Australian Economics

[KnightersRevenge]

LOL Joe Hockey saying that the fundamentals of the Australian and global economy are "still good". He didn't care to eloborate what fundamentals he is referring to though. He obviously can't be referring to the record levels of private and public debt, record low interest rates, the huge increase in the money supply or the huge asset price bubbles in stocks, property, fine arts, and bonds?

Yes, but aside from that...

 

[evo]

Schiff is spot on here, and most of his criticism applies to Australia as well...

https://www.youtube.com/watch?v=Z0zBwWc5W0M

 

[tigersnake]

Schiff is spot on here, and most of his criticism applies to Australia as well...

https://www.youtube.com/watch?v=Z0zBwWc5W0M

opening line is funny, 'easy to see the future if you have an understanding of economics...' lol (I'm an economist)

 

[Giardiasis]

Schiff is spot on here, and most of his criticism applies to Australia as well...

https://www.youtube.com/watch?v=Z0zBwWc5W0M

The central banks will choose deflation over hyperinflation, but if the government gets direct control over the money supply it is goodbye Charlie. In any case it is certain that the government will nationalise our main commercial banks when people figure out that they are all insolvent.

Unfortunately the idea that increasing the supply of money is beneficial to society pervades economics. Central banking has exacerbated the severity of the boom and bust cycle, but it is fractional reserve banking that is the cause of it. Only free banking with 100% deposit reserves and market set interest rates will solve the problem. However, government wouldn't then be able to use inflation to fund their welfare-warfare boondoggles, so the collapse of civilisation is probably more likely.

Cash and gold is the way to go, but spread your cash among a few different banks in case the government doesn't bail it out.

 

[Giardiasis]

http://www.acting-man.com/?p=40486

 

[Giardiasis]

I've actually discovered an article from Fairfax commenting on economics that I can describe as "good"!

http://m.smh.com.au/comment/get-set-for-bill-shock-inside-the-legal-fiasco-pushing-up-electricity-prices-20160303-gn9gic.html

 

[Giardiasis]

I've seen more and more articles from the media recently that float the idea of abolishing cash and forcing people to store money as demand deposits only. They are primarily in favour of such a move because it is argued that it will reduce criminality, make it harder to people to avoid taxation, it allows banks to lend more money, etc.

http://www.news.com.au/finance/economy/australian-economy/should-we-scrap-the-100-note/news-story/0e480aa7b1f24b5c2ef063f2a3b30fb7

http://www.smh.com.au/federal-politics/political-news/cashless-future-will-save-billions-and-requires-red-tape-abolition-alex-hawke-20160216-gmv8ka.html

http://www.abc.net.au/news/2016-10-21/world-awash-with-cash-fuels-illegal-activity/7933250

It is fair to say that the banks and the government would love to go cashless. For the banks it would allow them to expand credit without the risk posed by customers converting their demand deposits into cash. The banks know that if they set negative interest rates for demand deposits, this would led to customer pulling cash out en masse, which they are in no position to accommodate. For the politicians, it will provide them much more power to regulate our lives as all transactions would be recorded, it would make it easier for them to tax, and it would make tax avoidance more difficult. It would also make it easier for them to institute bail ins (losses worn by depositors) rather than bail outs (losses worn by tax payers) for when our big banks go belly up.

All I can say is that everyone should keep a close eye on these developments, and plan accordingly.

 

[TigerForce]

I've seen more and more articles from the media recently that float the idea of abolishing cash and forcing people to store money as demand deposits only. They are primarily in favour of such a move because it is argued that it will reduce criminality, make it harder to people to avoid taxation, it allows banks to lend more money, etc.

http://www.news.com.au/finance/economy/australian-economy/should-we-scrap-the-100-note/news-story/0e480aa7b1f24b5c2ef063f2a3b30fb7

http://www.smh.com.au/federal-politics/political-news/cashless-future-will-save-billions-and-requires-red-tape-abolition-alex-hawke-20160216-gmv8ka.html

http://www.abc.net.au/news/2016-10-21/world-awash-with-cash-fuels-illegal-activity/7933250

It is fair to say that the banks and the government would love to go cashless. For the banks it would allow them to expand credit without the risk posed by customers converting their demand deposits into cash. The banks know that if they set negative interest rates for demand deposits, this would led to customer pulling cash out en masse, which they are in no position to accommodate. For the politicians, it will provide them much more power to regulate our lives as all transactions would be recorded, it would make it easier for them to tax, and it would make tax avoidance more difficult. It would also make it easier for them to institute bail ins (losses worn by depositors) rather than bail outs (losses worn by tax payers) for when our big banks go belly up.

