The Economist Intelligence Unit Worldwide Cost of Living 2012

As I mentioned on Monday in my post about Crime Rates, we love a good survey here on BobinOz. But what makes us laugh like a drain is a really bad survey.

A Really Bad Survey

Australian cities amongst most expensive in the world are the kind of shock horror headlines that greeted any of us Australians who cared to dig too deeply into the news today.

I read about it in the Courier Mail, their heading was “Brisbane one of world’s most expensive cities.”

Another Skint Aussie

Another Skint Aussie

It is, of course, all poppycock, as I explained last time the Economist Intelligence Unit came out with their survey. I fully explain why this survey is complete twaddle in my post, and you can read it by clicking this link, called Australian Cities: Most Expensive in the World?

But if you don’t want the full explanation, here’s a quick one.

The Economist Intelligence Unit calculates the cost of living in each city in the whole world by how much it would cost to buy things, like a loaf of bread, using US dollars.

To buy things in Australia, where we sell stuff in Australian dollars, first you would have to exchange your US dollars into AUD.

Here’s a quote from the article mentioned above…..

The cost of living in Brisbane was 35 per cent cheaper than that of New York a decade ago,” Worldwide Cost of Living report editor Jon Copestake said from London. “Now it is 28 per cent more expensive, having almost doubled in a decade. In US dollar terms the cost of a loaf of bread has risen by 150 per cent….

Source: Courier Mail

I decided to visit Reuters and take a look at currency exchange rates for today and from a decade ago. Here’s what I found:

  • 1 USD = 0.93 AUD – Today
  • 1 USD = 1.97 AUD 1st January 2002

Do you need me to say any more? Okay, I will.

Over the last decade, the buying power of the US dollar here in Australia has plummeted to less than half of what it used to be 10 years ago.

Now go back and read Jon Copestake’s quote above and see how meaningless it is to everyone except, perhaps, someone from the US who is thinking of having a holiday here in Australia.

The bottom line is this. The Economist Intelligence Unit seem to be suggesting that the stronger the Australian dollar becomes against the US dollar, the more expensive it gets for Australians, earning Australian dollars, living here in Australia.

Piffle!

Last time I wrote about this survey, I asked at the end of that post if anybody could explain to me the point of it all. Nobody did, but I have since found out.

Misleading

In fairness to the Economist Intelligence Unit, their survey does have a point. It is to assist human resources managers to correctly compensate their workers when sending them to other countries to work.

Yes, I can see how it can assist with that.

My gripe with them though is that you have to read the ‘small print’ to understand that. Even their headlines claim to reveal which are the most expensive cities to live in and which is the cheapest.

But they don’t, do they?

This survey is more likely to tell you which currencies are strongest against the US dollar and which is weakest.

Unfortunately the media get hold of it and create sensational but misleading headlines which are supported by ridiculous quotes from people like the guy I mentioned above.

Don’t be fooled, Australia isn’t as expensive as some people are suggesting right now. Unless, of course, you’re coming here on holiday from the USA.

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{ 45 comments… add one }
  • Joyce Stephenson July 15, 2012, 3:55 am | Link

    Hi Bob Me and my husband have applied for a retirement visa in june 2011 we are waiting to go for our medicals do you no how long it will take from start to finish. thankyou Joyce x

    • BobinOz July 16, 2012, 6:06 pm | Link

      I’m sorry Joyce, I really don’t know the answer to that one.

  • Caroline June 21, 2012, 2:28 am | Link

    Stefani,

    Hi! I am planning a move to Oz here in the near future as well. I have been asking Bob a ton of questions about Byron Bay, as despite the high cost of living, it seems like a really incredible place to live. Let me know when you are going/if you would be interested in a roommate! My email is [email protected] Cheers!

  • Col B. June 13, 2012, 8:33 am | Link

    Stefanie and Bob. When I went to live in Lismore to study music in 1997, l decided to spend another year there renting a unit with a flatmate. After that, l left to return to Mullumbimby.

