Category Archives: The Economy

And now the CBA has woken up and started to fear a GFC 2

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Ralph Norris of the CBA has now finally caught up to what I’ve been saying for months: GFC 2 is on it’s way and it’s coming fast.

Yesterday a very peculiar thing happened in the debt stricken EU, one of the key economies Germany failed to sell its long term bonds shocking debt markets and sparking fears of a national scale Lehman brothers collapse.

Up until now Germany and France have been holding the plug in place in the currency bathtub, keeping the many weaker European states afloat despite the spreading fears of contagion.

Now France’s AAA rating is being questioned and Germany is suffering as investors are steering clear of the Euro only augmenting fears of the region breaking up in disarray.

Now all of this sounds absolutely atrocious, but at the same time I can’t help but to smell a rat. To quote Gail Kelly of Westpac “The various authorities in Europe actually have the capacity to deal with these issues – I certainly wish they’d get on with it and do it”.

At the end of the day Europe has the assets and power to burst out of this. So where is all this ‘recession’ coming from?

This begs the question – will the GFC 2 be rooted in real economic problems or will it be determined by the fund managers and nervous investors.

Regardless I’ve got a sneaky feeling this time Australia won’t be spared!

Your thoughts?

More take, less give: why we hate banks

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It’s that time of year again! The profit results for the ‘big four’ are out and the results are nothing short of jaw dropping!

According to marketwatch.com, Westpac is in the lead with a massive $6.99billion in profit closely followed by the CBA at $6.39Billion. ANZ came in third with $5.36Billion and NAB at the bottom with ‘only’ $5.2billion NET PROFIT. Let me say that again NET PROFIT!

Put these figures together and you’ll see that just the big 4 banks made a staggering $23.94billion in combined profits.

Look I have no problem with banks making profits but I do have a problem with how they continue to market themselves as they live in our world or they give more and take less. What a load of rubbish. They don’t have any idea what it like in our world nor do they give more. Take for example last week’s rate cut by the RBA of 0.25%pa.

3 out of the 4 banks followed suit and passed on the full amount but the bank who has been marketing itself as giving more and taking less was the only stand out. They only dropped 0.20%pa. Hmm whatever happened to the More Give Less Take marketing slogan that NAB has been plastering all over the media to convince us consumers that they are not like the others?

By this action it clearly shows that they are a bunch of hypocrites and should never be trusted. They are all smoke and mirrors.

My thoughts on this are that as consumers we should take the hardest line of all here and be ultra mercenary. Milk whatever bank or financial institution that offers the best deal as much as you can.

There is no such thing as loyalty. Simply switch your banking as often as you can to get more for yourself.

I say we as consumers need to take a leaf out of the books of the banks. Give less and take more!

Your thoughts?

The Land of the Great Online Casino

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As the Government struggles to find a ‘quick fix’ solution to the mounting private debt in Australia no one is safe from their clasping reach. One of the proposed ways of helping us improve our financial standing is the controversial ‘pokey’ reforms that are affecting local communities all over Australia.

Don’t get me wrong, gambling is something which should only be undertaken in moderation, but I really don’t think that it is the pokeys in your local RSL that is the culprit of our worries.

Considering that Australians will gladly bet on two flies crawling up a wall, it gets a bit ridiculous when you’re required to have a de-facto licence to bet a dollar whilst mobile betting apps and online betting communities are left to flourish and grab the lions share.

What gets me even hotter under the collar is how the government is going after pokeys with the full armada yet happily letting betting advertisements become a part of our everyday TV content.

Watching the rugby cup last weekend for instance, every other commercial break had an ad for betting. Even the pre and post game commentaries somehow had betting integrated into the content of the presenters WHICH I FIND UTTERLY DISGUSTING.

Honestly, I reckon it’s time for Gillard to let Wilkie go ahead with his low-intensity machines, allowing RSLs and local communities to keep what little they have, and focus her efforts on getting a hold of the new Aussie ‘eVegas’ before it gets out of hand.

Is Australia at risk of becoming an eVegas? Shouldn’t we rather focus our efforts on education instead of moderation?

Your thoughts?

The cost of antics and instability

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A recent article in the Business spectator offers a disturbing insight into the state of the Australian property market.

