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This is Why Australia Hasn't Had a Recession in Over 25 Years (bloomberg.com)
Australia is close to seizing the global crown for the longest streak of economic growth thanks to a mixture of policy guile and outrageous fortune. From a report: While growth is being underpinned by population gains and resource exports to China, failure to spur productivity has meant stagnant living standards and electoral discontent; a property bubble fueled by record-low interest rates has driven household debt to levels that threaten financial stability; and a timid government facing political gridlock could lose the nation's prized AAA rating as early as May because of spiraling budget deficits. Australia's last recession -- defined locally as two straight quarters of contraction -- occurred in 1991 and was a devastating conclusion to eight years of reform designed to create an open, flexible and competitive economy. But it also proved cathartic, paving the way for a low-inflation, productivity-driven expansion. As momentum started waning, China's re-emergence as a pre-eminent global economic power sent demand for Australian resources skyrocketing, helping shield the nation from the worst of the global financial crisis. But the post-crisis return of the boom proved ephemeral, failing to boost government coffers and pushing the local currency higher, eroding competitiveness and driving another nail into the coffin of a fading manufacturing sector.
There's rather a disjunction between the rah-horray headline and the text, which seems to be about how Australian economy is heading for a major bust. "Failure to spur productivity has meant stagnant living standards and electoral discontent; a property bubble fueled by record-low interest rates has driven household debt to levels that threaten financial stability; and a timid government facing political gridlock could lose the nation’s prized AAA rating as early as May because of spiraling budget deficits."
The answer to the question posed in the title seems to be "because Australia is close to China, so when the rest of the world economy hit a depression, the Australian economy was buoyed up by the Chinese money."
http://www.geoffreylandis.com
Complete right wing rubbish, the reason we got thru the GFC without recession was the governments prompt stimulus actions at the time.
The housing bubble is not due to supply, there are many vacant investor properties, it is the ridiculous negative gearing tax dodge that is fuelling the housing price problems.
It was our first house, and my partner was a lot more risk adverse than me. She insisted we be prepared for one of us being out of work and interest rates doubling. Both happened. I changed careers to IT and it took me nearly 2 years to get work, while interest rates went from 9% to 18% in a matter of months.
We managed to pay the mortgage and keep the house, but it was not a fun time.
To know that you know what you know, and that you do not know what you do not know, that is true wisdom. --Scooby Doo
I've posted this maybe dozens of times across the internet, I'm tired of shouting it and I'm tired of making lengthy posts with links and evidence.
The country is selling all it's gas, minerals at rock bottom prices to anyone and everyone for a start. In a huge massive way. The mining boom is finally slowing down significantly, at least so I hear.
We are also pretty lax with stopping people buying property. There's arguments why shouldn't we stop them, but seriously, I'm sick of debating it. If you can't see how someone vastly wealthier than the common local, bidding for houses isn't going to mess up the cost for the locals,..... well I don't know what to say. There's a reason Thailand, Indonesia, other smaller second class countries don't let foreigners buy.
We're getting 'Vancouvered'. It ain't about race, it's about economics and the locals (who don't own yet, you know, a LOT of people) are getting destroyed, totally by this.
That's the facts, it's as simple as that. Furthermore, as long as the Chinese can still buy property (and they do it legally and illegally) then I suspect the 'crash' which I've hoped for, for a decade, simply won't come. They'll just see a cheaper place to store their money they want to hide from China.
We're boned. Best benefit to all this would be a property developer in the last 20 years. Rest of us? Well I've held off using expletives but to say I'm white hot raging angry would be an understatement. @$#%^ our governments.
The country is selling all it's gas
You're not wrong. What a wonderful example of a free-market economy. A small localised gas supply at relatively cheap prices made using gas for everything affordable. Even cars were converted to run on LPG to save costs.
Fastforward to now. Shale gas has boomed. Australia sold it's own grandmother to gas companies for a penny and we became a huge exporter of gas able to rival Russia and the middle east. Everything happy right? Except Australiasian gas prices fell to below the break even cost of the shale gas but thanks to pre-existing contracts with China and Japan they couldn't just stop production without a penalty. Wait a second, it's a free market! Just buy all the local cheap gas and sell it overseas instead of the shale gas.
No money for the government, no gas for the people, but a few oil companies are able to stay afloat despite their shitty business decisions. The economy is still running and the government pat themselves on the back for not going into recession even though they have no handle on the situation at all.
Hurrah!
LOL.
The only reason anyone made it through the GFC was because Obama (which inherited the mess) fired up the money presses and kept liquidity in the economy. If not for that it could have been decades long, the only thing that fixed the great depression in the 30s ultimately was WW2.. because ta-da the government starts spending up by building lots of stuff, thus putting liquidity into the economy.
Australia is not special, its just been riding an almost never ending mining boom with China.
Quick question for you.
1) The US pretty-much doubled federal spending in order to get us out of the depression, putting us now $20 trillion in debt.
