Okay – Okay – written about the Dutch Disease and Australia before – but this time it is RBS – Macro Economic section.
And yes I am the bad news guy – because there is no good news.
As Australia reliant on exports to China and APEC – and with China struggling to overcome a manufacturing contraction plus internal debt – the graphs tell the story.
So export data obvious enough?
What about employment in mining and construction?
Then we look at housing prices – Mamma Mia – what goes up, must come down. Even in a negative gearing country through nothing more than lack of demand.
China has implemented capital controls to stem the outflow of capital.
A lot of billionaires are now millionaires due to their stock market collapse.
And from RBS – “If unemployment continues to rise, due to losses in mining and construction, the house price bubble could pop.
Rising unemployment in the mining industry, due to its exposure to a slowing China, will create risks in the property market; house prices are likely to fall as the newly unemployed could be forced to sell.
The RBA has less dry powder now. The central bank has cut rates twice this year, from 2.25% in March to 2% now. As the domestic economy slows, accommodative policy is needed to encourage investment, particularly in non-mining sectors, to boost growth and create jobs.
However, with rates already at 2%, there is much less headroom for monetary easing to offset a downturn in Australia.
The worst is yet to come, in our view.
Now – do you understand the problem?
It is the Dutch Disease – and no – their is nothing you can do about it.
Neither can Turdbull – the political fallout within the liberal party may mean the establishment of a ‘third’ political party – with clout.
The ALP has a defective gene – called the Unions – and the RBA are clueless.
Ouch – watch out below.
A long way to fall.