The strange rules and stipulations for new property development and their lengthy approval processes are leading to massive increases in costs.

So much so, that according to Meriton founder Harry Triguboff, as much as $150,000 could be shaved off a $650,000 apartment if the local council antics were stopped.

What we need to do is to get the local governments to realise just how important affordable apartment living is to consumers and focus on finding ways to cut out the cost of ‘red tape.’

Your thoughts?

Little bites are causing a big decay

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A perfect storm is brewing inside Australia with the gap between the strongest and weakest industries being greater than ever before.

From a business confidence study conducted by NAB it shows that there are several factors underlying the deterioration of weaker sectors. The biggest concern was that the gap between two speed economy was actually getting wider. Scarily so it was not due to the larger sectors getting stronger but by smaller industries getting even weaker. Small business is hurting and hurting bad. Who cares you say? You should, as the small business community are a massive employer of Australians and the more that sector shrinks the more people that will be put out of a job.

It seems that in a nutshell simply don’t understand how what’s happening around their own day to day world. Sure they may read the news headlines and take in a few micro seconds of what’s happening in countries like Greece and the US but they unfortunately have no mechanism to aggregate all the news stories together to form one big picture.

Unfortunately that big picture is looking bleaker than the politicians would have us believe. We all seem to so well deluded by our ‘mining boom’ and the rhetoric from the government. The little bits of information you are receiving is hiding the massive decay.

This has been a concern for mine for quite some time now. As I said in a post back in September, we’re all just a bunch of lemmings. But as evidenced by the NAB falling business confidence report I fear that the ‘boom times we are bathing in are short numbered.

Every financial event adds up. The bite sized chunks of news in this country are contributing to the decay which is going to surprise many people and unfortunately cost them dearly. Just think about the last time you went to the dentist and they discovered a tooth that needed some work and cost you fair bit.

Your thoughts?

Time to wake up and smell the roses – they’re dying!

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As I said in a post back in August, Australia is slowly sliding into another GFC. Now here we are a few months later and despite all of the continuing signs such as the Australian and world share markets collapsing, the Aussie dollar tumbling and big business realizing that Australia isn’t bullet proof. Australians are merrily carrying on with their daily lives, totally oblivious to what’s going on around them.

What gets me hot under the collar is that so many people seem to think the good times will never end. Take for example, a recent study of Gen Yers (18-29 years old) showed a renewed interest in saving, (not a bad thing) but when asked why they wanted to save for, the answer was very simple: to afford bigger ticket items NOT for unexpected expenses down the road.

God help us! I am perplexed. The signs are all around us and still yet we seem to have such a ‘she’ll be right attitude – we’re the lucky country.’

Hmm… that’s what the USA and Greece thought – and now look at them.

What’s your take? Are we fine and I am overreacting, are we all too busy to see what’s going on or do you simply not care?

What do you think?

We’re all just a bunch of lemmings

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Today’s release of the Consumer Confidence statistics has totally cemented the fact that Australians are living in ‘la la’ land and literally have got no idea of what is happening (or worse still what is about to happen) to them from a financial point of view.

According to the Westpac-Melbourne Institute Index of Consumer Sentiment consumer confidence has rebounded strongly in September, as a recovery in economic growth and fading expectations of an interest rate hike reassured households. As a result the index, after falling to its lowest level in more than two years in August, rose by 8.1 per cent in September to 96.9. Interesting, just one month ago the index was at its lowest level since May 2009.

Surprising how simple Australians really are. All we look at is what is happening to interest rates are to measure our confidence.

Clearly we need to look a little further and read between the lines more.

All is not as rosy as it would seem.

Let me show you.

Business failures are rising

According to credit agency Dun & Bradstreet, business failures in Australia rose 12.1 per cent in the June quarter, compared to a 4.1 per cent rise in the prior quarter. The reason for this is that outside the mining sector, business sentiment is generally still poor, and the strong Australian dollar is straining profits. Insolvency activity in Australia is up across almost all sectors, with a significant deterioration in retail and service sector failures, reflecting subdued confidence.

