[foxdemon]

http://au.finance.yahoo.com/news/resour ... -over.html

The Minister for Resources and Energy, Martin Ferguson, has declared the end of the mining boom, following the shelving of BHP Billiton’s Olympic Dam expansion in South Australia.

“You've got to understand, the resources boom is over,” Mr Ferguson told ABC radio this morning.


......


The Minister for Resources and Energy, Martin Ferguson, has declared the end of the mining boom, following the shelving of BHP Billiton’s Olympic Dam expansion in South Australia.

“You've got to understand, the resources boom is over,” Mr Ferguson told ABC radio this morning.

Hmm, could the time for gloating over US and European woes be coming to an end?



http://au.finance.yahoo.com/news/grave- ... nomy-.html

Ever since investors got jittery about a Chinese hard landing, global analysts starting predicting that Australia was in for a rude shift in its fortunes.

In April, Dylan Grice from major European bank Societe Generale wrote that Australia is "a credit bubble built on a commodity market built on an even bigger Chinese credit bubble."

Grice summed up his beliefs claiming that "Australia looks like leveraged leverage, a CDO squared".

Seems the good times are coming to an end for those with the social status to have benifited from the long boom. Tough for the poor old Aboriginals and other marginalied groups in Australian society who were left out, eh? No problem, we'll all be unity in poverty soon.

Perhaps Australia's horeshit elites ought consider training for new careers, like rickshaw driver for Chinese tourists?

[Swagman]

.........the (horseshit) Govt is just posturing for another budget deficit that's all

[Igor Antunov]

I don't think so. The resources aren't going to stop flowing outwards any time soon. Growth could slow, that's about it.

[Swagman]

That's the point.......posturing

Slowing growth -> less tax revenues to pay for pork barrells -> surplus unattainable -> excuses needed -> it's the end of the boom's fault.................

[AVT]

If the government factored in a never ending mining boom (ie rapidly expanding) to justify their flimsy surplus then they are incompetent.

The mining industry cannot maintain the level of growth it has been going through just by shear economic constraint (workforce, wages etc), it will still grow (and be way ahead of any other part of the economy) but the growth will be more manageable.

Also anyone who has been to Perth will know it is not just the 'elites' that have and are benefitting, once meanial trades like diesel mechanics, electricians etc are now paid very well, it is not so much a class divide but rather a divide between those that were lucky enough to work in a mining exposed job vs the rest.

[foxdemon]

http://www.bigpondmoney.com.au/rba-read ... utch-smack

RBA readies for a double Dutch smack
Updated: 6:09:50 PM, Tuesday October 02, 2012

By Robert Gottliebsen
First published 2 Oct in Business Spectator

The RBA has made the right call with Australia needing to batten down the hatches for a double dose of the dreaded Dutch disease as well as a potential unemployment explosion.
Behind the Reserve Bank commentary that went with the lower interest rates decision is a horrible truth, Australia is set to get a double dose of the the so called 'Dutch disease'.

And, as I will explain below, unemployment is set to rise sharply.

In my view it would have been irresponsible for the Reserve Bank board not to cut rates. The good news is that their commentary indicates they are on top if what is really happening. They will need to do cut rates again this year and keep going in 2013.

Unfortunately, while lower rates will boost house prices and kindle some extra home building activity it will not enable us to avoid a double dose of the Dutch disease.

The Dutch disease describes what happened to Holland after it discovered natural gas in the 1950s. The economic Dutch disease is caused by the higher currency that comes with the exploitation of natural resources which creates a decline in the employment-creating non-resource economy lead by manufacturing, tourism, education, etc.

Australia is being hit hard by the conventional Dutch disease. Our double dose is caused by the sudden decline in our natural resource prices which is not causing a fall in the currency as would normally happen. As a result our miners are also being affected by the Dutch Disease – hence the double dose.

Lower interest rates will help lower the currency but the LNG and other mineral construction contracts are so big that money will keep following in for a year or two so artificially boosting the currency. Around 2014-15 the investment will come to a sudden halt because most unstarted new projects have now been cancelled thanks to lower prices, labour costs boosted by industrial relations rules, the high currency and the carbon tax.

In the non-mining economy the effect of the Dutch disease on unemployment is being temporarily hidden.

Thanks to the work of Brian Redican of Macquarie Bank we now understand why our official unemployment has not increased when clearly there have been enormous retrenchments (see Invisible cuts to the middle class).

The Reserve Bank has effectively recognised this work and pointed to weakness in the labour market that has not come out with the official figures. The hidden unemployment is masked partly because of the way the statistician asks the questions in his labour surveys. Morgan Research is picking up the trends isolated by Redican and there has been a sudden jump in people unemployed in the Morgan data.


In time this will boost the official unemployment figures especially as lower interest rates boost the fortunes of those with mortgages but ravage the returns of those relying on investments. Many mortgagees are frightened of their jobs so are lifting their savings. It is the retirees who are the spenders and they are being hit.

[GandalfTheGrey]

If the government factored in a never ending mining boom (ie rapidly expanding) to justify their flimsy surplus then they are incompetent.

