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How Australia will survive the Global BUST in the B-B-B Cycle

Written on the 26 September 2016 by James Cagney

Much of the information I will share with you today is from Harry Dent Jr., who is an pioneer in Demographic Trends and renowned for predicting BOOM-BUBBLE- BUST Cycles over the years such as the Global Financial Crises in 2008. He is an international speaker and the author of  a number of books on the subject and the founder of Dent Research . He publishes the "Boom & Bust" newsletter, which is essential reading for those who want to keep ahead in the coming BUST phasewhich will soon hit the global economy and is expected to drag on for many years. Details on how to subscribe to his newsletter are below.

When you subscribe to his newsletter "Boom & Bust" you will receive a free report on " Get Rich off the Demographic King" which is -  India. Harry Dent says India will outgrow every other economy over the next 25 years. His reasons are:

  • India's population is over 1.3 billion, accounting for nearly 18% of the world's total population. It continues to grow at a rate of 1.2% per year and will be larger than China.
  • More than a third of the country's population has moved into the cities The sheer numbers of people surging into the cities will create unprecedented demand for goods and services.
  • Urban households earn three times on average of what rural households do and the disposable income of consumers will propel the country towards a BOOM
  • In India, a bio-tech or pharmaceutical company can discover and develop a new drug just as quickly andefficiently as other western countries - but at a fraction of the costs.
  • The potential for development and infrastructure is enormous as sixty-eight million Indians still live in homes made of straw, mud or corrugated iron.
  • Almost half a billion Indians still don't have access to electricity. The infrastructure needed for this will create a huge demand for raw materials and labour.
  • The large numbers pouring into the cities will drive demand for infrastructure, manufactured goods, electronics, luxury goods, transport , utilities and services,
  • International companies have begun to seek out professional people and services to develop and drive their new innovations like aerospace,biotechnology, energy, entertainment, life sciences, insurance and everything else that an emerging economy needs. India is the new China!
  • India intends sending a rocket into space once a month. These rockets have additional satellites on board from foreign countries and technology companies. This subsidizes India's government program for space communication and defence.
  • India has a large pool of educated and skilled people to draw from in its innovation programmes. Competition is fierce and they can do this at at least half the costs of any of the western nations.
  • India's large resource of cheap skilled labour can produce manufactured goods more economically than the USA, Europe, Japan etc. The  innovation and invention will make  India the 'place to be' for companies who want to slash costs and improve profits.
  • India's demographics of a large population of productive workers aged between 25 and 59 will create a middle class with an unprecedented appetite for consumer goods and these large corporations will make millions of dollars and their share prices will reflect this.   
  • The revenue from internal consumption as well as exports will swell Government coffers and they will have the funds for the much needed infrastructure.

Here is what research from the USA has revealed:

it is expected that by the year 2025, 46% of the Indians population will live in cities - each housing more than one million people. India needs up to 59 million square feet of floor space.That's the equivalent of '4' New York cities. India will have to build about 249 miles of metro rail every year; will have to pave 8.2 million square feet of road; will have to build up to three million square feet of combined residential and commercial space each year. That's's the equivalent of adding 'Chicago City' sized residential area each year. (Source: www.foreignpolicy.com)

Habil Khorakiwala, chairman of the Federation of Indian Chamber of Commerce & Industry (FICCI), said "The Indian populace is increasingly viewing luxury goods as necessities in their households and higher disposable income means people can spend more on lifestyle products," Indians will buy color TVs, electronic goods, DVD players, washing machines, air conditioners, microwaves, stoves, refrigerators, latest smart phones and more.

However, the coming boom will be very different to the China boom. The Indian government will manage it's growth far better than China did. The Government of India does not control the economy and every day life of it's citizens as does the Chinese government. International corporations and brands will fall over each other to get into the Indian market place. This will certainly help their flagging profits as the rest of the world falls deeper into recession. These companies will spend millions (mostly borrowed money from international banks) to get a foothold in the market.

What india's market  needs are cheaper electronic,electrical and digital products. The advance of robotics in China will flood the market in India with these products. They will not have the capability of the products available in the west but these products will do the job at prices which the Indian public want and can afford. Google / Facebook are very active in India right now. They're making free internet services available at bus and train stations. Imagine what revenue is in store for Google and internet marketers as millions of consumers are added on a daily basis.