    In the time l was in Lismore, I shopped at Franklins supermarket because it was as cheap in its day as what Aldi is today. Franklins is gone now, the site is now T-Mart, Big-W, Woolworths and Coles.

    Stefanie, Google Earth only show some, not all, supermarkets in a city or town. The same goes to all types of retailing businesses.
    Lismore actually has two Coles, two Big-Ws. two Woolworths, a Target, K-Mart, Spar, Aldi, Bunnings, and a number of others.

    One of the Coles, Big-W and Woolworths mentioned above, and K-Mart are all combined in a giant building covering a whole street block, it is called the ‘Lismore Square’, which also has many other shops in it.
    A new supermarket that is fast growing in Australia is called Spar is located there. My fav, Aldi, has also just been built in Lismore.

    Of course there are also many types of retailing stores and hundreds of shops in the CBD a few blocks away and elsewhere around Lismore. Good eateries and Cafes too.

    Along the North Coast of NSW there are sharehouses (especially Byron Bay) for less than $190 a person for a room. Some large sharehouses vary with multiple rooms and multiple bathrooms. There are also non-holiday houses for rent for less than $300 per family or group. You can find these along the Far North Coast NSW beaches by checking out this cool classified site,

    http://www.gumtree.com.au/s-shared-accommodation/lismore/c18294l3002856

    What is the American definition of a Mall? here in Australia, a Mall is a permanent closed-off street turned into a walkway in a shopping area. I guess the American Mall is a giant Building with something like arcades? in that case, the Aussie version is called the ‘Square’. Lismore has one (as mentioned above).

    Lismore to Newcastle: 8 hrs drive.
    ” ” Gold Coast: 1 hr 44 mins
    ” ” Brisbane: 2 hrs 45 mins

    Byron Bay to Newcastle: 8 hrs
    ” ” Gold Coast: 1 hr 11 mins
    ” ” Brisbane: 2 hrs 12 mins

    Anyway, Aldi supermarket is the cheapest supermarket in Oz. Cheers!.

    • BobinOz June 14, 2012, 1:18 pm | Link

      I feel as though I know Lismore like the back of my hand now, thanks Col B. Stefanie, I don’t think you’ll need to do that mega shop before you leave, plenty here. And yes, rents are always quoted weekly in Australia, even long term rentals.

      I hope you have a great time when you get here!

      Cheers

      Bob

  • Stefanie June 12, 2012, 10:54 pm | Link

    Jeez you guys are so nice! This is why I want to move to Oz!

    This is a lot of super great info, I looked up Lismore on Google Earth, found they only have one shopping center that has a Kmart, Coles and Big W. This means I will have to do some serious shopping while I am here and pack with a million rubber bands! How far is the nearest shopping mall other than this one?

    I went to look up rent prices in Lismore on craigslist.com and did not find much, Newcastle would be the area on that particular website yes? Honestly 1000 does not seem that expensive for a shack on the beach for a week, we are going to the East Coast this summer and spending 5x that for a 5 or 7 bedroom 2 blocks from the beach. So we are good there!

    Is rent really paid per week there or am I only finding visitor sites? You guys are the most helpful bunch ever!

    Best,
    Stefanie

    P.S. Sounds like I do need a car!

  • Col B. June 12, 2012, 4:27 am | Link

    I don’t know whether the regos and its associated costs are higher or lower than Sydney’s. But it certainly was beyond my reach to have a car on the road as a pensioner in Northern NSW Coast region.

    • BobinOz June 12, 2012, 2:13 pm | Link

      Great information about Lismore and the surrounding areas Col B, it does sound like a real good place. I think I want to live there now 🙂

      Thanks for taking the time to do it, I’m sure Stefanie will be be very grateful.

      Cheers

      Bob

  • Col B. June 12, 2012, 4:18 am | Link

    I find Lismore (pop: just over 30.000) a fun place to live. Situated in the Lismore City Shire which is inland next to the coastal Shire of Ballina (pop: just over 11,000).

