Posted by nyssa on August 09, 2012 in , World News; Economy
State of the economy… state of the job market… state of the carbon tax… state of the miners… state of China… is it all State of Mind?
It’s pretty easy to hear, read and see a lot of negativity at the moment – the economy, China, carbon tax, miners tax, Government lay-offs, Greece, Spain; Europe falling apart… a seemingly endless list of negative and bad news about the current state of affairs… or is it the current state of mind? Is it really as bad as everyone – or the media – says it is?
I, for one, think perspective should always be employed. Especially in these “bad” times.
Let’s have a look at what is going on currently and I’ll start with the so-called Euro Crisis. I was born in Europe before moving to sunny Queensland as a youngster and have travelled through many countries in Europe as an adult – I love Europe; it is a beautiful part of the world, steeped in great history, with many friendly and wonderful people. But I am at a loss to understand how the fiscal problems in Greece and Spain can have such a MASSIVE influence on global confidence… this may be controversial and I may have people gunning for me for saying this, but what do Greece and Spain provide the Global Economy that threatens to tip the World into the greatest depression of all time (according to media reports)? Olives and sangria?
I understand that Germany and France will be affected if Greece and Spain default, but I’m pretty sure the rest of the world isn’t in debt to Germany and/or France… they will be affected, but the greater impact on the rest of world is minimal. A rare positive article I read about the Euro Crisis is that it will affect parts of the banking system only, but because Australia banks aren’t heavily invested in European banks/European debt, it won’t affect us much. This article advised that the Euro Crisis is nowhere near as bad as the GFC and they’re right.
Now we’ve got fears that China isn’t growing as rapidly as we’d like… they’re growing at 8%… hang on a sec, did you say 8% growth? No other country in the world is growing at that rate and they will continue to do so and they want our resources and minerals. Whose state of mind says that 8% growth and a hunger for our resources isn’t good enough? Clearly quite a few.
The carbon tax however, is a real concern. I completely agree that everything that can be done to ensure our environment is kept clean, safe and sustainable for many future generations to enjoy be implemented, but given that we are one of the smallest polluting countries on the planet, the rate of Federal Labour’s carbon tax is very high considering other countries:
- China doesn’t have a carbon tax but has stated it will implement a US$1.55 per tonne tax in 2015
- The US doesn’t have a nationwide carbon tax but California has a tax of 4.4 cents per tonne
- Canada doesn’t have a nationwide carbon tax but British Columbia as a tax of $10 per tonne
- Japan doesn’t have a carbon tax at all
- India has a nationwide tax on coal of $1.07 per tonne
- The Europe Commission has a proposed carbon tax ranging from 4 to 30 euros per tonne but nothing has been implemented
Having spoken to my mining sector clients, the carbon tax is their greatest concern because it is an unknown variable and they won’t know of the full cost of the tax on their business for 6 – 12 months. And it is this State of Mind that is causing them to be bearish. In these same discussions I’ve had with mining clients, the MRRT is surprisingly not too much of a concern because it is a tax on “bottom line” and this is something they can predict. Another State of Mind.
The new Queensland Government cancelling temporary permanent and contract staff is quite a broad stoke and a bold move, but this is their State of Mind to strengthen the Queensland economy. Whether this is the right or wrong move by the LNP remains to be seen.
At theend of the day, all that any person can control is themselves, their thoughts and their State of Mind. Slowing markets have created some the greatest wealth and innovations in history. I recently read that that the Great Depression in 1930’s created the greatest wealth creation of the 20th century in the US after it and in the downturn in the early 2000s caused by the Y2K and .com bust, Apple created the iPod, which revolutionised the way we buy, play and listen to music – not to mention that from the iPod, came the iPod Touch, iPod nano, iPhone and iPad.
Tougher times created by external circumstances give us an excellent opportunity to focus on what is good and what we can achieve to make our respective lives better. Stay focused, look for opportunities, grow and develop – keep a positive State of Mind. Carpe diem.
Rasmus George – Senior Consultant