Are we heading towards a recession

I completely agree - the economy moves in cycles, action by the government of the time can nudge at the edges, or give favourable support to certain participants, but they dont actually make the economy boom or bust. What I do find interesting is how the public tends to perceive and react to the phase of the economy, and how that impacts their voting. I was surprised by this election result, not because I thought Labor had better policies, but because of the phase of the economy. In boom times, generally people feel safe and secure, are happy to risk more, and dont feel the need for the gov safety net - and lean towards the Libs, in economic downturn, they feel less safe and secure, and like the thought of a safety net, and lean towards Labor. The other end of this cycle also means Labor often inherit an economy that was booming, but is now on the turn. Vice versa, Libs often inherit an economy that was doing poorly, but is on the upswing.

The other thing to consider is the erosion of the tax base. Labor was trying to get some back to be available for infrastructure spending, whereas Libs continue to push for tax cuts. Certainly the merits of each, and whether they would achieve their stated objective is up for debate (and, as you point out, for the unsuccessful party, you will never know for sure).

Cheers,
Inertia.

 

What are your thoughts on this article???

Australia being compared to what happened when the **** hit the fan in Ireland??

The Barefoot Investor warns Australian economy is on brink of collapse | Daily Mail Online

 

Yeah nah.

 

Interesting analysis of AU loan book. One very valid point that is raised is the control of our own currency, unfortunately it will take too long to flow through as productive infra and will need to be something more short term.

 

Yes, not really sure what they mesn by control of our currency?

 

Ireland couldn’t pump prime economy like au did in gfc as they used euro and did not control ability to issue it into economy...afaik

 

The UK was so lucky not to adopt the Euro.

 

Yes it did, but most of that rise happened very quickly.

 

At the time we also had bank interest rates sitting around 9% so there was plenty of room for the RBA to stimulate.
We were also very very lucky at the time as the government was literally sitting on billions of dollars in cash from the mining boon.
Very few times has that occurred and we just timed it right with the GFC.
Fast forward 10 years later were in a pile of debt.
Wages have not really grown in almost 7 years ,as opposed to the 1.5-2% yearly growth above inflation from over 10 years ago..
Same events today would provide a totally different outcome.
Just expecting the AUD to fall and save our economy is very wishful thinking as it would also push up the costs of many housheold items and possibly the cost of borrowing more money as local savings disappeared.

 

But largely irrelevant.

Unemployment is not just about job losses, it’s about jobs not being created.

The unemployment rate in Ireland would have risen to over 20% were it not for wholesale emigration.
The entire episode represented the largest contraction of a developed economy since the Great Depression.

 

Yes.


Ireland was frozen out of the bond market in 2010.

Then the Troika came to town.

The Troika made a bad situation much worse by imposing strict austerity on an economy that was already contracting.

Never forget that, because if things get worse here there will be plenty of people who will argue against stimulus and for austerity.

 

Haha I find this very humorous by Seek. They specifically sales pitch now for recruiters to NOT post ads instead favoring to use their Seek Premium Talent Search and just handpick the ideal candidate directly from their 9million candidate database.

This diagram is useless at best.

 

How recently did they make that change? Could you use the data to compare with their earlier reports to at least see a trend movement if not specific values? Of course if what you are saying about seeks strategy is a new shift then this wouldn't be possible.

Much like how corelogic and domain quantify clearance rates the specifics might not be accurate but they can be valuable in a broad sense.

 

Seek have been fairly aggressive in their push of SPT. This has been ongoing for a couple of years now and the product is still evolving.

They are however now getting considerably more traction and when you throw in LinkedIN their is less and less a need to use the traditional method of post and refresh ads.

It simply wouldn’t be possible to compare data because that graph is based purely on ads posted. They can not compare ads posted in a certain category against a recruiter who just does a broad SPT search.

 

AU didn't prime the economy in 2008.....China did.

 

Once everyone realized that China was largely unaffected those 10,000 plus workers that were sacked were promply rehired again.
But the mining industry is notorious for mass sackings in huge numbers when commodity prices take a big hit.

 

"He said recent research by Endeavour Equity Strategy found at least 40 per cent of Australian mortgages are non-prime or sub-prime, meaning they are risky because the homeowner may not be able to afford them."

This doesn't seem correct.

 

An article written by someone who opinions I respect:

Australian growth will be constrained but here’s 9 reasons why recession is unlikely

 

I like Dr Oliver's analysis too, he was one of the first mainstream economists to call the current downturn a 15%-20%er and not 5-10% like all the others. He is fairly balanced in general considering he works for AMP.

I think all his points here are well founded. But it's odd that all 9 points refer to our local economy only.

IMO, if and when recession comes it will be set off by global event not local conditions. Aus is a little sail boat in a big sea.

 

As long as the Population Ponzi Scheme keeps expanding, NO recession!