All I can say is that everyone should keep a close eye on these developments, and plan accordingly.

Hackers world. We will never go cashless.

 

[Giardiasis]

You'd hope that the general population would oppose it.

 

[Giardiasis]

Yet another one.

http://www.news.com.au/finance/economy/australian-economy/government-floats-100-note-removal/news-story/042220701a8310c39a1a87da4e20de35

http://www.smh.com.au/federal-politics/political-news/future-of-the-100-note-up-for-grabs-as-government-targets-undeclared-cash-payments-20161213-gtakk5.html

 

[Giardiasis]

More government intervention in the economy that will waste money to keep unproductive jobs.

Alcoa's Portland smelter: PM, Premier Andrews announce deal to secure plant's future

http://www.abc.net.au/news/2017-01-20/alcoa-portland-announcement-expected-from-state-federal-govts/8196602?pfmredir=sm&pfm=ms&WT.z_navMenu=abcNavSites&WT.z_srcSite=news&WT.z_link=Change%20to%20standard%20view

 

[1eyedtiger]

More government intervention in the economy that will waste money to keep unproductive jobs.

I don't think the jobs are unproductive. It's more a case of multinational companies taking Australia for a ride. I'll use SPC as an example. Owned by Coke Cola Amatil yet the Victorian government bailed them out to the tune of 25 million over several years, a deal they reneged on and the government had to cough up more. Apparently if the Victorian government was to renege on a contract, they'd be labelled irresponsible and putting investment in Victoria at risk. But private business's treat the very same contracts as not worth the paper they're written on a do as they please. Is anyone going to seriously tell me Coke Cole Amatil didn't have the 25 million? Why are Australian taxpayers propping up profitable business's? This is what happens when you sell everything and remove protection from local industry. Well, too late now. More and more companies are using the ruse of job losses to extort money from Australian taxpayers. Any taxpayer money going to private business's should either be loans or investment so we get a return. Not the current, 'Take a few million, no strings attached' type deals done today.

 

[Giardiasis]

Without government intervention, the plant would be closing down. By unproductive I mean uneconomical, the money would be more efficiency spent in other ways. There should be no government redistribution to private businesses, be it direct hand outs, loans or investment. Economically it is a waste of resources, morally it is wrong.

 

[mrposhman]

Without government intervention, the plant would be closing down. By unproductive I mean uneconomical, the money would be more efficiency spent in other ways. There should be no government redistribution to private businesses, be it direct hand outs, loans or investment. Economically it is a waste of resources, morally it is wrong.

Uneconomical for a company to operate but I would expect the government to review investment in businesses by reviewing all direct and indirect tax income that the government would receive. If that makes the investment economical then I would expect the government to invest.

An uneconomical mine is one thing, losing jobs will mean losing tax receipts from employees, will reduce purchases by said employees and therefore reduce GST which then goes on and effects other companies income and therefore ongoing corporate tax from indirect businesses. Thats before you include potential government handouts to the jobless.

A lot more is taken into account than just an economical decision by a company. Indirect taxes / benefits not provided can change the decision and therefore influence whether the government will invest in individual projects.

 

[Giardiasis]

Uneconomical for a company to operate but I would expect the government to review investment in businesses by reviewing all direct and indirect tax income that the government would receive. If that makes the investment economical then I would expect the government to invest.

An uneconomical mine is one thing, losing jobs will mean losing tax receipts from employees, will reduce purchases by said employees and therefore reduce GST which then goes on and effects other companies income and therefore ongoing corporate tax from indirect businesses. Thats before you include potential government handouts to the jobless.

A lot more is taken into account than just an economical decision by a company. Indirect taxes / benefits not provided can change the decision and therefore influence whether the government will invest in individual projects.

When I say uneconomical, I mean from the perspective of the whole economy, not the government. In any case the analysis for tax revenue you suggested would not include revenue missed from the business activity that can no longer happen thanks to the redistribution. It is this business that would have provided a greater economic outcome.

 

[MB78]

Without government intervention, the plant would be closing down. By unproductive I mean uneconomical, the money would be more efficiency spent in other ways. There should be no government redistribution to private businesses, be it direct hand outs, loans or investment. Economically it is a waste of resources, morally it is wrong.

