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.
Employment is a cost, output is the benefit.
This means;
Exports are a cost, and imports are a benefit.
It should be in the national interest to import as much / many goods and services per unit of export. In other words, a trade deficit is an economic benefit.
But the article implies we get money / funds / income from overseas. This is a stock-flow inconsistent approach to macroeconomics.
I saw you tried to ask a very simple question to flawse about "the AUD is already here the rest is just an FX swap", to which he seem to reply "yes we can issue as many AUD as we want (you idiot etc)".
Leaving aside the issue of real resources, Flawse entirely debunked the whole macrobusiness article right there. Of course no-one will dare mention 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!
Its very simplified but not incorrect.
Australia produce nothing of value to export besides what comes out of the ground. There is no export industry worth mentioning at all. Nada, zip, zero.
This is one of the first things you notice when you come here from another country, the complete lack of knowledge about anything and the fact that everything locally made is inferior: Fashion, cars, furniture, houses, highways, internet, film and even amusement parks & Tourism. And there is little chance of any IT or high tech sector worth mentioning will ever eventuate due to the Coalitions NBN plans.
And as opposed to Norway which has almost exactly the same economy (no knowledge or industry but a lot of oil) Australia has not saved or invested the income at all. Well except for in housing... In fact, the only thing I can think of that Australia is successfully exporting is imaginary house prices. The Chinese seem to be buying so maybe this is the future export industry of Australia? At least its something we do well.
It should be in the national interest to import as much / many goods and services per unit of export. In other words, a trade deficit is an economic benefit.
But the article implies we get money / funds / income from overseas. This is a stock-flow inconsistent approach to macroeconomics.
I saw you tried to ask a very simple question to flawse about "the AUD is already here the rest is just an FX swap", to which he seem to reply "yes we can issue as many AUD as we want (you idiot etc)".
Leaving aside the issue of real resources, Flawse entirely debunked the whole macrobusiness article right there. Of course no-one will dare mention it.
In other words, a trade deficit is an economic benefit.
Well yes it might be but I can't say that I'm completely on board here. If we run a CAD our dollar will buy less. I'm happy that it will settle at a price that compensates for our production level, but we do have to maintain production, and the goods and services that we produce must be wanted to our trading partners. I agree that a large trade surplus doesn't help unless we want to invest in the bond issued by our trading partners, but a large trade deficit has dangers IMHO.
Any expressed market opinion is my own and is not to be taken as financial advice
Australia produce nothing of value to export besides what comes out of the ground. There is no export industry worth mentioning at all. Nada, zip, zero.
Really? No other exports at all?
According to this: http://www.dfat.gov.au/publications/trade/trade-at-a-glance-2012.pdf , in 2012, in the midst of a huge minimg boom as well, 16%/$50.1B of our exports were services, and 13.3%/$41.7B were manufactured goods. There's another 4.2%/$13.1B in the "other" category. In addition there's another 10.8%/$33.7B of agricultural products that we exported. So that's 44% of our exports having nothing to do with mining? Doesn't sounds like "nothing worth mentioning" to me?
Of course, this is looking at exports only - which are only a part of the picture of an economy. Exports certainly help improve your standard of living if they enable you to lower the cost of imports through a higher currency value etc. Looking at all components of GDP, Australia does a LOT more than just mining, and we have one of the highest standards of living in the world as a result.
Quote:
This is one of the first things you notice when you come here from another country, the complete lack of knowledge about anything and the fact that everything locally made is inferior: Fashion, cars, furniture, houses, highways, internet, film and even amusement parks & Tourism. And there is little chance of any IT or high tech sector worth mentioning will ever eventuate due to the Coalitions NBN plans.
Ok so you are a general Australia-basher/bear. That's fine - at least we know where you stand!
PS I think Australia makes/does a lot of things here that are world class - including the locally manufactured cars etc. But then I like big spacious cars (loads of room for kids/stuff etc) with lot's of power, that is not a 4WD, and anything made o/s in that category costs more than double what the local product does. Not sure what you think is so wrong with our highways either? (Apart from the silly low speed limit maybe?). Or all t!hat other stuff? Furniture made here is great! Aussie movies are often hidden gems as well! And so on....... Take the poo-coloured glasses off, please!
If the lower interest rates are having the desired effect of chasing people out of TDs and into riskier asset classes and into property investment (with some debt) how are the banks funding their mortgage lending?
After all the reason Term Deposit rates rose and stayed higher than usual was because APRA was twisting the banks arms on wholesale borrowing and they were forced to offer a bit more on TDs to get locals to fill the gap.
Is wholesale borrowing starting to rise to fill the gap?
If so – what exactly is the strategy to improve the stability of our financial system?
According to this: http://www.dfat.gov.au/publications/trade/trade-at-a-glance-2012.pdf , in 2012, in the midst of a huge minimg boom as well, 16%/$50.1B of our exports were services, and 13.3%/$41.7B were manufactured goods. There's another 4.2%/$13.1B in the "other" category. In addition there's another 10.8%/$33.7B of agricultural products that we exported. So that's 44% of our exports having nothing to do with mining? Doesn't sounds like "nothing worth mentioning" to me?