2) Depressions seem to come roughly every 8 or 9 years. Call it every 10 years.
3) When the next depression hits, will the US have had enough time to pay back the extra debt?
4) Are steps 1-3, a sustainable plan for shortening recessions going forward?
Extra credit:
According to your post, the US helped *everyone* through the depression. Was the extra debt borne by everyone, or only the US? Will foreign citizens help us pay back the money we spent to help them through, or only US citizens?
Was the extra money spent on things that would make our economy stronger, such as infrastructure, high-speed internet access, health care, or research? Or was it spent to expand the military (as in: number of aircraft carriers)?
Spending all that money, is the economy sound or are we just limping along? Are we back to the pre-depression unemployment levels and wage levels?
Would it have been better to simply let the banks fail, so that the depression was worse but much shorter? Did any other countries do this, and what were their results?
You can't keep throwing public money at private companies to preserve local jobs when it's become obvious that we simply can't compete with manufacturing in developing countries. The big automakers have closed because it's just cheaper to make cars in other countries, regardless of how many govt "incentives" they get.
You may as well have the govt nationalise the auto industry if they're going to keep funding it.
They sentenced me to twenty years of boredom
Oh please, spare us your xenophobia.
If I said the population of Africa is mostly black is that xenophobia? No? Then why is pointing out the simple fact that there is an incredibly large institutional investment from Chinese non-residents of Australia in the country?
I mean every major skyrise construction is bought out mostly by Chinese non-residents. Whole suburbs in major cities have been bought and build by Chinese non-residents. The two largest cattle companies in Australia have been bought out by Chinese consortium. The largest property in Australia (the size of Israel) was bought by a Chinese consortium. And let's not forget the all their investment in our dairy industry, coal industry, telecoms, ... they'd own it all if it weren't for the fact that the government keeps coming up with new laws limiting foreign ownership (and good-on-em as well).
I wonder why people were concerned about the Japanese and not the English.
You may wonder, but you don't know despite what you claim. There's a big difference between having foreign ownership from a country who is a close ally, has strong political ties, similar financial systems, and works on the same principles as yourself, vs a country who you will quite likely be at war with again within the century, who you have strained political relations with, and who you accuse of and constantly take to the various trade organisations of deceptively rigging their financial and trading systems. China is economically hostile, just as Japan was in the 80s.
The fact that you put this down to xenophobia is just an amazing display of ignorance.
Housing in Australia has several components to it which I will try to cover in this post. I live in Melbourne Australia and I want to provide insight to people interested in learning more. 1. The 1980s Hawke/Keating Market reforms set the country up for the past 30 years of economic growth. Anyone denying that is crazy. They floated the currency, freed up the market for global trade and set the nation on a path to long term wealth. They did however over stamp on the breaks in 1991 causing a short recession. https://en.wikipedia.org/wiki/... 2. Negative Gearing and the Capital Gains Tax concessions are two massive tax breaks for existing home owners. Their effects are huge and not to be underestimated. Negative gearing allows any loss on a property such as repair work or investment loss to be written off against the owner's taxable income. Originally it was introduced to boost investment in the housing market. The Capital gains discount allows a property owner to not pay tax on 50% of their profit on a property when they sell it. In the current market this has created a situation where it is better to leave a property empty, appreciating in value and then sell it without the hassle of dealing with tenants and property management firms. http://www.abc.net.au/news/201... 3. Foreign investment. Market research data from Vancouver shows that implementing a 15% tax on foreign property investment caused a property price drop of around 20%. Where that money is coming from doesn't really matter, the point is that foreign investment accounts for approximately 8-11% of properties purchased in the market. https://www.bloomberg.com/news... 4. Recent studies of water usage in Melbourne and Sydney show that upto 80,000 properties in Melbourne alone lie vacant. http://www.heraldsun.com.au/ne... and http://www.afr.com/real-estate... 5. Immigration, 182,000 people migrated to Australia in 2015-16 the 2016-17 stats are not available http://www.abs.gov.au/ausstats... This is a large number by Australian standards, but most immigrants are not rich enough to buy property outright. Mostly they increase competition in the rental market. Most of these people are settling in Sydney and Melbourne with an estimate of 70-80% of people moving to these two cities. http://www.abc.net.au/news/201... 6. The mining/resources boom. In the late 1990s/early 2000s the mining/resources boom brought a ton of wealth into Australia, this prevented a natural correction from occurring in the property market. More money flooded into the market which has helped to inflate prices and keep the cycle going. Now, with all of these factors combining there are many things occurring in the domestic market. Yes the car industry is closing, but overall that's not a big deal so far, because we haven't been exporting many cars for years and it's been a government funded jobs program. Wages are stagnant and growth is quite low at the moment, at the same time we have seen layoffs increasing especially in the mineral states such as Queensland, South Australia and Western Australia. The biggest threat to the economy in my opinion is high house prices growth at a time of high unemployment growth. We are seeing areas which most people would not consider desirable to purchase housing in (traditionally poverty stricken high crime areas)