What is Australia’s Long Bust?

[PUBLISHER’S NOTE: On Saturday we published a very important book. So important, we made it available to send to any reader who requests one…free of charge.

It’s called The End of Australia: The Real Story Behind Australia’s Coming Economic Collapse and What You Can do to Survive It, and it’s been a long-term research project of Vern Gowdie’s.

In it he explains why something he calls a ‘Long Bust’ is coming to Australia. Here is an excerpt…]

Officially, the term Long Boom tends to apply to the post- Second World War period, right up to the 1970s. A rising tide of factors — increased global trade, a population boom, a developed world explosion in consumer demand for automo­biles, white goods and televisions — lifted all boats.

While Australia lived off the sheep’s back during the post Second World War long boom, our real golden economic period was from 1991 to the present. This has been our Long Boom. And, as I will demonstrate in this book, Long Booms tend to end in equally Long Busts.

As The Australian’s editor-in-chief, Chris Mitchell, said in July 2015, Australia’s 24 years of recession-free growth has created ‘a community expectation that growth will continue and prosper­ity will go on rising’.

As I will demonstrate in these pages, that expectation could be fatal.

It’s one that’s going to result in bankruptcies, property fore­closures, high levels of unemployment, shattered retirement dreams, family breakdowns and worse.

But, until very recently, the China-driven mining boom has sheltered Australians from a simple fact…

Australia is part of the wider world. And the wider world is one that now functions with an increasing level of dependency on mountains of easy credit. Without credit, the wheels of commerce seize up.

We saw the havoc this caused in many countries when the global debt super-cycle started to crack up in 2008. Now, finally, the same havoc is heading Australia’s way.

Put in its simplest form: we are entering a world where people make purchases based more on savings and less on credit. And this is going to be highly disruptive. Think of it in these terms:

Credit is a high calorie sugary fix and savings are a vegan diet

The girth of the global economy has expanded decade after decade on a high calorie intake of credit. The level of sugar build up in the system has rendered the global economy sluggish and extremely unhealthy.

Going ‘cold turkey’ to a vegan diet will be a massive (but essen­tial) shock to the system. The withdrawal symptoms are going to be far more painful than people are prepared for.

Unfortunately the economy has to suffer this ‘dietary’ extreme before we can return to a more balanced, stable and sustain­able economy.

There’s no doubt the ‘she’ll be right mate’ attitude has served Australians well when the chips were down. Most Aussies have a quiet confidence in our ability to overcome and capitalise on whatever challenges are put to us as individuals or a nation.

However, with what I believe awaits the country within the next decade, Australia and Australians will need much more than the Aussie spirit to survive.

The prospect of our ‘lucky country’ entering a prolonged period of extreme hardship — or Long Bust — gives me no joy. However, the facts are what they are.

No amount of wishing it could be different will change the facts…imbalances, unfortunately, must be corrected.

An attitude of ‘she’ll be right’ may assist in providing us with a coping mechanism…putting on a brave face amidst a world of turmoil.

But behind closed doors, the brave face will give way to the inner demons of:

Is my job safe?
How will we cope on one wage?
Will I ever find employment again?
Will we be able to keep our house?
Why did we borrow to buy that second property?
How much more will my superannuation lose?
Are we going to be able to keep the business open?
Can we afford to keep the children in private education?
Will there be a job for me after uni?
Will we be able to retire?
What if the government cuts back on the age pension?

These are questions framed by fear…the fear of losing lifestyle, assets, employment, business and entitlements.

The coming collapse of the global debt super cycle…and the ensuing Long Bust here in Australia…means everything we’ve grown used to as being normal is going to be challenged. Hence the title of this book: The End of Australia.

Without context, trying to make sense of the magnitude of this pending upheaval will be difficult to comprehend.

This book has been written in the spirit of ‘forewarned is forearmed’.

How we’ve arrived at this point
Why Australia is defenceless against ‘GFC MkII’
What you can expect when the debt cycle collapses
How best to protect your finances from the coming Long Bust
The ways you can capitalise on the opportunities that will arise from this adversity

As I say, the prospect of a Long Bust or Even Greater Depression gives me no joy.

All Australians are bound to be adversely impacted by the effects of a contracting economy. Very few will escape the suffering caused by this economic contraction.

The after effects won’t be pretty. However, the prospect of a more rational and sustainable society emerging on the other side gives me great hope for my children and future generations.

A society that is less obsessed with keeping up with the Joneses might just create a healthier, less stressful and more compas­sionate world.

Perhaps in a world that is more affordable and less focussed on ‘things’ it may mean children can be nurtured at home by parents who are happy and financially able to put their career on hold.

After all, solid family values make an invaluable contribution to the fabric of society. The monetary value of a well-balanced family with a strong moral compass and work ethic is impos­sible to calculate…it really is priceless.

While the near term is going to be extremely challenging and upsetting, in the longer term I am confident a stronger, wiser and more prudent Australia will emerge.

The aim of this book is to help guide you through the troubling times ahead, so that you and your loved ones not only survive, but are in a position to prosper from the next financial crisis.

[PUBLISHER’S NOTE: Copies of The End of Australia: The Real Story Behind Australia’s Coming Economic Collapse and What You Can do to Survive It have been printed. We will ship a free copy on to you, should you so desire. To find out how to get your copy, click here.]

Vern Gowdie has been involved in financial planning since 1986. In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners. His previous firm, Gowdie Financial Planning was recognized in 2004, 2005, 2006 & 2007, by Independent Financial Adviser (IFA) magazine as one of the top five financial planning firms in Australia. He has been writing his 'Big Picture' column for regional newspapers since 2005 and has been a commentator on financial matters for Prime Radio talkback. His contrarian views often place him at odds with the financial planning profession. Vern is is Founder and Chairman of the Gowdie Family Wealth advisory service, a monthly newsletter with a clear aim: to help you build and protect wealth for future generations of your family. He is also editor of The Gowdie Letter, which aims to help you protect and grow your wealth during the great credit contraction. To have Vern’s enlightening market critique and commentary delivered straight to your inbox, take out a free subscription to Markets and Money here. Official websites and financial eletters Vern writes for:

To read more insights by Vern check out the articles below.

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