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Despite indications to the contrary, we are apparently doing “incredibly well”

Earlier on Tuesday, the Australian share market ended deeply in the red losing $56 billion in value, as the Glencore crash raised fears about companies across the commodities sector.

Fears about the heavily indebted Glencore’s ability to survive caused the rout in its share price and a surge in the cost of insuring its debt, leading many analysts to question whether this might be the commodity sector’s Lehman Brothers moment.

By the close, the benchmark ASX 200 index was down 3.8 per cent to 4,918 and the All Ordinaries was off 187 points to 4,958, cracking below 5,000 for the first time since mid-2013.

BHP Billiton shares tumbled below $22 for the first time since the global financial crisis.

All four major banks were down over 3.5 per cent and retail plummeted, with Woolworths and Wesfarmers both down more than 3 per cent, and Myer down 4.9 per cent.

But the Federal Treasurer Scott Morrison said the economy was performing “incredibly well”, despite a plunge in the Australian stock market.

“These are obviously difficult days and there’s lots of headwinds we already know that,” he told Sky News.

“I think the issue for the Australian economy and Australians more generally [is] we know that we have to swim against the tide in many respects, but I think we are swimming against the tide … incredibly well.”

We are certainly “swimming against the tide” by backing fossil fuels and ignoring renewables but the “incredibly well” part is just the new rhetoric. Everything is not rosy just because Scott says so.

Top ten losers on the ASX 200:

  • Paladin Energy -13.2%
  • Karoon Gas -11.1%
  • Origin Energy -10.4%
  • AWE -9.2%
  • Santos -9.1%
  • Liquefied Natural Gas -9.1%
  • Whitehaven Coal -9%
  • Beach Energy -8.7%
  • BlueScope Steel -8.1%
  • M2 Group -7.5%

Removing the carbon tax has obviously not brought the results this government was hoping for. Not even the resurrection of Malcolm can make the markets believe all is well. These businesses are suffering because the world is changing and it is time our government accepted the fact and got in the race.


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  1. Jennifer Meyer-Smith

    No Scott, if the share market is struggling, that does not mean the economy is performing well.

    And that’s no excuse to cut Welfare, Education, Medicare, Health, Disability Pensions, other Pensions, Public Transport infrastructure, financing diverse homegrown industries and micro-businesses. I could go on but I’m sure you get my drift.

    Increase spending to all of these worthwhile social-economic imperatives and you’ll find business confidence increase along with consumer confidence and voila, the economy will be boosted and the share market will rise. DUH, Scott!

  2. David

    JoHo must have left all his notes on the desk when departing the Treasurers suite. New singer, same song (yawn). Chris Bowen, holder of an economics degree should have a field day with this hopelessly out of his depth criminal, the happy clapping Morrisonscum

  3. Kaye Lee

    If consumers have more to spend, demand increases, more supply is needed, jobs are created.

    The thing I don’t understand is why we refused to spend money to prop up the car industry but we spend billions propping up an industry that all indicators are telling us could end up being a stranded asset.

    The car industry was always going to find it hard to be profitable without assistance but the prospect of free trade agreements with cheap cars flooding the market was the final nail in the coffin.

    The car industry not only employed tens of thousands of people, and possibly hundreds of thousands indirectly, it also gave us the manufacturing expertise that can be used in new industries as they arise.

    Mining leaves us with pollution, big holes in the ground, and ponds filled with toxic waste. It employs about 2% of the population at best and the companies engage in aggressive tax avoidance. A significant portion of the royalties they pay are given back in the way of government funded infrastructure.

    It will take the market gods to make our politicians see sense, but Scott is even ignoring that bible of the capitalist.

  4. kizhmet

    @Kaye Lee – you’re doing it again; you are being logical, rational and sensible – tut tut. Haven’t you learned yet that making sense is not on the government’s agenda? And the idea that we have a treasurer who is actually qualified for the job and understands the workings of an economy???? Shock horror. That simply wouldn’t do! Big business wouldn’t be able to manipulate a person who had a modicum of knowledge about fiscal policy.

  5. kerri

    I agree Chris Bowen is better educated, but I have my eye and my hopes on Andrew Leigh!
    Leigh is one smart cookie!

  6. Jennifer Meyer-Smith

    I agree kerri. Andrew Leigh is smart, well-skilled with economic credentials and interesting to listen to.

    He would make an exciting Treasurer. Hopefully Labor and its allies can give him an exciting platform on which to form exciting, progressive and innovative economic packages.

  7. David

    Kerri/Jennifer…no disagreement from me re Andrew 🙂

  8. Jexpat

    “The car industry was always going to find it hard to be profitable without assistance.

    That’s largely because they operate on the American model, and tend to compete on the price, rather than on quality and innovation.

    For example, there’s a large and growing sector for high quality aftermarket 4×4 add ons and accessories that commands worldwide respect, and if the Australian dollar remains around historic exchange rates, it’s quite competitive with overseas products (and could be moreso with due to inherent branding opportunities associated with the country).

