Welcome to Finance and Fury, the Furious Friday edition

A reminder of how lucky we are and why we are called the lucky country. Also, what we have to lose if we neglect to remember this

Some perspective:

  • You don’t know what you have until you have lost it
  • Taking things for granted like our power, because blackouts suck
  • What about the billions of people who don’t have power or deal with rolling blackouts daily?
  • Who would value having power more?
  • The hatred of the rich shows the lack of gratitude by those who do it
  • Countries with the highest number of millionaires/billionaires per capita have the highest GDP per capita and quality of life
    • They are wealthy (some exceptions) because they provide more value to our lives
  • We are lucky to have “rich people

But why are we called the lucky country?

  • First used in 1964 by Donald Horne – The Lucky Country
  • The origin of the phrase was negative in the context of the book
  • “Australia is a lucky country run by second rate people who share its luck”

Where did we come from?

  • Few places on earth better suited for middle-class prosperity than Australia
  • British convicts and free settlers – first government in 1788 were autocratically governed by a British Governor (mini-dictatorship)
  • Considerable unhappiness with the way some colonies were run
  • The monopoly of Rum used as currency and Australia has a history of a beer economy
  • English common law was introduced, the rights of Magna Carta and the Bill of Rights 1689 were introduced.
  • The number of settlers increased and they were given resources and land from the government. Convicts were used as Laborers
  • Land assigned back then as “Liberty Plains” is now Homebush and Strathfield in Sydney
  • Then had the gold rush and entrepreneurs came flocking in
  • Given the freedom and vast resource-rich country Australia is, it provides an ideal environment for upward mobility
  • From the pioneering ranches of the nineteenth century to the middle-class suburbs of the late twentieth

 

Has our luck actually changed?

  • Or did we change our luck?
  • Became a socially divided society like most first world countries
  • The political influence will either make it or break it
  • Bob Hawke – Legendary figure for Labour, 1983 – 1991. Did you know the Hawke Government implemented financial deregulation and reform?
  • Australian dollar float, dismantled the tariff system, privatized state sector industries, ended the subsidisation of loss-making industries and introduced full dividend imputation.
  • Did also have some popular ALP policies, with tax system reforms and introduction of Fringe benefits tax as well as capital gains tax
  • He would be considered moderate these days, if not closer to the LNP
  • A political party for the working class is now dominated by those operating outside the tangible economy
  • Some people are focused on achieving one thing and will do whatever it takes to do it
  • Pushing for climate change mitigation programs will further deindustrialise Australia
  • What about all of the people who will lose their jobs? Or those in other countries that rely on our Coal for energy?

What has changed our economy?

  • Gradual deindistrialisation stems directly from policies imposed by local governments in NSW, VIC, and QLD
  • Sydney’s manufacturing employment is down 50% in the last 2 decades
  • Politics was slowly transformed into an instrument of the bureaucracy and “progressive” gentry
  • Why are the yellow vests protesting?
  • We are sabotaging our economy, dependent on resources sales to China
  • Our commitment to renewable energy dwarfs EU, US, and China. Per capita, we have 5 times the number of renewables
  • Our energy costs are now among the highest in the world
  • ALP want to boost renewables from 20% to 50% in 2030 and the Greens want 100%
  • Ironically just as Australia is to replace Qatar as the world’s largest producer of natural gas, industrial enterprises in Australia are under pressure from high energy prices
  • Imports are replacing the closing Australian producers
  • With more taxes, energy prices, fuel, and super payments, there is less disposable income to you
  • OECD households were considered middle class, but this has dropped 1% per decade since the 1980s and now ranks below the OECD average

 

How policy affects our market?

