May 2006

26-May-2006 - The future of the Australian Economy

Well my blog is usually about me :-). But lets change the topic... to a topic that will affect all of us, but may just bore you to tears hehehe. Lets discuss economics! So heres my spiel about the future of the Australian economy...

The Australian economy is running very smoothly now and everything is looking rosy. This is in part a result of strong global growth, particularly in developing countries such as China, it is in part a result of spending cuts and reforms by the Howard government, and it is also in part a result of the groundwork put in place by the Keating and Hawke governments. Property prices are high (despite recent drops), and the sharemarket is strongly growing. But this cant last and my prediction is that over the next 30 years Australia, and even more acutely NSW, is going to go through an economic meltdown.

Why would I make such an audacious statement? Two reasons: baby boomers, and globalisation.

It is a well known fact that the baby boomer generation on the whole has not saved enough money to finance their retirements. Most of what they have is tied up in property, and some of it is invested in shares. In 25 years the older population will more than double, and this for many people is going to lead to a serious economic dose of reality. In order to finance their retirements, it is inevitable that baby boomers will need to sell off a lot of their assets.

Do you think property prices will keep on their strong upward trend? Think again! A glut of people selling off their property and shares in order to finance their retirements is going to result in strong downward pressure on property and share prices. As people realise that their assets may not perform as well as they had imagined, more people will sell, compounding the problem.

To add to this big asset firesale is the fact that the workforce will shrink significantly. The number of people retiring will far outweigh the number of people entering the workforce. This will result in a shortage of employees leading to increased wage pressure. Less profitable companies will not be able to afford the increased expense and will be forced to shut down. Basically a smaller workforce means less companies, and less goods and services being produced (ie. lower GDP).

If the economy is producing less but still has the same quantity of money circulating then inflation will result. To counteract this trend of inflation the reserve bank will be forced to increase interest rates. This will only help to worsen the asset price collapse as it will scare investors and potential home owners away from the market.

What will we see over time is a transfer of assets from the aging population to the working population, and with new demand for assets coming almost exclusively from the working population, and the working population being significantly smaller in size than that of today, the real prices of those assets will come down to match the new supply/demand ratio (where supply is the same, but demand has dropped).

This does not look good for baby boomers, or anyone holding their wealth in assets - particularly property. But the news only gets worse for eastern Australian states.

The world is getting smaller. Trade between nations is increasing and the wave of globalisation is washing ashore. Never before has so much been traded between nations. 'Globalisation' usually has a bad name, and is used by tree-hugging hippies all over the world, but it does have many advantages. If China can produce tshirts for $5, and it costs Australia $10 to produces a tshirt but we can produce bananas for $5 but it costs China $10 to produce bananas then if Australia exclusively produces bananas and China exclusively produces tshirts and we just swap, then everyone gets cheap bananas and tshirts! Thats the essence of globalisation and free trade, and why so many countries are trying to increase free trade and remove barriers to trade.

So what is Australia good at producing? Where can we fit in this world of globalisation? Well we are good at pretty much one thing and one thing only. Mining. No wonder Paul Keating called us a 'Banana Republic', despite it not being bananas in this case but mining. Maybe he should have called us the 'Mineral Republic'. There are some other things such as Tourism, Rural commodities etc, that make up our GDP but mining makes up a significant amount of it. With China and India's growth, mining is set to be a much larger part of our GDP in future.

So what has this all got to do with eastern Australian states faring worse? Well the mining jobs are located mainly in western states. And with our economy moving towards mining, and a lessening of manufacturing (being taken over by countries such as China), and services, the jobs are going to move from the eastern states to the western states. As a result the population will slowly migrate westward leaving the western state economies growing while the eastern state economies shrink. Less population = less demand for housing etc. See what i'm getting at? On top of the asset sell-off (increasing supply), and on top of interest rate fears (decreasing demand) there will be even less demand for property in eastern states. Prepare to watch your property price stagnate or even drop over a very long depressed period.

On top of all this there will be a migration of baby boomers from cities to coastal towns as they retire, increasing demand for property in coastal towns but lessening it in cities. So if you live in a city, in an eastern state of Australia and you have property, all the best for the next 30 years! :-)

22-May-2006 - Digging through the centre of the Earth

Using DigHoles, I discovered that if I was to dig a hole through Sydney and come out the other side of the earth I would find myself in the North Atlantic ocean off the coast of Morocco :-)

And google maps has just mapped Australia. You can check out Sydney. Looks like the beginning of the end of whereis.com.au

I spent the weekend going to Plastic, Paddys Markets, playing games, and going to Ten Pin Bowling. Next week is Transmission and I cant wait!!!! :-)

Ok thats enough links for today. Byee!!

19-May-2006 - Da Vinci Fundies

Yesterday I walked past the George street cinemas and discovered about 100 protesting christians on the opposite side of the road. They were there to protest the opening of the movie The Da Vinci Code.

They had signs up urging Christians to boycott the movie, and other signs rambling about blasphemy. Pretty much everyone on the other side of the street was looking at them and laughing.

I have never understood why people choose to believe something, then refuse to ever question their beliefs, and do no even allow others to question their beliefs. If you cant even question something, then how do you know it is correct?

Anyway I'm not going to go into a long religious argument here, but another thing worth noting is that by actively protesting they are doing nothing but promote the film which they are trying to shun. It brings a real element of controvery to the film. Controversy = Interest. Interest = $$$ for the movie makers.

Good work Christian fundies.
I too had a bit of a laugh and then walked on my merry way :-)

4-May-2006 - Mobile phone phishing

Today I received a mobile phone call early in the morning. It was very brief and they hung up straight away before I could answer the phone. The phone number was 03 95405189.

After doing a bit of a google search on this number I found out that this is actually a marketing company (DC Marketing) doing mobile phone phishing. Its a scam, but apparently they are not doing anything illegal. They rely on people calling the number back, and when they do they are told they have won a prize etc.. and to call a 1900 number which then starts charging them lots of money.

Talk about dodgy. There is a page dedicated to it on the 4wisemonkeys site.

If you get a phone call from 03 9540 5189, do not call them back! Do not encourage this behaviour. It should be illegal.

4-May-2006 - Interesting fact

At 2 minutes and 3 seconds past 1am last night, the time and date was:

010203040506

Amazing!

1-May-2006 - Seeing double?

This weekend Tim came over and we took heaps of photos around Chinatown and Pyrmont. Here are a couple of funny ones that I did in Photoshop...