It's the economy, stupid!

 
  RTT_Rules Dr Beeching

Location: Dubai UAE
Nothing unusual for Japanese cars to exceed 300000 km.  But European cars often don't last the distance - perhaps more car buyers are waking up to that fact and staying away from the "Premium European" stuff....  (Disclaimer - many Mercs from decades ago were tanks and lasted forever)
Carnot
Agree, most medium to larger Toyota's and Lexus are good for 500k km easy. In Dubai the CamryTaxi's get retired at 1m km or 3.5 years  what ever comes first unless they suffer a major breakdown before. Many do the 1m km and you wouldn't know it unless you look at speedo.

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  don_dunstan Minister for Railways

Location: Adelaide proud
The much-troubled Retail Food Group has denied that it's about to appoint administrators despite haemorrhaging money at a rate of knots (ABC);

The group behind Australia's biggest franchise brands, including Brumby's Bakery, Michel's Patisserie, Gloria Jean's, Donut King and Crust Gourmet Pizza, has hosed down concerns it is in financial strife and could soon be forced to appoint administrators...

...But the company has defended its financial position, with a spokeswoman saying RFG was in conversation with its lenders.

"RFG continues to work closely with its lenders and remains in constant dialogue with them," she told ABC News.

"Our lenders understand the complexities surrounding our business and we remain confident that we will continue to have their support.

"On an underlying basis, the company remains profitable and there remains strong support for our brands."

Apparently they've been closing stores everywhere across Australia but it's still not enough... I'd hate to be one of the poor old franchise holders, many of them have obviously done their money.
  don_dunstan Minister for Railways

Location: Adelaide proud
More property horror-stories, this time from the Financial Review:

The property downturn has left the buyers of as many as 450,000 properties across Sydney and Melbourne with homes worth less than what they paid for them and this figure will almost double if the market continues to fall, putting further pressure on household budgets as the RBA tries to fire up a slowing economy.

That's a significant amount of negative equity - what that means longer term for our banking system is anyone's guess but it's got to be bad for someone seeking a mortgage in those cities. The banks are bound to be shy about mortgages with those sort of figures?
  davesvline Chief Commissioner

Location: 1983-1998
Would it be fair to say then that all real estate country wide currently is  15% over priced???
  don_dunstan Minister for Railways

Location: Adelaide proud
Would it be fair to say then that all real estate country wide currently is  15% over priced???
davesvline
It's really impossible to know or predict. Perth is down more than 7% year-on-year, that's really a huge amount when you consider the slump began in 2015 and is showing no signs of slowing down. If that was replicated in Sydney and Melbourne you'd have about 15%-20% down since the peak and that will put a lot of people underwater. You have to wonder what these sorts of stresses are going to do to the housing market, traditionally considered a 'safe haven' in times of economic stress.

Other news this weekend shows that retail is still in trouble with Big W rumoured to be shutting about a third of its shops (via News.com.au):

Macquarie Wealth Management said in a client note on Friday that closing 60 stores would come at a massive cost due to the existing $2.7 billion in lease commitments, The Australian reports.

Woolworths is due to give an update in coming weeks about the future of the troubled general merchandise retailer, which lost $110 million last financial year and $8 million in the first half of 2019.

“Partial closure of the most unprofitable and shorter lease stores is more likely,” Macquarie said in the note, according to The Australian.

“Given significant closure costs for the portfolio, a more likely scenario is Woolworths to close up to one-third of its stores (60 stores), in our view. This cost could be around $759 million.”

It costs them money to close stores because they generally have lease commitments on them that need to be paid out - apparently most of the stores marked for closure are in regional centres. Given that Big W is often the anchor tenant in a lot of shopping centres that's going to kill a lot of small businesses that rely on them to bring in trade.
  nswtrains Chief Commissioner

The much-troubled Retail Food Group has denied that it's about to appoint administrators despite haemorrhaging money at a rate of knots (ABC);

The group behind Australia's biggest franchise brands, including Brumby's Bakery, Michel's Patisserie, Gloria Jean's, Donut King and Crust Gourmet Pizza, has hosed down concerns it is in financial strife and could soon be forced to appoint administrators...

...But the company has defended its financial position, with a spokeswoman saying RFG was in conversation with its lenders.

"RFG continues to work closely with its lenders and remains in constant dialogue with them," she told ABC News.

"Our lenders understand the complexities surrounding our business and we remain confident that we will continue to have their support.

"On an underlying basis, the company remains profitable and there remains strong support for our brands."

