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Re: Australian economy

Postby HBS Guy » 04 Oct 2017, 09:56

It needs a full on attack on neoconservatism and that means attacking the cash flowing to the rich and privileged and self-entitled (start by winding back outrageous perks for pollies!)

While engaged in that war, fix the NBN and that will take another $20Bn on top of whatever the libs have wasted so far building a temporary copper network.

Neither easy nor quick! And Murdoch will be doing his dirty best to derail all of this!
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Re: Australian economy

Postby HBS Guy » 04 Oct 2017, 10:04

BTW, another little index of the economy: HM cars on the side of the road have “4Sale” signs on them. I think wage stagnation makes paying the cars off and maintaining them gets too expensive. Certainly seen lots of cars like that, usually somewhat upmarket, recent type of cars.
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Re: Australian economy

Postby HBS Guy » 05 Oct 2017, 07:43

China to introduce an ETS by the end of the year plus will beef up pollution fines.

The travelling inertia show aka Lib govt—politics as usual :sad

http://www.afr.com/business/mining/coal/rio-tinto-backs-china-ets-josh-frydenberg-says-it-wont-affect-policy-20171003-gytexf

Has the stupid govt noticed that the two biggest mining companies have moved out of thermal coal? :roll
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Re: Australian economy

Postby HBS Guy » 06 Oct 2017, 19:05

Wow!

Prime Minister Malcolm Turnbull has blamed low wage growth for the worst monthly drop in consumer spending since 2010.


Sharp as a balloon is turdfull! People pointed out what the stupid and evil penalty rates decision meant but turdfull barged ahead anyway, the cretin. Now the “unforeseen consequences” as I am sure the dickhead is putting it in what passes for his mind has a problem. :oops

This is not the only thing the spineless jellyfish has fucked up:
. . .some economists pointed the finger of blame at rising household debt and cooling house prices.


Household debt has been rising for a long time but there is a limit to how far that can go. turdfull ignored any action on house prices and hard shit like that, doesn’t want to get wrinkles from thinking too much.

August retail trade slumped the most at ‘Newspaper and book retailing’, down -2.3 per cent; ‘Cafes, restaurants and catering services’, down -1.8 per cent; and at ‘Electrical and electronic goods retailing’, down -1.6 per cent.

Nowhere in Australia escaped, with retail sales falling in every state and territory, with New South Wales, Victoria and the ACT tied for worst performance at -0.8 per cent.


Jobsungroeth, eh?

The link between low wage growth, low spending and low economic growth has been a growing area of concern in recent months.

Commonwealth Bank CEO Ian Narev said in a speech on Friday that wage growth was the “No.1 metric” that policymakers should be concerned about.

The reason experts are so concerned is that any drop in consumer spending from cash-poor workers could have big consequences for economic growth, as household consumption currently accounts for roughly 57 per cent of Australia’s economic growth.

The full impact of the August slump will be seen when the September quarter GDP figures are released. In the GDP figures for the June quarter, the share of economic growth flowing to wage earners fell to 51.3 per cent in trend terms, the lowest since 1964, while the profit share soared to 27.3 per cent, the highest since 2012.


All this is classic neoconservatism but the end stage of it when those at the bottom cannot give anymore. Now what?

Read the rest of the bad news yourself:
http://thenewdaily.com.au/money/work/2017/10/06/retail-spending-turnbull/
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Re: Australian economy

Postby Lefty » 07 Oct 2017, 07:40

As far as I can see, the bit of improvement that has occurred since the beginning of the year has been largely driven by government spending - but at the state government level. Our biggest states have embarked on a very solid spending spree and this has flowed through to economic growth. The national accounts have told us that the private sectors overall contribution to growth has been wavering between weak and zero (it's net contribution was basically zero in the June quarter). Government stimulus works!

Another factor has been that after returning to more historically normal savings behaviour post-GFC (households have long typically saved 10-15% of income) households have also been running their savings ratio back down toward zero in an effort to maintain consumption - but this factor looks to be getting stretched as well.

