Let’s ask a simple question: Would the world be better off…or worse off…if governments completely ignored COVID-19?
Economy News, Analysis and Updates
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The Australian economy is a unique beast. It almost completely relies on housing price growth and commodity exports to China. If both of these engines are firing, the economy does very well. If only one fires, the economy does OK. If both struggle, then the economy is in trouble.
The sectors behind house prices and commodity exports…
The financial sector and the resources sector are closely tied to these two things.
By market capitalisation, financials and materials or resources make up more than half of the ASX index:
Source: Canaccord Genuity
And of the more than 2,200 stocks available, 33% are junior mining stocks — this gives you a sense of where priorities lie in the Aussie economy.
What factors influence the Aussie economy?
Like many developed economies, Australia’s economy has recently been propped up by cheap money (low interest rates) and debt.
While debt is often ignored by mainstream outlets — it plays a critical role in the Australian economy.
The Australian government has traditionally kept the debt to GDP ratio relatively low compared to major economies.
As of 2018, this stood at 40.70% compared to Japan which has the highest — coming in at a whopping 238%.
But even though the government’s ‘credit card’ isn’t maxed out like other countries — Australians household debt is one of the highest in the world.
Coming in at 119.4%, Australians’ wealth (or more precisely debt burden) is very much tied up in their homes.
So it is no surprise that rising house prices have gone hand in hand with rising household debt.
It is also worth noting that all up, the services sector makes up around 75% of the pie.
Turns out, Australia doesn’t ‘make’ all that much.
How we look at the economy at The Rum Rebellion…
An expensive house, lots of household debt, a job providing services for others, all propped up by digging things out of the ground for export, and a central bank hell-bent on the extinction of savings.
It may seem like a grim picture, but The Rum Rebellion analyses the Aussie economy through this lens. We will often show how the economy is going by looking at charts of key stocks or sectors. Charts tell you where the money is going. If it’s going into or out of banks and resources, for example, it can give you great insight into where the economy is heading.
Looking purely at economic data releases isn’t always useful. Economic growth data for example, is backward looking. It tells you where we’ve been, not where we’re going.
At The Rum Rebellion, we want you to be ahead of the game. So we analyse the economy from this unique perspective. Check out our latest news and articles on the Aussie economy below…
The Transurban Group [ASX:TCL] share price is halted today pending an equity raising. Transurban seeks to raise $4.2 billion to acquire the remaining 49% equity stake in WestConnex from the NSW government for $11.1 billion.
You raise money from friends and family. You ‘invest’ it in the highest-flying, fastest-moving tech companies on the market. If they go up, you become rich and famous. If they go down, well…it wasn’t your…
We interrupt Australia’s slow-motion descent into medical fascism to report on a big story from China. Greg Canavan reported on the looming collapse of property developer Evergrande last week.
To participate, people had to have at least US$100,000 in investable assets. And, on average, these investors had saved around 16.6% of their annual income for retirement.
The government have announced a deal on nuclear submarines in concert with the US and the UK. It’s a good move and the start of what I hope is a nuclear industry here in Australia.
Retail sales, a key gauge of China’s consumption, rose just 2.5% in August from a year earlier, down sharply from July’s 8.5% year-over-year growth, according to data released Wednesday by China’s National Bureau of Statistics.
And the story, while reported as truth by the major media, might just as well be a total fantasy. It makes more sense as a fantasy. But then, so does most of the news.
But what if the price of bitcoin plunges overnight and the $100 of bitcoin the business accepted yesterday is only worth $50 today?