Submerging or Emerging

Submerging or Emerging

Submerging or Emerging was the title of a speech by Jonathon Pain from www.thepainreport.com.au at a recent fund manager presentation. It was a very simple but powerful explanation of where the global economy is & where it is heading.

Traditionally the global economy has been defined as ‘the haves’ & ‘the have nots’. I.e. the so called developed countries such as USA, Japan, and Western Europe, UK making up say the G8. Is there a common thread in government with these countries? Then there have been the so called emerging countries such as the BRIC countries of Brazil, Russia, India & China.

Jonathon pointed out the now obvious, that these ‘haves’ now ‘have’ so much debt to GNP that they are submerging in debt. The ‘have nots’ now are much less debt & hence have the facility to grow faster.

Some key points that arose from Jonathan’s presentation were;

Ø ‘Submerging’ economies will spend less and save more whilst ‘emerging’ economies will spend more and save less

Ø Emerging economies will continue to grow due to the shift in demographics (more people working), labour (more people earning wages and hence spending) and capital (more money circulating to develop infrastructure

It is the savers that are now maximising their wallets & buying up big. We note that Australian companies are being bought up by overseas companies keen to lock in the future. Hence we have seen a Singapore company buy CSR; a Thai company picks up a coal company, Indian & Chinese companies everywhere.

Where is Australia ‘the lucky country’ on this matter? This really is the choice that the electorate have facing them on Election Day.

Let’s recall that the ‘working family’ is ‘moving forward’ by reducing their debt levels where they can. This is shown up by the slowdown in retail spending & ‘home loans’ at a nine year low. What’s good enough for the gander should be good enough for the goose.

The above presentation was all about where the gander should invest in the future. Do we invest in the submerging economies or do we invest in the emerging economies. Let’s think about it.

The other debate for the August 21st is taxx. Do we need to debate it as surely you could do much more with your pay packet than some government department which may have wasted a Billion of taxx payer funds?

We observe that NZ across the ditch has made some taxx changes. Ire reduced company taxx to 28%, the top income taxx rate reduced to 33% and increased the GST to 15%. This is all so as to be competitive & to survive. Perhaps we could learn from them apart from the rugby. Don’t mention the rugby.

Let’s remember that companies pay dividends after they have paid expenses which include taxx. So simply if companies pay less taxx then they have a greater ability to grow their profits & hence their dividends. Isn’t a lower company taxx rate better for your retirement superannuation jar? We don’t understand where an MRRT would be better for our super but maybe we are labouring the point.

So where & what column did Jonathon place Australia. He did place it in the emerging column if only because it was not submerging in government debt. The choice we make at Election Day is whether Australia continues to emerge or is submerged.


As a topic within his speech Jonathon did mention the Chinese very fast train & how it would & did help growth within China. This could be something that could help Australia remain competitive. Brisbane to Sydney in 3 hours is faster than leaving for & leaving the air terminal.
We imagine & hope to do a very fast train from Singapore to London sometime.

If you want to emerge from your current financial position & not submerge in debt & taxx & invest in emerging economies then our active wealth strategy maybe for you.

Welcome to call on 07 3848 1088, email info@wealthcoach.net.au or visit our websites www.wecoachwealth.com.au


John McAuliffe