I think neoliberal economics are reaching their endgame (that doesn't mean it will just end - it will stagger on and on in zombie-like fashion for as long as we are prepared to tollerate it because it suits the elites). But the long regime of substituting household credit growth for household income growth is almost out of options - households can carry bigger and bigger debts as long as the rate of interest keeps getting lower and lower but households are now consequently choked on debt without precedent and credit is difficult to make much cheaper to repay. I don't think the idea of interest rates rising much - if at all - is credible because of the sheer size of the debt burden households are now carrying. According to Digital Finance Analytics modelling, if mortgage interest rates were to return to what they were when we bought our house almost 20 years ago, close to half of all households would be in financial difficulty with as many as 20% risking default - this would obviously place the banking system itself in great danger. As long as households remain historically hokked to the eyeballs,
interest rates must remain very low to accommodate.


So here we are now being confronted by a simple, basic fact that has held true since the inception of the economic system we call capitalism: the employee who is a cost of production to one firm is also the customer and source of income to the next firm. If they aren't earning it they can't spend it unless they borrow it - but that option looks to be close to exhausted.
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Re: Australian economy

Postby HBS Guy » 07 Oct 2017, 08:07

The other side of the argument is that those saving—to buy a house say—or those living on savings, pensioners with some assets—are getting fuckall return on their investment and that is not helping the economy either! Especially as interest rates are about the level of inflation and you pay tax on the meagre interest.

Would have been much better if the idiots on the RBA board had kept rates at 2.5%, the extra cuts did nothing but stimulate speculators in real estate.
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Re: Australian economy

Postby Lefty » 07 Oct 2017, 08:34

Yup, once they began deregulating the banking system it was only a matter of time. We had to basically scrape and bow to get a loan of a size that would be considered trivial by today's standards - just a few years later they seemed to be throwing money at anyone with a heartbeat.

It's a self-reinforcing process - each time the rate of interest is lowered (or increased grants offered to first home buyers or perks to investors or any kind of money pumped into housing at all), housing vendors simply put up their asking prices in response to buyers being able to spend more and the net result is that the borrower is left no better off.

They are simply left holding a bigger debt that requires low rates to service - and in the meantime the low rates squash savers. After all, that's the idea of low rates, discourage saving and encourage borrowing.

We're seeing the limits of monetary policy as an economic counter-stabalisation tool (as well as the side effects of using it in a loose credit environment)
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Re: Australian economy

Postby HBS Guy » 07 Oct 2017, 08:38

Part of my savings is putting extra money into my small mortgage on the block of land, can draw back if need be but in the meantime I consider it as getting 4% tax free on that money, best investment ever!
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Re: Australian economy

Postby HBS Guy » 10 Oct 2017, 00:44

The “experts” at Treasury and the RBA have woken up to the fact that consumer spending is not, in fact, increasing:

The retreat in retail sales is challenging Reserve Bank and Treasury forecasts that consumer spending will power a return to 3 per cent plus growth over the next year.

The consumer sector of the economy has been at odds with the upbeat business surveys and the strong employment growth for much of the year, leaving aside April and May, when Queenslanders flocked to the shops to replace goods lost to Cyclone Debbie.

With household spending accounting for 55 per cent of the economy, the contrary trends cannot persist and will be resolved, either with households lifting spending or business turning down.


Oh dear.

The Reserve Bank’s August review of the economy was upbeat about consumers, based partly on the reported retail sales in April and May, but also believing that spending would be supported by stronger income growth. It predicted consumption growth would be “a bit above its average since 2008”, which would put it at about 3 per cent (not including inflation).

“Given the recent strength in total hours worked, growth in household disposable income is expected to increase and be in line with the growth in consumption, implying little change in the household saving ratio,” it said.

In the May budget, Treasury tipped that spending would rise by 2.75 per cent this year and by 3 per cent in 2018-19, saying this improvement in consumption would contribute to a lift in the growth rate.


