Australia: for sale to the highest bidder?
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
xiao fang xu
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If any one want to buy/Invest something in Australia they should be welcome to do so.
And problem lies in the RBA they are the one who by law can print money.
To buy something in Australia you need Australian dollars, and guess who is printing them.
Of course that is not only problem welfare state, big bureaucracy to many laws that only layers can understand …
Robert Summers
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It seems to me that your suggested course of action would lead to deflation. Is this your intention?
Lower wages would lead to reduced consumption and reduced ability to service debt. Not to mention the capacity (or desire) to take on new debt. This would lead to lower rates of growth unless the public sector significantly increases debt-funded investment. Given the Australian private debt (and housing market) situation, there is a definite risk that such a scenario could lead to a Fisher type debt-deflation.
While I am perhaps sympathetic to the idea that this might be the fastest route to a more competitive Australia, the fallout and consequences for many would be severe.
Perhaps what you mean is ‘reduced wages in comparison to the rest of the world’? That is, a lower exchange rate that would make Australia more competitive on a cost basis. In which case, lower exchange rates and macroprudential regulations on housing (to curb further private debt expansion) would be perhaps the most desireable course of action.
However this would still not address the lack of companies with strong pricing power, and could further favour the price takers over the price makers. In my opinion, there is no real way out without addressing the obsession with housing (and debt) as a route to wealth. High land prices are also detrimental to businesses via lease and debt servicing expenses.
Roger Montgomery
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These are all good points Robert. To promote innovation, as touched on with my comments on Scandinavia, Government needs a change in mind-set. Wouldn’t it be satisfying if we could point to dozens of Australian companies aspiring to be like Cochlear, CSL, or Resmed (or dare I say Suntech Power?)?
rmassera
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Hear, hear Roger! Well spoken! You should serve the current administration as a policy adviser. We must become pro-business like Singapore & we must sell brands! We should be seeking insight & input from industry leaders in Germany, Korea & Singapore. We should invest in superior public transport infrastructure and work towards becoming wage competitive.
Michael Shapiro
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China had a current account surplus with US for a very long time. Where did this surplus go? Mostly Chinese bought US government debt. This resulted in lower interest rates in US economy. Many businesses and consumers would argue that’s a good thing. If Australia runs out of raw materials to sell to foreigners, the exchange rate will drop and guess what, money will still come back here because our competitiveness will improve. Imagine if every foreign country will start raising barriers to capital and goods inflow coming from Australia. That will kill local businesses a lot faster than foreign capital inflows into Australia. On the other hand if you own assets why should anyone be in position to stop you selling it to anyone you see fit? Instead of paying salaries of those who sit on FIRB, refund it to those who actually create wealth.
Rajnay Padarath
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Thought that given some of the arguments you ran in this interview that this article was especially relevant, the only difference being that in their case it was done in one transaction rather than many:
http://qz.com/127258/why-china-just-bought-one-twentieth-of-ukraine/