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19 Dec 08 -
Consumers get canny: Roy Morgan Research's chief executive
officer, Michele Levine, this week took the time to explain some of
the enormous changes taking place in consumer behaviour during
these tough times. These changes are occurring against a background
of steeply rising unemployment. Morgan says real unemployment as
measured by those who are seeking work has risen to 6.4 per cent
whereas the ABS figure is still at 4.4 per cent because of the very
restricted definitions that they employ. The fact that unemployment
is steady according to the ABS while consumer confidence is down
sharply is a good indication that something is wrong. The Roy
Morgan figures may be a better reflection what is actually
happening. ...... Some of the key factors behind the reduction in
demand are higher levels of unemployment, fears of falling income
and the increased difficulty in obtaining finance. [more
details]
14 Dec
08 - Half of businesses plan cuts, pay freeze: Nearly half
of businesses in Australia and New Zealand are axing employees or
freezing staffing levels - three times more than eight months ago -
on expectations that business conditions will worsen. According to
a worldwide survey of pay and staffing at more than 2,500
organisations by global consultancy Hay Group in November, 17 per
cent of organisations in Australasia are decreasing staff numbers,
and 27 per cent are freezing them.Twenty-seven per cent expect
business results to be significantly worse than targeted levels,
compared to 7 per cent in March. [more
details]
10 Dec
08 - Stuck in the middle: Which professions come through
tough times in good shape and which suffer badly? What I am seeing
in many areas is that hands-on professionals who are in close touch
with customers are retaining their jobs in many areas. But those
who were promoted in to middle management are in grave danger. I
know one suburban banking operator who understood customer needs
but was promoted to assistant manager for a region. That job is now
going to be eliminated despite the pleas of Kevin Rudd. There are
many thousands of people caught in the elimination of management
layers and they often upgraded their houses and cars on the back of
the ‘promotion’. ..... Recently I addressed a debt collectors’
dinner. The champagne was flowing. After many lean years their time
had come. Those accountants and lawyers who are struggling know
where to go for business. [more
details]
03 Dec
08 - Sluggish economic growth points to recession in 2009,
economists say: Economic growth was marginal in the September
quarter, which economists say points to a recession in the first
half of 2009. ..... AMP Capital Investors chief economist Shane
Oliver said the Australian economy would have contracted in the
September quarter but for the recovering farm sector. "We're
grinding to a halt here," he said. ..... "The global financial
crisis has led to a slump in demand for our exports and a slump in
commodity prices, therefore our national economy is weakening
rapidly. "There's been a major blow to confidence ... Australians
have suffered massive blows to wealth from share market falls.
"These things will be enough to tip us into recession in the first
half of next year." [more
details]
29 Oct
08 - Cash crunch squeezing small business: Almost all small
to medium sized businesses in both Victoria and NSW are feeling the
pinch of tighter cash flows as the credit crunch dries up the funds
needed for business to function, a report said today. .... In
Victoria, 94% of small business owners and managers say they are
often concerned about cash flow for their business, with 86% saying
the worries have affected their home life, according to the
National Australia Bank's SME Cash Flow Study. .... In NSW, a
similar number - 93% - said they were frequently stressed about
cash flow, while 63% of business owners have taken a pay cut as a
result..... "The key trigger points for stress this study has
identified include chasing payments from late or non-paying
customers, sorting out taxes at the end of the year and being hit
by unexpected bills." [more
details]
24 Oct
08- Jobs market 'in
for a rocky ride': Australia's jobs market is in for a rocky
ride over the next two years, with some economists predicting the
unemployment rate rising as high as 11 per cent, as consumer
spending is curtailed and economic growth falls. Many economists
think the federal government's $10.4 billion fiscal stimulus
package and still strong Chinese economic growth would give
Australia some protection from an expected global economic
recession. However, all agree jobs will be lost, as consumers
struggle to pay off their debt burden. The best case scenario is
for a jobless rate of 11 per cent by 2010, according to a Sydney
academic who has also forecast official interest rates falling to
zero over the same time frame. But on a worst case basis,
University of Western Sydney associate professor of economics and
finance Steve Keen says one in five people could be out of work by