Did they look at what was holding up the level of economic activity? Public or private sector?

Following last week’s Reserve Bank board meeting, governor Philip Lowe wound back the optimistic tone of the August economic outlook on consumer spending, commenting that “slow growth in real wages and high levels of household debt are likely to constrain growth in household spending”.

The impact of debt is underlined by the International Monetary Fund’s analysis for its forthcoming global economic outlook, showing that rising household debts deliver a short-term boost to economic growth that is followed by a long-term drag.

The IMF’s analysis shows that on average, a 5 percentage point rise in household debt to GDP over a three-year period foreshadows weaker growth in GDP, which would be 1.25 percentage points lower in three years’ time.


Rising gas and electricity prices are squeezing discretionary spending.

Another cockup!

http://www.theaustralian.com.au/business/opinion/david-uren-economics/hopes-for-strong-growth-in-doubt-as-retail-sales-retreat/news-story/928c1f3e7f9517ee0614bc8de3fe24b6
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Re: Australian economy

Postby HBS Guy » 15 Oct 2017, 05:12

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Re: Australian economy

Postby HBS Guy » 17 Oct 2017, 08:43

At the moment at least seems moves to cut stamp duty in NSW & Vic has seen a surge of owner occupiers buying real estate. Grogs Gamut wonders how long it will last:

https://www.theguardian.com/business/grogonomics/2017/oct/17/first-home-buyers-get-their-foot-in-the-door-but-will-it-slam-shut
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Re: Australian economy

Postby Lefty » 17 Oct 2017, 09:56

HBS Guy wrote:At the moment at least seems moves to cut stamp duty in NSW & Vic has seen a surge of owner occupiers buying real estate. Grogs Gamut wonders how long it will last:

https://www.theguardian.com/business/grogonomics/2017/oct/17/first-home-buyers-get-their-foot-in-the-door-but-will-it-slam-shut


Yep, here is something that doesn't simply flow straight into the pockets of vendors. Grants and subsidies for first time buyers have only had the effect of making housing less affordable as it simply allows investors selling to up their asking prices.

Unfortunately, it does mean that lots of young people are now saddled with huge debts of the magnitude that was unthinkable when I bought.
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Re: Australian economy

Postby HBS Guy » 17 Oct 2017, 10:03

Yup. they better put every fucking cent they can lay their hands on into the mortgage because at some stage interest rates WILL rise! No more lattes or smashed avocado, no updating the smart phone every year or two. Oh dear, how will they cope? No Netflix, no new TV or car!
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Re: Australian economy

Postby Lefty » 17 Oct 2017, 16:48

Interesting titbit....

Dodgy FTA’s helped kill the car industry

The first Toyota closure reason was actually the so-called “free trade” agreements that Australia signed. Probably these agreements had more of an effect on Japanese executives in Nagoya than anything else.

The Japanese could not understand why we kept signing “free trade” agreements that were not free trade agreements at all. John Howard signed the Thailand free trade agreement, which allowed free entry of Thai motor parts into Australia but whacked huge tariffs and other restrictions on exports of Australian motor parts and cars into Thailand. We were conned.

General Motors in Australia complained that the so-called US “free trade” agreement prevented unfettered access of Australian cars to the United States. Conned again.

In 2013-14, the Japanese believed that the looming Korean — and indeed Japanese — “free trade” deals would see the Australian motor industry unfairly disadvantaged once again.

Australia could overcome the effect of these “free trade” deals with massive subsidies. The Japanese could never work it out and assumed that Australians were either stupid or did not want a motor industry.


I worked as the Australian Treasury’s trade guy in the early-2000s when the Thailand-Australia and the Australia-US FTA’s were negotiated. And I distinctly remember the former included a clause giving Thailand unfettered (but unreciprocated) access to the Australian market, which subsequently helped fuel the explosion of imported commercial utes into Australia (let alone car parts).


