Armstrong......show me the money [Archive]

Glass

24th November 2010, 12:48 AM

He, allegedly Martin Armstrong talks about about how good the Aussie economy is doing. Well it's definately at least a 2 tiered economy. If you are connected to mining and energy, which is classed as a single economic sector down here then you will be doing ok, not brilliant but ok. As for everyone else, it can be iffy at best. Housing is slow in both new and resale. Cars are dead unless it's trade vehicles - utes, pickups. Discretionary is slow, that is fashion, food, entertainment, electronics (excluding apple but thats an IQ issue not an economic one).

Most of the mining development work is being outsourced to low skill imigrant labour from asia. It is not widely known in the cities because mines are remote work. Ports being developed to ship out the mined materials are all very remote and the labour is encamped for the duration. There are islands where oil and gas processing facilities are being built and Australians don't go there for work. All labour is landed there from its orgin in asia onto the island. They have this big quarantine scam going where they want to protect the precious ecosystem so no mainlanders can go there.

Law and taxation practitioners are doing well, as you would expect in difficult times but the economy is not booming. AUD is not stronger, USD is weaker. That is the only way to measure it IMO. We are in a state of churn at the moment. This means there isn't very much production going on. There is a lot of turning over of assets from one class to another so brokerages aren't doing too badly judging by the cars and appartments the 20 - 30's spikyhaired somethings are into, however this is drying up as the wealth gets stripped out of peoples portfolios. Businesses that have reserves have been conned into running those down by stimulus packages and overall media/government rhetoric. Instead of sitting on the side lines, they are keeping thieir businesses going waiting for the turn around.

Our property market slump is underway and should accelerate.

The great Australian nightmare
Tasman Times
James Gruzman
24 November 2010

The Australian housing bubble. Below I have gathered information which suggests that Australian properties are unaffordable and that these prices cannot be sustained. We are currently experiencing high property prices that are based on debt.

Affordability
According to the 6th Annual Demographia International Housing Affordability Survey: 2010, the average house price amongst nations surveyed has been 3 times average earnings. This is known as the Median Multiple. There are 272 markets surveyed in Australia, Canada, Ireland, New Zealand, United Kingdom and the United States to gather this data.

A Median Multiple of 5.1 and over is classed as severely unaffordable.

Australia’s house prices are 6.8 times average earnings. For the average Australian house price to fall in line with the average for the rest of the nations surveyed, it would require a 56% drop in prices.

Sydney’s house prices are 9.1 times average earnings. Sydney house prices are three times the average. To be able to afford a house 9.1 times the average income, it requires a huge loan that would be difficult to pay off.

If Sydney house prices were to fall inline with the average of 3 times median household income for the nations surveyed, the average house price in Sydney would have to drop by 67%.

Debt
- In December 2009, Australian household debt was $1.2 trillion.

- Federal government debt is almost $173 billion.

- Combined state debt is $159.6 billion

With the increasing government debt levels, more money will be spent paying interest on the loans than on infrastructure and services. The Federal Government is set to pay $48 billion in interest on its loans over the next four years.

Expect taxes to increase or for new taxes to be created to meet this gap. This can lead people to default on their loans or be forced to sell.
High government debt also gives it the excuse to privatise any remaining state assets to pay down the debt.
With borrowed money you are also at the mercy of interest rates. When interest rates go up you have less available funds to spend on day-to-day living.

Default
Something that isn’t widely known is that some of Australia’s wealthiest suburbs are at the highest risk of defaulting on their loans. The top three in Australia at highest risk of default are Frankston North in Melbourne, Victoria, followed by Bellevue Hill and Woollahra in Sydney, New South Wales. Request report here.

Link...... (http://www.tasmantimes.com.au/2074/the-great-australian-nightmare/)