2010, as sky-high household debt levels weigh on demand. That would
be the highest level since the Great Depression almost 80 years
ago, when the jobless rate peaked at 29 per cent. [more
details]
20 Oct
08 - Greed a deadly sin for the economy: This article
concludes: "During 17 years of unbroken economic expansion and a
10-year commodities boom, it took a lot of people, borrowing a lot
of money, taking a lot of unproductive risk, to get to where we are
today: a nation with excessive debt and excessive vulnerability to
external circumstances barely within our control." [more
details]
08 Oct
08 - Don't kid yourself: When the stock market
of any country falls 5 per cent in a single day and around 40 per
cent over the course of a year it is a clear alert to all its
inhabitants that there is going to be a significant fall in not
only business and consumer activity, but also asset prices. Here in
Australia, we keep telling ourselves that we're different from the
US and Europe. Our banks are in good shape. We have a budget
surplus. We have enormous natural resources. Then we point to China
and assure ourselves that demand from the Asian powerhouse will get
us through. That might all be true, but right now the world is
trashing our shares and the dollar. We are kidding ourselves if we
think that we will somehow sidestep the downturn. Australian banks
are tightening their lending criteria across the board, which is
going to affect both businesses and asset prices. Credit has been
loose for a long time and many undercapitalised businesses will go
to the wall. [more
details]
07 Oct
08 - More SMEs now risk insolvency: Small businesses have so
far escaped the insolvency woes of large companies, but insolvency
practitioners forecast a darkening outlook if slower economic
conditions persist ..... Insolvency practitioners say they are
beginning to deal with more small businesses..... the credit
squeeze is making it harder for SMEs to refinance when they face
financial difficulties. [more
details]
06 Oct
08 - More blind alleys besides Wall Street: It is wise to
listen to multi-billionaires when it comes to money, at least the
ones who have railed against corporate greed and government laxity.
Almost five years have passed since George Soros wrote The
Bubble Of American Supremacy, a book that warned about the
dangers presented by excessive debt and enormous market in
securitised mortgages. Almost everything Soros predicted has come
to pass...... Now Soros is back in the fray with another book, and
another warning, and this one is closer to home. He thinks the
global economy is caught in a commodities bubble, not just a
housing bubble. Oh-oh. The commodities boom is supposed to be
Australia's get-out-of-jail card...... We are, Soros warns, not
just in a rapidly deflating asset bubble caused by cheap money, lax
standards and excessive debt: "We are currently experiencing the
bursting of a credit bubble that has involved the entire financial
system and, at the same time, a rise and eventual fall in the
prices of oil and other commodities that have some characteristics
of a bubble, and the two phenomena are connected in what I call a
super-bubble. The fundamental trend in the super-bubble has been
the ever-increasing use of leverage - borrowing money to finance
consumption and investment - and the misconception about that trend
was what I call market fundamentalism, the belief that markets
assure the best allocation of resources."...... The solutions are
not simply going to come from more government regulation and
intervention... [more
details]
04 Oct
08 - Rescue or no rescue, we're in foreign territory now:
There's nothing like the worst market crash since 1929 to really
focus the mind.What exactly makes it the worst and how do you
measure these things? If the definition is just in terms of
measuring a percentage fall on a particular day, then it's not a
particularly difficult task. In reality, however, it is far more
complex. No amount of statistics ever really take account of the
human cost - unemployment, lost opportunities, family breakdowns,
personal hardship. And that's where it gets complicated. The real
tragedy of October 1929 didn't play out until well after the market
crash, during the Great Depression of the 1930s........ There is no
understating the seriousness of the situation in which we now find
ourselves. This is a historic moment, a pivotal point in global
affairs. And no one can really tell where we are headed right
now........ Given the lack of transparency in primary debt markets
and the highly complex nature of derivatives, there is only a
select handful who truly understand what is going on at the
moment....... It reached a point
where even the banks which had created these things had no idea how
widespread they were. They still don't. That's why they won't lend
money to each other. That's why we have a credit crisis.......
Whatever the outcome of
Henry Paulson's rescue package, we are in foreign territory now.
There's no doubt the credit market meltdown will affect us all.
