If the boom is over why then did mining investment increase in the June quarter by 6.5% to equal our all time high of investment set in 2012. We reversed the previous losses over the last 9 months in just 3 months as economic conditions have changed. Resource prices have remained at high levels, demand is increasing strongly. For the boom to be over you would think we would sell less of those items, not increase iron ore exports by 33% over the last 12 months, that is a boom. With demand increasing and prices rising more projects can be expected in the future.
The problem the bears have is you always hitch your boat to the negativity of the moment. Last few years it was Europe, The the US debt issue, US sequestration and China. All proved to be wrong. Chinese growth is accelerating as I said it would, US growth is continuing to increase as I said it would. US growth is now 2.6% with previous quarters being revised up. Everything the bears have clung to in recent years has failed.
Perhaps it would be easier to look at events the bears got right...........I can't think of any. To make predictions you need credibility or past results in your favour which the bears have none or little of.
You are wrong and you will see it over the next few years just like all previous events.
The biggest event for the world economy at present is Syria, that situation could easily get out of hand.
How is your prediction for that India boom looking?
Looks like the Liberals will win the election just in time to see revenue spike, return to massive surpluses and pay down labours debt. Then in 10 years Labour will be back in to spend it all again. Hopefully this time the Liberals lock away much of the revenue in a Sovereign wealth fund that cannot be raided easily.
According to Perthite the sky is falling and we are in recession. He should sell some of what he is smoking, would help save for a house deposit much quicker.
People are so caught up on the negative risk side if a drop in what was a short term super investment cycle which did not at the end of the day deliver all that much back to the Australian economy of itself,the real benefit is the investment in long term production and infrastructure with its own benefits. In WA house prices are only now returning to pre 2007 levels ie pre -mining investment boom. The rise in mining investment coincided with dramatic fall offs in home construction and all the negatives we have witnessed for tourism with the high dollar. These had country wide negative outcomes,that led to falling retail (GST) falling real estate transactions (stamp duty) and falling home construction and land sales.
At the moment we are seeing improvements in most of the above and on top of that we are witnessing this huge windfall from mining exports, all of these contribute more to the local economy than massive construction projects in the middle of nowhere managed by large US corporations and staffed from huge numbers of 457s.
Over the past two years we have supposedly been in a construction boom but we have witnessed record numbers of building companies failing. The mining investment boom came with a good few negatives
It is good for the economy that we are returning to a more normal pre 2007 Australian economy. The very good news is that we have a nice income boost from this iron ore export boom.
There is also a very real positive risk side if mining companies are encouraged by our lower dollar and increased profits from iron-ore to invest again in further project. A few recent reports have suggested this may be on the cards. If this happens we could be in serious trouble finding people to staff these projects and cities like Perth will face a real squeeze trying to support more projects plus a normal Australian home building economy.
The next few years will be interesting for sure.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
well he could always use the time tested bear reasoning that his prediction is correct, the timing is just delayed?
Just making sure that Mike remembers there is a possibility of downside risks. I must admit I am very surprised that the Indian rupee has collapsed given how cheap it was to start with. Currencies are mostly a complete mystery to me.
Just making sure that Mike remembers there is a possibility of downside risks. I must admit I am very surprised that the Indian rupee has collapsed given how cheap it was to start with. Currencies are mostly a complete mystery to me.
I think Brazil is more interesting to watch. (Cue Mel ...)
But seriously - it is
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
I think the money coming into federal government coffers from the revenue phase of the boom will likely be little more than a pale shadow of the tax revenue that was created by the great surge in economic activity from the construction phase which has now peaked. Private spending is barely growing now - start reducing the amount spent on mining investment and I seriously doubt that earning from flogging dirt will cover it. It is building new infrastructure for digging dirt that makes Australians wealthy from our vast mineral resources - actually selling the dirt appears to do more to make foreigners wealthy.
Seriously Mike - you're still trying to sell the notion of a boom that cannot end. We've had booms in the past - not as big as this one admittedly - that did not continue once we transitioned to the production phase. The boom ends when it ends, otherwise Australia would be in a permanent boom. I think you might be the one holding the bong on this issue.
