What's your prediction on the Australian Dollar?

[JohnK]

At some stage it will all come crashing down.I hope that the can can be kicked down the road for some time yet.

The crash is inevitable. Way too much paper wealth floating around. Some say the crash is a lot closer than we think. I hope we don't see it the crash in our lifetime.

And 2008 was only a minor blip and that was bad enough.

 

[whatmeworry]

Yes RAM I was in business from 1979 so as an importer and exporter I have seen a lot. I do credit my late mother for making our business invest in production tooling by telling me importers cause Australian jobs to go overseas.
With the world turning to computer and manufacturing automation it will become increasingly more difficult for full employment of everyone. I went on a Swiss manufacturing tour and there were almost zero production staff. Massive high tech production off robot machines is what I saw.
Maybe 0.7644 was ok but you always want to do better.

Adidas is closing down most of their shoe production in Asia and moving their operations back to Germany using robots.
Adidas robot factory to make shoes from 2017

 

[RAM]

Yes RAM I was in business from 1979 so as an importer and exporter I have seen a lot. I do credit my late mother for making our business invest in production tooling by telling me importers cause Australian jobs to go overseas.
With the world turning to computer and manufacturing automation it will become increasingly more difficult for full employment of everyone.

RAM - 2002 - Ex-Chinese Govt t-shirt factories went from 12,000 T-shirts/worker a year to 500,000 within 1 year of 'gift' of operation to connected official's family. Guess how many workers were cut...

and today..
http://www.marketwatch.com/story/foxconn-replaces-60000-humans-with-robots-in-china-2016-05-25?siteid=nwhpm
Apple Inc. AAPL, +0.79% supplier Foxconn Technology Co. 2354, -0.14% has replaced 60,000 human workers with robots in a single factory, according to a report in the South China Morning Post, initially published over the weekend.
This is part of a massive reduction in headcount across the entire Kunshan region in China’s Jiangsu province, in which many Taiwanese manufacturers base their Chinese operations.

I went on a Swiss manufacturing tour and there were almost zero production staff. Massive high tech production off robot machines is what I saw.
Maybe 0.7644 was ok but you always want to do better.

Which way is the Aust Dollar headed long term...

Local Jobs - total cost to the economy analysis IS NEVER DONE.

The multiplier effect is huge. Consider some item, say a 3 seater couch. Sold for $500 at a low-mid range shop. Their mark up around 25% - so they paid $400 for it. Not exact example but near enough...

Made in Aust - $400 goes to manufacturer. Their cost of delivery around $10 (part of larger delivery to store). Cost of materials around $110 - wood & metal Aust sourced/made, material made in China (cost $25). Wages $70. Power/rent/water etc - $20. Other overheads $70 (including Workcover etc), sales cost $35 and profit before depn etc = $130.

So on 1st round of the $500 spent - $475 stays in Australia. The workers spend their wages and that money then helps pay wages, buy goods etc for other Australians. Typical multiplier (reason for $900 GFC tax payment) if used for Aust produced goods = 9x or $4,500 added to GDP

Made overseas - $400 goes to overseas manufacturer (90% furniture now imported from China). Their cost of delivery around $10 within Australia (part of larger delivery to store). Cost of materials around $60 - wood from rain forest metal & material made in China. Wages $20. Power/rent/water etc - $15. Other overheads $30 (no worker safety cover nor allowances etc), sales cost $15, shipping cost China to Aust in 40 ft teu $35 and profit before depn etc = $215.

So on 1st round of the $500 spent - $110 stays in Australia. The workers spend their wages and that money then helps pay wages, buy goods etc for other Australians. Typical multiplier if used for overseas produced goods = 0.4x or $200 added to GDP.

Did any of you see this ever appear in the papers following the $900 payment? No. There was some coverage on the $900 paid to people who were living (or had died) overseas but nothing about this impact.

Why? Because it does not result in change to the status quo and lead to consultants making money. If consultants (across the entire cost spectrum) do not make money then there is not anyone feeding lobbyists. Nor are there donations to Political parties of all colours. In the US (pre-internet) a privately fund organisation affiliated to no political party tried to work out over a 4 year presidential cycle - How many individuals actually donated money to a political party or lobbying group of some form.

