A Spoilt Little Rich Country


A Spoilt Little Rich Country.

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“A spoilt little rich country, a nation of whingers- that’s us.”

That was veteran financial reporter Michael Pascoe’s opening line for a brochure promoting property developer Lend Lease’s latest land subdivision in Melbourne’s West.

This marketing brochure goes on to highlight that we’ve been “ spoilt by two decades of unbroken growth and that we have the best performing economy in the developed world.

One which is heading into its third decade of unbroken growth- something we should be celebrating instead of complaining about. Australians have lost perspective about their good fortune and prospects.”
So why aren’t Australians buying it !

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A generation of Australians have known nothing but Economic Good Times.

John Howard’s ‘We’ve never had it this good’ resonates today as it did for most of his tenure. During these last two decades of uninterrupted growth, a large proportion of those under forty would struggle to remember the nasty offshoots which recessions spawn, double digit unemployment rates , depressed property markets, and an all pervasive pessimism. And for anyone under 30, recessions are what happen in other countries- they’re Un Australian.

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I recently met a young Japanese graduate about to start his first job back in Tokyo.
He told me how he felt very fortunate to have secured a job with a construction company as the employment prospects for many graduates in Japan were fairly dire.

“My generation are very pessimistic about the future. Ever since we can remember our country‘s economy has been in recession.”

Unlike their parent’s generation who lived through the heady 1980s when Japan’s economy was the envy of the developed world [ heard that one before ].

Profligacy to Parsimony in one generation…….While the children of the 80s Generation maybe a pessimistic lot, their parents had a ball pissing it away during those heady times. A time when Corporate Japan was expanding exponentially- this time brandishing Yens not Samurai Swords. And its salary men would regularly clock up entertainment bills totalling thousands of dollars for a night of Corporate Entertainment.

I know a couple of Australian women who worked as hostesse
s in Tokyo bars during those heady times. They spoke of an omnipresent optimism, unconstrained by fiscal shackles or accountability. Corporate Japan was indulging in a Global Shopping Spree [ not too dissimilar to what Corporate China in partnership with its Government is currently engaged in].

By all accounts the off spring of those former corporate raiders are ‘penny pinchers’ in comparison to their father’s former largesse and spendthrift ways.

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The contrast in their drinking habits highlights a profound generational change. Paying inflated bar prices, enjoying the company of blonde- Caucasian hostesses by their side was the norm in the culture of entertaining business associates. The average Japanese salar
y man’s nocturnal outings were comparable to the proverbial sailor on long overdue shore leave……..Today their sons shop around for the bars that sell the cheapest drinks before selecting which one to patronize [ as I witnessed young Japanese tourists doing in several South East Asia countries late last year ]. Something their fathers would have thought beneath their dignity during those good times. These young guys have been dubbed ‘Grass Eating Men’ in contemporary Japan to highlight the divide between themselves and their fathers.

If this country’s economic tide eventually turns how will those who have experienced nothing but good times cope and adapt. An unimaginable scenario for young Australians, the bullish and the ‘perpetually inebriated ’. Just as it would have been for those Japanese Corporations and their ‘intoxicated-perpetually inebriated’ salary men just on two decades ago…An ironical reversal of national fortunes has recently seen Japanese property companies advertising Tokyo Apartments for sale in Australian Weekend Newspapers. Japanese land values decreased every year for 14 consecutive years after their property bubble burst. The Japanese are anything but bullish about real estate these days.

And the same goes for investors in most developed countries. Even the Chinese are starting to wake up to the reality that property prices can fall….sometimes substantially from their peaks. So corporate Japan is targeting one of the few countries in which the
‘You Can’t Loose On Property’ mindset tenuously still exists- The Lucky Country.

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In these uncertain economic times statistics will be used by stakeholders to defend and further their respective causes. Whether it’s the Retail Traders Association bemoaning the precarious state of bricks and mortar retailing on behalf of its members to influence further interest rate cuts or the REIV furnishing data to substantiate Melbourne’s medium house prices. A sobering statistic- over the last decade house prices in this country have risen by 147% ,whereas wages have only increased by 57%.

Jim Chanos, a maverick Wall Street Hedge Fund manager has been banging on about the unsustainability of China’s economic model for the last two years. He says its growth projections are principally underpinned by speculative property developments and that China is on a “Treadmill to Hell ”.

And countless bullish growth projections are underpinned by this country having hitched its wagon to China’s continued growth. The bulls say that the upturn in resources investment promises to deliver more Good Times. Whilst the bears look at Europe’s woes and see global calamity.

Maybe some of the recent data showing Australians are starting to reign in discretionary spending and save more is a sign of fiscal maturity.

Those spoilt little rich kids might have started listening to their grandparents.
History has perennially shown that The Good Times don’t go on indefinitely.

Despite the fact we are entering our third decade of ‘unbroken growth.’

Now who remembers Daimaru ?


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Fabrizio Marsani

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