    Both these towns are interconnected with the Lismore-Ballina bus route along the Bruxner Hwy and are 44 minutes drive away apart.

    Wollongbar ( pop: less than 2,000) in the Ballina Shire lies smack in the middle of this route. Wollongbar is a mere 3 mins drive away from nearby Alstonville (pop: just over 5,000) which is also in the Ballina Shire and on the same route.

    Byron Bay is 40 mins drive from Wollongbar (You have to take interchanging buses to travel between these two towns).

    Lismore has lots of things to offer. Rent prices vary (but it certainly has lower rents than Byron Bay). It has three huge competing supermarkets that competes better than any of the supermarkets in the towns mentioned above. I’ve shopped at them all.
    I particularly like sunday market days in Lismore and in surrounding villages.
    Accomodation can be found in Alstonville, Ballina
    or Lismore with rent prices not much difference between the three. Some students can find cheap accommodation elsewhere in or around surrounding villages if each has their own car.
    Lismore has better chances of available rental properties than all of these.

    A student who has at least three references to show to any real estate agent or landlord has a better headway.
    If more than one student want to share a house or unit to rent, then at least only one of the students is required to produce all three references.
    Of course, there are other accommodation that do not require references like disused warehouses (I knew half a dozen students sharing in one, and others in four different disused warehouses or factories with low rents in Lismore) disused shops and so on.
    Then there are caravans on site (although limited) in caravan parks.
    In fact a student can find accomodation simply from talking to first or second year Tafe students who may want to share co-tenancy.

    Summing it up, Lismore was the cheapest for me in terms of rentwise and foodwise. There is even a soup kitchen where you can buy a meal for 2 dollars each and every day! (though I did’nt much require that often).

  • Col B. June 9, 2012, 9:13 am | Link

    Bob, mate I lived near Byron Bay in the hills behind Mullumbimby. for thirteen years. I tell you that Byron Bay went from a sleepy place to a bottleneck full of tourists, esoterics and leftover hippies by 1992. To rent even a run down weatherboard house there for a few weeks holiday would set you back around a grand a week!. This place also has the second highest house price on the property sales market in NSW (circa mid-1990’s). Food there is’nt cheap and a pensioner or a student cannot afford to live there unless one shares a building with half a dozen others. On the costs of living standard NSW coastal region is the most expensive state in the country and among the most expensive in the world.

    South-west Western Australia comes in second in the country.

    The cheapest State or Territory in terms of the costs of living standard in Oz is the Northern part of Victoria and all of South Australia, followed by rural Queensland.

    I left Mullumbimby in 2003 for reasons there was no way I’m having to pay the highest rego and other costs associated with keeping my car on the road, high house rent and so on.

    In NSW, car owners must not have a single bit of rust on it or else it is deemed unroadworthy.

    I have a Hiace commercial van and I only pay for a three-seater vehicle rego at 132 bucks and nothing else each six months (Victoria), payment is made through a post office.

    In NSW, it cost nearly a grand a year not just for rego but for other costs involved like roadworthy check, etc etc for a commercial van based on the size of the vehicle and not by how many seats the vehicle have.

    Anyway, in 1997 I won a spot to study higher music at the Northern Rivers Conservatorium Of The Arts based in Lismore (about 15 mins drive from Wollongbar). I was lucky to find cheap rent on the top floor of an old pub in Lismore in order to be alone not having to share with anybody.

    Food prices in Lismore is at least cheaper there than the coastal cities/towns of Northern NSW.

    Can you advise Stefanie to buy her food in Lismore or from surrounding farms or markets around Wollongbar.

    Oh, I almost forgot that the rego costs for a vehicle is based on as for a pensioner. Cheers!.

    • BobinOz June 11, 2012, 10:07 pm | Link

      Stefanie, buy your shopping from Lismore!

      OK, I’ve done that, but what was it actually like to live there Col. B? Regos and rents may be high, (surely not higher than Sydney though) but did you enjoy your time there? I think it’s pretty good down that way, what do you think?

