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A barista for everyone: Why Australia's economy is looking far from bleak; Restaurants are buzzing, holiday bookings are soaring
Topic Started: 19 Dec 2013, 07:29 PM (1,695 Views)
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A barista for everyone : Why Australia's economy is looking far from bleak

December 19, 2013 - 3:09PM
Michael Pascoe

A common mistake has been to describe Tuesday’s MYEFO economic outlook as “bleak”. For the vast majority of Australians, it’s actually predicting an improvement on the present – and the present is pretty damned good for most of us, if we’re capable of a little perspective.

Treasurer Hockey is partly to blame for the misconception with his lingering political message about Labor trashing the economy, bankrupting the nation, etc, but mostly it’s a problem of confusing the threat of growing government debt with a “bleak” economy. In Australia’s case, the former is there to prevent the latter.

There’s a substantial body of opinion that Treasury’s mid-year economic and fiscal outlook assumptions have been tweaked to present a “bleaker” vision of the next few years, so that all the upside from this “Labor” starting point can be claimed by the Coalition. It’s the opposite of the idea that Treasury’s assumptions under Labor were on the Pollyanna side, so the outcomes inevitably were the downside for that government.

But even with taking the forecasts at face value and avoiding that argument, MYEFO means most of us should be better off.

Allowing for some gross simplification, the baseline is that real GDP growth remains around 2.5 per cent for the next 18 months and then picks up in the next two years to about “trend” of 3 per cent. So for a start, Treasury is saying the next 18 months should be more of the same – our annualised growth for the June and September quarters was 2.6 per cent. While acknowledging that many people are finding life difficult, especially and always the socially and educationally disadvantaged, and that the unemployment rate will drift up as jobs growth fails to keep pace with population growth, you’d still have to be from a very strange planet or with a mindset locked back in the pre-GFC bubble period to think Australia right now is “bleak”.

There are still more jobs being created than lost. The unemployment starts with a 5, wages and social welfare payments are still rising. Retailers are expecting (another) record Christmas. We’re still in the lower third of the OECD when it comes to paying tax yet we’re in the top half dozen when it comes to our social safety net.

The restaurants are buzzing, holiday bookings are soaring and there’s a barista for everyone and everyone for a barista.

And that’s just the starting point. As confirmed in yesterday’s RBA House of Representatives economics committee meeting, the MYEFO forecasts are Treasury catching up with what the Reserve Bank published on November 8.

That November 8 RBA forecast was based on the technical assumption that the Australian dollar would stay where it was on November 7 – 94.5 US cents. Thus the RBA forecast was based on an assumption that the RBA itself expected and hoped would be wrong. So with the Aussie around 88.5 US cents today, down 6 per cent, there’s already a considerable fundamental running the right way.

Where the 2.5 per cent growth comes from makes a difference to how people feel about it. During the first two stages of the commodities boom (the terms of trade jump and construction), there was plenty of whinging from people who (mistakenly) thought they were getting no benefit from the surge in Chinese demand, that only those rich miner bogans were having a good time at the expense of the rest of the nation. Less competitive parts of the economy did have to make room for the construction boom, but we all still benefitted, if only from the greater buying power of the stronger dollar and the tax cuts funded by mining profits.

No we’re about to see a switch the other way. Much of our GDP growth has depended on resources construction that’s going to taper in 2014 and then fall quickly. So if Treasury and the Treasurer say growth is going to remain steady for 18 months, there has to be a better performance kicking in from the broader economy – where most people work and play.

If you’re dependent on the activity that goes into building a new mine, the economic outlook for the next couple of years is worse than it has been. If you’re not in that game, Joe Hockey effectively is saying the outlook is better – but he can’t say that when he’s setting the scene for cuts in various politically sensitive parts of government spending; he still requires some of his “budget crisis” persona to sell it.

Read more: http://www.smh.com.au/business/comment-and-analysis/a-barista-for-everyone--why-australias-economy-is-looking-far-from-bleak-20131219-2zmnx.html
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peter fraser
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Don't tell Peter Schiff or Gerald Celente.
Any expressed market opinion is my own and is not to be taken as financial advice
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Trojan
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Alex Barton
19 Dec 2013, 07:29 PM
many people are finding life difficult, especially and always the socially and educationally disadvantaged
Now I know why some people here whinge so much :lol
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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goldbug
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I can just see it now, in some distant future park. A bronze statue of people sipping $5 coffees and a plaque describing how Australia became a great nation, built on the eating out habits of its founders.

