From an article today in Macrobussiness - this line from DLS:
Quote:
There is a simple way to understand the Australian economy. It’s not the miracle that outsiders deem it to be. Nor is it the fruits of magisterial management by the RBA or government that some claim.
It is this: we get income by selling our dirt overseas, then we leverage up those earnings with offshore loans and blow it on houses. That’s all there is to it.
So that's it! All we do is sell dirt, and leverage the income into houses?
Discuss. I think this is complete bullshit - it's easy to show that the Australian economy is far more diverse and broad than this doom&gloomer schoolboy level assesment, but let's see what everyone else thinks first!
There is a simple way to understand the Australian economy. It’s not the miracle that outsiders deem it to be. Nor is it the fruits of magisterial management by the RBA or government that some claim.
It is this: we get income by selling our dirt overseas, then we leverage up those earnings with offshore loans and blow it on houses. That’s all there is to it.
i'd be asking for my money back with that sort of analysis
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
From an article today in Macrobussiness - this line from DLS:
So that's it! All we do is sell dirt, and leverage the income into houses?
Discuss. I think this is complete bullshit - it's easy to show that the Australian economy is far more diverse and broad than this doom&gloomer schoolboy level assesment, but let's see what everyone else thinks first!
The major portion of our export income is from our mineral wealth, so I don't disagree with that portion of his statement. That's what makes our dollar so strong and that gives us a better quality of life because we can afford luxuries that people in other countries with lower exchange rates can't.
Cars, electronics, jewellry (precious gems) overseas holidays etc are just so much cheaper that they once were.
Any expressed market opinion is my own and is not to be taken as financial advice
From an article today in Macrobussiness - this line from DLS:
So that's it! All we do is sell dirt, and leverage the income into houses?
Discuss. I think this is complete bullshit - it's easy to show that the Australian economy is far more diverse and broad than this doom&gloomer schoolboy level assesment, but let's see what everyone else thinks first!
I don't mind a nice oversimplification. It appeals to human nature to explain the world (or country in this case) and if you can do it with a catch-phrase, all the better.
I don't have any personal friends that work in mining or related services. I've previously had mining services clients but they would represent less than 5% of business since I've been here (since 2001). Even my friends in banks and financial services don't do any mining related debt or investment work.
This is just my own experience so is anecdotal at best.
I'm sure one could mount an argument that all my work is the result of mining related income and investment filtering through the rest of the economy, a sort of, butterfly wings argument. These can be framed in compelling terms but are really just a narrative in an attempt to describe history. We can't know what the alternatives would have looked liked without mining. Maybe the economy would have been more diverse and more prosperous?
PS I just remembered, I do have 1 friend who works for a company that provides services to the mining industry and, although diversified, that has driven the success of that particular business.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
In 2011 David Llewellyn-Smith predicted a decade of nominal house price declines, with unemployment to be above 6% within a year, and the iron ore price to crash and stay low, Australian economy to go into recession, China to collapse, and various other gloomster outcomes. He's just mad now that none of his predictions actually came true. House prices are booming instead of crashing like he predicted, and it drives him nuts.
We employ people mostly to service each others needs, usually in construction, retail, health care or education (building a house, filling it with stuff, staying healthy, and teaching the uneducated)
Manufacturing and Agriculture is comparatively non-existent.
To clarify, the manufacturing stats in the above pdf link also includes smelting ore into primary metal products (slabs, sheets, ingots), we may send raw ore overseas, but I think it vastly more likely that we smelt most of it first and in my opinion, it isn't far enough removed from mining to count it as manufacturing. (more, preparing for cheaper, easier transport). Just my opinion, I'm sure there are many who would argue that point.
"If man is to survive, he will have learned to take a delight in the essential differences between men and between cultures. He will learn that differences in ideas and attitudes are a delight, part of life's exciting variety, not something to fear." - Gene Roddenberry
"Balloon animals are a great way to teach children that the things they love dearly, may spontaneously explode" -- Lee Camp
I'm in two minds about mining and selling everything now. Look at Nauru - an island that was so very wealthy per capita until the fertilizer ran out.
On the other hand technology can leave you behind, for example the saltpetre in Peru is still abundant but no one wants it anymore for explosives, so they should have mined it harder while it was still in demand.
I lean in favour of the mine it and sell it camp because no one might want it in 100 years. Even iron/steel can be replaced with other products that are waiting to be developed.
It would be good though if we as a country had a policy of investing those export dollars into overseas assets that continued to earn money for our nation, or assets here that increased our earnings. Perhaps that was his point.
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