Australians - at least many of the elite - seem to posses a unique brand of ideological stupidity difficult to find elsewhere. The remarkable zeal that we show at so willingly gutting ourselves of any truly productive capacity and crushing our own ability to innovate and adapt into the dirt must be regarded with amazement by other nations. The Japanese invented hari-kari and they still appear astounded at our ideologically-driven slow suicide.

How many other nations have taken their own entire mechanical engineering capacity - and all the spin-offs than arise from R&D in the field - and just casually tossed the entire industry in the garbage, in the unshakable belief that food and dirt exports and selling each other real estate are all we will ever need - we can just import every other last thing we consume.

To say call this stupidity really is inadequate and does not do justice to what we keep doing - this deluded belief that we can (and should) just ditch any ability to produce anything except bulk commoddities and can remain a rich first-world nation by simply borrowing to consume most of what we consume is stupidity on such a monumental scale that it really should have it's own special dictionary definition.
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Re: Australian economy

Postby Squire » 19 Oct 2017, 01:32

Lefty wrote:Interesting titbit....

Dodgy FTA’s helped kill the car industry

The first Toyota closure reason was actually the so-called “free trade” agreements that Australia signed. Probably these agreements had more of an effect on Japanese executives in Nagoya than anything else.

The Japanese could not understand why we kept signing “free trade” agreements that were not free trade agreements at all. John Howard signed the Thailand free trade agreement, which allowed free entry of Thai motor parts into Australia but whacked huge tariffs and other restrictions on exports of Australian motor parts and cars into Thailand. We were conned.

General Motors in Australia complained that the so-called US “free trade” agreement prevented unfettered access of Australian cars to the United States. Conned again.

In 2013-14, the Japanese believed that the looming Korean — and indeed Japanese — “free trade” deals would see the Australian motor industry unfairly disadvantaged once again.

Australia could overcome the effect of these “free trade” deals with massive subsidies. The Japanese could never work it out and assumed that Australians were either stupid or did not want a motor industry.


I worked as the Australian Treasury’s trade guy in the early-2000s when the Thailand-Australia and the Australia-US FTA’s were negotiated. And I distinctly remember the former included a clause giving Thailand unfettered (but unreciprocated) access to the Australian market, which subsequently helped fuel the explosion of imported commercial utes into Australia (let alone car parts).


Australians - at least many of the elite - seem to posses a unique brand of ideological stupidity difficult to find elsewhere. The remarkable zeal that we show at so willingly gutting ourselves of any truly productive capacity and crushing our own ability to innovate and adapt into the dirt must be regarded with amazement by other nations. The Japanese invented hari-kari and they still appear astounded at our ideologically-driven slow suicide.

How many other nations have taken their own entire mechanical engineering capacity - and all the spin-offs than arise from R&D in the field - and just casually tossed the entire industry in the garbage, in the unshakable belief that food and dirt exports and selling each other real estate are all we will ever need - we can just import every other last thing we consume.

To say call this stupidity really is inadequate and does not do justice to what we keep doing - this deluded belief that we can (and should) just ditch any ability to produce anything except bulk commoddities and can remain a rich first-world nation by simply borrowing to consume most of what we consume is stupidity on such a monumental scale that it really should have it's own special dictionary definition.


If Australian cars had been of appropriate technology, quality, and price FTAs wouldn't have been effective because they would already have established markets. There was nothing about Australian cars that positively differentiated them from foreign competitors.

Losers are falsely blaming FTAs for Australia's inability to manufacture into the world market.
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Re: Australian economy

Postby Lefty » 19 Oct 2017, 07:39

Squire - Australia made good cars and some of them had ready export markets. The industry was deliberately shot in both knees and then kerbstomped by Abbot and Hockey. It was already bleeding heavily from the astonishing ideological zeal with which this country pursues a campaign to de-industrialise and erase the ability to do much other than make coffee and sell each other real estate (or increasingly, sell it to well-heeled foreigners and squeeze our own young people out of home ownership). Apart from growing food and digging up rocks, which employs only a tiny fraction of the labour force and mostly belongs to foreigners.

