In an attempt to quash the myths surrounding mining and its effects on the economy, last year I wrote Mining The Truth - Absolute Power Absolutely or 730,000% ROI over 10yrs and I'm not going to go over all the data again, you can visit the link.
Why is that? He has seen (advised more likely, I doubt he can see shit from clay, ditto Hockey) how totally exposed Australia is and can't afford to wait for something to happen. As an example see Macrobusiness here.
- Household debt is a smidge under 100% of GDP at $1.365Trillion (mostly mortgage debt, see bottom point).
- Whilst Federal Govt debt is relatively low (compared to other G20 nations), private foreign debt (ie banks funding from overseas to feed the housing bubble) is $765Billion.
- Mortgage (Owner occupier and Investor) debt (the Achilles heel) is $1.23Trillion*.
If the Australian 'economy (*cough* aka debt fuelled Ponzi scheme) is $1.4Trillion and exports of Iron, Coal, Gold, Natural Gas and Oil only account for less than 10% of GDP, where is economic activity and why is the treasurer worried?
Services. The Wiki definition:
The tertiary sector of the economy (also known as the service sector or the service industry) is one of the three economic sectors, the others being the secondary sector (approximately the same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as mining).
The service sector consists of the "soft" parts of the economy, i.e. activities where people offer their knowledge and time to improve productivity, performance, potential, and sustainability. The basic characteristic of this sector is the production of services instead of end products. Services (also known as "intangible goods") include attention, advice, experience, and discussion. The production of information is generally also regarded as a service, but some economists now attribute it to a fourth sector, the quaternary sector.
The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer, as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The goods may be transformed in the process of providing the service, as happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods.
70% of Australian economy is powered by 'services'. 70% of The Australian economy is driven by: Buying and selling crap to each other; Going out for a Latte; Getting someone to cut your lawn etc etc.
The governments of the last 16 years (AK, After Keating) are even proud of it:
DFAT: [Australia's]Service sector—world class tertiary industries
Australia has a competitive, world-class service sector that is underpinned by a skilled, multilingual workforce, a stable liberal democratic political system, a strong economy, and proximity to the major financial markets of Asia.If only 1.8% of the workforce is employed by Mining, what sector employs the most?
The service sector—or tertiary economy—accounts for 70 per cent of the country’s economic activity. It includes: banking, insurance and finance; the media and entertainment industries; consulting, tourism and retail; services provided by government, such as education, health and welfare; and other personal and business services.
Australia has a well-developed tourism industry that welcomes more than five million visitors to the country each year and contributes around $20 billion to the economy annually. Additionally, Australians spend annually around $60 billion on domestic tourism, making 208 million trips in 2006–07. Overall, tourism accounts for 3.9 per cent ofgross domestic product. The industry employs 464 500 people nationally, or 4.5 per cent of the total workforce.12% of the workforce employed in retail, our biggest employment sector.
The retail industry is the largest employer in Australia, accounting for 920 000 jobs, or 12 per cent of the workforce. It typically accounts for around $150 billion in transactions annually. The majority of workplaces in the sector employ fewer than 20 people. The larger retail stores are mainly sellers of clothing and soft goods, supermarkets or grocery stores, and department stores. Around 44 000 of the people employed in the industry are working proprietors and partners.
The Australian food and beverage industry is recognised worldwide for its variety, high quality, healthy image, innovative manufacturing and packaging technologies. The diversity of foodstuffs available from Australia is huge and comprises grains, meats, dairy products, seafood, fruit and vegetables, bakery goods, olive oil, wine and other beverages, and confectionery, plus a host of individual gourmet treats and specialty lines.
Can anyone see a problem? Since Paul Keating lost the 1996 election, 11 years of Liberal government and 4 years of Labor government, made Australia's economy into a giant Ponzi scheme.
- Banks borrow heavily from overseas and create and feed a Property boom (bubble) through easy credit.
- As new entrants into the scheme borrow more heavily believing the 'shortage' myth/scam and 'get in on the property ladder' bollocks, earlier entrants get rising home equity (as all Ponzi schemes work).
- This equity is used to buy, buy, buy, and spend, spend, spend on all sorts of retail junk, take holidays, cars, etc
- What happens to Ponzi schemes when you get no new entrants and the easy lending is tightened is simple: the schemes collapse, like the US and Irish property bubbles.
This situation was obvious last year...Smells Like?