Of course, this is looking at exports only - which are only a part of the picture of an economy. Exports certainly help improve your standard of living if they enable you to lower the cost of imports through a higher currency value etc. Looking at all components of GDP, Australia does a LOT more than just mining, and we have one of the highest standards of living in the world as a result.
Ok so you are a general Australia-basher/bear. That's fine - at least we know where you stand!
PS I think Australia makes/does a lot of things here that are world class - including the locally manufactured cars etc. But then I like big spacious cars (loads of room for kids/stuff etc) with lot's of power, that is not a 4WD, and anything made o/s in that category costs more than double what the local product does. Not sure what you think is so wrong with our highways either? (Apart from the silly low speed limit maybe?).
Well compare to other countries you have no exports worth mentioning. What Australian products do you see anyone outside of Australia using? Where is your IKEA, your Sony, Pharmacia, eBay, Skype, Zara? Thats right. Nothing at all.
Im not a general hater of Australia, I love it here. But I see Australia as such a missed opportunity and such a let down in many areas. Its the one country with the most unrealised potential in the world.
And to your point of cars. Lets get two things straight.
1) They are not good cars and thus are rarely sold outside of Australia. Its not like Volvo, Audi or even Opel. I love big cars as well but the locally made ones are shit. Even worse than US cars.
2) Cars made overseas do NOT cost double. In fact they cost considerably less than local cars. A BMW M3 for example actually costs $60,000, not $210,000 which you are charged in Oz. The reason overseas cars are more expensive here is due to import taxes to protect the local industry and also because of price gouging. So its a double negative. Not only do you pay to much for imported cars, you also misallocate a huge amount of resources to produce locally made shit boxes.
And the highways... Are you kidding me? They are awful. All roads are awful here and they lack signage so you have no idea where you are. I have lived here for 15 years and still use my GPS every day. In Los Angeles I drove without a GPS after 7 days. There aren't even any highways in most places where there should be. Or they call some shitty suburban street a highway. (Princess highway)
Well compare to other countries you have no exports worth mentioning. What Australian products do you see anyone outside of Australia using? Where is your IKEA, your Sony, Pharmacia, eBay, Skype, Zara? Thats right. Nothing at all.
There are loads of big name exporters in Australia with names known all over the world. Not every country can be the best/bigger exporter of everything!
Quote:
And to your point of cars. Lets get two things straight.
1) They are not good cars and thus are rarely sold outside of Australia. Its not like Volvo, Audi or even Opel. I love big cars as well but the locally made ones are shit. Even worse than US cars.
2) Cars made overseas do NOT cost double. In fact they cost considerably less than local cars. A BMW M3 for example actually costs $60,000, not $210,000 which you are charged in Oz. The reason overseas cars are more expensive here is due to import taxes to protect the local industry and also because of price gouging. So its a double negative. Not only do you pay to much for imported cars, you also misallocate a huge amount of resources to produce locally made shit boxes.
Re 1) I lived in the US for a year and have driven loads of cars made there - ours are FAR better, especially the Holden's in particular, and the locally made Toyota's.
Re 2) If you can show me where I can go in Sydney and buy an M3 for $60k, I will believe you. Given that I can't, I'll spend $30k-$50k on the local product thanks (at least for the daily/drive come family-truckster), which is unmatched in the market available to me in terms of value for money.
If we get ripped off on o/s cars, then why is this so? Import duty is only about 5% nowadays, if any at all? I think you will find it's all marketing, plus probably the GST and luxury car tax as well - BMW etc know that people like you hate locally made cars and so you will pay them 2-3 times what the Euro import is really worth, hence their prices stay high.
There are loads of big name exporters in Australia with names known all over the world. Not every country can be the best/bigger exporter of everything!
So many of them that you declined to provide a single example. Yes, we're good at mining. We're not so good at the rest.
There are loads of big name exporters in Australia with names known all over the world. Not every country can be the best/bigger exporter of everything!
So many of them that you declined to provide a single example.
Straight off the top of my head - BHP, Rio Tinto, Xtrata, Forstescue (there's a few big miners), others: Cochlear, Resmed, Penfolds wine (and numerous other wind makers), Holden (they do actually export to South Africa / Middle East etc), ANZ Bank has a big presence in NZ and around Asia nowadays. There are also hundreds of smaller, niche players, as you would expect to be the case for a country with the population / economy of our size. I'm sure there are loads of names I haven't mentioned.
Edit: There are also several extremely successful luxury boat builder based on Australia the export all over the world like Riviera, and several others.
Straight off the top of my head - BHP, Rio Tinto, Xtrata, Forstescue (there's a few big miners), others: Cochlear, Resmed, Penfolds wine (and numerous other wind makers), Holden (they do actually export to South Africa / Middle East etc), ANZ Bank has a big presence in NZ and around Asia nowadays. There are also hundreds of smaller, niche players, as you would expect to be the case for a country with the population / economy of our size. I'm sure there are loads of names I haven't mentioned.
So mostly mining then. Which takes us back to the point of DLS's article, does it not?
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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