If anyone should be criticised for relyng too heavilly on the mining boom its the Howard government - neglecting the skills shortages, training, education etc. Furthermore they were happy to ride the boom without looking at ways of maximising the benefits for the Australian public. The labor government at least tried to use more of the profits for Australia's benefit, instead of being content with 80%+ of the profits going offshore.

Also, regarding the boom, Igor is right, anyone who sees the massive urbanisation of Chinese society that is happening could not possibly say there will be an imminent bust or significant slowdown. The huge urban growth that is fueling the demand for infrastructure raw materials is not going to end in the forseeable future. The mining "boom" is to all intents and purposes a permanent state of affairs for us. The dutch syndrome that this creates will simply have to be lived with. However I don't think it would be nearly as much of a problem for our economy if the wealth from the mining could be better distributed to the Australian public. As it stands we are getting all the detriments from the boom, with not nearly enough of the benefits.

[Swagman]

As it stands we are getting all the detriments from the boom, with not nearly enough of the benefits.

Investment pouring in, export income, income tax revenues, direct and indirect employment, not benefits enough for you GTG?

[foxdemon]

http://www.bigpondmoney.com.au/invisibl ... ddle-class

http://www.bigpondmoney.com.au/marching ... ome-exiles

A pair of articles tracking the fate of the Australian middle class. Niether article links the rising unemployment among white collar workers, but the imbalance between the mining sector and the rest of the economy is a significant driving force behind this issue. The mining sector pushes up the dollar and that hurts other areas of the economy.

The second article concludes that ex-white collar voters will turn away from the Liberals and toward Labor, as their new circumstances will make income redistribution, means tests, etc, more desirable for them.

[GandalfTheGrey]

no they are not benefit enough for me Swag - as I have explained several times before, and you continually ignore:

export income: over 80% of mining companies are foreign owned. Thus the vast majority of the export profits go to overseas shareholders - and is never seen by the Australian public. This in itself shouldn't necessarily be such a bad thing as there should be other flow-on benefits to the Australian economy for such a big profit maker. However these are somewhat negated by the following:

income tax revenues: the mining sector gets massive tax breaks, such that they pay one of the lowest rates of income tax of any industry in Australia - around 14% of the theoretical maximum 30%

direct and indirect employment: the mining industry in Australia stands out for how few people they employ. Direct employment contributes around 2% of total employment. Moreover, indirect employment is a misnomer. Basically the industry uses a set of 'industry multipliers' to calculate the percentage of indirect employment. But here's the catch: the propaganda about the massive indirect employment in mining relies on the industry multipliers being applied to mining, but not any other industry. The reality is, all industries can boast massive indirect employment - and if all multipliers were applied to all industries, the percentage of mining would remain about the same. Long story short, mining employs comparatively few whichever way you want to measure it.

The mining boom creates the Dutch syndrome, we know that and we have to try and live with it. But it might be an acceptable price to pay if we could maximise the benefits of such a boom - particularly through an efficient tax system. Howard was happy to ignore this, and even more dangerously didn't have the foresight to see that other industries needed some long term investment to manage the detriments of the mining boom. Rudd saw the missed potential of the mining profits and attempted to make a fairer deal for the Australian public - and got crucified for it.

[foxdemon]

http://www.abc.net.au/news/2012-10-11/u ... n=business


An article on rising unemployment, from the ABC. Check out the graph at the end of the article. Shows we are much better off that 10 years ago.

Should unemployment jump up sharply, watch the housing market for signs of collapsing prices.

So far we are just seeing the economy treading water while waiting on events overseas to take their course. A rather reactive approach, I'd say. Could be we need to look more closely into reinventing our economy rather than fly a holding pattern waiting for the world to go back to the way it used to be?

[AVT]

http://www.abc.net.au/news/2012-10-11/unemployment-figures-september/4307330?section=business


An article on rising unemployment, from the ABC. Check out the graph at the end of the article. Shows we are much better off that 10 years ago.

Should unemployment jump up sharply, watch the housing market for signs of collapsing prices.

So far we are just seeing the economy treading water while waiting on events overseas to take their course. A rather reactive approach, I'd say. Could be we need to look more closely into reinventing our economy rather than fly a holding pattern waiting for the world to go back to the way it used to be?

In a globalised economy we are always going to be held hostage to large economic powers, in what way re-invent our economy? Our wages are too high to support low-tech mass manufacturing (and who would want to work those menial jobs anyway), our service industry is already well developed and that leaves our resources which are plentiful and so the cost of extraction is reasonably low. The only way to divorce ourselves from international shocks would be to move to the self-sufficient model, just ask North Korea how that is going.

[foxdemon]

In a globalised economy we are always going to be held hostage to large economic powers, in what way re-invent our economy? Our wages are too high to support low-tech mass manufacturing (and who would want to work those menial jobs anyway), our service industry is already well developed and that leaves our resources which are plentiful and so the cost of extraction is reasonably low. The only way to divorce ourselves from international shocks would be to move to the self-sufficient model, just ask North Korea how that is going.

We need to reconsider what ideas we hold about what consititues the economy. You mention services, manufacturing and resources. Can we look at it another way, apart from the N Korean example so favouribly presented by those looking for a convenient foil.

Divorcing ourselves from international shocks isn't what I'm getting at. The current model is dying and we need new ideas.