Going through all company filings, electoral declarations etc (did not cover municipal elections) they arrived at a figure of less than 75,000 people for the US.

Think about that, in relation to what has been revealed within Australia in the last few years of hidden and not so hidden political donations and benefits received? 4Corners on Monday certainly proved that it is possible for a donor to most major parties to coincidentally get over $500m in Federal Govt subsidies. Compared with donations of less than $1m by that party. 23 meetings with various Fed Gov ministers in a small period of time to boot.

So think that 75,000 people bank-rolled the major US political parties (over a four year period) that covered the $10 donations through to the $75m ones.

In Australia I suspect (from having done some work on it but only 20 hours worth) if you made the cut off $100 then it would be less than 5,000 over the 3 year Fed term (includes donations to State Party as well btw). The top 10 donors to each major party make up to 90% of total donations by value btw.

The figure for 2012/13 was over $300m to all registered political parties (Fed, State and Local) in Australia. $6m every week.
View attachment 71443

Now that's members.
Party officials less than 1/20th of that at best. So does make you wonder where that $6m every week goes to doesn't it?

Curiously enough it is next to impossible to track down how many paid party officials there are for ANY of the major politicial parties.

I wonder why that is?

(Extreme sarcasm intended for those in any doubt).

 

[wandering_fred]

Tradies.
For renovation work local / on-site workers will continue to be needed.
However
The local treated pine truss shop will build wall and roof trusses in a factory environment with labor / material costs significantly below on-site costs. Adding wiring and plumbing at the factory? If not done now, it soon will be. Fewer employees needed.

The Aussie $$ will balance where the benefits of local match the cheaper overseas costs. The lower the AU$ the more mining jobs.

And world-wide politics creates interesting times.

Happy wandering

Fred

 

[junbugging]

Use of colours and bolding is impressive, but I think you also need some all-caps and varying font sizes to make it a true internet manifesto.

 

[Awesom Andy]

Tradies.
For renovation work local / on-site workers will continue to be needed.

In the end, there would only be jobs that have a high number of variables. e.g. electricians and plumbers as each house is different. And I guess there are jobs for those who are designing the robots. I'm currently in finance and I'm pretty sure most of the jobs would disappear. The infrastructure to replace workers are already in place - just that most managers are not technologically orientated enough to make such decisions.

 

[drsmithy]

A challenge that seems to be ignored for the time being.

The "challenge" of full employment has been abandoned since the '70s. It's bad for business.

 

[cove]

Someone did a comparison of Australia building destroyers for our navy in Australia compared with getting it built in England. Ours can be 30% short on range, 70% higher cost, 50% less potent and without helicopters. Mission control will allow us to then try to get these craft to perform up to specification over a decade or two.
We are doing this to keep jobs and skills in Australia.
If our exchange rate were to go down the imported stuff for the vessel will get a to cost a bit more.

 

[Foreigner]

In other words, nautical cough made in oz

 

[Isochronous]

Someone did a comparison of Australia building destroyers for our navy in Australia compared with getting it built in England. Ours can be 30% short on range, 70% higher cost, 50% less potent and without helicopters. Mission control will allow us to then try to get these craft to perform up to specification over a decade or two.
We are doing this to keep jobs and skills in Australia.
If our exchange rate were to go down the imported stuff for the vessel will get a to cost a bit more.

The "challenge" of full employment has been abandoned since the '70s. It's bad for business.

Building navy ships and submarines in Australia is a terrible idea. We don't have the skills base or the capacity to do it efficiently, so it just becomes a feeding frenzy for feral unionists.

And if we did go to war, we saw in WWII how the unions sabotaged Australian military production. Sourcing overseas will be cheaper, more reliable, and mean a more technologically advanced and capable ship or submarine

 

[Foreigner]

We can opt to buy a seaworthy, second-hand one.

 

[drron]

I did like the report in the AFR describing our subs deal with the French as Turnbull's underwater NBN.