This sort of thing is not even free trade. It's like a lopsided boxing match where I voluntarily bind myself to Queensbury rules but tell my opponent he is free to bite, eye gouge, tackle, kick me in the balls, throw salt in my eyes - anything he likes. It is stupidity, pure and simple and the outcome is a given.

While carmaking in western countries may have downsized, I cannot think of another country that has so deliberately beheaded it's own capacity for something as fundamental as mechanical engineering.

This has absolutely nothing whatsoever to do with expensive, poor-quality vehicles being supplanted by cheaper yet better quality vehicles - it is a case of one country being so obsessed with the ideology you mention that it unilaterally pursues a spectrum of policies literally designed to destroy it's own manufacturing base. The carmakers based here were not purely local, they were global and that gave our industry access to high-tech innovations from nations with advanced manufacturing sectors - that will now cease since even if we can access the knowledge we've just shitcanned the ability to do anything with it anyway.

Other countries pay varying degrees of lip service to the notion of pure, unfettered global markets - because they aren't stupid. We appear to posses a unique brand of stupidity and are racing headlong to wind back the clock to the days when we were a colony, unable to do a thing for ourselves and totally dependent on those on the other side of the world for every last requirement.
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Re: Australian economy

Postby Lefty » 19 Oct 2017, 07:52

In additon to the appalling loss of engineering know-how and capability, the market for new cars will soon be 100% import, meaning every cent involved in carmaking that either stayed here or was earned by exports will now instead flow out of the economy through the external sector.

Go Straya.
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Re: Australian economy

Postby HBS Guy » 19 Oct 2017, 07:56

Car making was unionised, hiss boo! Cut that nose off to spite that face!

Italy, France, Holland, and Germany still have their manufacturing base, just us that has killed it in the name of neoconservatism!
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Re: Australian economy

Postby Lefty » 19 Oct 2017, 08:12

It's just unbelievable!

I'd like to say that as far as coffee-making goes, at least we grow it - but it's not hard to imagine this mob declaring that biosecurity is an affront to unfettered trade and destroying our industry with a flood of imports.
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Re: Australian economy

Postby HBS Guy » 19 Oct 2017, 09:20

Like letting in NZ apples complete with fireblight! Great decision, NOT!
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Re: Australian economy

Postby Lefty » 19 Oct 2017, 09:22

A statement (not the first either) coming from seemingly unlikely quarters...

Australia's biggest domestic economic risk is a "skewed consumer cycle" and the government may need to step in with a policy on wages, Commonwealth Bank of Australia chief economist Michael Blythe says.

Normal wage growth is around 3.5 per cent per annum, according to the Reserve Bank of Australia, but Mr Blythe noted that wages are now growing at around 2 per cent per annum, "if you're lucky".

"There's a disconnect between slow wage growth and other economic fundamentals such as the employment rate, which are approaching levels that the Reserve Bank considers normal for a robust economy," he said.

"Given the usual economic fundamentals, like the unemployment rate, you would be expecting to see wages growth faster than it is right now. There's a market failure here, in a way, and governments are there to sort out market failures."


http://www.afr.com/news/economy/we-need-to-talk-about-wage-policy-says-cbas-chief-economist-20171018-gz35z2

Consumer spending is over half of economic activity and if they aren't earning it then the only way they can spend it is to borrow it - but with household debt already at levels without historical precedent and little or no room left to use monetary policy to make repaying borrowed money any cheaper and the household savings ratio (which had returned to the historically normal range after the GFC) crashing back toward zero....sooner or later (quite possibly sooner) we will run out of the means to power the economy with ever-spiralling private debt.

That's when our the effects of our insane drive to completely denude ourselves of the ability to produce anything other than dirt and food will begin to bite.

