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.

Bonds; How do they work, when do they increase in value and how do they fit into your portfolio?

Episode 20 Bonds; How do they work, when do they increase in value and how do they fit into your portfolio? Today’s episode stems from the question last week from William about investment bonds (an investment vehicle, kinda like a life insurance product). Today...

From trading cows to ones and zeros, Pablo Escobar’s money eating rats, and how our money is all debt based currency

Hi everyone and welcome to Finance and Fury! Today we’re going to look at our current monetary system; what is considered money, and also the future of our monetary system. Today’s episode will be a fairly quick episode, and will be an introduction to a series of...

How do coercive Government policies turn competitive markets into monopolistic competition into government-granted monopolies?

Welcome to Finance and Fury, The Furious Friday Edition Today – Run through SDG Goal 17 – Sneaky side to the SDGs along with the method of creating global monopolies – part 1 of two – today 17, next week 12 – they go hand in hand SDG17: “seeks to strengthen...

Can politicians use the Future Fund to bail out the economy?

Welcome to Finance and Fury, the Say What Wednesday edition. This week the question comes from Justin. “Hi Louis  - I have been listening to your podcast for the last few months. I love all your work. I was just listening to Mondays episode of your review of the...

Do you need a family trust?

Say What Wednesdays Do you need a family trust? This week’s question is, ‘do I need a family trust?’. I have had a few questions about this over the past weeks, however in order to avoid making this ‘personal advice’, I thought I’d just talk about it in more general...

The economic impact from the Russia-Ukraine conflict on financial markets

Welcome to Finance and Fury. I hope you are all doing well and safe at the moment – I know a lot of people in QLD and NSW have lost their homes and my thoughts go out to you - where we live is currently cut off – we are fortunate though – no flooding in the house –...

(Intro Series) From ‘Puzzle’ to ‘Map’

Intro - Episode 3 From 'Puzzle' to 'Map' Welcome to the 3rd part of the intro series for Finance and Fury. Today let’s start with a bit of time travel. Picture 1500’s, London. All the guys have hipster like facial hair, accessories, the big beards, the little curly...

Why work your whole life, just to have nothing left over at the end?

Episode 8 Why work your whole life, just to have nothing left over? Pay yourself first! Keep your own money – why work for others, then have nothing left to show for it? You earn more over your lifetime with this strategy – you save more and get rich right? Regular...

Cover your butt! A closer look at diversification

Episode 6 Not all returns are created equal; diversification (and over diversification), correlation and covering your butt Welcome to Finance & Fury! I’m sure that everyone’s heard the saying, “playing it safe” before. And in any game, it’s generally a good idea....

What are the pricing and redemption risks of Managed Funds versus Listed Investment companies?

Welcome to FF – SWW- answer questions from each of you – this week from Sebastian   Hey Louis. I've been thinking about the pro's and con's of Managed Funds vs LICs/LITs. It occurs to me that one of the main disadvantages of managed funds is their open-ended...

Pin It on Pinterest

Share This