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Attended the Economic Outlook Conference

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  • Attended the Economic Outlook Conference

    I attended this conference today presented by a well know independent economic forcasting company.

    For what it's worth the guts of their message for WA was something like this
    (remember I'm just the messenger so don't flame me if you disagree). If any of you were there (at the Hyatt) please post you own interpretation:

    The second round of large resource projects are taking a while to gather momentum but they're building up a head steam now.

    Solid strong growth for the next five years or so from the end of this calendar year. The growth will not be as strong as from the early 2000's until the onset of the GFC but will be pretty close to boom conditions again.

    Skilled labour shortages starting to become noticible next year and will constrain growth.

    WA economy will be driven by the mining & resource projects construction activity.

    If you a skilled worker in the mining/construction game you'll be walking around like a Sheik for the next few years until the enevitable bust.

    Manufacturing will struggle. $AUD to remain around parity with the $USD for a while.

    House prices to stay flatish with low real growth in prices for the next couple of years then stopped by rate rises. Affordability is an issue but we are underbuilding which keeps a bit of a floor under the current prices. Not expecting 40% drop in pricing as some economists are/were predicting.

    Interest rates to be raised progressively from the end of this year to peak about 7.5% (RBA cash rate). This will make home loan rates about 10% around 2013/14 and will stop any house price rises in their tracks.

    Coal, iron ore, oil, gas, copper to remain high until supply starts catching up. We're not the only country trying to bring iron ore mines into production for the China/India demand.

    The US has a good ten year grind to climb out of the hole they're in.

    Setting ourselves up for a bust at the end of the decade with a pretty decent recession.

    Never believe the "but this times it's different" when the media and pollies tell you the streets are paved with gold and the boom will go on forever.
    I'll be riding for you #52, my dear son, Cameron Taylor Elliott 1985-2009
    2008 CBR600RR and 2010 GSXR750 Track Bikes, KTM530EXC Enduro bike wrist breaker

  • #2
    Interesting - i follow these same principles.

    Did they theorise any reasons for a bust - apart from the well know fact that what goes up usually comes back down eventually.

    Did they talk about food and fertilizer prices?

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    • #3
      thats about how i see things happening also. which is why i have set myself up with a stable future in the gold industry with a long mine life.
      Atlas Performance, dyna pumps, " your name goes here"

      Comment


      • #4
        Originally posted by gordonleslie View Post
        Interesting - i follow these same principles.

        Did they theorise any reasons for a bust - apart from the well know fact that what goes up usually comes back down eventually.

        Did they talk about food and fertilizer prices?
        Not fertiliser but food ... basically all on the way up ... which I guess would imply fertiliser as well.

        The recession at the end of the decade is just because that's the way the business cycle pans out. It's a not a smooth gradual run up. It overshoots and we all get ahead of ourselves and pricing gets too high.

        The other thing is that interest rates will be gradually increasing over the next 20 years. So each peak and trough will be a touch higher than the last. Reverse of whats happened since the early 80's where each peak and trough was slightly lower than the last.
        I'll be riding for you #52, my dear son, Cameron Taylor Elliott 1985-2009
        2008 CBR600RR and 2010 GSXR750 Track Bikes, KTM530EXC Enduro bike wrist breaker

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        • #5
          Very very interesting. Deeeej! Would be good to get your view on this.

          Sounds like the best course of action is to set yourself up if you can and consolidate your gains over the next few years while the conditions still allow it.

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          • #6
            Originally posted by Arwon View Post
            thats about how i see things happening also. which is why i have set myself up with a stable future in the gold industry with a long mine life.
            I work in the contract mining and civil construction game. The company I work for has been doing well over the last five years since I've been there. We'd better visit a tailor to measure up for the Shieks robes!
            I'll be riding for you #52, my dear son, Cameron Taylor Elliott 1985-2009
            2008 CBR600RR and 2010 GSXR750 Track Bikes, KTM530EXC Enduro bike wrist breaker

            Comment


            • #7
              Gota love any economist that reckons they can see 10 years into the future. 3 years ago the credible ones couldn't even predict what would happen in 10 days.