Once again, Australia will be the "Lucky Country". Our abundance of coal, iron ore, uranium, gold, oil, numerous minerals will help us through the BUST phase. The opportunity for Australia is enormous and once again we will get through the BUST more easily than any other country in the first world. The boom will cross over into our tourism industry as millions of Indians start to prosper and travel as a result of the BOOM that India will experience. Australia benefited from wealth generated by the industrial revolution of the emerging countries like Japan in the 1980's, Russia in the 1990's and  China in the 2000's. Move over - here comes India.  It's closer to Australia than to other countries with raw materials like Africa, the USA, and South America. Therefore Australia has the 'transport cost' advantage.

Gone are the ridiculous wages that were paid for labour and skilled workers during the last commodities boom. The mining companies will be in control and the Unions will take a back seat.  These mining companies will justify this because we will have to be price competitive with other counties if we are to obtain and sustain long term contracts. Australians will become grateful just to have full time jobs again and will not be manipulated by labour hire companies who have used and abused them over the past few years. The airline companies will flourish as FIFO (Fly-In: Fly-Out) workers fill the air-crafts again. However, mining companies will want to reduce costs and will favour local workers. For example, the rent in regional centres in Queensland like Rockhampton, Gladstone, Emerald, Mackay and Townsville will increase. Similarly rents in other regional areas Like South Australia, Western Australia and NSW will also increase. Property investors looking for yield will flock back to snap up the bargains once again because property prices in the cities are outrageously high. Property investors who bought in these areas will smile again - but do not expect the ridiculously rentals we saw during the last mining boom!

The mining boom will once again save the day. However, most economists predict a global BUST starting around 2017 and lasting into 2022's. The weak Australian economy, due to "Demograhics" and  "Spending Trends" within the local market,  from about 2016 through to 2020's will still be a problem. I have covered this changing demographic trend in the previous articles released over the past five weeks in my "Finance and Property Updates".  The recession which will hit Australia will be shorter because of India's economic boom and our mining boom.  We are very fortunate to live in Australia but this is not the time to take on more "Bad Debt" because interests rates will rise again.  Avoid the self indulgence of buying expensive new cars, boats, caravans, televisions and taking expensive holidays on credit. Take a reality check and stop trying to keep up with friends and colleagues. Don't over extend yourself by buying a bigger and better home in a leafy suburb or near the water. This is the time to invest in "Income generating good debt" like invetment property which will give you ongoing rent and income tax rebates rather than indulging yourself (during this bust period). To find out where to invest in property right now that will give you good capital growth and rental yield contact James Cagney on 0416 137 645 or click on Hot Property of the Week

To find out how the trends BOOM-BUBBLE-BUST has unfolded since the 1950's in Australia by following the series below. Take the time to do it now as it will be time well spent. Click on the subject below to go to each topic:

We highly recommend that you subscribe to Harry Dent's newsletter which covers Demgraphic Trends, the BUBBLE-BOOM-BUST Cycle and gives excellent strategies for investing to take advange of these cycles and trends.  You can subscribe to his newsletter at www.dentresearch.com  It is not expensive and you can buy a yearly subscription for as little as USD.49.00 per annum. James and his associates have no commercial or financial arrangement with Dent Research and do not benefit, personally or financially, in recommending his newsletter and/or his other excellent educational material. Our recommendation is based solely on providing our readers with the best advice possible from experts.

In the Dent Research report "Get Rich off the Demographic King", which is a bonus when you subscribe to his newsletter - Harry Dent recommends certain companies which are poised to take advantage of India's growth in the future. Read about how these company's 'cost-innovation' strategies will bring down the costs of TVs, microwaves, refrigerators, vacuum cleaners, air conditioners and all of the luxuries and products which Indian consumers will more easily be able to afford.

This is not financial advice. You should not act solely on the basis of the material contained in this Property Update for your investment strategies. Changes in government and legislation occur frequently and without prior notice and financial markets are unpredictable.
Please note that the information herein is of a general nature only and is not intended as specific advice for any particular person or entity.

This information was written and compiled by James Cagney.  The opinions expressed herein do not necessarily represent the views and opinions of his associates including
Asset Finance Pty Ltd.




Author: James Cagney
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