Australia is too hooked on China's need for resources. This has led to economic decisions which unbalance economic development.

http://www.wattelectricalnews.com/NEWS/Canadian-Recession:-Why-Australia-is-Next-in-Line/27883&email=bron.skiba@gmail.com&utm_source=Weekly+Wire+Loyals&utm_campaign=6b6d80b713-weekly_wire_wk21_monday&utm_medium=email&utm_term=0_acdc6e3c64-6b6d80b713-86717297&ct=t(weekly_wire_wk8_monday)&mc_cid=6b6d80b713&mc_eid=a232a64333


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Canadian Recession: Why Australia is Next in Line Mat SpasicSeptember 2, 2015 The Canadian economy contracted 0.5% in the quarter to June. This came on the back of an 0.8% contraction in the first quarter of the year. But it could have been worse. The slump actually bettered expectations for a 1% decline in growth. The net result, however, remains the same. With two consecutive quarters of falling growth, a recession was unavoidable. If you’re an Aussie reading this, it should give you some serious food for thought. Canada is the closest thing we have to a model for the Aussie economy. Why? Like Australia, Canada’s prosperity is built on commodity exports. Both nations are rich, and of relatively similar size in population. Both are progressive, and open to immigration. Together they rank among the most business-friendly nations. Most importantly, both live and die by what they sell to the rest of the world. For Aussie iron ore and coal, think Canadian oil. That makes Canada the perfect case study for our own economy. And it’s why this recession is so telling. Canada’s economy entered recession for two reasons primarily. For one, its balance of trade is worsening amid falling oil prices. At the same time, business investments are falling, stalling economic growth. Both of these stem from slowdowns in the global economy, led by China. However, Canada can expect oil prices to recover at some point in the mid-term. Australia, meanwhile, can’t rely on rebounding iron ore prices anytime soon. Because of this, we now stand on the brink of our first recession in 23 years. Declining GDP driven by weak trading terms ‘We are living, once again, in a time of ongoing global economic stability’ — Stephen Harper, Canadian Prime Minister Harpers comment came in the immediate aftermath of Canada’s slide into recession. Yet it’s easy to see Tony Abbot evoking similar sentiments in a few months’ time. After all, the prospect for an Australian recession has never been higher. Just today, Aussie GDP growth for the second quarter came in a disappointing 0.2%. Economists had predicted 0.4% in the weeks leading up to the announcement. At 0.2%, it represents the slowest quarterly growth since 2011. And it’s a far cry from the 0.9% growth from the first quarter. In the year to June, the economy grew at a paltry 2%. Another decline in Q3, and we’d find ourselves in the same position as Canada. Canada’s economic slump came as a result of worsening trade and investment. Australia’s recession will come in exactly the same manner. Declining trade and weak investment is underpinning Australia’s poor growth this year. The current account deficit dropped 41% in the June quarter, to $19 billion. In other words, the value of imports exceeded exports by a huge margin. At the same time, ABS figures show investment levels are plunging. Capital expenditures fell 4% in the June quarter. Business investments are down 10.5% on last year. In Canada’s case, business investment fell by an annualised 7.9%. As in Australia, capital expenditure is down amid weak growth prospects. Meanwhile, Canada’s resource sector shrank 4.5% amid plunging oil prices. Prices of the commodity have halved in the space of 12 months alone. Canada’s budget has been left decimated as a result. As a result, both economies relied on consumer spending to lift growth in the first half of the year. But clearly consumers can’t make up for the shortfalls in exports. No China to save Australia from recession this time Canada has now entered recession twice in the space of 7 years. The first time was at the back end of the global financial crisis in 2009. Australia, as you’ll know, weathered that storm. But there was a good reason why we didn’t follow Canada into recession during the GFC. China was still undergoing rapid growth at the time. It’s appetite for steel ensured iron ore demand didn’t waver. But that’s where the problem lies. China’s demand for Aussie commodities is falling. The construction boom is slowing, and China is readjusting to weaker growth. We’re not so lucky this time around, because we have no key selling point anymore. We’re just one in a pack of many commodity exporters feeling the brunt of this global slowdown. Canada’s recession is merely a reflection of the sickly state of the global economy. But it provides the perfect analogy for Australia’s own future. China kept Australia out of recession seven years ago. This time, we won’t be so fortunate. A brighter future for Canada? Despite the recession, some observers believe the worst is behind Canada. BMO Capital Markets economist Doug Porter noted: ‘While far from good news, the decline in Q2 GDP was a bit less nasty than expected. [The] good news is that the economy contraction looks to be in the rear-view mirror’.