Apparently they've been closing stores everywhere across Australia but it's still not enough... I'd hate to be one of the poor old franchise holders, many of them have obviously done their money.
don_dunstan
Recent article about this group re-selling stores that have gone broke to some other hapless sucker. Not surprised about Gloria Jeans since its dis-association with Hill Song Church it no longer has a free source of labour.
  don_dunstan Minister for Railways

Location: Adelaide proud
Recent article about this group re-selling stores that have gone broke to some other hapless sucker. Not surprised about Gloria Jeans since its dis-association with Hill Song Church it no longer has a free source of labour.
nswtrains
That was a very strange relationship wasn't it.

Which reminds me, I came across this interesting article about the poor take-up of the government's "PaTH" youth internships the other day:

Youth Jobs PaTH is a three-step program designed to provide unemployed youth with a financial incentive to get back into the workforce.

Prospective interns participate in a six-week training program, which is often carried out by third-party training providers, before being made eligible for four- to 12-week internship placements in businesses, which run between 15-25 hours a week.

Interns are paid $200 per fortnight in addition to their existing government income support for participating, while businesses are given $1,000 for hosting an intern...

...[Council of Small Businesses of Australia (COSBOA) Chief Executive] Peter Strong blames providers who have signed on to facilitate the first stage of the PaTH program for its ineffectiveness, arguing interns aren’t being given appropriate skills for local businesses.

“The service they’re getting from the job network providers is not very good,” he tells SmartCompany.

With the federal election slated for later this year, Strong says it will be incumbent on the coalition to seize on a recent review of employment services late last year to take steps to reform the system.

That review, titled I Want to Work: Employment Services 2020, found just 4% of employers used the Jobactive system, of which PaTH is a part, in 2018.

What a shock that JobActive (the new name for Job Network) is not sending appropriate people, nor supervising placements properly. The fact that the old CES system has been privatised two decades ago has done nothing to improve service and employers avoid JobActive providers like the plague.
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
What a shock that JobActive (the new name for Job Network) is not sending appropriate people, nor supervising placements properly. The fact that the old CES system has been privatised two decades ago has done nothing to improve service and employers avoid JobActive providers like the plague.
don_dunstan
Some people are doing very $$$ well out of this. LNP socialism at its $$$ best Razz

Speaking of LNP socialism, anyone know which agency is getting all this 'Government' advertising $$$. Media outlets must appreciate the extra income.
  don_dunstan Minister for Railways

Location: Adelaide proud
What a shock that JobActive (the new name for Job Network) is not sending appropriate people, nor supervising placements properly. The fact that the old CES system has been privatised two decades ago has done nothing to improve service and employers avoid JobActive providers like the plague.
Some people are doing very $$$ well out of this. LNP socialism at its $$$ best Razz

Speaking of LNP socialism, anyone know which agency is getting all this 'Government' advertising $$$. Media outlets must appreciate the extra income.
Groundrelay
There's lots of people doing really well from the LNP's largess, those ads telling me how much they're flogging multinationals to get tax out of them are particularly annoying because it's a complete lie; Michael West spells it out in detail. Companies like Ford Australia, Amcor and Mitsubishi Australia pay ZERO tax. Kinda makes a mockery of all of us, doesn't it.

Meanwhile the housing situation gets worse; diabolical in fact. News.com.au reports this morning that a whopping $133 billion has been wiped off the value of Australian housing in the last quarter alone:

The Australia Bureau of Statistics released figures today showing house prices in capital cities fell 2.4 per cent in the December quarter to record a total drop of 5.1 per cent in 2018.

This compares with the annual fall of 4.6 per cent in 2009 during the GFC.

Sydney prices lost 3.7 per cent to the three months to December for the sixth consecutive quarter loss and were down 7.8 per cent for the year.

Melbourne prices were down 2.4 per cent for the quarter and 6.4 per cent for the year.

That's a huge amount of wealth destroyed; gone. At some stage either the Reserve will cut or the Commonwealth will have to try and move to put a floor under prices. Given that housing wealth is pretty much the only game left in this country the fact that prices are in free-fall will cause all sorts of problems, not the least of which will be the construction sector laying off hundreds of thousands due to the stock of unsold houses and apartments.
  RTT_Rules Dr Beeching

Location: Dubai UAE
What a shock that JobActive (the new name for Job Network) is not sending appropriate people, nor supervising placements properly. The fact that the old CES system has been privatised two decades ago has done nothing to improve service and employers avoid JobActive providers like the plague.
Some people are doing very $$$ well out of this. LNP socialism at its $$$ best Razz

Speaking of LNP socialism, anyone know which agency is getting all this 'Government' advertising $$$. Media outlets must appreciate the extra income.
There's lots of people doing really well from the LNP's largess, those ads telling me how much they're flogging multinationals to get tax out of them are particularly annoying because it's a complete lie; Michael West spells it out in detail. Companies like Ford Australia, Amcor and Mitsubishi Australia pay ZERO tax. Kinda makes a mockery of all of us, doesn't it.

