When I landed in Australia in 1995, I was immediately struck by the concept of a “fair-go” being right at the heart of the Australian psyche. But more recently it appeared to me that this was becoming something of a myth, as inequality and poverty started to expand and impinge on people who previously were able to get on, buy and house, and enjoy the Australian dream.
The Productivity Commission just released a research paper titled “Fairly equal? Economic mobility in Australia” and make the point that Inequality is a serious concern when people at the bottom of the income distribution cannot meet their basic needs or where they experience the stress of economic insecurity. And inequality is a serious concern when it limits people’s future opportunities. The countries with the highest inequality are also the countries with the lowest intergenerational mobility, with children from poor families more likely to be poor themselves.
The truth is the fair-go ideal is dissipating, and people are becoming less mobile economically speaking. Those with wealth in the family will enjoy the benefits, but a larger proportion of people are stuck in a poverty rut, and have few ways to escape. Bye-Bye Fair Go Australia.
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Today’s post is brought to you by Ribbon Property Consultants.
Continuing my occasional series with George, where we go deep into tin-foil hat territory, we chat about democracy, and power, and how corporations interact with Governments and international non-governmental organisations, like the UN and WEF, and how this impinges on our lives.
Who are politicians working for really?
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If you talk to ordinary Kiwi’s across New Zealand, its pretty clear things are not looking good. We already highlighted the easing of home prices and businesses are closing in many centres, take for example, downtown Wellington, New Zealand’s capital city, where dozens of empty shops speak to an economic gloom that’s pervading the entire country.
Retailers are in the front line as households simply do not have money to spend, given the current 5.5% interest rate, and until now expectations that rates will remain here for the rest of the year. Struggling retailers are the most visible sign of a sag in demand that’s hitting multiple industries, from manufacturing to construction and real estate.
Possibly the latest Reserve Bank released “OCR 5.50% – Inflation Approaching Target Range” gives a slight hint of possibly earlier relief, but barring the pandemic-induced slump in 2020, the economy is heading for its worst year since the Global Financial Crisis 15 years ago.
The RBNZ on Wednesday acknowledged that domestic price pressures still remain strong, but said there are signs “inflation persistence will ease in line with the fall in capacity pressures and business pricing intentions.”
So, it does appear the RBNZ’s next move will be a cut, though there is a wide range of views on the timing — from as soon as August this year to as late as the first quarter of next year. They will be reliant on incoming data, and we know from previous history data can turn negative quite quickly, once we factor in the current higher Oil prices, and shipping costs alongside weaker new migration as more Kiwi’s head offshore.
In the longer term, it could be the higher Kiwi rate will pull them through the inflation battle quicker than in Australia where rates are a lower 4.35%, and where there is still talk of a need to raise rates to pull inflation down. At least in New Zealand, inflation is easing, for now; but the social and economic consequences of the brutal Monetary Policy will be with us for years.
Worth remembering that this bout of inflation was inflicted by too loose monetary policy, QE and high Government spending and debt. As always policy makers case the problem but real people play the price!
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This an edit of a live discussion with Sydney based Buyers Agents Veronica Morgan as we explore the tricks and traps of property purchase. Veronica believes that it’s easier to lose money in real estate than most people realise and it’s her mission to guide people to make better property decisions!
Veronica Morgan is the Founder and Principal of Good Deeds Property Buyers. She is also the co-host of the popular series Location Location Location Australia with Bryce Holdaway and Relocation Relocation Australia on Foxtel’s The Lifestyle Channel Australia. You can also tune into Veronica as she co-hosts the Your First Home Buyer Guide podcast & The Elephant in the Room property podcast, which investigates who is really in control when you buy property. She’s also recently co-founded Home Buyer Academy, which provides online support for first home buyers so they don’t get lost buying their first home and is a co-founder of Suburb Help. And if that’s not enough, she’s the author of “Auction Ready: how to buy property at auction even though you’re scared sh!#less”.
Join us for another journey of exploration through the property market, as Edwin Almeida, our property insider, and I look at the latest data and headlines and try to figure what is really going on.
Are there early signs of listings easing lower – and who is, and who is not buying?
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Today’s post is brought to you by Ribbon Property Consultants.
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This is the second post relating to our household stress analysis for June 2024, in which we answer specific viewer requests for deep dive analysis at a post code level. Specifically we covered:
This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in Australia, while covering the main points in commodities and crypto along the way.
This past week has been a doozy, with US markets still clawing higher on increased rate cut expectations, as the latest employment data and adjustments posed some important questions alongside a weakening the dollar, while in the UK the incoming Labour Government won with a whopping seat majority despite voters really voting against the Tories rather than for Starmer.
