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Ashes to economy: why Australia may be on the brink of a new collapse; Australia emerged from the global recession largely unscathed, but now bears the hallmarks of an industrial base hollowed out
Topic Started: 19 Aug 2013, 09:46 PM (2,422 Views)
Shadow
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Evil Mouzealot Specufestor

themoops
19 Aug 2013, 10:57 PM
If there is/was no bubble, then why was the First Home Vendor's Boost necessary? Why are the rich Chinese necessary? Why are the lowest interest rates for 50 years necessary? All in order to prop it up.

Douche.
Why are bears unable to debate without hurling insults? Why so angry?

First Home Vendors Boosts are not necessary - they haven't been around for years. The market is rising without them.

Rich Chinese are not necessary - they are a very small part of the market.

Australian interest rates are the highest in the developed world right now, although they are consistent with Australian rates over the past century. For most of the past 110 years, rates have been around current levels. The high interest rate period around the 1980s were an anomaly cause by high inflation. Inflation is contained now so rates can go back down to their historic norms.
Edited by Shadow, 19 Aug 2013, 11:05 PM.
1 - Debunking Demographia. Demographia Survey Debunked. Australian housing is not particularly unaffordable by global standards.
2 - USA, Ireland, UK, Spain and Japan Property Bubbles versus Australia. All property bubbles had one thing in common...
3 - Banks can't margin call on residential property unless borrower defaults, because residential property loans regulated by NCCP Act 2009.
4 - Housing is second highest taxed sector of Australian Economy. Renters subsidised by high taxes incurred by homeowners.
5 - Epic Fail! Steve Keen's Bad Calls and Predictions.
6 - Australian household formation rate faster than population growth rate since 1960s = ongoing improvement in housing affordability.
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mango66
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Shadow
19 Aug 2013, 10:52 PM
I know you're upset, but no need for name calling.

What are the key similarities you see between Ireland pre-crash and Australia today?

A key difference I see is that Ireland had a huge residential construction boom with construction accounting for 25% of Irish GDP and 20% of Irish jobs at the peak.

http://www.economicshelp.org/blog/7344/economics/irish-economy-summary/
So you accept the term"employment bubble" then. Thats great Shadow, you're really starting to make some ground. Theres hope for you yet. K Town is learning the concept slowly as well.
Shadow
19 Aug 2013, 11:02 PM
. Inflation is contained now
Comedy
Edited by mango66, 19 Aug 2013, 11:10 PM.
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Shadow
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Evil Mouzealot Specufestor

mango66
19 Aug 2013, 11:09 PM
So you accept the term"employment bubble" then. Thats great Shadow, you're really starting to make some ground. Theres hope for you yet. K Town is learning the concept slowly as well.
I can see how a term like that might apply to Ireland, where a property bubble and residential construction boom resulted in 20% of Irish people being employed in (mainly residential) construction, and 25% of Irish GDP being related to construction. But what are the key similarities you see between that Irish environment, and Australia today?

Australia has had about 10% employment in construction for decades - there has been no construction boom, it has been pretty steady for 50 years...

Posted Image
Edited by Shadow, 19 Aug 2013, 11:19 PM.
1 - Debunking Demographia. Demographia Survey Debunked. Australian housing is not particularly unaffordable by global standards.
2 - USA, Ireland, UK, Spain and Japan Property Bubbles versus Australia. All property bubbles had one thing in common...
3 - Banks can't margin call on residential property unless borrower defaults, because residential property loans regulated by NCCP Act 2009.
4 - Housing is second highest taxed sector of Australian Economy. Renters subsidised by high taxes incurred by homeowners.
5 - Epic Fail! Steve Keen's Bad Calls and Predictions.
6 - Australian household formation rate faster than population growth rate since 1960s = ongoing improvement in housing affordability.
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mango66
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Australia has seen 13 years of relative low unemployment but if you look back at the 11% it reached in the mid nineties you see house prices remained fairly flat until 2001 when unemployment steadily decreased. House prices rose as unemployment continued to decrease throughout the early 2000's. Look i dont think there are many similarities between Ireland and Australia but If we see a return to 10% + levels of unemployment i think it will certainly have a dramatic effect on house prices. Thats given you believe the ABS unemployment figures and i certainly dont. I personally see it much higher than they publish.
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Veritas
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Shadow
19 Aug 2013, 11:11 PM
I can see how a term like that might apply to Ireland, where a property bubble and residential construction boom resulted in 20% of Irish people being employed in (mainly residential) construction, and 25% of Irish GDP being related to construction. But what are the key similarities you see between that Irish environment, and Australia today?

Australia has had about 10% employment in construction for decades - there has been no construction boom, it has been pretty steady for 50 years...

