Resourceville blues and the great economic slump

[mantra.]

This is on behalf of Leftofcentresalterego who can't access the main forum....


I think Jovial Monk is right when he talks about the beginning of a depression. The last ten years at least has seen massive growth in the global capacity to both produce and consume, powered heavily by huge private debt expansion. It was always an unstable situation. The shit has hit the fan and the capacity to consume is collapsing, leaving an absolutley stupefying amount of money and resources and jobs tied up in the production side which now cannot be used.

The worlds biggest markets for Chinese-made widgets and gadgets are the US and Europe - the US is in recession and sinking deeper and Europe isn't that much better. This has hammered demand for Chinese products. China derives close to half it's GDP from the export of manufactured goods. Australia is one of the biggest suppliers of the raw materials and thermal coal (electricity generation) used to manufacture all this.

As JM says - the US is fucked so China is fucked so we are fucked.

[Jovial Monk]

Thought I should post this here as well as the sandpit:

Oh boy, Sheepthought blogged on the mining boom today. Funny, when me and Lefty were posting on PA2 the twit strenuously denied there was a mining boom Machi (IIRC) asked him (as if he knows anything about economics) why the trade deficit under Rodent and Tip was so big and growing so fast and he replied "That trade deficit just proves that we can't be having a mining boom. . . ." Guess that position was hastily abandoned as facts caught up with Little Boy Lost

Read his blog! It was all Howard's genius! Yup, Keating just made Asia the focus and we had the Asian meltdown (of course little things like dates, references never given in these blogs he writes to himself) but Howard turned to Europe or something stupid like that. Keatings floating of the dollar got us out of that one but he doesn't say that.

DFAT documents (publications on the DFAT website, go and look, I am right) show that most of our increase in mineral exports went to China and India. I believe these are still in Asia? Continental Drift hasn't moved them into Africa or something? Japan still big customer for them and that too is still in Asia?

In fact, he could have given credit to Gough Whitlam who visited China and established formal diplomatic relations without which China probably couldn't have bought our dirt. But that sort of thing has no place in the fact-free blogs we see.

[mantra.]

The worlds biggest markets for Chinese-made widgets and gadgets are the US and Europe - the US is in recession and sinking deeper and Europe isn't that much better. This has hammered demand for Chinese products. China derives close to half it's GDP from the export of manufactured goods. Australia is one of the biggest suppliers of the raw materials and thermal coal (electricity generation) used to manufacture all this.

China's exports are only supposed to be approx. 20% of their economy - not 50% - but I might be wrong, although their exports had been growing steadily. That's why it was assumed they would be able to get through this crisis fairly smoothly. They have been stockpiling our minerals, but they can get by even with a huge decline in exports. Their biggest consumers are themselves.

The last ten years at least has seen massive growth in the global capacity to both produce and consume, powered heavily by huge private debt expansion. It was always an unstable situation. The shit has hit the fan and the capacity to consume is collapsing, leaving an absolutley stupefying amount of money and resources and jobs tied up in the production side which now cannot be used.

Much of the huge private debt expansion has been incurred by the mining companies because of the imported equipment used for mining in the "boom". This has contributed quite considerably to our foreign trade deficit.

Yes we're in a mess although we're not feeling it too much at present. Even a year ago - our $600 billion trade deficit proportionally way exceeded our debt preceeding the Great Depression - the US is ahead of us of course. They're going down harder and faster than us. We had plenty of warnings.

[Outlaw Yogi]

I believe we are about to enter the biggest economic depression in written history. U$A has been living way beyond its means and accruing debt since the 1950s. OZ has been doing the same to a lesser extent since the 1970s. Britain and Japan also have massive debt and will economically collapse as well.
If it wasn't for the Arabs, Chinese and 3rd world nations proping up the American economy, U$A would have collapsed years ago. Apparently U$A owes US$41 trillion, which is 3 times the entire asset worth of U$A.

Personally I like seeing rat race junk culture consumerism take a kick in the guts, but historically large economic depressions tend to preceed big wars.

[Jovial Monk]

A repost of Lefty's second post in this thread:

The most recent figures I have seen (2006) showed exports to account for slightly more than 40% of GDP, a roaring increase of around 21% as China has become the world's biggest factory. It had almost certainly grown from there until the shit hit the fan.

I have often pondered as to how a country with close to half it's GDP tied up in exports could simply "de-couple" from the rest of the world. It's booming domestic growth, with tens of millions going from Dickensian conditions to living more like us must have been paid for at least in part through those exports. Let's hope the Chinese government's huge stimulus package can help slow the rot at least.

Auzgurl, your sister's home town would seem to be the exception rather than the rule. From what I can gather, the was a pre-existing contract to build that 1200 man accomadation, signed well before anyone saw this coming no doubt and that contract has to be honoured. Filling said accomadation may be another thing.

But let's hope your sister's resource town fare's better than I believe mine is about to. I live in Gladstone, a small port city on the cental Queensland coast. With 2 alumina plants and an aluminium smelter we are (still, I think) Australia's biggest exporter of alumina and alumiunium ingots. Bauxite (aluminium ore) and coal are also big export products. Unlike Port Headland, which is "owned" by BHP - a (recently) immensly profitable mining company with few debts, Gladstone is "owned" by the other big player, Rio Tinto. Rio is heavily saddled with debt from the purchase of Alcan when times were better and announced before Christmass that it would slash 14 000 employees from it's global operations, particularly from aluminium production - the lifeblood of my town. I am waiting with bated breath for the expected announcement on Feb 14. In fact, Rio Tinto closed down and mothballed an entire smelter in Anglesea, Wales yesterday.