In France, horse trading ahead of Sundays second pole could mean the Right do not get the prize they were expecting, while Oil was firmer across the week on fears of middle east conflicts and in Crypto, Bitcoin has dropped more than 20% from recent highs.
Wall Street stock indexes closed firmer on Friday, with the tech-heavy Nasdaq and benchmark S&P 500 hitting record highs.
All up, the Dow Jones Industrial Average rose 0.17%, to close at 39,375.87. The S&P 500 gained 0.54%, at 5,567.19 and the Nasdaq Composite advanced 0.90%, to 18,352.76. For the week, the S&P 500 gained 1.95%, the Nasdaq rose 3.5% pct, and the Dow climbed 0.66%. The Russell 2000 Small Cap index is down 0.95% for the week and the S&P500 equal weight was parallel to its 2022 high, showing the narrowness of the support for the all time highs on the S&P500.
French financial markets have come under selling pressure since President Emmanuel Macron called for a snap election last month, with concerns that a far-right win could add to worries over fiscal sustainability. But there is also nervousness about what will happen if there is no clear winner in Sunday’s second round of voting. Fresh polls showed the far-right National Rally (RN) party and its allies were still in the lead but looked to fall short of getting an outright majority.
The UK national election on Thursday propelled the Labour Party to a sweeping victory, and Labour leader Keir Starmer became the next Prime Minister. In the six-week election campaign,
The latest update indicates that Labour has won 411 seats, and the Conservatives have secured 121 seats. This gives Labour a massive majority in the House of Commons. One seat has not yet declared a winner.
Actually, though this was a vote against the Tories, while the share of the vote Labour got hardly moved, and was in fact lower than in recent elections, votes went to the right in the form of Reform, or to the Liberal Democrats, Greens and other parties – and Labour was unseated in a couple of spots as a result of this, and in the light of their stance on Gaza.
As Sky put it, A thumping majority without a thumping share of the vote’. Chief Pole analyst John Curtice said “Actually, but for the rise of the Labour Party in Scotland… we would be reporting that basically Labours vote has not changed from what it was in 2019”. Roughly one third of the votes and two thirds of seats shows the problem with the first past the post system, with turnout (which is not compulsory) below 60%. Labour is pretty centralist and conservative.
Starmer did not win because Britain was hankering for a social-democratic government. He did not win because his Albanese-style small-target strategy appealed to voters. He won merely because he wasn’t the government. Starmer won because Labour was not the Tories. Prime Minister Rishi Sunak’s government was stale, tired, divided, regicidal and largely directionless, sapped by eight years of post-Brexit chaos.
Trying to get a handle on what is going on in the economy is not easy, as I discussed recently in my show about retail turnover, which when adjusted for inflation is falling, and falling hard.
So no great surprise to see that the latest data from the ABS on Household spending growth showed it has slowed, up 0.1% over the year. The 0.1 per cent rise in May follows a 2.2 per cent increase in the 12 months to April.
Through the year household spending increased for four spending categories. The largest increases were in: health (+8.8%), miscellaneous goods and services (+7.3%) and furnishing and household equipment (+3.3%).
Through the year, household spending on: services rose 2.3%, driven by increased spending on health and other services. goods fell 2.5%, driven by decreased spending on clothing and footwear and goods for recreation and culture.
Once again, there was higher growth in spending on non-discretionary goods and services, – things people have to buy such as on health services and food, compared to discretionary items – things which are not necessary, rather more aspirational spending. Typically when people are under financial pressure, it shows first in a fall in non-discretionary items.
But this is not inflation adjusted, at 4% currently and if you adjust for inflation, in fact both are falling. Plus we have a population increase of circa 600,000 which should help the numbers. So this weak data might be seen as one indicator which suggests a further RBA rate hike is not needed, as the tightening is now showing, though of course the various tax cuts and other Government support flowing from 1 July 2024 worth at least $20 billion could well boost household spending.
At very least it does appear the Government and RBA are pulling in different directions – in what Tarric Brooker has coined as “burnout economics”- I love the smell of burnout in the morning!
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Today’s post is brought to you by Ribbon Property Consultants.
Data from CoreLogic shows the “dead cat bounce” in New Zealand home prices, driven by the higher for longer interest rates, and significant pressure to refinance,
Recent changes from 1st July will not have much impact on the market, while the Reserve Bank won’t be cutting rates for some time. Demand will remain weak, as migration starts to turn negative.
Therefore expect more downside to prices, especially in areas of Auckland and Wellington!
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