  • Stefanie June 7, 2012, 9:19 am | Link

    Bob! I am from the U.S. and am thinking about coming to school in Australia. Where does this leave me and my pocket?

    • BobinOz June 7, 2012, 10:12 pm | Link

      Probably with less money than you started with. But I really don’t know, how old are you? What do you want to study? How much would it have cost to study it where you live now? Which school do you want to go to?

      Unfortunately, you could give me all this information and I still wouldn’t know how it would leave you and your pocket. Maybe somebody else reading this does know something about school fees, anybody?

      Good luck though.

      • Stefanie June 8, 2012, 2:21 am | Link

        I am thinking more in the realm of cereal, food, living expenses. I have heard it is crazy expensive and I have also heard it is comparable. I am looking to move to Wollongbar specifically (omygosh sub-tropical fruit!!) for costume design at TAFE. How is this part of Australia? Thanks1

        • BobinOz June 8, 2012, 9:24 pm | Link

          Ahh, then you need to read my page called The Cost of Living in Australia of Everything, in particular, click on the links to the food prices, you can get the price of any cereal you like!

          You could make your biggest money savings by being smart when exchanging your money, check out my Currency Exchange page.

          Wollongbar, never been there but Byron Bay which is close by is a cool place, second most visited town by tourists in all of New South Wales I believe. You will have lots of fun there. It’s hippiesville! Full of laid-back surfer dudes.

          • Stefanie June 9, 2012, 5:48 am | Link

            Bob! That is awesome! I will totally check out thoes articles! Thanks, I love hippies so that is like AMAZING! This blog is so awesome! One of the best tools I have used to learn about Australia, way to go for being awesome!

            • BobinOz June 11, 2012, 10:02 pm | Link

              Thanks Stefanie, let us know what you think of the place when you get there. Cheers!

  • Col B. April 7, 2012, 1:46 am | Link

    Some of us know that the mainstream medias distort facts. I read and listen to better sources of medias that we call ‘alternative medias’ on the internet. They have whistleblowers and have people fighting against anything and everything that are being suppressed from the mainstream medias.

    What the Globalists and their Freemasons have been/are doing to the planet and its people are horrifying. Already 98 per cent of the world’s Globalists and Freemasons (in the vicinity of around 10,000 of them) have been exposed by the alternative medias on a large scale for their incredible instigation and manipulation of the world’s economies and global financial system, genocides, wars, suppressing 100 or more years of sustainable technologies, every education system, pretty much everything.

    These criminal gangs (Globalists, Freemasons) who form the basis of the “New World Order”, that is, to drive down the population of the world down to just 500 million with an agenda to turn the remaining common people into slaves very much the same way they treated the Negroes in 18th century America, so to be easier to control. These nuts owns big charity organizations that are only facades to steal away all the moneys meant for feeding the people of the famine countries, as well as meant for healing the global environmental problems. They have been/are robbing the life out of all of us. They want to start WW3 to further their gain.

    They assassinated nearly every famous persons that mainstream medias lied to extents to put the blame on innocent “terrorists” or “hitmen”. 9/11 was an inside job. Osama Bin Laden was the scapegoat. in fact the western world is rife with propagandas on almost everything we hear or read about. The Globalists pays the Freemasons to do all kinds of dirty criminal works as outlayed above.

    Want the good news?

    The Globalists as we speak are all currently getting hunted down, bit by bit, by the White Dragon Society of China, with the support of Russia, Japan and 157 other countries starting by rejecting the American dollar that the Globalists control. A brand new global financial sytem is currently in the making. The moneys are about to be returned to actually fix all major world problems (starvation, environmental etc) and to every countries to the tune of 1,000 trillion yen. that’s right, 1,000 TRILLION yen. With Japan leading the way.

    Fossil fuel will be replaced with suppressed technologies that will put the Globalists out of business. Everybody in the world will receive 100,000 Dollars, yes, 100,000 dollars each with no strings attached, with no repayment required. The Globalists and Freemasons go by many names, like Illuminati, Cabals, and so on.

