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Australian Economy in Cardiac Arrest: Solomon Lew calls for urgent 50 basis point interest rate cut; Retail magnate Solomon Lew wants 50-basis-point cut in official interest rates before Christmas
Topic Started: 18 Sep 2013, 04:43 PM (3,208 Views)
Sweetdish
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Kulganis
18 Sep 2013, 09:16 PM
I don't know about other products, but computers and technology is monopolised by Ingram Micro and Synnex as the only mass importers in Australia.

Retailers get vastly inflated products from the distributors, then have to add their own costs on top.

Very few import for themselves, which gives Ingram Micro and Synnex the ability to charge whatever they like and retailers have to wear the flack that the general public gives them.

It really has very little to do with wages and rent, of course, streamlining a business operation and lowering the rent and wages would mean more profit/lower prices.

It's more to do with the fact that we're an isolated, tiny population country.

If we had more people, we would have more purchasing power and the distributors would likely lower their prices because they would be able to ship things more efficiently (as in more product per shipment) and possibly have more stock in the warehouse.

If only we had manufacturing as well as mining, processing of raw materials could happen onshore and we could be exporting goods to the world and have the opposite effect on retail.

But no, the hunt for more profit sent most of the non-niche manufacturers overseas to large population lower wage countries.
The high costs here have absolutely nothing to do with the size of the population or the cost of shipping.
Take Sweden for example which is considerably cheaper and has a population thats less than half of Australia.
ANd almost all consumer products sold in retail is shipped from China so with that logic it would be cheaper to ship to Australia than to a tiny country in Northern Europe.

The high costs here are due to;
-Rents to some extent.
-Staff costs are very high.
-But mostly due to the fact that businesses here are so used too ripping of their customers that they find it almost impossible to adapt to a more competitive global economy.
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Kulganis
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Sweden has the good fortune of being relatively close to high population centers (Germany, France, UK), Sweden is not as isolated from buying populations as Australia is.

Australia and surrounding nations don't purchase enough volume to allow for less predatory practices.
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MMM
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Boys and girls, the answer to many of your questions can be found in the link below, very interesting indeed.

http://www.businessinsider.com.au/unveiling-the-big-mac-minimum-wage-index-2013-8
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mango66
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Sooner or later aussies will be ordering bacon and egg rolls from asia. Australia fucked itself on a housing boom and now no one wants to pay for anything sold here. Quite stupid really....pay 500k for a house no worries but pay $25 on a tea shirt when you can buy o'seas for $10 . Disposable incomes are history.
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goldbug
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willy_nilly
18 Sep 2013, 06:03 PM
Retail started its downward trend from 2003, when the average boomer (then 48) moved from spending to saving.
And was exaserbated after 2008 when their super got hammered. The young here don't realize that, or care, because their super is an esoteric thing to be worried about in 20 or 30 years. Those in or nearing retirement though have gone into austerity mode in a big way.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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MMM
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goldbug
18 Sep 2013, 11:00 PM
willy_nilly
18 Sep 2013, 06:03 PM
Retail started its downward trend from 2003, when the average boomer (then 48) moved from spending to saving.
And was exaserbated after 2008 when their super got hammered. The young here don't realize that, or care, because their super is an esoteric thing to be worried about in 20 or 30 years. Those in or nearing retirement though have gone into austerity mode in a big way.
i COULD GO ON ABOUT THIS FOR DAYS, but will try and keep it short, sortof :lol

many self funded retirees with funds in the bank now get little interest and some who may of thought they had enough to last them though interest bearing accounts will become broke and now forcedonto the pension so a further and further erosion of the economy, both by frugal spending instead od say 10% interest on accounts where they could recieve a decent return and then spend a lot more on the economy.

we are trapped by the usa failer of economics and have been forced to follow suit like many othercountries, created more wasted time and money bby creating reserve banks. this was done to stop interest rates returning to the highs we saw in the late 80s, to those that dont know people wer paying 17-18% on the average home loan but on the other hand people were getting a decent return on there bank savings . this was how a normal economy sorted itself out , but it was not good for all the us debt that was owed ,so reserve banks started to stop these high rates of interest even though it was a balancing act,which always balanced things out. thats how a fuckin economy works, but some dopes wanted to interviene because THEY owed to money and it was not good for them, reserve bank came along, no more high interest rates ,more borrowed money to pay for debt we cant repay and now look at where we are. so now things are screwed, enough on that now.