Posted Image
Eh...the author explains quite clearly the similarity: in the case of Ireland construction, in the case of Australia all things China. In each case, the "wages bubble" that resulted blew the bubble. Remove the wages and you prick the bubble.

But then, I have always said that I will be a property bear until Australia comes through a proper recession (not the post GFC pussycat) unscathed.

Until then, Much to the bulls chagrin, I cant be proved wrong.

Quote:
 
As a result, Australia was the Ireland of the antipodes. Both countries put in place supply-side reforms designed to boost growth and both had access to a huge market. Ireland's 20 years of expansion can be neatly divided into two phases: the first decade in which growth was the result of getting the fundamentals right at a time when multinationals were looking for a European base; and a bubble decade of wild property speculation and irresponsible lending.

Before looking at why Australia could go the same way, it is worth looking at the way in which the global economy has evolved over the past five years. In the days before the financial crisis, there were three groups of countries. In the first category were the workshop nations, the ones that produced the cars, the clothes, the machine tools, the TV sets and the toys. Low-cost countries such as China fell into this category, but so did high-cost countries such as Germany.

In the second category were the debtor nations. These countries bought all the goods churned out by the workshop nations, running up big current account deficits in the process. The United States and the United Kingdom were prime examples of debtor nations: levels of private debt exploded to allow consumers to live beyond their means.

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Shadow
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Evil Mouzealot Specufestor

Veritas
20 Aug 2013, 12:44 AM
I will be a property bear until Australia comes through a proper recession (not the post GFC pussycat) unscathed.

Until then, Much to the bulls chagrin, I cant be proved wrong.
If house prices double in the next seven years, then we have a recession and 40% crash (leaving prices still higher than today), you will claim you were right.

Won't do you much good, being 'right' in that scenario.
Veritas
20 Aug 2013, 12:44 AM
in the case of Australia all things China. In each case, the "wages bubble" that resulted blew the bubble. Remove the wages and you prick the bubble

I thought your position was that easy credit blew 'The Bubble'?
Edited by Shadow, 20 Aug 2013, 08:26 AM.
1 - Debunking Demographia. Demographia Survey Debunked. Australian housing is not particularly unaffordable by global standards.
2 - USA, Ireland, UK, Spain and Japan Property Bubbles versus Australia. All property bubbles had one thing in common...
3 - Banks can't margin call on residential property unless borrower defaults, because residential property loans regulated by NCCP Act 2009.
4 - Housing is second highest taxed sector of Australian Economy. Renters subsidised by high taxes incurred by homeowners.
5 - Epic Fail! Steve Keen's Bad Calls and Predictions.
6 - Australian household formation rate faster than population growth rate since 1960s = ongoing improvement in housing affordability.
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mango66
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Shadow
20 Aug 2013, 08:23 AM
If house prices double in the next seven years, then we have a recession and 40% crash (leaving prices still higher than today), you will claim you were right.

Won't do you much good, being 'right' in that scenario.
How can house prices double in the next 7 years.? Wage growth would be out of control. The workers at Holden would be fucked. :to:
Do you think this is achievable.?
If they do double any gains above todays prices will be lost as well as a 40-50% crash. Bring it on.
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K-town
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mango66
19 Aug 2013, 11:09 PM
So you accept the term"employment bubble" then. Thats great Shadow, you're really starting to make some ground. Theres hope for you yet. K Town is learning the concept slowly as well.

Awwww, posting about me in a thread I'm not involved in. Must be thinking about me. Not grinding your teeth are you?
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Frank Castle
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Business As Usual

K-town
20 Aug 2013, 09:00 AM
Awwww, posting about me in a thread I'm not involved in. Must be thinking about me. Not grinding your teeth are you?...............
and furiously wanking at the same time
The forum is a better place with the forum fuckwits and their spank socks on ignore
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Ned Flanders
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Shadow
19 Aug 2013, 10:40 PM
What is an employment bubble?
A temporary increase in employment as a result of a temporary increase in spending.
Quote:
 
What does it look like?
What do you mean by "What does it look like?". It looks like what we have now.
Quote:
 
How have they burst in other countries

When the temporary increase in spending ends.
Quote:
 
... any examples?
Sure, hundreds, but nationwide employment bubbles are relatively rare. The smallest of employment bubbles lasts a few months to a year, and are usually created by either an event; Olympics, Grand Prix, etc, or the proximity of some kind of temporary exogenous workforce, such as a military force or a construction site. Larger employment bubbles form in the proximity of permanent military bases or large scale construction projects, and still larger employment bubbles are what I call 'bread and circus' employment bubbles, where a dying Empire spends the treasury to keep the citizens of the Empire distracted while the empire crumbles. There are also employment bubbles created by fraud and debt.

Does that answer your question?
Edited by Ned Flanders, 20 Aug 2013, 09:01 PM.
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