If the boom is over why then did mining investment increase in the June quarter by 6.5% to equal our all time high of investment set in 2012. We reversed the previous losses over the last 9 months in just 3 months as economic conditions have changed. Resource prices have remained at high levels, demand is increasing strongly. For the boom to be over you would think we would sell less of those items, not increase iron ore exports by 33% over the last 12 months, that is a boom. With demand increasing and prices rising more projects can be expected in the future.
The problem the bears have is you always hitch your boat to the negativity of the moment. Last few years it was Europe, The the US debt issue, US sequestration and China. All proved to be wrong. Chinese growth is accelerating as I said it would, US growth is continuing to increase as I said it would. US growth is now 2.6% with previous quarters being revised up. Everything the bears have clung to in recent years has failed.
Perhaps it would be easier to look at events the bears got right...........I can't think of any. To make predictions you need credibility or past results in your favour which the bears have none or little of.
You are wrong and you will see it over the next few years just like all previous events.
The biggest event for the world economy at present is Syria, that situation could easily get out of hand.
Mike, see the way that line shoots up way above its long term average and is now starting to come down again (Quelle surprise!) that's what the grown ups are talking about.
If you wish to believe that WA has invented the "boom without end" economic model and will ride that wave forever, good for you.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Just making sure that Mike remembers there is a possibility of downside risks. I must admit I am very surprised that the Indian rupee has collapsed given how cheap it was to start with. Currencies are mostly a complete mystery to me.
I can see lots of risks out there in minerals.
chinese over capacity for iron ore QE ending for gold indian exporting booming for iron ore european recovery falling in a heap for everything base metals warehouse levels of base metals are through the roof
but how likely do i think these will develop into full blown disaster? not very.
the indian's have a bunch of government interference in their system which aims to keep their steel industry in cheap iron ore at the expense of the entire country.
Veritas
6 Sep 2013, 01:15 PM
Mike, see the way that line shoots up way above its long term average and is now starting to come down again (Quelle surprise!) that's what the grown ups are talking about.
If you wish to believe that WA has invented the "boom without end" economic model and will ride that wave forever, good for you.
and yet all through out that chart house prices continued to grow. amazing.
even when mining investment was much lower houses grew in value. tell us o wise one why will they suddenly crash when mining investment is back to "normal"?
I think the money coming into federal government coffers from the revenue phase of the boom will likely be little more than a pale shadow of the tax revenue that was created by the great surge in economic activity from the construction phase which has now peaked. Private spending is barely growing now - start reducing the amount spent on mining investment and I seriously doubt that earning from flogging dirt will cover it. It is building new infrastructure for digging dirt that makes Australians wealthy from our vast mineral resources - actually selling the dirt appears to do more to make foreigners wealthy.
Seriously Mike - you're still trying to sell the notion of a boom that cannot end. We've had booms in the past - not as big as this one admittedly - that did not continue once we transitioned to the production phase. The boom ends when it ends, otherwise Australia would be in a permanent boom. I think you might be the one holding the bong on this issue.
Correct me if I'm wrong, but ore produced here and exported, must be paid for here and taxed here before any money flows offshore to shareholders. The combination of mining royalties and taxation going forward will not be insubstantial.
Yes - but I doubt that it will come near the kind of economic juice that the construction phase has contributed.
Don't forget that royalties are only as good as how much of them are spent back into the economy. State governments are of an austerity mindset. The incoming Abbot government has pleasantly surprised me by not embracing austerity - but I won't be surprised if shortly after the election, they wheel out Costello for another commission of audit, this time at the federal level and make their cuts then.
Every time we have had a mining boom here in Gladstone (as the end of the mining production chain before export) employment has boomed and house prices have grown solidly (and gone absolutely nuts this time round). But then when it's all complete, most of the jobs dry up, housing and general local economic activity stagnates - despite the fact that mining companies are making motza from their newly-expanded exports.
Not a perfect analogy of course but it's worth noting.
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