    Taking that one step further, although we might not be equipped historically to produce high quality sedans like Mercedes and BMW, we coiuld certainly produce some of the most rugged 4×4’s and softroad SUV’s -and could incorporating hybrid electric technology and nifty little bits like fridges, solar panels, dual batteries and so forth that we already have exertise with.

  9. Neil of Sydney

    The thing I don’t understand is why we refused to spend money to prop up the car industry

    This is wrong. Funding was legislated until 2020. It was in the budget and would take an act of parliament to stop funding. And the Coalition did not have the numbers in the Senate to stop funding even if they wanted to.

    The Automotive Transformation Scheme (ATS) commenced on 1 January 2011 and will run until 31 December 2020.

    The ATS will provide $2.5 billion in capped assistance and approximately $348 million in uncapped assistance.

  10. babyjewels10

    Don’t bamboozle ’em with facts, Kaye!

  11. kizhmet

    Andrew Leigh is definitely worth keeping an eye on. What I have seen/heard from him, he is a big thumbs UP.

  12. mmc1949

    Reading Kaye’s article made me think yet again that the stock market is a puffed up casino. So Glencore overstretched itself financially (if that’s what happened). Why should that affect every other company? Glencore, BHP and all the others still have their assets in the ground. They might be worth less than they paid for them last week but there’s the gamble that didn’t pay off.

    If I went to Crown casino and and lost my house to the roulette wheel, I might be homeless but it isn’t going to bring suburbia down. OK, so that’s mixing domestic/family and national financial arrangements but really ….. As for futures ….. an even bigger gamble. And when you gamble, there are always losers.

    Why do we accept the stock market as it is? Who is served by it in its current incarnation? Who profits???

  13. susan

    mmc1949. I agree that the stock market is a casino which doesn’t reflect the real world. Its only purpose is to employ the offspring (mostly sons) of rich white men when they are not intelligent enough to get a real job.

  14. Wally

    mmc1949 I agree I don’t have a lot of money invested (wasted) in shares but I would have been better off putting the money under my mattress. Three companies I bought shares in have vanished along with my money and over the past few weeks the value of what are left has dropped below half of there value.

    The biggest problem with companies nowadays is very few of them actually own anything of value. Modern business lease cars, plant and premises so any perceived company wealth is purely speculative based on performance in the market place and future projections. If an employee approached a bank or prospective investor to borrow money on the premise that they might get a well paid job or win lotto at some time in the future they would be ridiculed but that is exactly what Australian companies are doing.

    When I was an apprentice the company I worked for were lucky to stave off a take over from investors who undertook practises that a short time later were referred to as “bottom of the harbour” schemes. They would seek to gain control of companies who had more assets than the total value of the shares and once they had control they would sell off all of the assets without any regard for the future of the employees or the company.

    Despite bottom of the harbour being illegal Australian Governments have acted just as badly selling off public assets that generated income to balance the budget. We need governments that can build infrastructure, manage public assets and provide for future generations without burdening us with excessive taxes because they follow in the footsteps of business models that are proving to be sustainable.

  15. Jennifer Meyer-Smith


    to my feeble mind, you speak utter sense by taking the lusted for car prototype which provides independence to each driver who likes their independence and accessibility to diverse, inaccessible places, and then giving the consumer a socially, environmentally and economically responsible means to make that independence work both for the individual – and more importantly – for the environment.

    Getting this equation of the environment and of course the necessary, and sometimes selfish, consumer right is the winning equation.

  16. Jennifer Meyer-Smith

    Wally, I understand your dismay at your unfortunate investment. If company eligibility processes were more strident and the norm where assets that they own and that could be liquidated for the investors, then you would (and probably me) not have a significant loss.

    I continue to demonstrate a competitive desire to win in sensible investments on the stock market but I now am very selective as to which company I will invest my money. They must be ethical to the environment and to human rights. It’s also especially good when they are Australian by birth and/or ownership.

  17. Bill Woerlee

    The stock exchange is a great way for the allocation of economic resources. Unfortunately, zirp has corrupted the market by unnaturally inflating the value of assets at the cost of driving capital generators (savings) from their traditional role to chasing a return on capital through high risk investments in shares and junk bonds. This is a stupid act of political bipartisanship promoted by the RBA. In essence, it doesn’t matter how much the market is corrupted, capital will find a way to its natural level, which in terms of the ASX, a loss of about a third of its current level, leaving a trail of bankruptcies, impoverished retirees and a broken economy in its wake.

  18. Neil of Sydney

    The thing I don’t understand is why we refused to spend money to prop up the car industry

    Well firstly that statement is wrong. Funding was legislated until 2020 and it would take an act of parliament to stop funding.

    But car manufacturing died under Rudd/Gillard. In 2006, 25% of cars were made in Australia. In 2013 only 10% of cars were made in Australia. You cannot have a local industry with 10% of the market.