Meanwhile the housing situation gets worse; diabolical in fact. News.com.au reports this morning that a whopping $133 billion has been wiped off the value of Australian housing in the last quarter alone:

The Australia Bureau of Statistics released figures today showing house prices in capital cities fell 2.4 per cent in the December quarter to record a total drop of 5.1 per cent in 2018.

This compares with the annual fall of 4.6 per cent in 2009 during the GFC.

Sydney prices lost 3.7 per cent to the three months to December for the sixth consecutive quarter loss and were down 7.8 per cent for the year.

Melbourne prices were down 2.4 per cent for the quarter and 6.4 per cent for the year.

That's a huge amount of wealth destroyed; gone. At some stage either the Reserve will cut or the Commonwealth will have to try and move to put a floor under prices. Given that housing wealth is pretty much the only game left in this country the fact that prices are in free-fall will cause all sorts of problems, not the least of which will be the construction sector laying off hundreds of thousands due to the stock of unsold houses and apartments.
don_dunstan
Don,
I hope your usual doom and gloom Donanomics predictions comes true. We are thinking of moving home in 2 years so low housing prices and $A will be to our advantage.

However, I suspect we will be disappointed.
  Carnot Chief Commissioner
  don_dunstan Minister for Railways

Location: Adelaide proud
Chinese Ports vs Australian Coal heats up:
https://www.abc.net.au/news/2019-03-19/coal-export-fears-resurface-as-restrictions-hit-more-china-ports/10915818
Carnot
This is the height of ridiculous - what the hell did we sign a so-called "Free Trade Agreement" with China for if they're allowed to do this kind of thing any time they feel like it? Then again lots of laws go un-policed now-days so I guess they realise they can do whatever they want to us and get away with it.

Our politicians are so feeble on China it's embarrassing. The problem is that a Shorten government will be even worse with some shadow ministers openly backing deeper integration between ourselves and our rather unreliable, unpredictable trading partner.
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
Chinese Ports vs Australian Coal heats up:
https://www.abc.net.au/news/2019-03-19/coal-export-fears-resurface-as-restrictions-hit-more-china-ports/10915818
This is the height of ridiculous - what the hell did we sign a so-called "Free Trade Agreement" with China for if they're allowed to do this kind of thing any time they feel like it? Then again lots of laws go un-policed now-days so I guess they realise they can do whatever they want to us and get away with it.

Our politicians are so feeble on China it's embarrassing.
don_dunstan
On the flip side they are buying our Iron Ore and it's translating into lots of $AU for the Government coffers.

The problem is that a Shorten government will be even worse ...
don_dunstan
And we're off... Rolling Eyes
  don_dunstan Minister for Railways

Location: Adelaide proud
Don,
I hope your usual doom and gloom Donanomics predictions comes true. We are thinking of moving home in 2 years so low housing prices and $A will be to our advantage.

However, I suspect we will be disappointed.
RTT_Rules
Where are you planning to move to RTT, South-east Queensland?
  RTT_Rules Dr Beeching

Location: Dubai UAE
Don,
I hope your usual doom and gloom Donanomics predictions comes true. We are thinking of moving home in 2 years so low housing prices and $A will be to our advantage.

However, I suspect we will be disappointed.
Where are you planning to move to RTT, South-east Queensland?
don_dunstan
Not sure, basically open minded but a few options

I love the border ranges area. Would love to get a acreage in the trees, permanent running creek, slight cooler climate but not frozen. Maybe start a Eco-stay for the city slickers in Brisbane. However I'm struggling to find price and proximity to suitable school to suit the budget.

We still have 4ac in Agnes Waters up against the National Park, it has a dry creek with yabbies in the water hole. I note there is now a private school going to yr 12, govt high school is 65km away. Need to see if it offers the subjects and quality we are looking for, but price is attractive. Renting similar properties with 3 bed house near by is $330/wk, ride to school for boys and to one of many beaches every day for parents. Quiet area, more rain than Gladstone . Problem no work, but might test the water on consultancy or try my luck on remote working, agent if I can find something.  I'm will to spend 2 years while oldest does Yr 11 and 12 looking for the right job to match lifestyle if required.

