make any effing thing!!! Service industry economies were more prosperous!!! Of course they bloody were because such economies are financed by debt which means you are, as a nation or a world, consuming more than you are entitled to.
      Quite possibly the BS really started about the time GDP became the sole total measure of the progress of an economy (or the planet) – and that was 50 years ahead of any of the so-called ‘neoliberals’

      So simplistic crap of just shouting ‘neoliberal’ is NOT the winning point of an argument nor is it even sound thinking in any form. It is an inanity!
      So the Guardian article is largely BS based on false premises and vastly underestimating the problems and difficulties of reforming this economy OR the world economy which it seems to believe is what Labor can do.
      Just a small example. Now for the nation or for the planet the first thing you need is a rise in interest rates so far beyond levels anyone now contemplates. That alone would throw the society into irreversible breakdown.
      Second, in Australia at least, your population is all in the wrong place. It is sitting in a couple of comfortable enclaves on the coast that are financed by debt and parasitising the rest of the nation. There is NO way to reform this without major dislocation to those societies.the A$ at about USD $0.2 (just a guess) Imagine the dislocation involved. That alone would cause the breakdown of our society.
      If we start on the problems of establishing or re-establishing industries we find a mass of now insurmountable practical problems including a population that is educated for the current fool’s paradise rather than a productive economy. Even the simple reform of education, if it could be done at all, would take generations.
      One other note – you have a population/society that is psychologically damaged. We’ve watched the stupid effing BOX for 60 years. Every night the population watches hours of psychological brainwashing that they need and are entitled to a level of materialism that neither the nation nor the planet can afford. Anyone trying to tell them they can’t have it all is going to get voted out – even before any election!!!!
      Flawse for dictator.

      • ErmingtonPlumbing

        Your words and thoughts depress me flawsie,…because I fear you are probably correct.

        Do you have Anything positive to say,….that will make me feel better?
        🙁

      • 🙂
        Strewth EP. I’ve been on this damned crusade, pounding my head against the same bloody brick wall, for over 50 economically conscious years!!! What do you reckon the inside of MY head is like! 🙂 To go with the head my body is basically smashed and broken from excesses of work and sport.
        Even worse it wasn’t until some time after my son graduated in Law and Economics that he convinced me that I ought invest according to what is going to happen rather than what should happen. So i’ve made a lot of bad decisions in my time with somewhat disastrous consequences.
        I’m lucky I’ve got a good family; my ex likes me; my staff are a happy bunch; I’ve got lots of old mates from as long as 60 years ago; I’ve got The Mankind Project which is important to me.
        So for good stuff – I’m at an age and stage of disillusionment where it’s the personal stuff that really counts…. while fearing for the future of my family and society.
        Unfortunately it is true that i don’t supply answers. The answers lie back in time. Mostly I see the prescriptions ladled out as more of the same on rocket skates making everything worse. So I do try to stick to rational economics.
        Frankly I’m too effing old and my ideological biases don’t amount to a hill of beans so I try to stay away from them in discussions here. However somehow…somebloodyhow…this stuff has to be rationally discussed. People like Pfh, Sweeper, Patrician (and occasionally HnH 🙂 ) need to be given their head. You need to take over the Labor party and we need a few rational people to take over the Libs and Nats.
        (Many decades ago i went to war with the Nats. I lost…badly! It was like a rural mafia. In recent times one or two of my mates have tried again – with something the same result. The entrenched have been digging in a long time – bit like “Nazi megastructures” except instead of a decade this lot have had 60 bloody years. If not impregnable then damned close to it!!!
        I’d still be happy to be elected dictator with those, pfh sweeper et al, above as the real power! As I’ve stated before I’ve always thought the GG’s job as ideally suited to me!!!

      • reusachtigeMEMBER

        ^^ Someone who has missed out on 50 years of happily endless relations by concerning himself with the unimportant permaneg things, like Aspies do!

      • Reusa
        Frankly you are much closer to the truth than perhaps even you might consider you are!!!!
        As I say “If you’re not in Real estate you are a failure to yourself and a disappointment to your family.”
        I don’t know why I never learned!!! I just didn’t!!! I guess i just always thought that one of those who have ruled us, some time in six decades, would try to do the ‘right’ thing for our nation and people at some stage and alter policy to get rid of the distortions.
        That is a pretty stupid concept

      • boomengineeringMEMBER

        Flawse, at your age you should be growing younger armed with years of wisdom and experience so just go with the flow and count your blessings. Happy times ahead for you, don’t look back.