super funds ,this is a massive ponzi SCHEME, where the government robs people and the economy of its funds ,plays the share market or the like and has there hand in the till, just like we saw with the superfunds going down, if we had decent interest rates it could of sat safely in a bank account and earned a reasonable return, so the ponzi shememe is to rob EVERYBODY WHO WORKS from 18-65 knowing that they will only ever have to pay the 65 year old who retire every year, and not everybody who contributes evryday for45 years or so,an exact ponzi scheme. but whats now worse it that becuase they have wasted all the money and now know the ponzi is dying quicker than expected they have to do something, lets rob them 12% instead of 9% every week , which now takes more money out of your pocket evry week ,which could have paid your home off sooner or be used on holidays and the economy or investing in your future. so know we have less money in our pockets and in our economy to help build and grow our economy and future, and more in there pocket to keep there pay packets topped up and to keep the ponzi scheme going for longer. sorry I tried to keep it short and could have gone on for much longer on the subjects...
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mel
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mel
18 Sep 2013, 05:53 PM
this is yet another complete failure to recognize the shift in the retail business model.

Unfortunately the writing is on the wall for many Aussie retailers unless the AUD gets totally trashed.

True story: just a couple of hours ago I was at a chain store in melbourne with my partner to buy a couple of specific items. The prices were so high we held off to see what the prices were like on ebay. Long story short i have ordered the same items from the UK for considerably less including priority shipping from the other side of the planet. Im honestly all for supporting the local economy but there is something very wrong with that.
some pretty interesting takes on that. Honestly if the difference wasn't so great i would be happy to pay a little extra if only for the convenience of having the item immediately. Curiously, I have bought nike sneakers a few times from ebay US for significantly less than the local nike factory outlet - even after paying around $50 for priority UPS shipping.

Sometimes I just don't understand international shipping fees though. I have bought items from China (from ebay) with a total cost for the item and shipping being just 1 AUD (shipped to my front door), but if i were to ship the same item to my neighbour it would cost more than $1 even though Aus Post handles the local part of the delivery in both cases. What the fuck is that all about?? :lol
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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willie
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MMM
19 Sep 2013, 12:46 AM
i COULD GO ON ABOUT THIS FOR DAYS, but will try and keep it short, sortof :lol

many self funded retirees with funds in the bank now get little interest and some who may of thought they had enough to last them though interest bearing accounts will become broke and now forced onto the pension so a further and further erosion of the economy
I know a businessman a relative, was small mower parts shop owner, for years and years he bought kugerands and soveriens and burried them away somewhere. Now he gets the old age pension and when he needs extra for a trip or car repairs he just seels a coin, what a life.
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Guest
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There are very good reasons why demand remains soft 6 years after the end of a massive debt boom. The level of demand 6 years ago was artificial and not sustainable and all we have seen is a return to a more sustainable level of demand.

In that circumstance expanding the money supply enormously and inflating the prices of certain assets has been a waste of time and not ‘playing for time’.

At best the attempt may induce some froth while loading more debt into the system.

Unfortunately for those still searching for a painless solution to an asset price bubble – the best solution remains right in front of us.

Stop pumping air into the punctured tyre, allow the prices of assets to deflate and use all the powers of govt to manage the painful adjustment and yes that may mean nationalising banks or setting up new publicly owned banks that advance loans for productive investment rather than asset speculation – the “Real Commonwealth Bank” has a nice ring to it..

People forget that the reason the last great deflation in asset prices (1930s) was so painful was that the size of government was a lot a smaller and less sophisticated and there was a very limited welfare state to provide income support to the general population.

People don’t starve because asset prices are falling. Food doesn’t stop growing because asset prices are falling. People who own their assets without debt do not get evicted. Houses that are repossessed can be bought by new owners (perhaps the govt) or let to new tenants at lower rents.

The government is quite capable of directly supporting the money supply and the level of demand for the daily necessities while the level of debt and the machine that drives it withers.

That is the power of a fiat currency.

If nothing else we have a very well developed safety net that is quite capable of depositing ‘accounting entries’ directly into the accounts of the general public instantly. That would seem a more direct and useful action than depositing accounting entries into the corporate accounts of banks and praying that the effect on asset prices conjures up the confidence fairy or some mishapen wealth effect.

Of course some useful public works are always an option – build houses and roads and transport links etc that make it easier for people to be active economically.

Clearing out the debts after a clueless asset bubble enabled by the RBA and others is exactly what our safety net was designed for.

But if Japan is any guide we will be having this debate for another 15 years.

After all, a direct solution to the problem of excess debt means shrinking / liquidating the primary asset of our mega banks and you can expect that their pet PR poodles, army of retired polly lobbyists and domesticated house economists will be quick to explain what what is not good for our banks is not good for Australia.

Expect the usual litany of hyperventilated scare campaigns that our current arrangement of banking, money supply management and debt creation is the highest form of human civilisation and any change will be a return to the cave.

How civilised does it feel to you?

There is no reason to lie back and let a mountain of debt smother an economy for a generation.

Debt is nothing more than accounting entries.
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