[zaph]

Quote

AUSTRALIA is on the brink of an unemployment catastrophe, with fears up to 100,000 jobs will be be slashed in the months after Christmas.

But the news isn't all bad, with economists suggesting the nation's wobbly economy could drive the official cash rate as low as 3.5 per cent by the end of 2012, The Daily Telegraph reported.


Westpac chief economist Bill Evans, one of the few economists who correctly predicted a rate cut in November, said lead indicators pointed to very weak employment growth next year.

"We would expect the unemployment rate to edge up to 5.75 over the next six months," Mr Evans warned.

"But on the flipside, the Reserve Bank would have to cut the cash rate by at least half a per cent to counter (the job losses)."

http://www.heraldsun...2-1226228053309

[boz]

Once things turn bad there will be a snowball effect, but it is very hard to predict how hard it will be. It also happen in US during the GFC and none really could predict correctly how it ended. Also because it depends on political and RBA decisions. For example I am sure Swanny will throw money at the problems like i t did few years ago. And like few years ago it did solve the problem by throwing the can down the road. Hopefully government will not wait till they get to 50% or so in public debt before they realise throwing money at the problem is not a real solution.

[ummester]

boz, on 21 December 2011 - 08:08 PM, said:

Once things turn bad there will be a snowball effect, but it is very hard to predict how hard it will be. It also happen in US during the GFC and none really could predict correctly how it ended. Also because it depends on political and RBA decisions. For example I am sure Swanny will throw money at the problems like i t did few years ago. And like few years ago it did solve the problem by throwing the can down the road. Hopefully government will not wait till they get to 50% or so in public debt before they realise throwing money at the problem is not a real solution.

Hasn't Swanny promised surplus - where will he get his money to throw at it? After the government giving themselves a 30% pat on the back with pay recently, I'm thinking they know we have turned the corner and are just trying to get what they can for themselves. Besides, I'm not so sure throwing money at housing will help anymore, same with retail.

[boz]

ummester, on 21 December 2011 - 09:16 PM, said:

Hasn't Swanny promised surplus - where will he get his money to throw at it?

You forgot we have a government that sayd there will be no carbon tax...Do you really believe they are not going to change idea on budget? after all Swanny will be saying he'll save heaps of jobs. Also it will be easy to market as he can just blame europe like last time blamed the GFC...

[cobran20]

boz, on 21 December 2011 - 11:47 PM, said:

Also it will be easy to market as he can just blame europe like last time blamed the GFC...

+1. I suspect that Goose gets down on his knees every night and pray that the markets crash so that he can bail out his arse on the promise of delivering a surplus.

[Chimerica]

Quote

But the news isn't all bad, with economists suggesting the nation's wobbly economy could drive the official cash rate as low as 3.5 per cent by the end of 2012,

Great news for those who lose their jobs, a low cash rate to pay the mortgage with money you aren't earning any more.

[AndersB]

Quote

"One in five Australians now think they are going to lose their jobs in the next 12 months," Mr Inwood said.

That is an astounding level of pessimism.

Is it really realistic that 20% of the workforce are at high risk of losing their jobs?

[Mr Medved]

AndersB, on 22 December 2011 - 12:41 AM, said:

That is an astounding level of pessimism.

Is it really realistic that 20% of the workforce are at high risk of losing their jobs?

Think FIRE industry. I understand at least one bank is already laying off people. RE is in the doldrums... attached to this is the building industry. Then ~70% of the economy is service/consumption. Those in retail would likely be a bit nervous. Anybody with inside info on the government sector? If government is implementing hiring freezes, etc. then people in that sector may be a bit nervous. Small business is not flying either.

Even with that in mind, 20% does seem a bit high. Very gloomy.

[AndersB]

Assuming that 50% of the job pessimists actually lose their jobs, and that 25% of those do not find another job within the year: that would mean that the unemployment rate in Australia may go up by 2.5% next year - to around 7.8%.

It is still a bit on the pessimistic side.

[Solomon]

If that happens, it will be devastating.
No other word for it.

Still we (on this site), have been hopefully bracing ourselves for this very eventuality.
Tough days ahead, even if it doesn't reach the predictions of that article.

This post has been edited by Solomon: 22 December 2011 - 01:07 AM

[Bernard L. Madoff]

For goodness sake guys, cut the hand wringing.

Its not like no one saw this coming (particlarly on this site) and it hasn't happened before.

When the Irish bubble burst Irish unemployment jumped from 4.4% in June 2007 to over 12.1% in June 2009. Spain and USA also got hammered. Its not 'different' here, there or anywhere.

When asset bubbles burst its always the same.

http://www.cbsnews.c...e-is-different/

Quote

They demonstrate that financial crises are protracted affairs that share three characteristics:

• Asset market collapses are deep and prolonged. Declines in real housing prices average 35 percent and stretch over six years. Equity prices collapse an average of 56 percent over a downturn lasting three-and-a-half years. Thus, the most recent crisis seems quite typical.
  
• The aftermath of banking crises is associated with deep declines in output and employment. Unemployment rises an average of 7 percent over cycles lasting more than four years on average. Output falls more than 9 percent over two-year periods, and it has taken about four-and-a-half years for output to fully recover.
  
• Government debt surges an average of 86 percent in real terms. The main cause is not spending but a decline in revenues.

The bottom line is that the aftermath of crises has a deep and lasting effect on asset prices, output and employment. Unemployment increases and housing price declines have extended for five and six years, respectively. The authors also note that V-shaped recoveries in equity prices are far more common than V-shaped recoveries in real housing prices or unemployment.