  • How our luck may have run out?
  • Decline in Australia’s middle class resulting in the regulation of land and expenditure to promote urban density
  • 1981 to 2016 – property-ownership rates fell from 60% to 45% for 25 – 34-year-olds
  • UK has only 6% of the land urbanised
  • US has 3% and Canada has 2.1% urbanised
  • 3% of Australia is urbanised
  • Major cities in the first world have a “smart growth” model
  • Helping turn once affordable cities into some of the world’s costliest
  • According to the RBA, planning regulations are a major addition to this cost
  • Inner core of Brisbane, Sydney, and Melbourne represents 11%, 7% and 13% of the greater metro population (31%)
  • More than four-fifths of families living in single-family homes in suburban areas
  • Market manipulation can leave limited choices
  • Not enough supply to keep up with the demand adds to increased prices
  • Projections show 50% of Sydney’s dwellings will be apartments by 2050
  • 40% of Sydney 35-49 year old’s live in townhomes or apartments, which is double the rest of Australia
  • This is a market-distorting approach that doesn’t let supply free and restricts demand choices
  • The threat of a financial meltdown as urban-core property prices decline is real

 

This process is not unstoppable:

  • The issues reflect policy decisions and not our economic or social fundamentals
  • Unless something changes, we may have a bleak future
  • Urged to settle where supply is allowed, making it unaffordable and congested
  • An ever-increasing demand for government revenues
  • With a little direction, this can be undone which is what will be tackled in next Friday’s episode

 

Be honest about what got us into this problem:

  • We are a lucky country, but luck can run out when you take it for granted
  • Next episode will talk about some cautionary tales

 

Thanks for listening, if you want to get in contact you can do so here.

Also, I am doing the St Vinnies CEO sleepout in June. If you could help support that would be greatly appreciated.

Why the Australian Share index is so reliant on just 5 companies and the risks that this brings

Welcome to Finance and Fury Today we are discussing the concentration risk Last week – how the modern banking system acts like dominos failing– Due to their liabilities and obligations to one another this week – look at the other side of the balance sheet – Which is...

Say What Wednesdays: What advice would you give your 21-year-old self?

Say What Wednesdays What advice would you give your 21-year-old self? Today’s question is from Declan, “What advice would you give your 21-year-old self?” To my 21-year-old self I would have the following advice: Life is a series of challenges, the more you solve the...

The political battleground around you being able to control where your superannuation is invested.

Welcome to Finance and Fury, The Furious Friday Edition Today, the episode is delving a little deeper into superannuation I Work as a financial adviser – see a lot of changes to the legislation of superannuation since I joined the industry in 2011 – Today - Episode on...

5 property investing myths you have to stop believing immediately.

Welcome to Finance & Fury! Today we’re talking about five property investing myths you have to stop believing. At the moment property has gone from being the most talked about, exciting thing… to the most talked about, negative thing. Since 1994 there has been...

Furious Friday: Market Update

Furious Fridays Market Update Today’s episode is a Market Update and we look at a few of the factors that affect our market. We will discuss why these things matter, and why we are in the state we are in! In this episode we discuss: Consumer confidence – Look at the...

Furious Fridays: Busting the myth that our big 4 banks are “Too Big to Fail” (Part 1 of 2)

Furious Friday Busting the myth that our big 4 banks are "Too Big to Fail" (Part 1 of 2) Welcome to Finance and Fury, the Furious Friday edition! Today’s misunderstanding is about the “Too big to fail” myth. I want to tell you a story. It’s probably a relatively...

What are the different forms of capital to help maximise your total level of wealth?

Welcome to Finance and Fury. Quick announcement – only episode this week – have my FASEA exam coming up so need to spend spare time studying for that – back to normal next week – sorry for any delays getting back to any of you In this episode – I walk to talk about...

Investing in the Share Market in 2019

Hi guys and welcome to Finance and Fury. Today we will start off on the miniseries with the best place to invest money in 2019. Investments to Consider in 2019 Where should you invest your money? Question plagues both beginning investors and established pros. We...

New Miniseries overview

Hi everyone, and welcome to Finance and Fury. Today won’t be a full episode, unfortunately, I am a little unwell. I am providing a bit of an overview of what the next few episodes will be about. When making investments, it’s all about considering what will be the best...

Can following insider’s trades lead to better investment returns?

Welcome to Finance and Fury. In this episode be looking at one piece of information in the share market – insider trading There is a lot of information in the markets that can be looked at – can look at the fundamentals of an individual company – can also look at...

Pin It on Pinterest

Share This