              So on the eight day, after wasting time faffing about with unimportant guff like heaven & earth & the waters & sky & creatures [& having a wee kip] & man.... God created PSB (GenesiSX-R1000)

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              • #8
                Economists make a fortune out of super-human hindsight and creating a language no-one else understands.... The OP is pretty much common sense, but could also be totally wrong (oh those crazy market speculators! )

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                • #9
                  Originally posted by Deej View Post
                  Gota love any economist that reckons they can see 10 years into the future. 3 years ago the credible ones couldn't even predict what would happen in 10 days.
                  An economist is someone who chases black cats in dark rooms.

                  What I can't stand are the so called Economists from Westpac, NAB et all and AMP/BT etc spruiking their predications when they are obviously biased. The banks are in the business of selling debt to individuals and business so they never give you the real story. If they believe the economy is slowing and the market is getting too bullish they'll never say anything negative. Remember when they were running around in 2007 selling million dollar loans to people to drop into their super? A couple of older fellows I work with went for it and now have small financial disasters on their hands.

                  I went to a presentation late 2009 by Chris Caton Chief Economist of BT. He put a graph up showing the 87 crash and the subsequent increase in the All Ords after two years. Super imposed was the crash of Oct 2008, the bottom in March 2009 and here we were 6 months later following the same path. He was implying buy now (BT Funds of course) because if history repeats you'll be well higher again in 18 months. What he conveniently didn't mention was that the All Ords was back to the 87 crash level in Jan 1991 and almost there again in Nov 1992 ... so five years after the crash the market was still around the same level.

                  Caton was doing nothing more than going on a roadshow spruiking their managed funds because they need people to keep buying for the wheels to stay turning. Sneaky bastards the lot of 'em. Fortunately I ignored his suggestion.


                  Sometimes the best way to double your money is to fold it in half and put it back into your pocket.
                  I'll be riding for you #52, my dear son, Cameron Taylor Elliott 1985-2009
                  2008 CBR600RR and 2010 GSXR750 Track Bikes, KTM530EXC Enduro bike wrist breaker

                  Comment


                  • #10
                    After talking with a geologist mate, I think the boom will go for more than 5 years - we have decades worth of iron ore out there, plenty still gettting found, and plenty of ideal areas yet to be explored. Provided the world still needs the stuff, we will be able to deliver for plenty more than 10 years.

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                    • #11
                      In a resorce rich state , with much of the state still unexplored as for potencial, the resorce secter will be an ongoing thing.
                      in a resorce rich state, skilled lader (trades) will always flourish.
                      West Australia has some of the best in the way of real world training on offer.
                      our traidies have shown repetedly that they are better trained and hold higher standeds than most of the worlds engineering degrees.

                      I am not haveing a go at engineers
                      Just sticking the flag up for traidies as many people tent to overlook this option that is a well paid option with the world at your feet once a few years hard time (as a tradie not the aprentership stage) has been acomplished.,

                      Smart people whom are willing to work , some sacrafice is needed .
                      but rewards are there.

                      Sometimes the best way to double your money is to fold it in half and put it back into your pocket.
                      Very true , are you scottish by any chance ???

                      EDIT= I stated most of the worlds engineering when i should ghave said most i have seen.
                      REPENT MOTHER FUCKER
                      (anarchy in english )

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                      • #12
                        While the demand is there the resources boom will continue. Our next major problem will begin when China (or India) stops buying what we dig up. They still have some major underlying problems that are not being addressed, for example they are building cities out in the middle of nowhere that remain deserted. When everyone realizes that that was a shit idea and stops buying materials to build more it'll hurt us.

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                        • #13
                          Originally posted by shan View Post
                          our traidies have shown repetedly that they are better trained and hold higher standeds than most of the worlds engineering degrees.
                          The minute they join a union they are also the world's biggest whingers.

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                          • #14
                            Fuck the unions
                            There be for people whom are slack or usless.
                            REPENT MOTHER FUCKER
                            (anarchy in english )

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                            • #15
                              I'm not Scottish ... West Aussie born and bred.
                              I'll be riding for you #52, my dear son, Cameron Taylor Elliott 1985-2009
                              2008 CBR600RR and 2010 GSXR750 Track Bikes, KTM530EXC Enduro bike wrist breaker

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