    We are about to go through the biggest change in the history of the world for the better, a brighter more prosperous new era for everyone. Putting a complete stop to meaningless wars. The mainstream media moguls have no options but to surrender. All of the above news will break out via the mainstream medias within a few weeks according to alternative news sources.

    • Rupert April 7, 2012, 1:49 am | Link

      @Col B. – Please use paragraph breaks in future. It makes for more pleasant reading and doesn’t strain the eyes so much. Thank you 🙂

      • Col B. April 7, 2012, 1:11 pm | Link

        I did , Rupert. But when I pressed the “submit” button it changed. It simply refused to accept paragraph breaks.

        • BobinOz April 10, 2012, 8:30 pm | Link

          I have fixed the paragraph breaks thing, not sure why that happened.

          Col B – a fascinating post for sure. I have no idea how much of it is true, but I already like the sound of the White Dragon Society of China. I will be excitedly keeping my eye on the news, it’s about time this planet had a good old shakeup for the better.

          Will we be getting rid of Julia Gillard? Just kidding, obviously she’d be one of the first to go!

          • Col B. April 15, 2012, 6:07 am | Link

            Julia first to go? I believe so. She’s only a mouthpiece and a facade being told to by her colleagues and in turn from the burocracy freemason mob and all the way up from the tip of the pyramid of world power
            All these like to decieve the public, and are therefore part of “Liars Inc.” (in my own words).

            The only guys that are worth listening, watching or reading are the ones who are being suppressed or refused entry into mainstream medias. Guys like BEN FULFORD, DAVID ICKE, DAVID WILCOCK, HENRY MAKOW, etc.
            I catch these above guys on a website that collects alternative news and articles worldwide, it’s called “PHILOSOPHICAL ANTHROPOLOGY: HOMO-SAPIEN TO HOMO-LUMINOUS” where you can read, watch or listen. It’s a big site.

            By the way, Bob, thanks for guiding me how to make proper paragraphs. I would’nt know what to do without you, mate.
            I still don’t know how to cut and then paste links.

            • BobinOz April 16, 2012, 9:05 pm | Link

              David Icke used to be a goalkeeper for Coventry back in the day. I’ve seen him on TV a few times, being interviewed, when he first started talking about the illuminati, the shadowy elite and the Queen being a reptile.

              He is actually very entertaining. Who knows what the truth is though.

              Click this link to see How to copy and paste.

  • Ian Cragg March 1, 2012, 12:33 am | Link

    Rupert, You’ d end up with well over $150K AUD over 12 months if receiving an interest rate of 6% on a transfer of $145K.

    Going back 2 years what would you have done, moved your money then or waited for it to get better? If you moved it back then you’d be in a far better position now than what you would be if you had chose to sit on it and I personally feel it will get worse before it gets better over the next 12 months. If I had to wait 10 years then yes I would sit on it but that isn’t the case – however with the vast majority of people this isn’t the case.

    Compared to the UK (which is what we are doing) the difference between interest rates of 0.5% and 6% is a lot and that rate is very high, higher than what we have seen in the UK for a long time.

    Time is obviously the major factor here, if for example you need to move the money it to complete on a house you don’t always have the option of waiting.

    As I also stated in most cases it is a good idea to move money (small or large) out to Australia prior to going to improve your credit history also

    • Rupert March 1, 2012, 1:08 am | Link

      Yes, I was originally working on a rate of $1.40 and then changed it to $1.45, but didn’t correct the final figure – my bad.

      I don’t know what I would have done two years ago, as I wasn’t two months away from emigrating, but I probably would have hedged what I needed to survive for a year and worked bloody hard to earn dollars. Despite the low interest rates in the UK, my savings are not in the bank and are tied up in other areas, some of which are earning me a not-discouraging rate of interest, so personally speaking I can afford to leave my money in the UK and wait for the situation to improve.

