What does Martin Place think of the Aussie economy?

Rogue financier says:

07:47am | 11/10/10

Yes, that wasn’t a very scientific study. Asking a few receptionists and a property developer about the economy is about as useful as asking a plumber about that red sore on your ankle.

Australia is going well at the moment. However we are reliant on other countries.

We are reliant on countries that have gone into massive debt to keep themselves inflated. Some countries won’t be able to bail themselves out again. Many of these countries have introduced austerity measures which will hurt their lowest citizens and reduce their spending capacity. The end result of this will be a collapse in spending in the rest of their economy.

The domino effect will hit us in a few years.

We will realise that a two-speed economy will not keep us aflost because the miners won’t be selling stuff to China because China can’t sell their stuff to the economies that are going under.

GFC v2.0 will make version 1.0 seem like a small hiccup.

Dash says:

08:16am | 11/10/10

The biggest risk facing the Australian economy is inflation. And we have a government who for some reason is looking to add fuel to the fire with stupid policies. The Murray Darling water “solution” has the potential to send fresh food prices upwards and to destroy a large section of communities along the river. But the Carbon price (tax, call it what you like) will put significant pressure on power and utility prices and have an indirect impact on nearly all of our cost of living expenses. And it’s not going to make even a tiny blip on the state of the worlds climate! It’s dumb politics and dumb economics. The governments additional 3% superannuation contribution will also be a cost to business passed onto the consumer. Increased inflation will slow demand and lead to increased unemployment. Some much for the caring ALPs IR policies!

The government is busy setting up committees to try to avoid the blame when all of this goes pear shaped. They will run a mile when your power bill goes through the roof. Has anyone noticed that the ALP is no longer making noises about Grocery Choice or Fuel watch or promising you Cheaper Better Childcare or More affordable Housing. They’ve moved away from those undelivered promises and on to the next set of policies they think will deliver cheap political points, without a view to the economic and social impacts. Good help the economy with this pack of boof heads in charge!

Richard he Lionheart says:

09:48am | 11/10/10

Ceasar Calligula would have loved to tax the air we breath. Now Jools has done it with the forthcoming carbon tax. It’s taken 2000 years but finally the politicians have the perfect tax which can always increase but never go down. The awful thing for Australians is that it will not make one iota of difference to our climate without the main polluters getting on board. And even then???

Shane From Melbourne says:

10:02am | 11/10/10

The new flavor of the month in US politics is China bashing. Apparently your [Democrat] or [Republican] opponent is responsible for all the jobs going overseas to China. Now if Congress passes punitive sanctions against China for it’s artificial manipulation of the Yuan, then yes, the Australian economy will tank and tank quite bad….

Richard says:

02:47pm | 11/10/10

A while ago on twitter there was a popular TT along the lines of #biggestliethatworked. Well now as an encore for your enjoyment ladies and gentlemen, I present to you THE 5 BIGGEST LIES (about the economy) THAT WORKED!

#5 Get a good education and a good job and your super will enable you to have a long and comfy retirement.
Works in theory, but in practice, when you have a demographic wave of retirees (like we have with the baby boomers from 2010 onwards), the predominance of sellers (i.e. mum & pop cashing in on their investments) over buyers (gen y kids with jobs and the inclination to save) causes asset prices to plunge, meaning that the nice fat nest egg you thought was worth $500k might only be worth $200k in the final wash up.

#4 Low interest rates are beneficial for the average middle class Joe.
But as we saw above, with a huge increase of the amount of non-working citizens trying to live off their savings, low-interest rates are a crippling handicap. It forces them to take excessive risks in seeking a fair rate of return. The main beneficiaries of high interest rates are American, Japanese and European governments, who are so hocked up to the eyeballs in debt that if their interest rates ever rise above 0.1% ever again they will be forced to default.

#3 Cash is the safest investment, like Money in the Bank.
But in order to deal with all their debts, governments around the world are wilfully destroying the value of paper money (by printing more in the form of Quantitative Easing) as fast as they can. Which in effect means that you’re safer off being in just about any other asset class apart from cash to preserve your purchasing power.