      • nexus789MEMBER

        Critical thought via ‘Political Economy’ died when they created what is now generally known as ‘neoliberal economics’. Political Economy is a distinct body of knowledge that generates inconvenient questions. Focusing on ‘economics’ as opposed to political economy eliminated those questions. This was probably done to discredit the threatening ideas of Henry George and other Political Economists. Critical thought was eliminated and anyone thinking outside this paradigm has to be discredited.

        Neoliberalism is really Hayek’s creation and his disciples via this thinking have now euthanised the global economy via ‘financialisation’ and ‘rent seeking’. Hayek was really saying that the way to control is via serfdom and the way to do this is to make people think that freedom is serfdom. So we’ve an Orwellian view of the world: Freedom is slavery, war is peace. That is the Orwellian economics that is taught by mainstream orthodoxy around the world and particularly in the US.

        Hayek in his limited wisdom promoted a free market that is free for rentiers – free for landlords, bankers and monopolists. This is why Von Misians spent all their time fighting against public spending and promoting the ‘threat’ of socialism which they say leads to fascism. In reality, it’s been the Chicago School thinking that does this. It’s the actions of the “free market” Chicago Boys which resulted in fascism in Chile due to the policies they implemented after the government was overthrown.

      • nexus your interpretations of Hayek are vastly different to mine. Hayek was NOT in favour of the ”no limits to debt model” of the modern world.
        Political economy????????????? That is the process where you decide the answer to fit your own ideology then you make up stuff to fit the answer you want. It’s really how we got where we are. Diff folks take different ideological routes.

      • boomengineeringMEMBER

        Nexus, hard to quote past economists true beliefs without including contamination acquired by vested interests. eg Keynes promotion of small amount of stimulus and now supposedly Keynesian is huge amounts.
        EDIT Dam Flawse beat me to it.

      • “The blanket use of the term ‘neoliberal’ for everything that is wrong is just a sign of unthinking bullshit coming up.”

        It’s still not as bad as the use of “socialism”, especially in the US, which is often used to describe virtually everything and anything conservatives dislike. Anyway, you make some interesting points about how and why we have got to where we’re at. Truthfully there probably isn’t any one set of ideas or practices that have got us into this mess, but given the prominence of deregulation and free market reforms over the past 30 years it’s not surprising (or wrong) it is coming under increasing scrutiny.

      • @Flawse….

        “nexus your interpretations of are vastly different to mine.”

        Libertarians are profoundly anti-democratic. The folks at Cato that I debate make no bones about their disdain for and fear of democracy. Friedrich von Hayek is so popular among libertarians because of his denial of the legitimacy of democratic government and his claims that it is inherently monstrous and murderous to its own citizens. Here’s an example from a libertarian professor based in Maryland.

        [W]hen government uses its legal monopoly on coercion to confiscate one person’s property and give it to another, it is engaging in what would normally be called theft. Calling this immoral act “democracy,” “majority rule” or “progressive taxation” does not make it moral. Under democracy, rulers confiscate the income of productive members of society and redistribute it to various supporters in order to keep themselves in power.

        In order to finance a campaign, a politician must promise to steal (i.e., tax) money from those who earned it and give it to others who have no legal or moral right to it. There are (very) few exceptions, but politicians must also make promises that they know they can never keep (i.e., lie). This is why so few moral people are elected to political office. The most successful politicians are those who are the least hindered by strong moral principles. They have the least qualms about confiscating other peoples’ property in order to maintain their own power, perks, and income. In his bestselling 1944 book, ‘The Road to Serfdom,’ Nobel laureate economist F.A. Hayek described this phenomenon in a chapter [10] entitled “Why the Worst Get on Top.”

        But von Hayek’s critique of democratic government has proven to be the most monstrous blood libel of the post-World War II era – falsely declaring that democratic government must end in tyranny and the mass murder of its own people.

        The political scientist Herman Finer … denounced [The Road to Serfdom] as “the most sinister offensive against democracy to emerge from a democratic country for many years.”