    As usual the Coalition got blamed for what happened and Gillard never got condemned.

    But car manufacturing died under Gillard.

  19. Wally

    Neil of Sydney

    If car manufacturing died under Gillard it was totally screwed by Abbott and Hockey.

    I wouldn’t mind 10% of the market when the Au$ was worth more than the US$.
    And a good government would have assisted the car manufacturers to tool up to build cars the market demanded.
    But of course the LNP have no vision beyond filling their own pockets and keeping the election funding flowing..

  20. Divergent

    I don’t know whether anyone here commenting has actually owned an Australian made car but I have owed three, bought from new, in the past fifteen years and they have been the most practical and economical cars I have ever owned; all commodore wagons. I lament the fact that we will be losing an entire industry and the skills along with it. I can remember Hockey crowing about Holden shutting down. Oh if he could have that time back now.

  21. Neil of Sydney

    I can remember Hockey crowing about Holden shutting down

    I don’t. Telling falsehoods helps nobody. What happened is that after Ford left under Gillard the economics changed completely.

    Holden went to the new govt and asked for even more money. But the industry was already dead, It died under Labor. If Australian cars were so great how come only 10% of sales were Australian made?

    Hockey told Holden the subsidies promised were all they were going to get. And subsides were legislated until 2020. So it is a lie that funding was stopped under the Coalition.

    Locally made car sales totally crashed under Rudd/Gillard. Nobody wanted to buy Australian made.

  22. jimhaz

    The only importance of car manufacture here was about retaining some level of manufacturing skills. If we had other large scale and complex manufacturing in other areas I personally couldn’t care less about where my car was made.

    In this global world, cars are perhaps the worst thing a small population could produce – far too much competition elsewhere (as its an ego trip for politicians). We need specialised manufacturing.

  23. Wally


    My current work vehicle is a dedicated LPG Falcon RTV ute, as well as being very economical to run the emissions are extremely low and it is the most comfortable work vehicle I have ever owned. What will replace it is one of my dilemmas without buying a 4×4 and increasing running costs significantly there is nothing on the market that suits my application. Without a local industry will there be vehicles on the market tailored to suit our conditions?

    As for the skills lost and the effect on industry, it is humungous. I worked in the industrial robot industry back in the 1980’s and much of the technology that has filtered through to other industries was developed by the auto industry. Car manufacturers only produce the major body components and assemble engines themselves. The seats, steering components, transmissions, axles, tyres, wheels, interior trim and exhaust systems are all manufactured by component suppliers. To dream that we can have “specialised manufacturing” as suggested by jimhaz without the technology suppliers that exist primarily because of the auto industry is unrealistic. Without an auto industry as the back bone it is most likely that we will have no manufacturing industry at all.

    Neil of Sydney

    Ford closing did not have a major impact on the viability of GMH and Toyota but it was stated by Toyota that when GMH decided to close shop (BECAUSE JOE HOCKEY said no to more subsidies) they had no choice but to follow suit. No matter how much you want to fanaticise that it was all Labors fault HOCKEYS decision was the final straw that killed off the industry.

  24. Neil of Sydney

    Ford closing did not have a major impact on the viability of GMH and Toyota

    How do you know? Because Ford left the economics changed.

    Holden went back to the new govt and asked for double the money that had been legislated because Ford left. Hockey said no. What was legislated until 2020 under the Automotive Transformation Scheme (ATS) was all they were going to get.

    Fact is in the 1970’s we used to make everything. Fridges, TV’s,radios, cars, washing machines etc and now it is all gone. And manufacturers all give the same reason for leaving. It is too expensive to make stuff in Australia.

  25. Wally

    Neil of Sydney

    “It is too expensive to make stuff in Australia.”

    Because we have too many executive earning millions of dollars a year for doing jack shit. John Howard changed the law so executives can dictate to the shareholders (the owners of the company) how much they will be paid. John Howard legalised extortion for the top earners and screwed the rest of us! The main reason for sending industry off shore is to increase margins so the executives can pocket bigger salaries, it rarely results in higher returns for investors and most companies that have relocated to China have or are going broke because Chinese companies copy the products and sell them for half the price.

    The only reason local manufacturing is too expensive is because workers are not paid enough to afford to buy the goods they manufacture and cover the cost of housing. The Howard government did nothing to control the price of housing many of their policies like the first home owners grant pushed prices even higher.

  26. Neil of Sydney


    I have dealt with Hawthornes article in previous posts.

    Anyway subsidies even though they were legislated until 2020 didn’t work. The more money Rudd/Gillard gave the car industry the less people wanted to buy Australian made. Australian made cars reached a low of 10% of sales in 2013. A viable local industry would need 50% of the market.

    And it is crazy to think that taunts by Hockey would scare Holden off. Anyway it was the other way around. Holden said to Hockey, give us more money or we will leave. Holden was threatening the govt.

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