 

[RAM]

We can opt to buy a seaworthy, second-hand one.

Oops, tried that (several times in fact).

There were the second-hand US transports that predated the two new purpose build behemoths.

However, extensive corrosion was discovered in both ships.[SUP][1][/SUP] The refit cost for the two ships increased to A$400 million, with half of the funding taken from repair and refit allocations for other ships.[SUP][1][/SUP] The two ships did not enter service until the end of the decade.
7.30 - ABC
There are currently 11 Defence projects with a combined worth of $10 billion running over time and over budget. For example, there's the Wedgetail airborne early warning aircraft, approved 14 years ago and still not airworthy. There are the Overlander field vehicles, constantly delayed and still at testing stage. And, the Collins Class submarines with huge maintenance issues.

Over summer, the Defence Minister's patience with his department was tested to its limits when he was repeatedly told that the only available transport ship was sea-worthy when it wasn't.

Then there were the 2nd hand helicopters ...
[h=3]the biggest white elephant in history[/h]The Australian Financial Review-Apr 29, 2016
Helicopters scrapped ... has been plagued by problems with operational deployment delayed five years. Our three Spanish air warfare destroyers have cost $1.2 billion more than defence planned and are, according to The Australian's ... It would be like a large fund manager saying it wanted to buy lots of

The $2 billion we spent on the 22 Eurocopter Tiger attack helicopters – preferred over lower-risk Apache or Cobra alternatives from the US – has been smoked with the latest White Paper resolving to scrap the machines due to ongoing operating issues.

The $4 billion gambled on the 46 MRH-90 helicopters, another European product selected over combat-tested American choppers, has been plagued by problems with operational deployment delayed five years.

Our three Spanish air warfare destroyers have cost $1.2 billion more than defence planned and are, according to The Australian's Greg Sheridan, "the most expensive ship of its type built anywhere in the world".

Read more: French subs the biggest white elephant in history | afr.com
​

It seems that the Australian Defence team come looking everyone else starts smiling and rubbing their hands together.

 

[eastwest101]

Meanwhile back to the AUD exchange rate - seems the AUD vs US$ has returned to its long-term average (note scale on the Y axis goes back to 1994), see if you can spot the late '90/early 2000s commodity bust and then "dot com" boom, followed by a commodity boom interrupted only briefly in 2009 and then the general retreat from 2013 onwards.




Or another way of thinking about it is that we are back in "normal land" last seen in 2006, 2004 and in 1997 and 1994.

 

[Doctore1003]

That last monthly candle is fugly! And the AUD's inability to hold up despite rallying stock markets in recent weeks is not good either.
Market sentiment has definitely shifted towards another rise in US interest rates in the coming months, as Yellen said would "probably" happen overnight.
This coming Friday's US jobs data should be interesting. We also have lots of AU data coming out this week (especially GDP & China manufacturing Weds; AU retail sales and trade Thurs).

 

[RAM]

Meanwhile back to the AUD exchange rate - seems the AUD vs US$ has returned to its long-term average (note scale on the Y axis goes back to 1994), see if you can spot the late '90/early 2000s commodity bust and then "dot com" boom, followed by a commodity boom interrupted only briefly in 2009 and then the general retreat from 2013 onwards.

Or another way of thinking about it is that we are back in "normal land" last seen in 2006, 2004 and in 1997 and 1994.

If that chart went back to the float in 1984 you get a very different long term level. What is even more interesting is to have a look at the AUD vs GBP and JPY over that time.

For those more adventuresome - then look at a similar chart (from 1984) for the gold price in AUD, JPY and GBP. For an extended period the price in JPY was a favourite trade/indicator for one investment bank.

 

[marki]

Bit of a jump today on GPD data

 

[cove]

Go AUD go!

 

[wandering_fred]

Go AUD go!

I'm sure it will... Just not in the direction you expected/anticipated.

Happy wandering

Fred

 

[marki]

I'm sure it will... Just not in the direction you expected/anticipated.

Happy wandering

Fred

Always the optimist