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.
Because Abbot is about to become pm didn't ya know?
Seriously, such spending is lumpy - there are mega-projects that kcik started a few years ago that are now committed to be finished no matter what. But I'm of the opinion that the boom has peaked. I may be recalling incorrectly but the renewed lump in spending was foretold in the forward capex back then. So it's interesting to note that the more recently released forward mining capex shows mining companies intend a big pull back in their investment spending this quarter.
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.
Im sure owners of property in Port Hedland and Karratha are now aware of downside risk.
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.
How is your prediction for that India boom looking?
India is interesting and looking a little shaky.
I did not factor in the effects of capital flight back to the USA so quickly. Sentiment is turning much faster then expected back to strong US growth over the coming years.
It appears a solid trend is developing with capital flight from Asia and other areas such as Brazil & Russia back to the US.
It will mean these nations will be volatile for awhile and will need close monitoring. It also means we can expect to see accelerating US growth in 2014 and beyond. I expect to see US growth of close to 4% in 2014/15 provided no large war occurs over Syria.
Lef-tee
6 Sep 2013, 01:49 PM
Oh, and I think that Frank deserves a gold star for that amusing little choofing teddy bear video - I love it!
It was a nice touch.
newjez
6 Sep 2013, 01:15 PM
I think Brazil is more interesting to watch. (Cue Mel ...)
But seriously - it is
I think you are right.
Brazil long term has a lot going for it, but a lot of hurdles over the next few decades. Once again capital is leaving Brazil and returning to the US for obvious reasons.
Oh, and I think that Frank deserves a gold star for that amusing little choofing teddy bear video - I love it!
That's actually from a movie called "Ted"
it's a great comedy has Mark Wahlberg & Milan Kunis in it.I think its really important to focus on things locally, nationally & globally it all has an impact to all of us.
Perth is certainly performing quite well, but there is those who have been affected negatively when it involves the corporate aspects.
Syria is a big question mark, that can make or break a lot of things.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
One thing that gets overlooked in the all the talk about mining booms and busts is the very different character of the economic stimulation during the mining investment phase versus production phase.
Even if the production income equals the investment income – they are very different in character in terms of who does the spending and how they spend.
During the investment phase there is lots of employment for design and construction and also the ‘vital’ work of lawyers, accountants and other deal facilitators. Money going into lots of pay packets and being spent throughout the community in distinctive ways – often boom time spending decisions.
During the production phase – the employment intensity drops significantly so there is a lot less money flowing into lots of pay packets in the resource and resource related industries.
Of course there is now lots of income being generated by the sale of all those commodities but the mechanism for how that money gets into the domestic economy is quite different.
Rather than via inflated pay packets it is now entering the economy via either:
1. Dividends to shareholders in the mining companies
2. State governments via royalties
3. Fed govt via company tax.
Certainly the fact the government (state and Fed) tax receipts are higher allows the govt to spend money or cut taxes but that sort of spending is very different in character to money arriving in the economy via lots of individual pay packets.
The ‘confidence fairy’ may perform quite differently during the production phase compared to the ‘heady’ investment phases of large pay packets and new projects being announced on a regular basis.
There may be a greater propensity to save and resist the bait rates offered by the RBA.
After all, politicians do have a reputation for directing their ‘sweeties’ in ways which are sub-optimal in terms of economic efficiency. They have habit of directing income from the productive to rent seekers and other lotus eaters.
And of course this is assuming that the politicians choose to distribute all the income they receive from the production phase tax receipts.
Some of them may even be tempted to reduce the level of government debt incurred during the boom investment phase.
So we may find that even though there is a lot of income during the production phase the impact of that income on the economy may be quite different to the impact of income during the investment phase.
One thing that gets overlooked in the all the talk about mining booms and busts is the very different character of the economic stimulation during the mining investment phase versus production phase.
Even if the production income equals the investment income – they are very different in character in terms of who does the spending and how they spend.
During the investment phase there is lots of employment for design and construction and also the ‘vital’ work of lawyers, accountants and other deal facilitators. Money going into lots of pay packets and being spent throughout the community in distinctive ways – often boom time spending decisions.
During the production phase – the employment intensity drops significantly so there is a lot less money flowing into lots of pay packets in the resource and resource related industries.
Of course there is now lots of income being generated by the sale of all those commodities but the mechanism for how that money gets into the domestic economy is quite different.
Rather than via inflated pay packets it is now entering the economy via either:
1. Dividends to shareholders in the mining companies
2. State governments via royalties
3. Fed govt via company tax.
Certainly the fact the government (state and Fed) tax receipts are higher allows the govt to spend money or cut taxes but that sort of spending is very different in character to money arriving in the economy via lots of individual pay packets.
The ‘confidence fairy’ may perform quite differently during the production phase compared to the ‘heady’ investment phases of large pay packets and new projects being announced on a regular basis.
There may be a greater propensity to save and resist the bait rates offered by the RBA.
After all, politicians do have a reputation for directing their ‘sweeties’ in ways which are sub-optimal in terms of economic efficiency. They have habit of directing income from the productive to rent seekers and other lotus eaters.
And of course this is assuming that the politicians choose to distribute all the income they receive from the production phase tax receipts.
Some of them may even be tempted to reduce the level of government debt incurred during the boom investment phase.
So we may find that even though there is a lot of income during the production phase the impact of that income on the economy may be quite different to the impact of income during the investment phase.
Yep.
I guess we'll see how it goes though.
Quote:
That's actually from a movie called "Ted"
it's a great comedy has Mark Wahlberg & Milan Kunis in it.
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