        The economist Paul Samuelson, in a reminiscence of Hayek published last December, was more dismissive still. “Where are their horror camps?’ he asked, referring to right-wing bugaboos like Sweden, with its generous welfare spending. Almost 70 years after Hayek sounded his alarm, ‘hindsight confirms how inaccurate its innuendo about the future turned out to be.”

        http://www.nakedcapitalism.com/2014/06/bill-black-hayek-helped-worst-get-top-economics-ceos.html

        disheveled… what – ???? – in your mind neoliberalism is a commie plot….. sigh…..

      • St JacquesMEMBER

        I read the Road to Serfdom many years ago. I concluded that this was the work of a monomaniac. It’s pure, unhistorical dickheadery, best compared to a religious rant.. I wouldn’t waste five minutes debating anything with libertarians, even those esteemed bozos and their groupies at Cato Skip, maybe you enjoy upsetting them, I’d just vomit.. Ask them how land became property and watch them go blue. Dickheads Incorporated.

      • “Ask them how land became property and watch them go blue.” – St Jacques

        Then don’t ever ask them how markets come into being…..

        disheveled…. regardless of social organization, its always whatever passes for government, at the end of the day.

  15. Please start mentioning finance in these kinds of posts. What are you afraid of; you’re mother?

  16. nexus789MEMBER

    Only ten years. Modern economics is garbage and its profound failure to explain how an economy generates ‘economic wealth’ goes back decades. We have now reached a point where the ramblings and deluded policy prescriptions of economists present a real danger to what little ‘competitiveness’ of the economy remains.

      • SOP = Standard Operating Procedure. Once you leave a role you can be open and honest, but not before.

    • ‘Mr Stevens in a report on the NSW government’s housing affordability package blamed negative gearing for the lack of investment by corporates in rental housing. He said Australia’s rental stock was in the hands of individuals rather than corporate investors’

      He is saying corporations have missed out on the profits made in specufesting parts of the population, that should have gone to corporations through cheep credit. The economy is supposed to get richer while the population gets poorer, don’t you know.

  17. 20XX

    “Despair gave way to apathy. People now die in a very simple manner. First they lose interest in everything. Then they lie in bed and never rise again. They die as if falling asleep. And the surrounding people are half dead themselves….. The scale of the suffering was almost beyond imagination……”

    • boomengineeringMEMBER

      That’s why the wrong motivation is better than no motivation, something I learn’t in the gym business late sixties. Incongruent or conflicting posts from non members are better than the echo chamber. Sad to see some valued non members not posting anymore.

      • boomengineeringMEMBER

        Getting your arse out of bed to reduce the suffering just begins with one step against the insurmountable resistance comfort zone offers to complete the longest journey.
        And don’t you feel great after the winter surf that the cold threatened to postpone.

      • Do you think the above description has some relevance to our future? The original quote was from the siege of Leningrad (1941).

      • blacktwin997MEMBER

        @boom also Malcolm and others…i do hope they at least lurk even if they feel embarrassed to post after that ‘freeloader’ event. They often had some good insights.

        Hope you’re all doing well anyway, silent non members 🙂

  18. Of course, as one reads more and knows more one will eventually outgrow this site. That’s okay. There are always new generations coming up who will benefit from reading you post.

    I stopped writing detailed posts a few years ago and stopped being a paid subscriber last year. Nowadays, I just post Star Wars quotes when I feel like doing so.

    Besides, the fate of the current bubble has long been sealed. No amount of analysis will change that.

  19. Just watching a recent video from Michael Hudson. https://www.youtube.com/watch?v=t6bC5JSBuGg

    At 15:40 he sums up the Australian government and RBA’s attitude to its citizens:

    Australia, the price of housing has gone up so high that Australia is unable to be a manufacturing centre, and its unable to produce good and services because if you can afford to pay for a home to live in Australia, you have to earn such a high income that your employer cannot compete with exporters in other countries.

    I discussed this in Canberra with the head of the Australian Central Bank and he said “well, we really don’t need industry, we actually don’t need 90% of our population because we are fortunate we live in a nice neighbourhood, the neighbourhood of China, and they’re buying our iron ore, they’re buying our others, and we can balance our payments, and pay the banks, really without industry at all”. I asked “what will happen to the other Australians”, and he said “that is not in our equations”.