#2 Gold has no intrinsic value, its just a pretty metal, so therefore we don’t need to back our currency with the gold standard.
This is so backwards, because in reality its paper money that has no intrinsic value, its just bits of paper or plastic with the reserve bank’s logo on it, which can be printed up into infinity at basically zero cost. Gold on the other hand (and silver) has been used as a store of wealth since basically time began, is finite in supply and can only be mined at great cost and effort. If you look through history and try to find a fiat currency that has ever held its value for longer than 40 years, you will fail.

#5 Governments HAD to bail out the big banks otherwise the financial system would have collapsed.
Straight wrong. Capitalism is designed to work so long as there are the twin motivators of greed and fear. If you take fear out of equation (i.e. the fear of going bankrupt) by making it clear that the government will stump up your losses with a bailout if you get in trouble, what your left with is not capitalism, but Casino Gulag Kleptocracy.
There are other smaller, leaner, more efficient banks and financial institutions that could’ve stepped in and increased their market share if the big boys went down, but all the GS/JPM old boys that hold office in Washington just couldn’t bear to let their former colleagues get flushed down the toilet, so they raided the treasury and bribed congress to pass what future generations will view as the greatest heist in history.

Ray says:

02:50pm | 11/10/10

Without doubt the world economy is on a knife edge.  Prospects don’t look good and if things turn really ugly then Australia will suffer as well.  To date however, we are doing better than any other advanced economy in terms of growth, employment and general standard of living. It is no accident.  The reforms of Hawke and Keating, the surpluses of Howard, Costello and the stimulus measures all brought this result about.  I am always amazed at the bleating about interest rates.  Along with the stimulus our capacity to lower interest rates during the GFC was of enormous benefit.  The low interest rate regime - particulalry in the US - was a significant cause of the GFC. Certainly in respect of housing where people got mortgages at next to nothing and when things got tight couldn’t afford them.  Having a higher interest rate is a good thing - it reminds people there is a cost to money.
A more scientific survey might have allowed your article to carry more weight and have some basis in fact Leo.

Gregg says:

03:45pm | 11/10/10

I reckon your survey was pretty close to the truth Leo, like think of when you’re being carpeted for not performing and if the carpet has already been reposessed you’ll sure be thankful for some goodly matts when taking the tumble!
” Matt Burgess, 32, Property development and construction industry
“Well in a year’s time we’ll still be a five years behind where we should be with this Labor Government. But that being said, I think we all look more to the Asian markets now that the United States. Look at the US Dollar, America is really losing its power and I think our markets are thinking more locally.”

Matt, 28, works at Macquarie Bank

“Yea I best not say what I think will happen in the next year, but needless to say I don’t think it will be great.”
And without being sexist, even the women reckon we’re doing better than Ireland and the Xmas party mightn’t be such a banging up affair this year, and with those insurance party throwers in the slammer and DJ tossing in the towell, you could say fear has won over greed!

And then Silvia, bless her heart for fancy someone so young being prepared to learn from her elders!
Silvia Barros, 21, receptionist in finance
“I think we are going to have another economic crisis this time next year. And this time it will be really, really bad. That’s what my uncle reckons anyway.”
Sort of a Matt squared!

And yep, what with a green government wanting everything to slide backwards to save the environment, Grand Uncle Bobby might even get his wish.

With a government that has spent so much on bugger all but school halls and now want to spend even more on cables and be considering the spending of more on fast trains there’ll be bugger all passengers for and yet we’ve still done nothing about water reliability and will not now if it keeps raining for a few years that may postpone the end of food producing farmers who the government is also considering ripping water off while they also want to tax carbon that we will produce less of as we are not replacing power stations and suffering blackouts because the other word for Nuclear is NIMBY TYVM! we’re sure on a slippery slope into a great cesspool.

The Wests woes are those smartier than smartypants G8 or how many gurus there were that invented the WTO level playing field and it’s for sure while there is fuel to ship material/goods internationally, manufacturing will occur where people might be lucky to earn $15/month as against $15/hour.
All that crapp about get everybody a university degree so as they can have good jobs is just so much crapp and it’ll be hitting the fan before too long.