12/10/10 Baltimore, Maryland – We should have more thoughts. But to tell you the truth, many of our thoughts went out of our head on our recent round-the-world trip. You need constant air pressure in order to maintain thoughts. And regular hours. Start getting up at midnight and going to bed at noon; thoughts have a way of disappearing by late afternoon. If they were ever there in the first place.
One thought that disappeared somewhere over the pacific was this:
The suntanned country must be close to getting burnt.
Australia is booming. Prices are high. It cost $38 for breakfast in the Crown Towers hotel. Even so, you could have only one cup of café latte. You’d have to pay extra for another one.
Our total bill for 3 nights was over $2,000. Impossible? Well, we thought so too. But when you throw in a bit of laundry…transfer from the airport…and breakfast for a friend, not to mention a consumption tax of $184, you end up over 2,000 bucks – without even a single dirty movie.
The boom has been going on Down Under for the last 19 years. Not even the Great Correction is stopping it. Each year, it sells more dirt to Asia… from 40% of its exports 10 years ago to 72% today. It should probably just sell all of Western Australia to the Asians and be done with it.
Meanwhile, the Ozzies enjoy their boom…raise their glasses…and throw raw meat on the barbie. Our colleague’s house in Melbourne has risen 200% in price since we sent her there four years ago. And it’s still going up. Converted shipping containers, transformed into mobile homes, sell for as much as $1 million. And truck drivers in the mining areas earn more than $100,000 a year.
How long can this go on? We don’t know. But our advice to our colleague was simple enough:
“Sell!”
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Sounds overheated to me too.
Thinking of moving there. America is increasingly giving me the creeps.
Yep,
Australia, the lucky country. Born in Melbourne 44 years ago and still living in the most livable city in the world. It’s the place to be. Yes there is a housing boom and it will bust, but Australia’s has a big futute, it’s a large country with a lot of real assets, a young country so it can grow and it has a stable political sysyem.
Aussie, Aussie,Aussie. io,io,io
Love the comments Bill, welcome back!
Thanks Bill for the Ozzie reality check.
Yes the boom continue to boom and prices are high Down Under. But the Aussie boom is based on a real export boom. An economic management far better than the USA has helped much. Australia booms because it can sell zillion tons of resources to China and others. Isn’t what strong export is supposed to do – real stuff to earn real money? They are not pumping monetary bubble, or trading houses like hot cakes.
Let it boom. And when their export eventually decline then life will go back to normal. A lot richer for the country.
Australia is similar to Canada, except Canada is doing even better based on similar fundamentals. Canada natural resources is far far greater and richer – an energy and related-technology superpower by any measure. An a banking system even better than Ozzie banks. But the land is a bit cooler …
G’day Bill, I’ve been reading your column for a year now and live in Oz, glad you came for a look. You’ve got me convinced about the economies of the world outside of Asia, buuuttt the only thing that can screw us is if China goes bust. How likely is this ? And if you don’t have debt aren’t you better off holding on in an inflationary environment?
PS For some strange reason you yanks are welcomed here and we have a growing skilled labor shortage (of course if you’re a banker this doesn’t include you).
We have raised interest rates 7? times recently, over one year or so. If the China/India/SKorea boom subsides, then we will drop interest rates, but not to US or UK levels.
Those countries have been run by crooks.
If she sells, she should keep the $ in AU !!!!! Things can happen quickly.
I wonder how the overall cost of living is. Sounds like you really got gouged traveling. I envy countries that have managed to keep things affordable. What good does it do you to make more money if you have to spend more to get the necessities? A friend of mine had a job offer as an engineer making 50% more money but figured after the increased taxes and cost of living it wasn’t worth it.
JRod – it is easy for a country to keep prices down! Just have millions of illegal immigrants working for nothing, pathetic minimum wage laws and a massive army of working poor. God bless America! Land of the free!
A decade ago, we didn’t make it in the top 100 most expensive countries to live in.
Now that Australia is up there with the best for expense, with skyrocketing housing prices along with basic utility costs out of control- we are all cheering our national chant Oi Oi Oi.
Weird hey!
John-
What I don’t understand is why housing prices are so high in a country as expansive as Oz. I know there is an extremely large desert, but isn’t there plenty of room to expand?
but isn’t there plenty of room to expand?
first and foremost is water
absent that, no
Sell Western Australia?!?! Wash you mouth out!!
Property here is 9.5 times earnings. I’ve sold out, bought in to PM’s and am waiting for the next ‘correction’ before I buy by back in (despite the protests from the SO
).
Sure, you can mock me for not running on this treadmill as it gets faster and faster, but to some (not many!) property prices are a little out of control. All we need is enough downward pressure in commodities from reduced demand (mostly from China) and the market is toast.
Aussie-
It is tough to buck the trend. At least you have some recent examples. All the things you are going through happened in the US over the last five years. People were “crazy” to not be buying homes that were going up 30% a year. I think the time to sell out was after we heard “housing never goes down” for the fiftieth time.
Cheers.
The Australian jurisdictions run very effective smart growth based housing shortage policies which should prevent any American style banking implosions. But it is still hard to see them as anything other than an accident waiting to happen. Their economy is so distorted now, that even with 3 mio square miles of territory, they are net importers of food.
JRod,
Plenty of land- and although we are only a little over 200 years old, we have a lot of history corrupting the market.
This isn’t our first manipulated bubble, nor will it be our last!
see:
http://museumvictoria.com.au/collections/themes/2676/land-boom-in-1880s-melbourne
http://aic.gov.au/publications/previous%20series/lcj/1-20/wayward/ch13.aspx
etc etc etc. But ask anyone here, and you will quickly be told we have never had a crash. DOGMA!
Also, as the worlds largest island we have increadible amounts of seaside, which seems to be what everyone wants. but we believe we dont have enough. Again- dogma!
LOL
Hmmmm… thinking out loud here.
So what happens when US citizens are no longer spending every waking hour at WalMart, buying every MadeInChina product? What happens when all of the US balloon mortgages come due, and no one can pay because they are all on unemployment in a service-based economy when no one can afford services?
In other words, if China has no one to whom to sell, how will they buy Aussie products?
Hi friends,
It seems like Australia is going at the top of the world, it is good to know that a country is working hard to improve itself.
Welcome Bill !! OZ rocks
WOW !!
the problem is china is a communist country new to the capitalist game, so they will make big big mistakes probably all at once,its obviouse the west are taking a back seat,and will watch, them get deeper in,and when it does go belly up oz will go with it,you have to remember the USA and europe allways bounce back,its been going on for decades, the chinese are relativly new to the capitalism game, dont put all your eggs in one basket oz
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