Timing about 2 years away, oldest is in yr 8 now, but 6mths ahead of Aus.
  don_dunstan Minister for Railways

Location: Adelaide proud
...

Timing about 2 years away, oldest is in yr 8 now, but 6mths ahead of Aus.
RTT_Rules
Good luck with that RTT, hope the timing works out for you.

The Pratt family are hosting another fund-raiser at their Raheen in Kew, this time for the Shorten push for the Lodge. The Australian is reporting:

Tickets are $5000 a pop and almost sold out to Bill Shorten’s Labor fundraiser next week at Anthony Pratt’s Kew mansion Raheen.

And Margin Call can confirm Anthony — the keynote speaker at The Australian’s and Visy’s Global Food Forum yesterday at Sydney’s Sheraton on the Park — his partner Claudine and mother Jeanne Pratt will all be on deck for hosting duties for the Raheen return of Shorten, something of the prodigal son in the Pratt family.

In the light of the fact that the Liberal Party had somewhat of a dismal fund-raiser at Raheen a few weeks ago you have to wonder if the Pratt family are having a bob each way? Or maybe that's just how they operate.

Meanwhile, in an expression of how ridiculous things have become, Gucci have put 'dirty, pre-worn' looking sneakers on the market for US$870; via Zerohedge:

Looking poor in fashion is hip this year and the only way to pull it off apparently is to spend nearly $1000 for a pair of poor-looking sneakers.

Considering that wealth inequality in the developed world is the widest in modern history, so maybe Gucci is making a statement, or better yet, giving the elites an expensive taste of what it's like to be poor. Although the most likely answer is that the company is merely maximizing its revenue by taking advantage of rich idiots the globe over...

..."A pastiche of different influences that span across decades, the Cruise 2019 collection references old school shapes and materials inspired by vintage sportswear," Gucci's product description says. "Influenced by classic trainers from the '70s, the Screener sneakers—named for the defensive sports move—feature the Web stripe on the side and vintage Gucci logo, treated for an allover distressed effect."



Wonderful that Gucci is catering for people with too much money who've never heard of op shops.
  don_dunstan Minister for Railways

Location: Adelaide proud
Prahran (VIC) apartment owners lose out because their apartments are covered in combustible cladding. Via Domain:

A couple selling an apartment they bought to fund their retirement could lose $100,000 on the sale because the building they bought into is covered in combustible cladding.

They are two of several vendors affected by the discovery that the Trilogi building on Clifton Street, Prahran, which they bought into off-the-plan in 2011, has the type of cladding which creates a fire risk...

...One apartment is listed for a whopping $205,000 less than the original price paid, at 510/15 Clifton Street, while the others are looking at losses of between $22,000 and $70,000.  

Prahran’s apartment median prices have fallen in the softening Melbourne market, edging down by one per cent between 2011 and 2018. The current median sits at $475,750.

Several of the real estate agents selling the apartments would not comment on the issue when contacted by Domain.

Looks like this sub-standard cladding thing is going to be a problem for years to come. In other interesting news, Finnish police are investigating the mystery of the new Nokia 7 phone sending data to state-owned servers in China: ZeroHedge -

NRK conducted an investigation after being tipped off by a man named Henrik Austad, who monitored the traffic on his Nokia 7 - discovering that it was sending unencrypted information to a Chinese server "vnet.cn" while switched on. The data reportedly included his location, SIM card number and the phone's serial number.

The information consists of identifiable data on both the telephone and the telephone number to which it is attached, and which base station it is associated with. This enables the recipient of the package, and anyone with access to the traffic stream along the way, to follow the phone's real-time movements.

I guess it's the modern-day equivalent of a "Gremlin from the Kremlin", right there in your phone...
  michaelgm Deputy Commissioner

Don, the building industry here is full of crooks, shonks and snake oil salesman. Interested only in a quick buck.
My apologies to the competent and honest builders, however rare they may be. Sad
  DirtyBallast Chief Commissioner

Location: I was here first. You're only visiting.
Prahran (VIC) apartment owners lose out because their apartments are covered in combustible cladding. Via Domain:

A couple selling an apartment they bought to fund their retirement could lose $100,000 on the sale....
don_dunstan
Idiots. No sympathy here.

Nothing to do with cladding either, or hindsight bias for that matter.
As stated in the article they are selling due to a fear of losing more if they hang on, due to the cooling market.