Once a jolly single mum sat by a vacant billabong shop,
Under the shade of a stratco awning,
And she sang as she watched and waited till her coffee came,
You'll come a Waltzing Ma latte with me.

Waltzing Ma latte, Waltzing Ma latte,
You'll come a Waltzing Ma latte with me,
And she sang as she watched and waited till her coffee came
You'll come a Waltzing Ma latte with me.

Down came a builder to drink beside that bankrupt billabong shop
Up jumped the single mum and grabbed him with glee,
And she sang as she shoved her loins into that builders crotch
You'll come back home and be a meal ticket for me.

Waltzing with poverty, Waltzing with poverty,
This whole fucking nation is bankrupt it seems,
And the builder fell for the smell of her cheap perfume
Yes I'll come a Waltzing Ma latte with you.


Waltzing Ma latte, Waltzing Ma latte
I'll come a Waltzing Ma latte with you
And he sang as he watched and wondered how she'd be in bed
I'll come a Waltzing Ma latte with you.

Up drove the banker sitting in his mercedes benz
Down came the collection agents One Two Three
Whose that jolly builder you've got pressed against your loins
He's coming to bankruptsy court with me.

Waltzing Ma latte, Waltzing Ma latte,
You'll come a Waltzing Ma latte with me,
And they sang as they watched and waited till their coffees came
You'll come a Waltzing Ma latte with me.




Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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themoops
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Huge government debt is the new normal around the world. Let's party. :re:

Those motels in ulladulla, and the marios running cafes must be praising the rich Chinese for a wonderful year of selling out.

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stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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mel
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goldbug
20 Dec 2013, 07:09 AM
I can just see it now, in some distant future park. A bronze statue of people sipping $5 coffees and a plaque describing how Australia became a great nation, built on the eating out habits of its founders.

Once a jolly single mum sat by a vacant billabong shop,
Under the shade of a stratco awning,
And she sang as she watched and waited till her coffee came,
You'll come a Waltzing Ma latte with me.

Waltzing Ma latte, Waltzing Ma latte,
You'll come a Waltzing Ma latte with me,
And she sang as she watched and waited till her coffee came
You'll come a Waltzing Ma latte with me.

Down came a builder to drink beside that bankrupt billabong shop
Up jumped the single mum and grabbed him with glee,
And she sang as she shoved her loins into that builders crotch
You'll come back home and be a meal ticket for me.

Waltzing with poverty, Waltzing with poverty,
This whole fucking nation is bankrupt it seems,
And the builder fell for the smell of her cheap perfume
Yes I'll come a Waltzing Ma latte with you.


Waltzing Ma latte, Waltzing Ma latte
I'll come a Waltzing Ma latte with you
And he sang as he watched and wondered how she'd be in bed
I'll come a Waltzing Ma latte with you.

Up drove the banker sitting in his mercedes benz
Down came the collection agents One Two Three
Whose that jolly builder you've got pressed against your loins
He's coming to bankruptsy court with me.

Waltzing Ma latte, Waltzing Ma latte,
You'll come a Waltzing Ma latte with me,
And they sang as they watched and waited till their coffees came
You'll come a Waltzing Ma latte with me.




How many bongs did you smoke before you wrote that?
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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peter fraser
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mel
20 Dec 2013, 09:38 AM
How many bongs did you smoke before you wrote that?
Don't be harsh Mel - it was his finest work.
Any expressed market opinion is my own and is not to be taken as financial advice
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mel
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peter fraser
20 Dec 2013, 10:02 AM
Don't be harsh Mel - it was his finest work.
:lol :lol :lol

Peter, I think his finest hour was a couple of weeks ago when he told everybody that gold has a yield.

merry xmas by the way
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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goldbug
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mel
20 Dec 2013, 09:38 AM
How many bongs did you smoke before you wrote that?
You don't smoke bongs Mel, you "pull" bongs.
You always seem to get it wrong don't you. That increasingly gives me the impression you have spent your life in a sheltered workshop, and not as a staffer.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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mel
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goldbug
20 Dec 2013, 01:30 PM
You don't smoke bongs Mel, you "pull" bongs.
Thanks for the clarification goldbug. How's your gold doing today?
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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