Don't mention Canada’s Green Revolution raising electricity prices as a reason for a failing economy.

this will be the 5th year in a row the pundits have predicted a recession in australia. one day they will be right but not this year as the economy continues to IMPROVE.

Australian economy is already in recession?

http://www.dailyreckoning.com.au/the-aussie-economy-is-already-in-recession/2015/12/03/

[quote]The Aussie Economy is Already in Recession
Greg CanavanDecember 3, 2015
Reddit

In case you’ve only had a chance to read a headline or listen to a news grab on yesterday’s Australian economic data release, today, I’ll dig a little deeper.

The headline number came in at 0.9% for the three months to 30 September. This was better than expected and, annualised at least, represents a 3.6% growth rate.

But it wasn’t as good as it appeared. The healthy result came from an unusually strong contribution from ‘net exports’. This refers to the volume growth of exports versus the volume growth of imports.

During the September quarter, export volumes increased while import volumes decreased. This combined to see ‘net exports’ produce an exceptional contribution to economic growth. According to Peter Martin at Fairfax, it was the largest contribution in 15 years.

There is one thing about the headline growth number that you need to know though. It measures increases in production volumes. It doesn’t care whether the increase in volumes is profitable or not.

This is why the headline economic growth number is not a very good measure of the country’s economic well-being. It doesn’t reflect economic reality.

I’ll show you what I mean…

The strong growth in ‘net exports’ came largely from a hefty 4.6% growth in export volumes. My guess is that much of that came from iron ore volume growth, as well as the start of LNG exports. The problem though, is that the growth in export volumes was more than offset by a decline in the price received for said exports.

We know this because the trade deficit for the September quarter came in at over $7 billion. So while additional export volumes contributed to headline economic growth, in reality, we sold these additional volumes for less. This resulted in Australia generating a big trade deficit for the quarter, meaning more money flowed out of the country, despite the so called export boom.


But plenty flowed back in too, in the form of foreign creditors satisfying our demand for more debt. I’ll get to that in a moment.

But first, let’s look at the growth numbers when they actually take onto account the prices we receive for exports and the prices we pay for imports.

Along with a few other minor adjustments, this more realistic measure of economic performance is called ‘real net national disposable income’. It actually contracted 0.1% in the September quarter and 1% over the year. So on a more realistic measure of economic wellbeing, Australia is indeed in recession.

Not that you’ll read that in the mainstream news. Instead, you’ll get lazy analysis saying how strong the Aussie economy is, and how it continues to defy the pessimists.

The bottom line is that we remain on a trend to lower growth. Increased production volumes are all well and good but if they don’t provide you with a decent return on investment, they are useless.

It’s like a Chinese steel mill making more and more of the stuff while losing more and more money. Eventually it will go bust.

Which brings me back to the earlier point. While dollars flow out of the country due to the trade surplus, money comes right back in via foreigners lending to us. This supports consumer (and government) demand.

During the quarter, both households and government demand contributed to growth. But it wasn’t enough to offset the drag coming from investment.

It will be clearer if I show the percentage point contribution (positive or negative) from each sector, so you can see where the growth is coming from:



Starting from the top, household and government consumption combined provided 0.5% to the overall quarterly growth figure of 0.9%.

But that was more than offset by a fall in investment. ‘Dwellings’, which represent new home buildings, aren’t growing fast enough to contribute to economic growth. Non-dwelling construction reflects the ongoing fall in mining related investment. ‘Machinery and equipment’, which reflects general business investment, was weak too. In short, we’re consuming ok, but not investing in future growth.

‘Public’ or government investment spending fell sharply during the quarter too, and detracted significantly from growth. This is likely to be a volatile component, and should pick up during times of large infrastructure spending.

All this combined to produce a contraction in ‘gross national expenditure’. This measures the performance of the domestic economy without taking into account the effects of trade.

And as I mentioned, net exports (via more dirt and gas going to China) saved the day…or the quarter.

There is a bit of evening out to consider here. While the fall in mining investment detracts from growth, the pick-up in mining production (a result of the investment) adds to growth.

My gripe is that the headline figure doesn’t convey the quality of that growth. It suggests the Aussie economy remains strong. But selling more for less, and generating lower returns on investment, isn’t creating wealth.

The real measure of the Aussie economy is worse than the headline suggests. That’s not pessimism, that’s just reality.

There is one other thing to note from the numbers above. There is a lot of talk around about the economy rebalancing away from mining to other forms of investment.

It’s not happening. Housing construction isn’t adding to grow

Information from the above article:

http://portphillippublishing.com.au/wp-content/uploads/DR20151204a.png

Ahh, a recession if we only look past our net exports. What a fun idea.