New home starts down

Take the data released this week on new home starts. Surprise, surprise, they unexpectedly fell in the three months to the end of June, pointing to a further weakness in the housing sector. Here, the number of new homes starting construction dropped 4.7 per cent in the second quarter of the year.

Unemployment unexpectedly rises

Recent data shows that the unemployment rate rose unexpectedly to 5.3 per cent in August, up from 5.1 per cent in July, taking the jobless rate to a 10-month high, and raising fears that weakness in the job market may be worse than initially expected.

Steer clear of ‘la la land’

Whatever you do, start to read between the lines and connect the dots from the various news articles out there. Don’t be lead astray by what the government and the bank economists are saying about how strong Australian economy is and that we are protected from the economic worries of the world. If you believe that you are just one of the lemmings

So as you can see the Australian economy is not all as rosy as it would seem. Yes we have a two speed economy, but the cogs are beginning to show signs of significant wear and tear.

Don’t believe the ‘la la land’ rethoric by the government. Keep on reading my blog and see the real story.

Tell me what you think?

Here comes GFC 2

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I’m going to make a prediction that I can guarantee will raise a few eyebrows.

The Australian economy will slide into a slow motion GFC over the coming 6 months.

A big call I know. But if you read between the lines of all the data and hype put out by the government and the media – Australia is up to it’s eyeballs in debt and hurtling towards an economic train wreck of train wrecks.

Oh, but what about the boom that we are in you say? Well, unless you are in the mining sector, not many other industries are experiencing boom time growth (just ask the retailers).

Leaving the rest of us mere mortals hocked up to the hilt and facing ever increasing day to day cost of living hikes. When it comes to debt, we as a nation over the past 20 odd years  have been partying like there’s no tommorow, consuming things for the now and payng for them using someone else’s money (ie the banks). The amount of debt we have racked as a result up is staggering having grown from $500 billion to just over $1.1 trillion in 5 years!!! All of which on home loans, credit cards and personal loans.

Now if you add this ticking time bomb to the government debt problems of the US and many European Union members it is little wonder why the world is teetering on the brink of a GFC 2. Sooner or later their weak economies will affect us. Not so much directly but indirectly as ultimately China is dragged into this financial mess.

You see China’s major export partners are the US and Europe and with them slowing down the Chinese ecomomy will start to slow. Hence, you guessed it, they will slow down on their need for the massive quantities of raw materials from Australia.

So as you can see in this simple scenario, our lucky country may not be luck for too much longer. Batten down the hatches as slow moving ecomomic storm cell is approaching.

Can’t think it can happen to Australia? Just ask anyone from the US, UK and Ireland.

Am I being too over reactionary? Maybe!

Your thoughts?

Money is not a game but perhaps we need games to get us involved

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Finally some reasearch that supports what I have been banging on about for years.

At the Financial Education Summit in December 2010, The Australia Institute released findings from their survey Evidence versus emotion: how do we really make financial decisions?, commissioned by financial institution Citi Australia.

The survey of 1180 Australians conducted in October 2010 found 40 per cent of men and 42 per cent of women are ‘oblivious’ to their financial situation. This attitude was most prevalent among women aged between 35 and 54, with 53 per cent of the women in this category responding they were ‘oblivious’ to their finances, while 39 per cent of women aged 18 to 35 were financially oblivious and 31 per cent of women over 55 were in this category.

More women also reported being overwhelmed by their finances than men: with 21 per cent of women, and 15 per cent of men stating they were financially overwhelmed. Among women, their sense of being overwhelmed decreased with age, with the under 35s being most overwhelmed (at 27 per cent) and this figure dropping as low as 12 per cent for women over 55.

This brings me to the conclusion that despite all of the thousands of books, phamplets and web pages on financial literacy a vast number of Australian men and women were still puttng their head in the sand when it comes to managing their money.

Perhaps, a way to engage Australians is to create challenges, games and competitions around money.

Let’s face it we all grew up with playing Monolopy – so why not as adults be engaged in games that keep us entertained and teach us a few things along the way.

What do you think? Other than the Australian Stock Exchanges Sharemarket Game and Robert Kiosaki’s Cashflow what other games would you want to play? or whould like toi see developed?

My take on this is that we need to get people engaged