Just how much is anyone's guess. [more
details]
29 Sep
08 - The danger for Australian banks: For Australia the big
question about the US financial package is whether it will restore
trust among global bankers so that they start lending to each other
again at reasonable rates...... Our banks depend on international
borrowing for a large chunk of their funds – they will need to
borrow $120 billion overseas this year and currently the costs are
prohibitive so we have a lot at stake..... When US banks sell their
toxic loans, they will take on conditions including executive
payout clamps and possibly equity sharing. It is therefore a
proposal about survival, not kick-starting. So while we will not
see a US depression, the US downturn/recession will last 18 months
to two years.... Very
important in this deal will be the stance of the Chinese. The
Congress politicians debating this package kept mentioning US
taxpayers rather than facing up to the truth – America must borrow
the money required for this package from abroad. The biggest
lenders will be China and Japan..... Assuming that the US
crisis is overcome and replaced with a more conventional downturn/
recession, it is the China debate and the hedge-fund risk that will
become crucial for the Australian market. [more
details]
26 Sep
08 - Upwardly immobile: mortgage stress bites: Reserve Bank
statistics do not begin to tell the real story of housing stress in
Sydney's western suburbs.... The biggest myth about mortgage
arrears and home repossessions, according to Mr Young, is that the
problem is confined to single-income, struggling families. "It's
not just the down and outers, a lot of the people I'm talking to
are your upwardly mobiles where the thing to do is buy your
investment property," he said. [more
details]
26 Sep
08 - Mortgage suffering: the suburbs on the edge: Western
Sydney became the nation's breeding ground for low-doc and
predatory lenders during the peak of the property boom and
residents are now paying the price, with the highest rates of
mortgage arrears and repossessions in the country, according to the
Reserve Bank. The proportion of mortgage holders in western Sydney
who are late on their loan repayments by 90 days or more is triple
the national average. [more
details]
17 Sep
08 - The high cost of credit: You may well know your
mortgage interest rate to two decimal places - before and after the
recent rate cut - but chances are you don't know the rate on your
credit cards. Amid all the hue and cry about home loan rates going
up over the past year - when lenders decided they'd go even further
than the central bank - not much was heard about cards. "People are
really concerned about mortgage interest rates," says Lisa
Montgomery, the head of consumer advocacy with non-bank lender
Resi. "These same people often have personal debt and these rates
increased, too - in some cases by a lot more but they didn't
necessarily notice that." [more
details]
09 Sep
09 - Economy in doldrums: Pessimists outnumbered
optimists for the eight consecutive month in August, leaving
business confidence levels at lows not seen since the aftermath of
the September 11, 2001 terrorist attacks in the US. Other data out
today showed retail sales and new home loans were flat in July,
underscoring the anaemic state of the economy. [more
details]
17 Aug
08 - Credit card debt
hits record $44 billion: Australians owe a
record $44 billion on credit cards as spiralling living costs force
them to put everyday expenses and even mortgage repayments on
plastic. Reserve Bank of Australia statistics reveal the national
credit card debt has blown out by 3.5 per cent since December last
year to more than $44.2 billion. The $1.5 billion increase has
alarmed experts, with figures showing the average credit card debt
is more than $3200. Consumer watchdog Choice said the typical
family credit card debt was likely to be much higher, with many
households juggling repayments on two or more cards. [more
details]
08 Aug
08 - Jobs slump hits
NSW: The tide is turning
on Australia's once-strong jobs market, and it's turning in NSW
first. NSW shed 17,600 jobs last month - the worst performance of
all the states and territories - while the resource-rich states of
Western Australia and Queensland picked up more than 15,000 jobs
each. The Treasurer, Wayne Swan, warned people to brace for a
slowdown: "Employment growth is slowing and it's slowing on the
back of eight interest rate rises over three years and, of course,
the most difficult global economic conditions in 25
years.... [more
details]
04 Aug
08 - Cash-flow pressures
bite on payments: Payment terms across
all industries have been stretched to their highest point in seven
years from 30 days to 55.6 days. This latest Dun & Bradstreet
trade payment analysis points to more cash-flow pressure, Bibby
Financial Services said last week. "Tight credit conditions and the