We have been a net exporting country for many years. Why did no one look to this before? You know like the World Greatest Treasurers - Keating and Swan? Why it might even explain "the recession we had to have" and the GFC.

longweekend58 wrote on Jan 1^st, 2016 at 1:43pm:

this will be the 5th year in a row the pundits have predicted a recession in australia. one day they will be right but not this year as the economy continues to IMPROVE.

The economy is being fueled by a steady growth in debt rather than a growth in wealth. When will we ever see a return on that investment ? And turning one old house into three dog boxes is not going to give you that return !!

Sir lastnail wrote on Jan 2^nd, 2016 at 9:54am:

longweekend58 wrote on Jan 1st, 2016 at 1:43pm: this will be the 5th year in a row the pundits have predicted a recession in australia. one day they will be right but not this year as the economy continues to IMPROVE. The economy is being fueled by a steady growth in debt rather than a growth in wealth. When will we ever see a return on that investment ? And turning one old house into three dog boxes is not going to give you that return !!

Apartments and small houses are the future. People are now going for quality instead of quantity.

Whats the point of a 4 bedroom house and quarter acre block when there is only one or two people resident. Its a lot of work looking after house and land.

Sun Tzu wrote on Jan 2^nd, 2016 at 10:43am:

Whats the point of a 4 bedroom house and quarter acre block when there is only one or two people resident. Its a lot of work looking after house and land.

If it is too hard for you, don't do it.

Sun Tzu wrote on Jan 2^nd, 2016 at 10:43am:

Sir lastnail wrote on Jan 2nd, 2016 at 9:54am: longweekend58 wrote on Jan 1st, 2016 at 1:43pm: this will be the 5th year in a row the pundits have predicted a recession in australia. one day they will be right but not this year as the economy continues to IMPROVE. The economy is being fueled by a steady growth in debt rather than a growth in wealth. When will we ever see a return on that investment ? And turning one old house into three dog boxes is not going to give you that return !! Apartments and small houses are the future. People are now going for quality instead of quantity. Whats the point of a 4 bedroom house and quarter acre block when there is only one or two people resident. Its a lot of work looking after house and land.

For decades now studies have shown that crowding people into small areas in numbers destroys lifestyle and the fabric of society.

I'll keep my acreage thanks....

Shitzu is a proponent of a growth industry

in creating Slums/Ghettos

I'm sure he'd make a great Slum Lord.

longweekend58 wrote on Jan 1^st, 2016 at 1:43pm:

this will be the 5th year in a row the pundits have predicted a recession in australia. one day they will be right but not this year as the economy continues to IMPROVE.

Or more precisely '5th year in a row the pundits have predicted a technical recession.'

Sun Tsu's article demonstrated how meaningless the term is. On the things that actually matter for an economy - investment and national spending, our economy is going to the crapper.

New socialist government in Canada so its party time  :D :D :D ... well party time for welfare scum, public servants and fake refugees anyway.


Anyone in private enterprise is going to get arse raped by the government in order to pay the bill for it all   ;D

innocentbystander. wrote on Jan 2^nd, 2016 at 12:45pm:

New socialist government in Canada so its party time  :D :D :D ... well party time for welfare scum, public servants and fake refugees anyway. Anyone in private enterprise is going to get arse raped by the government in order to pay the bill for it all   ;D

Canadians have learned to live with rape and now expect it. Canada has been a high tax country for a long time.

Sun Tzu wrote on Jan 2^nd, 2016 at 12:57pm:

innocentbystander. wrote on Jan 2nd, 2016 at 12:45pm: New socialist government in Canada so its party time  :D :D :D ... well party time for welfare scum, public servants and fake refugees anyway. Anyone in private enterprise is going to get arse raped by the government in order to pay the bill for it all   ;D Canadians have learned to live with rape and now expect it. Canada has been a high tax country for a long time.

Some societies just can't get enough of being the prison bitch  ;D

polite_gandalf wrote on Jan 2^nd, 2016 at 11:49am:

longweekend58 wrote on Jan 1st, 2016 at 1:43pm: this will be the 5th year in a row the pundits have predicted a recession in australia. one day they will be right but not this year as the economy continues to IMPROVE. Or more precisely '5th year in a row the pundits have predicted a technical recession.' Sun Tsu's article demonstrated how meaningless the term is. On the things that actually matter for an economy - investment and national spending, our economy is going to the crapper.

you cannot have subjective definitions of recession otherwise you will always have one or not have one all at the same time depending on who you are talking to.

there is a definition of recession which we continue to use because it ISNT subjective.