It has only been in the past several years that I have found myself in a position to actively research an investment strategy to safeguard my position going forward. It never involved real estate. Particularly with apartments, Blind Freddy could foresee the present glut that was always going to happen.
  don_dunstan Minister for Railways

Location: Adelaide proud
Prahran (VIC) apartment owners lose out because their apartments are covered in combustible cladding. Via Domain:

A couple selling an apartment they bought to fund their retirement could lose $100,000 on the sale....
Idiots. No sympathy here.

Nothing to do with cladding either, or hindsight bias for that matter.
As stated in the article they are selling due to a fear of losing more if they hang on, due to the cooling market.

It has only been in the past several years that I have found myself in a position to actively research an investment strategy to safeguard my position going forward. It never involved real estate. Particularly with apartments, Blind Freddy could foresee the present glut that was always going to happen.
DirtyBallast
As stated in the article:

They’re being faced with either paying part of the bill to fix the cladding through a local council loan scheme set up by the state government last year, paying for legal action, or losing money in a sale.

So they seem to be trying to get rid of it before they have to make a decision about replacing the cladding (?) Doesn't specify in the article what they have to do in order to get their apartment fixed, if they're bailed-in to any scheme to replace the outside cladding etc etc.

And also I agree with you, off-the-plan is a dreadful way to buy but most people are attracted by the nil stamp duty for that type of purchase; also it's possible to write down the new value over several years before you cash in and get your (assumed) capital gain. The problem at the moment - at least in Melbourne - is that apartments are chronically over-supplied and the price is stagnant.
  don_dunstan Minister for Railways

Location: Adelaide proud
It's a sign of how bad things have become when people put their block of land on Melbourne's fringes on Gumtree looking to get out of the rest of their contract - I'd say there's no way this guy will ever see his deposit again!

Meanwhile Sydney is about to hit 11% year-on-year losses according to CoreLogic:

Sydney -3.39% last quarter -10.97 year-on-year
Melbourne -3.34% last quarter -9.71% year-on-year
Perth -3.08% last quarter -7.68% year-on-year

There's no denying a full-on property crash any longer but it's just an issue of what effect it will have on the greater economy?
  Carnot Chief Commissioner

Looks like China is putting the pressure on the EU to join their Belt & Road Initiative.  In all honesty, how can the EU survive if some of their nations become beholden to China?  It seems the smell of renmimbi is all too much:

https://www.abc.net.au/news/2019-03-26/italy-joins-china-belt-and-road-initiative-as-france-signs-deals/10935476
  RTT_Rules Dr Beeching

Location: Dubai UAE
one for Don

https://www.abc.net.au/news/2019-03-28/why-workers-are-getting-the-smallest-pay-rises-since-wwii/10942530?section=business

We can see the Wage price index was ahead of inflation. its now called payback time!

Also interesting wage stagflation is highly global as the world repays debt and industry works out how to again make profits on commodity prices that exist today we could only dream about 15 years ago.

  don_dunstan Minister for Railways

Location: Adelaide proud
Thanks, RTT_Rules - but the fact that wages are only slightly above inflation would be cold comfort for many I'm sure.

Also from the ABC today some pretty diabolical news about the amount of wealth being destroyed in the current housing crash and stock-market slump:

According to Australian Bureau of Statistics data, household wealth fell $257.6 billion in the fourth quarter as the housing and equity markets tanked.

The 2.1 per cent fall in household wealth is the largest since 2011 and follows a 0.1 per cent in the previous quarter.

In real terms, taking into account inflation, the news was even glummer with wealth down more than $310 billion — made of $170 billion in real holding losses on land and dwellings and $140 billion on financial assets.

While eye-watering in size, the losses were not surprising given housing market retreat was accelerating (the fourth quarter house price index dropped 2.4 per cent) and the ASX tumbled around 10 per cent over the quarter.

As a result of all this household debt has now managed to hit 200% of income.
  RTT_Rules Dr Beeching

Location: Dubai UAE
Would appear its now certain that the Negative Gearing on existing properties bought after Jan 2020 will be axed assuming the ALP win the Fed election is also very likely.

https://www.abc.net.au/news/2019-03-29/labor-to-end-negative-gearing-concessions-for-new-investors/10951194?section=business

If I could vote on polices rather than holistic parties, this would get my vote and yes I also make use of the existing laws.

Yes this policy becoming law will not help the current housing market crash with an expectation it will add another 10-13% to the fall and ultimately see Sydney's housing prices drop by as much as 25% over 3 to 5 years. However I think its short-term pain for longterm gain and will benefit lower income Australian's in longer term.

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