slowing economy are forcing businesses to stretch payment terms
well beyond the limit, placing a major strain on businesses already
feeling the pinch from high fuel costs and higher costs of
finance," said Bibby managing director Greg Charlwood. [more
details]
31 July
08 - House prices are a bubble waiting to burst:
A recession
is the biggest threat to Australia's real estate market. ARE house
prices going to crash in Australia as has occurred in the US? Based
on West Sydney University economics professor Steve Keen's regular
Debtwatch newsletter, the answer is probably yes. [more
details]
30 Jul
08 - Gerry Harvey's Lament: "I've got a shop in every
town, and it's tough"..... with real sales growth - discounted for
inflation - almost grinding to a halt in the past three months. And
the future looks grim...[more
details]
30 Jul
08 - Credit Crunch may cast four-year shadow: A senior
executive at the Australia and New Zealand Banking Group has warned
that the impact of the global credit crunch could last for up to
four years ...... "I would be the last person to try and pick the
bottom. That's a mug's game" he said. [more
details]
09 Jul
08 - Australian business
hits the skids, report shows: Australia's economy
is braking sharply, with business reporting that soaring petrol
prices and high interest rates have wiped away all positive
momentum from demand. Bankruptcies have soared
to record levels. [more
details]
05 Jul
08 - The year everything changed: The stormclouds are
gathering. Our market has plunged below 5000 for the first time in
two years, oil prices are soaring, America is in (unofficial)
recession and the Reserve Bank is clearly worried about the home
front. After years of
partying, many believe it's time for the inevitable hangover when
gloom and doom replace the exuberant optimism that just a few
months ago seemed as though it would never end... [more
details]
04 Jul
08 - Banks squeeze small
businesses as credit crunch takes hold: Small- and medium-sized
companies are being squeezed by the banks, with interest rates on
their loans being raised by even more than the amounts added to
home loans as a result of the global credit crunch. [more
details]
02 Jul
08 - Survey shows a crash
in Australian confidence: Australians'
confidence about their jobs and the cost of living has crashed to
its lowest since the recession of the 1990s. Pessimism in the
community is at levels last seen two decades ago when Paul Keating
warned that the nation could become "a banana
republic.... [more details]
01 Jul
08 - Struggling with the
mortgage? Get out now: Homeowners already
struggling with mortgage repayments need to cut their losses and
sell up before it is too late, an industry insider has
warned. Those homeowners
feeling the pinch from rising interest rates and living costs need
to put their house on the market now because things are about to
get much worse, Wizard Home Loans founder Mark Bouris
said. [more
details]
01 Jul
08 - After the binge, a
thumping $400b hangover - A year to forget, for
most: Bearing the scars of
a tumultuous year for business, the sharemarket recorded its
biggest fall in 26 years in 2007-08, wiping close to $400 billion
from investors' funds. The market fell 0.4 per cent yesterday,
capping off a financial year in which it shed almost 17 per cent,
the worst performance since 1981-82, and the worst decline in the
month of June since 1940.
[more
details]
30 Jun
08 - Wild ride in sharemarket not over yet: Australian
sharemarket investors should brace for more pain to come as they
are finishing off their worst financial year in 26 years today,
fund managers and economists have warned. [more
details]
29 Jun
08 - Mortgage stress to
hit 1m homes: Almost one in 10
Australian households is suffering from mortgage stress, with the
figure predicted to come close to 1 million homes within three
months. [more
details]
27 Jun
08 - Crunch time could
last two years: The fallout from the
global credit crisis which has pushed up borrowing costs in
Australia to growth-sapping levels could last for another two
years, the head of the country's largest bank said
yesterday. [more
details]
14 Jun
08 - Interest rate pain here to stay, says RBA: Interest rates
will have to remain high for as long as the commodities boom lasts,
according to Reserve Bank Governor Glenn Stevens. Mr Stevens made
no apology for the pain being inflicted on parts of the nation
missing out on the mining riches. [more
details]
30 May
08 - Bracing for worst as growth contracts: The economy could
be heading towards its first quarterly contraction since 2000, as
businesses rein in spending on new equipment and consumers put
their credit cards on a tight leash. National accounts figures next
week will paint a clear picture of economic fallout from
interest-rate rises and the credit market maelstrom. Figures issued
yesterday show businesses have started to brace for the worst.
