you don't get it, and it's why you are constantly disappointed.
capex has increased more than 250% since 2005. even if 50% of that is lost, we are still surging ahead with a huge back log of money to be spent, and it won't be the catalyst for the crash you keep holding out for.
I am the love child of Tony Abbott and Pauline Hanson
I agree with Perthite. Regardless of how high mining CAPEX has gone, losing half of it would be very bad - especially since it is clear that at this point in time, nothing else is rising to replace it.
Forward-looking CAPEX released yesterday was woeful. There is no exaggeration in that statement - it was the weakest since the time leading into the severe 1990 recession. That's not to say that recession is a given but it does give a pretty clear indication of the general state of things. Mining companies expect their spending to soon plunge sharply and nobody else is giving any indication that they are going to chip in anything to help any time soon.
The main hope seems to be that hyper-low interest rates will trigger a huge wave of spending, kick-starting everything off. Thus far, the main effect seems to have been the resumption of house price inflation. There has been some building stimulus arising from it, but not nearly enough.
If the private sector will not currently invest for economic reasons and government will not currently invest for political and ideological reasons then about the only thing left to do is drive monetary policy to the floor. If Houses and Holes is correct, we are not far from the floor now. If b_b is correct, then we should be able to drive one more burst of growth out of it - but I reckon it'll be the last.
In the earlier days of the neo-liberal era, Paul Keating remarked that governments were now mostly concerned with steering the boat rather than rowing the boat. I think that has just about come full-circle - they had better start dusting off the oars.
I agree with Perthite. Regardless of how high mining CAPEX has gone, losing half of it would be very bad - especially since it is clear that at this point in time, nothing else is rising to replace it.
Forward-looking CAPEX released yesterday was woeful. There is no exaggeration in that statement - it was the weakest since the time leading into the severe 1990 recession. That's not to say that recession is a given but it does give a pretty clear indication of the general state of things. Mining companies expect their spending to soon plunge sharply and nobody else is giving any indication that they are going to chip in anything to help any time soon.
The main hope seems to be that hyper-low interest rates will trigger a huge wave of spending, kick-starting everything off. Thus far, the main effect seems to have been the resumption of house price inflation. There has been some building stimulus arising from it, but not nearly enough.
If the private sector will not currently invest for economic reasons and government will not currently invest for political and ideological reasons then about the only thing left to do is drive monetary policy to the floor. If Houses and Holes is correct, we are not far from the floor now. If b_b is correct, then we should be able to drive one more burst of growth out of it - but I reckon it'll be the last.
In the earlier days of the neo-liberal era, Paul Keating remarked that governments were now mostly concerned with steering the boat rather than rowing the boat. I think that has just about come full-circle - they had better start dusting off the oars.
I agree with leftyand perthite on this. A fall in capex means a fall in "I" in the GDP identity. This will create a drag on GDP and therefor jobs. It will have a similar effect as austerity.
Having said that I'm not combined it is bad for house prices. The Rba will keep pushing rates lower and we will have a housing cycle. And the multiplier from a housing cycle is much much higher than building train lines in the desert. I also think yesterday's fad capes numbers will prove to be understated.
Agree b_b. My own personal feelings aside, I don't see why we can't have another housing boom, though it may prove shorter-lived.
I maintain that (detatched) housing is generally unaffordable to those without either large incomes or equity to use - but if we can push mortgage rates to say, 3% then affordability should improve enough for another solid wave of first timer buying - at least until swiftly rising prices driven by investors nullify the affordability gains made by super-low interest rates.
Whether first timers will keep partying along with investors and upgraders might be an interesting question for other reasons as well. The signs are for the likelyhood of difficult times close at hand - and the worst impact of recessions/economic downturns tends to fall disproportionately upon the low-skilled and the young. The cohort who own the bulk of the investment property are less vulnerable. That's not to say they are immune but rather that the current main drivers of house price growth may continue to operate even if unemployment rises.
I really do think it unwise though, to engineer a situation where the average income household carries a million dollar mortgage.
Epic fail. Why is the government so desperate for Mining CAPEX to be replaced by other sources.
Because it matters.
Seriously ???????
No-one is going to back you up. Lose 50% and it does not matter?? lmao.
f*ck off where did i say "it doesn't matter"?
you are like a child unable to handle subtleties of situations.
b_b
30 Aug 2013, 07:33 AM
I agree with leftyand perthite on this. A fall in capex means a fall in "I" in the GDP identity. This will create a drag on GDP and therefor jobs. It will have a similar effect as austerity.
Having said that I'm not combined it is bad for house prices. The Rba will keep pushing rates lower and we will have a housing cycle. And the multiplier from a housing cycle is much much higher than building train lines in the desert. I also think yesterday's fad capes numbers will prove to be understated.
Interesting times.
I guess we will just see won't we.
i'm book marking this for future reference when lower capex fails to produce the housing crash you all expect.
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