We all know or know of someone who has lost their jobs from one of the numerous coal mines that dot the nearby Bowen basin.

Not much good news in The Australian this morning - US electronics retailer collapses leaving 30 000 jobs in doubt, Woodside shelves plans to export our LNG to California, more grim statistics from the mining sector.

What goes up inevitably comes down sooner or later.

[mantra.]

You are probably right about those figures for China lefty, the 15-20% seemed a bit low considering all the junk that's hit our markets over the last few years. Although the US is a lot fussier than us and insisted on a higher quality of imports from them.

I read about the US electronics retailer this morning - that's quite scary - it's an indication of what's to come. Possibly China is one of their creditors. Unfortunately for the US they are heavily in debt to the Chinese, but we are in debt to the US - thanks to Howard. Aren't we lucky we didn't sign an FTA with China? Thank goodness Swan changed the legislation in regard to foreign investment which excluded the Chinese government from ownership or investment and made it applicable to only individuals or private corporations. It could be a little too late though because of the agreement Howard made with the Chinese government to have unfettered exploration of our mineral resources, so eventually - if and when we start to come out of a recession/depression - China will have heavily staked Australia and it could mean a permanent decline in our exports to them.

[mantra.]

Personally I like seeing rat race junk culture consumerism take a kick in the guts, but historically large economic depressions tend to preceed big wars

Let's hope not - but history says you're probably right Heretic. Haven't we had enough war - even the invasion of Iraq & Afghanistan has caused serious damage to our reputation - besides the US has run out of cash, so who's going to pay for it?

[mantra.]

This post was copied from the sandpit - I think it might have been written by someone we are all familiar with, but seeing as it was a genuine attempt at a political post ...I've put it here for comment.


Boom or no boom- here is what a Labor govt does with the increase of public funds into their coffers over a great period of time.

FUCK ALL

http://www.news.com.au/perthnow/story/0 ... 61,00.html
WEST Australians have every right to feel dudded. The so-called unrivalled boom has come and, according to the official figures, gone, and has left not much.

Take a drive through city streets and try to get a sense of what the ``once-in-a-lifetime'' economic picnic delivered.

There's the odd new chrome and glass monolith with the name of a mining company stapled to the side of it, but apart from that, where's the public benefit? Where's the social dividend associated with all the prosperity?

Time lapse video of the Perth city skyline with the ferris wheel spinning

We've been rolling in excess funds for the past five years and, still, we have no new football stadium, no new indoor sporting venue and no new state museum. The Northbridge rail line is still above ground and the city foreshore remains sterile and undeveloped.

The East Perth power station site has been left to rot, the mothballed Entertainment Centre is a terrible eyesore and the much-vaunted urban renewal around the WACA Ground is half-baked.

Apologies at asking another rhetorical question, but how is all this non-achievement possible given the vast amount of wealth that has flowed through state coffers?

In 2004, with the boom kicking in, former treasurer Eric Ripper booked a surplus of $799 million. The following year it delivered $1.104 billion, then $2.59billion, $2.25 billion and last year $2.507billion.

And remember those riches are independent of the billions that we sent off to Canberra to fatten the national wallet.

Based on those numbers, Mr Ripper had at least $9 billion over and above the normal operating cost of running the state to spend on infrastructure from which all taxpayers could benefit.

Regrettably, the Gallop government delivered a southern train line that was started by the Court government, a broken election promise to sink the Northbridge line and an indoor stadium, which is still to be finished.

Similarly, the Carpenter government dithered on development and allowed self-interest from the football lobby to delay, perhaps terminally, the construction of a major outdoor stadium.

On the strength of that, an outsider would be forgiven for thinking that treasurer Ripper was publicly horse-whipped, tarred, feathered and sent to socialist re-training camp in Siberia. But no, wait for it, Mr Ripper has actually been promoted.

Notwithstanding that his record with the purse strings probably qualifies him to be Bernie Madoff's accountant; this bloke is now the Leader of the Opposition.

Mind you, he has been leading for quite some time. He led us all into higher land taxes, higher stamp duties and higher payroll taxes. He led an escalation in government spending that went from $12 billion to $16.8 billion in the same period of record surpluses. So, not only did we completely blow the farm, but at the same time, we were spending like a drunken sailor on the public service. A 30 per cent increase over five years and what do we have to show for it?
The answer is becoming monotonous; not much.

[Jovial Monk]

And as I said in the sandpit, guess labor was following hte lead of Tip and Rodent. Altho Rodent blew all the mining tax revenue. . .pissed it up against a wall!

[White Indigene]

Im glad I can agree with most of what is here.

Although Mr JM plays both sides of the fence a little I reckon.

Like, how can you say Rudd/Labor is following the Libs previous. An odd perspective, unless there is little to really stand for in posts and comradeship.

But hey, JM seems 80%, so thats something I spose.