[more
details]
28 May
08 - Aussies reeling in financial doom: Australians are reeling
in financial doom, with 2 in 3 saying their financial situation is
worse now than it was a year ago and many homeowners could be
forced to sell their properties if interest rates rose another 1
per cent, according to a survey.[more
details]
28 May
08 - Abrupt slowdown on the way: Australia is heading for an
abrupt slowdown in economic growth, with business expected to pull
back investment, putting jobs at risk.
[more
details]
26 May
08 - The US economy is in deep deep trouble: Is this
the start of a 1930's-style Great Depression? In April, the
International Monetary Fund warned that America's mortgage crisis
had spiralled into "the largest financial shock since the great
depression" and said there was now a one-in-four chance of a
full-blown global recession......over the next 12 months [more details]
07 May
08 - Delusions of Grandeur: How much debt is too much?
Australian Households have become addicted to debt over the past 15
years and, writes Annette Sampson of The Sydney Morning Herald, a
day of reckoning may not be far away. As economies worldwide sort
out the fallout from the global credit crisis, too much reliance on
debt is emerging as a very bad thing. Associate Professor Steve
Keen, of the University of Western Sydney's school of economics and
finance, is one commentator who finds the level of debt in Western
countries alarming. Ken says we're living in a debt bubble that
dwarfs those of 1892 and 1931 - the time of the Great
Depression....At the bottom of the 1990s recession, he says,
Australia's debt was about 78% of GDP. It is now 165%. That's more
than doubled over the past 15 years. In 1892, he says, debt peaked
at 104% of GDP and in 1931 it peaked ay 77%.... [more
details]
May 2008
- Why things are different: If the past decade and a half
was about wealth creation in all its glory, this year it's starkly
about wealth preservation. Belts and braces time. Once again cash
flow is king; structures are being simplified and luminaries in the
turnaround field are being called in by banks, and even a few
nervous companies, to neaten the accounts, shore up some financing
and stress test the business model.... [more
details]
29 Apr
08 - Business Conditions Slump: Business conditions worsened
significantly over the first quarter as a slump in consumer
confidence and higher interest rates took a heavy toll on sales and
profits.... [more
details]
29 Apr
08 - Confidence hits seven-year low: Business confidence has
nosedived to its lowest level in seven years, adding pressure on
the Reserve Bank ..... The weak outlook has also hit the
construction sector, with the industry now expecting new housing
starts to be subdued until at least the middle of next year,
worsening rental shortages.... [more
details]
22 Apr
08 - One in five stressed borrowers losing their
homes: UP to one in five
households under mortgage stress will lose their homes, research
shows. The findings in a new report - the Anatomy of Australian
Mortgage Stress - to be released on Thursday show that about 20 per
cent of people who go "into the slippery slide" of borrowing never
get out. And "once you're in severe stress there's only about a
50-50 chance of getting out,"....
[more
details]
13 Apr
08 - Free advice for battlers: The The State Government plan to broaden
eligibility for mortgage assistance will ease the backlog as people
flood into counselling services in a last-ditch effort to avoid
bankruptcy.... [more
details]
31 Mar
08 - The Taxman Cometh For You, Big Earner: The Australian
Taxation Office is stepping up its crackdown on wealthy
individuals.... [more
details]
27 Mar
08 - When pain persists, they come knocking: Allen Diazli
has seen homeowners come and go over the past 17 years in the
mortgage belt of Sydney. He's one of the Sheriff's men in
Bankstown, the officers responsible for carrying out repossession
orders for banks and mortgage brokers. But Mr Diazli has never seen
the belt tighten by so many notches in such a short time for so
many people. Since January, he and his colleagues have been
repossessing an average of 15 homes a week.... [more
details]
18 Mar
08 - Business owners tap the brake: Fast-growing businesses
are putting expansion plans on hold as spooked capital markets
tighten the screws.... [more
details]
18 Mar
08 - Meter's Running for small developers: Rising interest
rates and a faltering property market have turned bankers that
previously supported small developers into hawks.... [more
details]
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