I think it was too big to fail for the town of Portland that has a population of 10,000. If it was based in Melbourne I think it would have been closed.

Perhaps it's time with NBN and the like that the government put more public service jobs in regional Australia.

 

[mrposhman]

When I say uneconomical, I mean from the perspective of the whole economy, not the government. In any case the analysis for tax revenue you suggested would not include revenue missed from the business activity that can no longer happen thanks to the redistribution. It is this business that would have provided a greater economic outcome.

Whats the difference? The government will look at the bigger picture. The investment of $240m is worth about $120k per indirect employee or about $30k / year. They'll get the majority of the investment back through ensuring tax receipts on wages comes in. They also gain through continued purchases goods in the region and the GST this serves up. The other consideration they have. Add on corporate tax, and plenty of other added benefits (ie. some people may own investment properties there, therefore additional income tax / capital gains etc). They have people continuing to buy houses, so therefore stamp duty etc.

The government aren't as stupid as you make them out to be, they will review all businesses that are in trouble in individual circumstances, otherwise no businessess would ever go bust if they knew they would just be bailed out.

 

[Giardiasis]

Whats the difference? The government will look at the bigger picture. The investment of $240m is worth about $120k per indirect employee or about $30k / year. They'll get the majority of the investment back through ensuring tax receipts on wages comes in. They also gain through continued purchases goods in the region and the GST this serves up. The other consideration they have. Add on corporate tax, and plenty of other added benefits (ie. some people may own investment properties there, therefore additional income tax / capital gains etc). They have people continuing to buy houses, so therefore stamp duty etc.

The government aren't as stupid as you make them out to be, they will review all businesses that are in trouble in individual circumstances, otherwise no businessess would ever go bust if they knew they would just be bailed out.

Of course there's a difference, the government is an agency of coercion that seeks to expand its power and prestige at the expense of everyone not politically connected. It holds monopoly powers and suffers no competitors in its claimed territory. For example the people of WA actually voted to leave the commonwealth back in the 30's by almost 70%, but because the federal government didn't support it, they were not allowed to peacefully secede. There are actually no mechanisms in place that allow this. Politicians will choose to act where it is politically benefical not where it is benefical for all. Politicians don't look at the bigger picture, they don't look past the next election cycle.

All those amazing economic gains you have brought up are even more true for the business activity that now can't exist because the resources they required to exist have now been tied up re-building over an entire potline to make a metal that is in oversupply.

 

[billyb#40]

Aluminium is electricity hidden in a metal bar
Whoever sells their electricity cheapest gets to sell Aluminium
Politics and control of the seats where the bauxite is "energised" drives the subsidy
Good luck to Portland but it won't last too long as it's a bad deal for the rest of us
Eventually economic reality will prevail

 

[mrposhman]

Of course there's a difference, the government is an agency of coercion that seeks to expand its power and prestige at the expense of everyone not politically connected. It holds monopoly powers and suffers no competitors in its claimed territory. For example the people of WA actually voted to leave the commonwealth back in the 30's by almost 70%, but because the federal government didn't support it, they were not allowed to peacefully secede. There are actually no mechanisms in place that allow this. Politicians will choose to act where it is politically benefical not where it is benefical for all. Politicians don't look at the bigger picture, they don't look past the next election cycle.

All those amazing economic gains you have brought up are even more true for the business activity that now can't exist because the resources they required to exist have now been tied up re-building over an entire potline to make a metal that is in oversupply.

Righto. I'll go back to the less crazy threads. Jeez your tin hat may well need a new strap. The scepticism you show to any government interaction is worrying. I'm not really sure what seceeding from the rest of Australia has to do with economic decisions like this one. Its fairly clear cut and I agree with MB78 that maybe in Melbourne this may not have occurred but in Portland thats a different story. There are so many impacts of creating ghost towns by removing the main source of income for that town.

I'm not sure how you can immediately make an assumption that this was the wrong move and there was a far better project to invest in. You have no idea what investment decisions were entered into, its all built on your pre-conceived ideas of government.

Theres a big difference between a companies economic decision and that that involves the overall impact on a rural community. This is where government step in with a bigger picture mentality.

So what other business activity might have been invested in and how are you sure this has a much greater ROI and payback than the investment that has actually been made in Portland?