Get your brain around it now and take defensive positions.

[Bernard L. Madoff]

AndersB, on 22 December 2011 - 01:05 AM, said:

Assuming that 50% of the job pessimists actually lose their jobs, and that 25% of those do not find another job within the year: that would mean that the unemployment rate in Australia may go up by 2.5% next year - to around 7.8%.

Optimistic. 13% by 2015 is doable.

Irish Unemployment Interactive

[AndersB]

Well, we can only guess how this will all pan out.

The bottom line is that if people are fearful for their jobs, the Christmas shopping will probably not go so well.

If unemployment goes up anywhere near these negative scenarios during 2012-2013, then the Labor government will be in a spot of bother trying to get re-elected.

But on the other hand, it would not surprise me if Gillard and Swan are prepared to spend another $100 billion or so to prop up the economy. If they do so, I sincerely hope they have advanced plans for some sensible projects instead of $900 cash handouts for imported Chinese TV sets. Another round of waste of taxpayers' money would be unbearable.

Wikipedia suggests that we already have $209 billion in gross public debt. That is about 17% of GDP.
http://en.wikipedia....n_national_debt
http://en.wikipedia....my_of_Australia

[AndersB]

Bernard L. Madoff, on 22 December 2011 - 06:15 AM, said:

For goodness sake guys, cut the hand wringing.

Its not like no one saw this coming (particlarly on this site) and it hasn't happened before.

When the Irish bubble burst Irish unemployment jumped from 4.4% in June 2007 to over 12.1% in June 2009. Spain and USA also got hammered. Its not 'different' here, there or anywhere.

When asset bubbles burst its always the same.

http://www.cbsnews.c...e-is-different/




Get your brain around it now and take defensive positions.

Wayne Swan says you are completely wrong:
http://www.smh.com.a...1222-1p6ki.html

Quote

Swan rejects post-Christmas catastrophe for jobs
December 22, 2011 - 12:56PM

Acting Prime Minister Wayne Swan has rejected claims of a looming jobs crisis.

Mr Swan says a newspaper report that Australia is on the brink of an unemployment catastrophe is "complete rubbish".

The reaffirmation of Australia's AAA credit rating by ratings agency Moody's demonstrates those talking down the economy are wrong, the treasurer said on Thursday.

"Our economy has strong fundamentals, we have low unemployment, we have strong public finances, we have trend economic growth and we have a huge investment pipeline," Mr Swan told reporters in Brisbane.

Sydney's Daily Telegraph reports Australia is on the brink of an unemployment catastrophe with up to 100,000 jobs set to be slashed in the months after Christmas.

Not so, according to Mr Swan.

"The Liberals have been talking our economy down. But we have also got the Daily Telegraph today running a story which is simply exaggerated nonsense."

Mr Swan said neither advertisers or their customers would appreciate the economy being talked down just before Christmas.

AAP

Phew! Not only is worrying about unemployment the wrong thing to do - things are going great!!!

It is comforting to know that our treasurer is the world's Finance Minister of the Year. So, as a treasurer Swan makes an excellent finance minister.
http://news.smh.com....0926-1ks2v.html

[booboo]

It seems not everyone agrees with the World Finance Minister of the Year.

http://www.macrobusi...t-growing-tren/

But don't let truth get in the way of a good spin. Go and spend spend spend, never mind the fact you could be jobless tomorrow!

[ummester]

We should never forget that UE in Australia during the depression hit almost 30% and lasted for a year or 2.

Sentiment is definately different now. The news just reports what they think most people will buy into, I believe. And people are buying into pessimism. Like Anders mentioned, if people are afraid of losing work, they won't spend.

Transport, RE, Construction, Retail - I would be scared in any of those industrys ATM. If the fear goes on long enough in will spread to non essential services and so forth.

[staringclown]

cobran20, on 22 December 2011 - 12:03 AM, said:

+1. I suspect that Goose gets down on his knees every night and pray that the markets crash so that he can bail out his arse on the promise of delivering a surplus.

Close. I think he gets down on his knees every night and prays that the markets don't crash until after he presents a paper surplus.

[staringclown]

ummester, on 22 December 2011 - 07:50 AM, said:

We should never forget that UE in Australia during the depression hit almost 30% and lasted for a year or 2.

Sentiment is definately different now. The news just reports what they think most people will buy into, I believe. And people are buying into pessimism. Like Anders mentioned, if people are afraid of losing work, they won't spend.

Transport, RE, Construction, Retail - I would be scared in any of those industrys ATM. If the fear goes on long enough in will spread to non essential services and so forth.

So what jobs are safe( r ) if you wanted to survive a depression I wonder? Energy industry? Food distribution? Centrelink? Is there a defensive employment position one can adopt?

[Dose]

staringclown, on 22 December 2011 - 08:38 AM, said:

So what jobs are safe( r ) if you wanted to survive a depression I wonder? Energy industry? Food distribution? Centrelink? Is there a defensive employment position one can adopt?

Savings account?

[minimumtrade]

staringclown, on 22 December 2011 - 08:38 AM, said:

So what jobs are safe( r ) if you wanted to survive a depression I wonder? Energy industry? Food distribution? Centrelink? Is there a defensive employment position one can adopt?

look at the companies that have >2007 peak share prices..

In a depression people will be dying to get work here: http://www.asx.com.a...ode&asxCode=IVC