A finance expert best known for Rich Dad Poor Dad is urging Australians to avoid investing in property, fearing a trade spat with China could spark a depression.
Bestselling author Robert Kiyosaki, who is close friends with Donald Trump, said Australia was ‘dependent on China for their exports’ .
Australia’s exports to China are worth $135billion a year but without that, the nation faced a prolonged economic downturn – with a 1930s-style depression more likely than a short recession.
‘It’s not good for Australia overall,’ Kiyosaki told Daily Mail Australia from his home in Phoenix, Arizona.
Bestselling author Robert Kiyosaki (right), who wrote three books with Donald Trump (left) before he became President of the United States, said Australia was ‘dependent on China for your exports’ and therefore was in danger of falling into a depression. He is pictured with Mr Trump in October 2006 launching their book Why We Want You To Be Rich
‘I hate to say it but it could be not an L-recovery but an I – it could be a drop, straight-down collapse.’
Australia’s biggest exports to China
Iron ore: $63.1billion
Natural gas: $16.6billion
Source: Department of Foreign Affairs and Trade China export data for 2018-19
China has confirmed it would be slapping 80 per cent import tariffs on Australian barely, in retaliation at Prime Minister Scott Morrison’s call for an independent inquiry into the causes of COVID-19.
There are fears other exports could be next, including iron ore, a steel making commodity worth $63.1billion in China export dollars.
China’s ambassador to Australia Cheng Jingye has already threatened a Chinese consumer boycott of Australian beef, wine and education – a $12.1billion a year export industry.
This is occurring on top of a long-running trade war between the US, Australia’s biggest defence ally, and China, Australia’s biggest trading partner.
‘This is a coronavirus: you guys are getting China and the US sneezing,’ Kiyosaki said.
This could see Australia go from being a rich country to a poor one – like Argentina, an agricultural exporter, did during the 1930s because of high debt levels.
‘It’s possible. Your standard of living is very high, so sometimes the higher they are the harder they fall. That’s the concern I have,’ he said.
An economic slowdown in Australia would be particularly detrimental to those with mortgages, particularly in Sydney (Cronulla unit block pictured) and Melbourne, where median house prices stand at $1.026million and $818,806 respectively, going by CoreLogic data for April
An economic slowdown in Australia would be particularly detrimental to those with mortgages, particularly in Sydney and Melbourne, where median house prices stand at $1.026million and $818,806 respectively, going by CoreLogic data for April.
Australia’s biggest trading partners
1. China: 25.2 per cent
2. Japan: 10.1 per cent
3. United States: 8.7 per cent
4. South Korea: 4.8 per cent
5. Singapore: 3.8 per cent
6. India: 3.6 per cent
7. New Zealand: 3.4 per cent
8. United Kingdom: 3.2 per cent’
9. Thailand: 3.0 per cent
10. Malaysia: 2.8 per cent
Source: Department of Foreign Affairs and Trade data on market share for two-way trading partners as of 2018
In his 1997 bestseller Rich Dad Poor Dad, Kiyosaki warned against investing heavily in real estate.
‘A liability is something you have to pay for. If you bought it for say a million, and you got to pay for it and it drops to let’s say $700,000, you’re in trouble,’ he said.
The Commonwealth Bank, Australia’s biggest home lender, is forecasting a 30 per cent drop in Sydney and Melbourne house prices by 2023 in a worst-case scenario.
Kiyosaki agreed a double-digit drop was ‘possible’ but didn’t nominate a figure on how far house prices could fall.
‘It’s going to be bad for someone who is over leveraged – your house is not an asset, a house is really a liability,’ he said.
Australia’s household-debt-to-income ratio of 186.5 per cent is the highest in the world after Switzerland.
During the 1990s, Kiyosaki owned two investment properties in Sydney’s east at Rushcutters Bay and Bondi.
He’s now advising against investing in real estate and instead advocates buying gold during a global crisis.
In his 1997 bestseller Rich Dad Poor Dad, Robert Kiyosaki (pictured left with his wife and fellow author Kim Kiyosaki) warned against investing heavily in real estate
‘I’m buying a lot of gold from your Perth mint, I just bought 40 ounces of Aussie gold,’ he said.
Australian free trade agreements
New Zealand – January 1983
Singapore – July 2003
United States – January 2005
Thailand – January 2005
Chile – March 2009
Association of Southeast Asian Nations – January 2010
Malaysia – January 2013
South Korea – December 2014
Japan – January 2015
China – December 2015
Trans-Pacific Partnership – December 2018
Source: Department of Foreign Affairs and Trade
‘Gold is money throughout the world, that’s what I’m buying.’
Despite Australia being in danger economically, Kiyosaki said he preferred the Australian way of life and was considering moving across the Pacific Ocean.
‘If America gets worse, I’m, emigrating,’ he said.
Asked what he hated about the US, he replied: ‘Violence, social unrest.’
By contrast, he preferred the Australian attitude during a crisis.
‘The Aussie spirit, I think is healthy – you have a kind of “don’t give a s*** attitude, she’ll be right”, you’ll fire back,’ he said.
‘It is really the lucky country and I say that with all sincerity.’
Kiyosaki said his disappointment at American gun culture had nothing to do with President Trump, a Republican who is running for re-election in November against presumptive Democrat nominee Joe Biden.
‘First of all, he’s a friend of mine and I’m not Republican or Democrat and I would vote for him if he was a Democrat,’ he said.
Despite Australia he in danger economically, Kiyosaki said he preferred the Australian way of life and would considering moving across the Pacific Ocean. Pictured are swimmers at Sydney’s Bondi Beach on May 17, 2020 after COVID-19 lockdown rules were eased
‘It’s a dirty job, it’s a dirty game, politics. I don’t know what’s going to happen – a lot of people are counting on him to check Trump out.’
Unlike the US, Australia, still has low levels of government debt to gross domestic product – even with $320billion of COVID-19 fiscal and monetary stimulus measures comprising 16.4 per cent of GDP.
Australia had a gross government-debt-to-GDP ratio of 27.7 per cent before the onset of COVID-19, compared with 107 per cent in the US as of December 2019.
Robert Kiyosaki is participating in an online seminar with American economist Harry Dent and Australian economist Martin North on Sunday, May 24