It's not rocket science - if you squeeze labour too far in favour of capital, the paradox that one businesses employees which are a cost to it are also the next businesses customers and source of income become obvious.
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Re: Australian economy

Postby Lefty » 19 Oct 2017, 09:23

HBS Guy wrote:Like letting in NZ apples complete with fireblight! Great decision, NOT!


Yeah, stupid decision - all based on the notion that unfettered trade always delivers optimum results. This has been proven wrong so many times it's a wonder we still persist with the agenda.
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Re: Australian economy

Postby Lefty » 19 Oct 2017, 12:00

Good news on employment appears to continue despite the contrary indicators elsewhere....

ABS jobs for September are out and the boomlet continues:

Employment increased 19,800 to 12,290,200. Full-time employment increased 6,100 to 8,398,200 and part-time employment increased 13,700 to 3,892,000.
Unemployment decreased 11,800 to 711,500. The number of unemployed persons looking for full-time work decreased 10,600 to 487,100 and the number of unemployed persons only looking for part-time work decreased 1,200 to 224,400.
Unemployment rate decreased 0.1 pts to 5.5%.
Participation remained steady at 65.2%.
Monthly hours worked in all jobs increased 11.2 million hours (0.7%) to 1,718.2 million hours.


https://www.macrobusiness.com.au/2017/10/australian-jobs-boomlet-continues/

I'll wait for the labour market expert - Bilbo of course - to further dissect the figures but they suggest things are ok on that front.

I'd probably put the contrarian situation down in large part to the huge infrastructure spend out two biggest state economies - NSW and Vic - began engaging in earlier this year, filtering out into the broader economy. As the last national accounts showed, growth was being entirely powered by government spending at the state government level - the private sector's net contribution to growth was roughly zero. Government spending works!
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Re: Australian economy

Postby HBS Guy » 19 Oct 2017, 12:14

Yup!
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Re: Australian economy

Postby Squire » 19 Oct 2017, 12:51

Lefty wrote:Squire - Australia made good cars and some of them had ready export markets. The industry was deliberately shot in both knees and then kerbstomped by Abbot and Hockey. It was already bleeding heavily from the astonishing ideological zeal with which this country pursues a campaign to de-industrialise and erase the ability to do much other than make coffee and sell each other real estate (or increasingly, sell it to well-heeled foreigners and squeeze our own young people out of home ownership). Apart from growing food and digging up rocks, which employs only a tiny fraction of the labour force and mostly belongs to foreigners.

This sort of thing is not even free trade. It's like a lopsided boxing match where I voluntarily bind myself to Queensbury rules but tell my opponent he is free to bite, eye gouge, tackle, kick me in the balls, throw salt in my eyes - anything he likes. It is stupidity, pure and simple and the outcome is a given.

While carmaking in western countries may have downsized, I cannot think of another country that has so deliberately beheaded it's own capacity for something as fundamental as mechanical engineering.

This has absolutely nothing whatsoever to do with expensive, poor-quality vehicles being supplanted by cheaper yet better quality vehicles - it is a case of one country being so obsessed with the ideology you mention that it unilaterally pursues a spectrum of policies literally designed to destroy it's own manufacturing base. The carmakers based here were not purely local, they were global and that gave our industry access to high-tech innovations from nations with advanced manufacturing sectors - that will now cease since even if we can access the knowledge we've just shitcanned the ability to do anything with it anyway.

Other countries pay varying degrees of lip service to the notion of pure, unfettered global markets - because they aren't stupid. We appear to posses a unique brand of stupidity and are racing headlong to wind back the clock to the days when we were a colony, unable to do a thing for ourselves and totally dependent on those on the other side of the world for every last requirement.


This is bull. If Australian car manufacturer export markets were robust nothing that happened in Australia other than exchange rates and wage rates would have affected them. Exchange rates would have been easy to overcome by having competitive sources for overseas components if Australian components became too expensive through high exchange rates.

The Germans, Japanese and Koreans all continued to grow their exports despite rising exchange rates.

You are right about the stupidity. Other countries don't use stupidity as an industrial manufacturing input.
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