wcmbusiness
Shiny, happy people
$55 million –
amount of stock Harvey
Normal will buy from Clive
Peeters after it went into
voluntary administration
with debts of $160 million.
700 jobs
will be created when
the $43 billion National
Broadband Network is
established in Melbourne.
$14.2 billion –
cost to employ state public
servants over the next
four years in Victoria.
75% of employers
report their business
suffers because of poor
written and numeracy
skills.
40 wealthcreator.com.au
increase were stronger than expected.
Business
It’s not over until it’s over
• After the Global Financial Crisis (GFC)
saw the world economy decline drastically
and leave behind a volatile marketplace
the question still lingers – are we financially
safe or will debt get the better of our
economy?
CommSec chief economist Craig James
said that compared to the rest of the world
the Australian market is still performing
strongly.
Latest figures from Commsec show
Western Australia is the best-performing
state in the country supported by an
increase in demand from the China and
India markets and a strong labour market.
“All states and territories across the
economy are doing well but, if there’s one
state which is really standing head and
shoulders above the rest, that’s Western
Australia,” he said.
Queensland and New South Wales are
in equal last place.
“The main reasons are that there’s still
lingering effects from the Global Financial
Crisis, which are constraining those two
economies,” James added.
James Cook University academic
Professor Craig Littler argues that even
though Australia hasn’t been largely
affected compared to some other
countries, the effects of the GFC will be felt
for the next 10 years.
“Historians will look back on this period
from the perspective of 2050 and define
this whole decade possibly as the period
of the GFC”, he said.
According to Professor Littler, Australia’s
relationship with China spared us some of
the more devastating effects of the GFC
for now.
“What is going to happen if Chinese
industry cannot cope with the collapse in
SEPTEMBER/OCTOBER 2010
demand in Europe and the United States
in 2014 or 2015? What are we going to
actually do about it as a country? The
issues are not even being raised,” he said.
Littler said he believes that as
Australians we generally believe the GFC
to be over and that our politicians are
downplaying its ongoing effects.
“We tend to be very bland, very
sanguine, very complacent about this in
Australia, you only have to be in Europe or
be in the United States ... and you realise
the continued severity of some of the
economic events”, he warned.
But The Age economics editor Tim
Colebatch contended Australia had a mild
brief recession whereas Europe and the
United States a lasting one.
“There, unemployment is around 10%,
growth is feeble, governments [are] in
massive deficit and there is a growing risk
of double-dip recession as fiscal austerity
replaces stimulus,” he wrote.
Colebatch noted that even though some
condemned the Federal Government’s
stimulus package which left Australia in
debt, it was necessary and it worked.
However, there were other factors which
allowed Australia to survive the crisis so
well.
“The banks didn’t go broke. House
prices didn’t collapse. Exports didn’t
collapse, thanks to stimulus in China.
Immigration kept the population booming.
And the Rudd government’s spending
propped up demand – especially for
construction, usually the biggest victim of
recessions,” Colebatch wrote, claiming
that only a few economists would argue
that a stimulus wasn’t needed at all.
Did Australia do too much or too little?
The debate continues.
wcmbusiness
“After tumbling by 15% in the wake of “What? Is all black
• Consumer confidence is at a high after three consecutive rate hikes in March, April going to help the
the recent Reserve Bank of Australia (RBA) and May, the index has now recovered by economy?”
decision to halt interest rate rises. 17% in the last two months,” he said in a Marc Jacobs defends his
Latest figures from the Westpac- statement. colourful winter collection
Melbourne Institute Index of Consumer
Sentiment show a 5.4% jump in the past
The survey of 1200 also showed that
consumers were more prepared to part “The inflation data
month to levels which have not been seen with their cash with 9.1% confident that released during
since October last year. now was a good time to purchase a house the month were
Overall all components of the consumer and 7.5% confident in buying a vehicle. in line with the
sentiment increased in August compared Buying major household items was at its board’s
to family finances a year ago. highest since July 2007 with an increase expectations
of 3.5%. Expectations for family finances for a decline, and
“Further evidence of over the next 12 months also showed a the outlook for
rise of 6.1%. economic
steady rates should “In the absence of any major new growth
start to see a disturbances from the global economy, had not
firming of housing further evidence of steady rates should changed.”
start to see a firming of housing and The RBA’s minutes from
and consumer consumer spending through the second its August meeting where it
spending” half of 2010,” Evans said. decided to leave the cash
rate unchanged
Interest rates rose six times between
Figures show that optimists outnumber October and May, but at the August
pessimists with the biggest jump in meeting the RBA board opted to hold “The additional
sentiment on the question of the economic interest rates steady at 4.5% for the third steps aren’t as
outlook for the next 12 months, which consecutive month. Many economists obvious or clear
rose 8.6% to 127. now predict there will be no further rises as the ones we’ve
Westpac chief economist Bill Evans said until the end of the year. already taken.
the 5.4% increase and the previous 11.1% It’s an enormous
problem. There
aren’t easy
solutions.?”
Federal Reserve Chair Ben
Bernanke can’t answer
TIME journalist Michael
Grunwald’s question about
what can be done to fight
unemployment
“It’s a real game-
changer in the
presentation of
news. We’ll
have young
people reading
newspapers.”
Rupert Murdoch reveals
plans to launch a trans-
American news title on the
Apple iPad
SEPTEMBER/OCTOBER 2010 wealthcreator.com.au 41