MercoPress. South Atlantic News Agency
Slow Chinese demand hits mining giants’ profits; not much change expected in short term
Newly-formed mining giant Glencore Xstrata has written down the value of Xstrata's assets by 7.7bn dollars and reported a drop in revenues. The firm, which was created in May, said the write-down reflected tougher conditions in the mining sector. Read full article
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Disclaimer & comment rulesThankfully for the Australian economy, the investment boom has ended and the production boom is now really taking off.
Aug 21st, 2013 - 12:31 am - Link - Report abuse 01 Anglotino
Aug 21st, 2013 - 08:42 am - Link - Report abuse 0What about the housing bubble though? :o)
@1 You are lucky that you have low debt, a diversified economy, a highly skilled work force and plenty of resources. I think you are pretty much storm proof.
Aug 21st, 2013 - 09:08 am - Link - Report abuse 0It is interesting that over the last couple of years there has been so much fretting about the demise of the west and the rise of China, some of it well reasoned. But here we are in 2013, the Fed only has to says they might choke off the liquidity and the BRICS start to splutter. That tsunami of money that went east is going to start to wash back. Turbulence ahead.
@ChrisR
Aug 21st, 2013 - 10:35 am - Link - Report abuse 0The housing bubble has been talked about in Australia for over 6 years now and I think the actual talk was the bubble. While we had a massive rise in housing prices for many years and there were affordability problems, Australia differed in many respects. First you pretty much need mortgage insurance and even if your house is repossessed, the bank can still come after you for any debt left over after a mortgagee's auction. Second, Australia has undergone massive population growth. We're adding about 1 million people every 3 years. From a very low base - we just hit 23 million. All these new immigrants want houses and we're not building enough. And finally our economy has been growing for 20 years and we are pretty affluent now. In 2000 our GDP was only US$400 billion and is now over US$1.5 trillion.
House prices eased off probably about 2 years ago and the bubble slowly deflated. However with low interest rates prices are starting to pick up again but mostly people are using low interest rates to pay down their debts so much that we are now net savers again.
@Condorito
Many people think that Australia is a one trick pony. They believe that we boomed simply because of our exports to China but fail to realise that we haven't had a recession for 22 years now. China's slowdown will have a good effect on Australia because it will drive a reformist agenda that we have not felt the need for in the past decade. We can afford to sit still.
I never bought into the BRIC idea. China's demographic problems are massive and have been ignored for so long that people are now have an uh-oh moment when they realise. None of the BRICs undertook the painful restructuring their economies needed that the west has been performing for the last several years. It all goes in cycles and the BRICs are on a bit of a downer.... for a while - which will reform first is the question?
4 Anglotino
Aug 21st, 2013 - 01:14 pm - Link - Report abuse 0Thanks for that. Until the cunt Brown managed to halve my net worth we were going to use the Self-funded Retiree’s Scheme.
We came over to Kadina, South Australia in 2005 to get a feel for the place and fell in love with the area and the people. I fired pistols in most clubs between Wallaroo and St. Augusta but the only thing that bothered me was the housing. Very expensive and not terribly secure. I checked about car, bike and house insurance and they wouldn’t touch any house that did not have at least a brick skin. Not many had that.
We looked at an old station house that had been renovated with photographs for each stage of the work but the Scheme insisted at that time that ALL housing had to go through government approval prior to offer so I couldn’t even put a deposit on it.
Pretty glad really when the bottom fell out of our net worth: we fell below the 1.5 million AUS $ we needed to make things work. Since the Labour rabble came to power the four yearly fees we would have to have paid EACH have gone through the roof.
However we are very happy with Uruguay, it is after all on the same 35 deg S parallel as York Peninsula.
I never believed in the BRIC hype either. China and Russia have serious population problems,
Aug 21st, 2013 - 01:28 pm - Link - Report abuse 0Russia has natural resources and a old drunk lazy population.
Brazil is poor, stupid and dangerous.
China is old and has some decent reserves but has destroyed their, arable land, has HUGE water problems, and is 2T really all that much to crow about when their population is so huge? They can't grow their own food nor power their massive build -up, the gov't can't afford further infrastructure building and their banks are in effect bankrupt. I don't think the current gov't will be able to manage this behemoth when civil unrest gets to the Eastern Coastal cities. It is just a matter of time before there is a revolution. I think they'll find U$2T is not near enough to keep everything going and the people fed and warm. Time will tell.
The whole BRIC hype was founded on a credit bubble which will burst. The US Federal Reserve's policies of QE, artificially low interest rates and TARP (which should be called WARP 'Worthless Assets Revaluing Programme) has created a commodity bubble that led to companies like the two that formed Glencore Exstrata being over-valued. In a recession, assets prices might be expected to fall to refkect the underlying demand based on the structure of production once the inflation hat caused the boom has receded.
Aug 26th, 2013 - 02:34 am - Link - Report abuse 0The BRIC hype is summed up by yankeeboy perfectly, never disregard the bleedin' obvious, all four countries have thieving, sclerotic bureaucracies and either deadbeats or thugs in charge.
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