Weeo, weeoo, weeoo.
After a month or so of dead battery commentary, the Pascometer has plugged itself back in with a surge of 240 volt headlines:
Economic commentary is as prone to fashion as haircuts and skirt lengths, but there’s one Australian look that’s always popular – ‘We’ll all be rooned’, to quote the poem Said Hanrahan by John O’Brien.
Fund manager and former highly-rated equities analyst Mike Mangan calls the constant pessimists DGB – the Doom-and-Gloom Brigade. He took them on in his newsletter, starting with a sample of quotes before the latest Reserve Bank board meeting:
…Mr Mangan thinks it’s an Australian cultural trait as well as fashionable to belong to the DGB. He also thinks the brigade is very wrong – and has been throughout our unprecedented 26 years of unbroken growth.
Given the overwhelming media predilection for “scary” news, it’s worth reading his spray for a little perspective: “DGB tend to focus exclusively on one issue – for example, high household debt – and then conveniently ignore everything else going right in this country.
“Notwithstanding overpriced and unsold beachfront apartments at Surfers, this country is pumping. DGB forget the mineral and rural bounty we extract.
“Commodity prices are slowly recovering, unemployment is falling, job vacancies increased 21 per cent over the last year, interest rates remain at multi-decade lows and tax cuts are ‘a coming. Even the falling A$ will support all our export industries including tourism, education and of course real estate. Government debt, spending and contingent liabilities are amongst the lowest in the western world.
“So even if there is an economic mis-step, the government has plenty of firepower to fight it, just as they did during the GFC in 2008-09.
“Frankly you couldn’t dream of a better economic combination facing Australia and New Zealand if you tried. DGB completely ignore the cultural attractiveness of this place. They can’t put a number on it, they can’t measure it, so they don’t even think about it. Throw in a pleasant climate and strategic depth and the whole world wants to come here. Who can blame them?
“Migrants bring with them energy and desire, skills and dollars. And they catalyse a multiplier impact across our economy as we scramble to build infrastructure and housing to accommodate them. The danger is that in our scramble, we unwittingly create the slums and ghettos of the mid to late 21st century.
“Meanwhile ordinary ANZACs are getting on with the job. Today we have world-class expertise in finance, advertising and media, digital economy, education, medical research, transport, law, property development and construction, tourism, education, sport (sport is about 1 per cent of GDP) and, more recently, infrastructure.
“OK we’re not great at making widgets. Never were. But that’s not really the direction the 21st century ‘gig’ economy is heading. Compared to other western peers, our outlook is fantastic.”
Mr Mangan’s call for perspective extends to corporate chiefs with limited vision.
“In late June I listened to one public company chairman wax lyrical about the ease of doing business in the US. He was pumped after just returning from Woodstock for Capitalists in Omaha. (Warren Buffett’s annual briefing.) Then he started whinging about all the restrictions imposed on him in Australia.
“I pointed out that American society is in crisis, about 30,000 per annum are shot, American life expectancy is falling (deaths of despair from drugs spiralling higher) and in all probability the US is headed for civil war with political rhetoric similar to the 1850s.
“He went silent. Hmmm, probably hadn’t considered that as an economic issue before. And I hadn’t even raised the imminent US constitutional crisis.”
Mike Mangan is no Pollyanna. In the shorter term, he was ahead of local mainstream media writing about the falling copper price, often posts for the global economy and, in the longer term, he’s concerned about both the risk of societal and potential economic breakdown in the US and what he sees as China’s desire to make countries like ours economic satellites, dependent on Chinese goodwill.
As a stockbroker what else would one expect from Mangan? He’s got to sell Aussie shares which he runs at 2MG.
The sad truth, however, is that if we use the Mangan measure, Australia has under-performed horribly through this cycle versus the US and there is no end to that in sight:
That’s not to say that American society isn’t in crisis. I can’t say that one way or another. But what it does say is that Australia is going nowhere at all, and most assuredly backwards versus the US on the Mangan measure.
And now, as the Pascometer declares the Australian boom on, it is guaranteed to slow imminently, as well plod through more of the lost decade punctuated by bouts of worse. Thus it is reassuring to know that those investing elsewhere are right on the money.
Good to see the contrarian apparatus back in excellent working order.
Weeoo, weeoo, weeoo.