      Regarding your last two paragraphs, while you are of course correct, please don’t forget there are many people who have no intention of purchasing a house in Australia at the moment, and would therefore not need a credit history. The last thing I intend to do when I get to Australia is borrow money! It’s too much ‘credit’ that has got the whole world into this mess in the first place.

      Who knows what’s going to happen – and far be it for any of us, experts and armchair amateurs alike, to advise anyone, but I’m crapping myself right now – and I don’t want to lose my life savings on one rotten currency exchange.

      Let’s just all hope for the best outcome for everyone.

  • Ian Cragg February 29, 2012, 10:59 pm | Link

    Dear Mrs Stephenson,

    I work for a leading UK foreign exchange company called TorFX. You have been provided with some good valid opinion from Bob and Rupert here which I would like to elaborate on;

    As we all know Sterling has been overwhelmed by the continued woes from the fragile UK economy since the start of the credit crisis in 2007. Low interest rates from the Bank of England look set to continue as the government strive to recover, and the pound is a natural victim which could possibly fall further against all major currencies as the UK faces the threat of being in another recession next quarter.

    The Australian picture is somewhat sunnier however, with interest rates being a lot higher, those looking to invest in AUS$ are getting some of the best returns anywhere in the world currently.

    Predicting where the currency markets are going is of course incredibly difficult, but in the case of GBP-AUD the rate has only been going down over the last 4 years, and as the economic picture in the UK is looking uncertain at best, while the Australian economy benefits from being largely commodity driven, cutting your losses on the exchange rate, moving the money and taking advantage of some very high interest rates may be your best bet depending on how much you have to move.

    As both Bob and Rupert rightly said it would be worth registering with a company such as ourselves (at no cost or obligation) so then when you need to transfer funds we can do it for you in a matter of minutes.

    In addition if you haven’t given any consideration to banking in Australia we can put you in touch with one of the leading national banks who can set up your account up to 12 months prior to moving out so you can take advantage of far higher interest rates than in the UK and build your credit history which starts from scratch once you move there.

    If you would like further information on any of the above please come back to me.

    • Rupert March 1, 2012, 12:14 am | Link

      “…cutting your losses on the exchange rate, moving the money and taking advantage of some very high interest rates may be your best bet…” – really? I beg do differ Ian.

      Interest rates are not “very high” in Australia. The best savings rates available at the moment are around 6%.

      If I had £100,000 savings and converted it to dollars, I would have $145,000. If I put that away for a year at 6% I would have made $8,700 in interest, leaving me with $148,700.

      If, however, I wait until the rate goes up to $1.50 to the pound I would have $150,000. Interest rates would need to go up significantly more in Australia for it to be worth exchanging sterling in the current climate.

      Yes, there is the argument that my £100,000 won’t be making anything while it remains in the UK, but the risk/reward ratio is so negligible, that I’d rather wait until the exchange rate improves.

      • BobinOz March 1, 2012, 12:29 am | Link

        Well no you wouldn’t Rupert, you’d have $153,700, which would be a better result than waiting for it to go up to $1.50 to the pound.

        I know you are probably kicking yourself for making that mistake, but we all make mistakes and that’s what I’m trying to say here. You cannot say with 100% certainty the rate will go up. Ask 10 different experts what they would do right now and I’ll bet you’ll get 10 different answers.

        We don’t want to send Mrs Stephenson’s head into a spin, I reckon the best advice we’ve given her is be ready to trade and watch the market.

        I think we should all stop trying to speculate with her money.

        • Rupert March 1, 2012, 12:37 am | Link

          Doh! I’ll be with Alan Greenspan on the naughty step.

          • BobinOz March 1, 2012, 12:56 am | Link

            We don’t have a naughty step here.

            Just go and stand in the corner for 5 minutes. No, face the other way.