    • SweeperMEMBER

      Why would they care though? As long as they hit their inflation target. They’re not the Red Cross.

      • True. It was more a swipe at our government rather than the RBA. We are supposed to be living in a Representative Democracy yet we have policy that is dismissive of 90% of the population.

      • drsmithyMEMBER

        We are supposed to be living in a Representative Democracy yet we have policy that is dismissive of 90% of the population.

        A solid 2/3 of the population keeps voting for parties running that policy.

        So, arguably, it’s representative of what the people want.

    • That’s been quite obvious to me since the 90s. You could’ve pretty much drawn a line between the old and new Australia around 96-97.

      What’s amazing to me is the denial the people of the west are in. They just do not want to believe it. Although it’s not the case for everyone. Some people are doing great, but unless they’ve got a mil or two to hand to their kids that’s where it ends.

      • drsmithyMEMBER

        That’s been quite obvious to me since the 90s. You could’ve pretty much drawn a line between the old and new Australia around 96-97.

        March 2, 1996, to be precise.

      • Yeah nah, given that the UK had those Blairite fake left wankers during much the same period and have almost identically hideous results blaming Howard is a cop out. It’s clearly a deep state thing.

      • SweeperMEMBER

        No Smithy; 5 Mar 1983 thats when everything turned to shite. And this is important. Lets not play this stupid red v blue team Rusty Penny stuff.
        Actually 10 Dec 1977 when Bill Hayden became Labor leader if you want to split hairs about it.
        In any case the ball was already rolling when Howard was elected to subsequently consolidate the already implemented neoliberal disaster.

        Edit: Just saw Owens comment. Spot on. Cmon Smithy some honesty the die was already cast.

      • Socially engineer the boomers so they think they’re geniuses and give them fat payouts. Socially engineer gen y with a relentless bombardment of PC so they think it’s normal to give their country away, even a good thing. Gen x were made to think being a trashy apathetic lay about was good. Making them weak and irrelevant. Boomers and gen x still in shock over what monumental wankers gen y are. Scarred for life. Some relief from unindoctrinated immigrants. Win.

      • drsmithyMEMBER

        Cmon Smithy some honesty the die was already cast.

        LOL. When replying to an obvious troll/parody account like “Owen” ?

        Respect is given as it is due.

    • fuck me dead i hate this country, its turned into an evil shit hole run by cunts ……unbelievable, the amount of fucking taxes small to medium manufacturers have to pay to these arseholes only to get reamed in return, honestly straya is nothing but a joke, a banana republic, a failed 1st world country and a half arsed emerging country fuck!

      thanks freddy for showing this

      • Well said.

        Any companies we do have here are too busy outsourcing labour to offshore locations or bringing in cheaper labour from overseas.

        My employer distracts us plebs with SJW feel good stories while in the background they are fast at work white-anting the local employee base through shifting operations overseas, whether it be manual work or computer systems. Senior management pat themselves on the back and get a nice bonus while the rest have to beg for basic CPI pay rises.

    • Thanks Freddy, I had read references to that presentation but had not come across a link.

    • the plebs are asleep

      The rich pricks are selling average Joe out without hesitation.
      They have an exit strategy to Switzerland already planned once the shit hits the fan and the plebeians bring out the pitchforks.

    • Hudson should name this individual so we can have as scaffold built with his/her name on it !

    • Thanks for posting Freddy.

      So if 90% of the population are unnecessary then why aren’t the RBA speaking out in criticism of the big Australia policy?

  20. bolstroodMEMBER

    Thank you H&H,Flawse, Skip,Nexus, Sweeper,EP,RP,Smartdipstick,
    for the most interesting, civil, informative and disturbing, debate yet on MB.
    I am an egg.

  21. Repeat
    Oz is upside down not only geographically. It is upside down economically too. This country was left as a safe haven for rich people from the northern hemisphere in case peasants dig up their pitchforks. This time that didn’t happen, which means Oz is going down.

    • St JacquesMEMBER

      “….This country was left as a safe haven for rich crooks and tax evaders from the northern hemisphere in case peasants dig up their pitchforks.”

      Fixed.