  • Mrs J Stephenson February 28, 2012, 10:13 pm | Link

    Hi Bobinoz We are pensoner and have applied for a retierdment visa.WE want to no what is the best way to exchange our english pound.Should we leave it in the uk and waite for the dollar to get better,has we feel we are going to lose a lot of money.Thankyou Mrs J Stephenson

    • BobinOz February 29, 2012, 12:51 am | Link

      I feel for you Mrs Stephenson, the pound is currently (February 2012) as low against the Australian dollar has it has been for around 27 years. It’s certainly not a good time to change all your money into Australian dollars, but nobody in the world can tell you if by waiting it’s going to get any better.

      The world is currently financially very volatile, who knows what might happen next. Sorry I can’t be more helpful.

      Just want to add this: my best advice is to set up your account and be ready to trade. That way, if there is some kind of global financial crisis, you are ready to strike. For a long time in 2008 the pound would buy about two Australian dollars, then when the global financial crisis struck late that year, for a very short time you could have got $2.45 – $2.60 AUD for one pound. But if you weren’t ready to trade, if you weren’t setup, you would have missed it. I do have a recommended broker, I have a page about it here called currency exchange.

    • Rupert February 29, 2012, 1:19 am | Link

      Yes wait! The Aussie dollar will weaken. In the meantime, only exchange what you need when you need it. But Bob is right, get everything set up, so that when the tide turns, you are ready to pounce. Good luck. It sucks having sterling right now – grrrrr!

      • BobinOz February 29, 2012, 10:20 pm | Link

        Rupert, with respect, you just can’t say that with the 100% certainty that you have. Nobody knows!

        You may well be right, the chances are you will be right. But you can’t be certain, so we really shouldn’t be telling Mrs Stephenson that she should categorically hold on.

        I’m going to see if I can get my contact who works in currency exchange for TorFX, ie a professional currency trader, to come on here and say what he thinks.

        Mrs Stephenson, just trying to make sure you get the best information.

        • Rupert March 1, 2012, 12:02 am | Link

          Absolutely Bob. Mrs Stephenson has to make an informed decision, but that will never stop me from calling it as I see it.

          I’ve never been one to sit on the fence about anything in life – and I don’t intend to start now. I’ve decided what I’m going to do with my sterling and it doesn’t involve exchanging it at $1.45. I’ll wait.

  • chris from america February 17, 2012, 3:19 pm | Link

    Well, NUTS! We’re heading there soon. But we will be permanent resident mifgrants and earning Asutralian dollars, so eventualy it will be ok (but will hurt at the start). Maybe if you slowly explain econimics to them via the YAKKA, they will see the light, who knows? I’m sure they are very open minded like most “educated” economists, right?

    • BobinOz February 21, 2012, 4:43 pm | Link

      Welcome (soon anyway) to Australia! Earn Aussie dollars, spend Aussie dollars, think Aussie dollars and you will be okay. It’ll just seem painful at the beginning.

  • Rupert February 16, 2012, 8:12 pm | Link

    …or the UK! $1.42 to the pound. Crippling, disgusting and utterly bewildering. I’m praying every hour for the dollar to weaken.

    A strong dollar is not good for Australians either Bob. The Australian economy is a ticking time-bomb. It’s only a matter of time before the whole thing bursts, sending property prices and the value of the dollar down. It can’t come soon enough.

    • BobinOz February 17, 2012, 12:32 am | Link

      Hi Rupert

      Since I have lived here, I’ve seen the pound drop dramatically against the Australian dollar. I thought I was hard done by because I could have got $2.50 to the pound. But thanks to Northern Rock, I got about $2.25 to the pound when I move.

      I always thought it would go back up again, but it hasn’t, has it? The Australian dollar remains strong, but I agree it isn’t good for some things. Tourism is the biggest example.

      But I’m not convinced that the Australian economy is a ticking timebomb about to burst. I know that’s what you want to happen, but I can’t see it. Australia has one of the most stable economies in the world right now.

      • Rupert February 17, 2012, 7:05 pm | Link

        Tourism is a blip compared to exports. The dollar has become strong because of the mining industry, but now the Chinese have bought most of the mines (along with the Brazilians), that trend will reverse, because the money will not flow back into the Australian economy.

        The Chinese have also spent the last two or three years in a massive residential property development program to house Chinese migrants. Those apartments now lie empty, because the Chinese economy is faltering. This is why property prices are slowly coming down.

        Australia has 10.3% unemployment – the highest ever, and people have over-leveraged themselves to borrow 10-15 times their incomes to pay for massively over-priced houses.

        There is a sub-prome crisis waiting in the wings – that is a given – so let’s wait for one of the banks to fail (it will) and then Canberra to call for austerity (it will), and the dollar will weaken.

        Believe me Bob, the economy is not stable. The rest of the world is cracking at the seems, and the Australian attitude, largely fuelled by the media, that “it will never happen to us” and “we’re different” is foolish.

        I may be bearish about the situation, but the bulls are dwindling in numbers, so only time will tell eh?

        • BobinOz February 21, 2012, 4:40 pm | Link

          Hi Rupert

          Not sure where you are getting these facts and figures from, but I do know that Australia’s unemployment rate is only 5.1% as at January 2012. That, for me, throws doubt over your other statements as well. I’m also not sure how you can be absolutely certain that one of our banks will fail.

          So we’ll have to disagree on this one.

          • Rupert February 21, 2012, 7:01 pm | Link

            The ABS cannot be relied upon in my opinion as it is based on estimates. It is also Government funded, and therefore can be taken with a pinch of salt. Have a look at: http://www.roymorgan.com/news/polls/2012/4746/

            There is a lot of talk from many economists in the US and the UK about the state of Australian finances, and as someone who has a vested interest in that information, it behoves me to study it. What is clear is that the Australian media are in denial about the problems to come. The maths just simply point in that direction. Australian banks have been lending too much borrowed money to people who will default on their mortgage payments as a result of increased unemployment. It happened in the Japan. It happened in the US. It happened in the UK. It’s happened in Europe. It is a global disease and Australia is not immune.

            Time will tell if the economists are right or the mainstream media. I know who I’m putting my money on!

            • BobinOz February 21, 2012, 9:21 pm | Link

              Well, I’ve just had a good look around the Economists Intelligence Units website to see what they think of Australia’s current economic state.

              You do have to join if you want to take a look around, but there is a free option I think. I know I signed up for one about a year or so ago.

              Their report is very thorough, it has about 15 or 20 sections, although free access users can only see about half a dozen or so. None of them have any kind of dramatic warning against them, almost all of them are described as stable.

              They describe Australia’s finances as being relatively healthy, our rating outlook as stable, our currency risk as stable, our banking sector risk a stable, and Australia is placed 6/82 countries in the business environment rankings.

              The only negative I spotted was that if house prices continue to fall, which they are doing gently rather than dramatically at the moment, then consumer spending would be likely to fall.

              So, no evidence of a ticking timebomb economy there, only time will tell who is right.

              • Rupert February 21, 2012, 9:47 pm | Link

                I really hope you’re right Bob, but Gordon and Tony thought everything was alright in the UK too and look what happened.

                I just get the impression from most Aussies that I speak to that they don’t have a clue what’s going on in the rest of the world – and those that do, think Australia won’t be affected by the fallout from the demise of the Euro or the Chinese economy stalling.

                A friend of mine just borrowed 8 x her salary to buy a unit in WA. All her savings went on the deposit and she says she’s living the Australian dream. I’m worried for her – I really am.

                The way I see it, the rest of the world has woken up to the fact that borrowing beyond your means is a stupid idea and so it’s only a matter of time before something goes wrong in Australia.

                With that in mind I think it’s better to be prepared than to be in denial.

                • BobinOz February 23, 2012, 1:02 am | Link

                  That’s true. Most Aussies don’t know what’s going on in the rest of the world, I’m losing touch and I’ve only been here four years or so.

                  But I don’t think we are in denial, the people that need to know are fully aware of the GFC and the importance of steering Australia clear of it.

                  I think our banks are strong (bordering on greedy) and I think lending has been sensible. So hopefully we have got a chance. We’ll see.

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