Australia is in the iron ore Ice Age. This is not the kind of news that lights up the Australian economic outlook.

Especially after an interminable per capita recession that has already smashed living standards. Big falls in iron ore have big effects on the economy by slashing national income.

This hits the national budget and wage growth hard.

Australia's current inflation travails will melt into deep cash rate cuts.

Chinese stimulus excitement continues in markets, notably iron ore. However, this has a lot more to do with reflexivity than it does fundamentals.

The stimulus will add little to iron ore demand and supply is still coming. More downside for iron ore is inevitable.

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ANZ nicely captured the failing Chinese stimulus this week:

"We expect a CNY10trn (10 trillion yuan or just over AUD$2.1 trillion ) bond issuance plan for a debt swap program but the economic impact will be indirect and unnoticeable."

How is a 10 trillion yuan figure that is at the upper end of market estimates but is still "unnoticeable" in the real economy?

It is about how the money will be spent.

Over three years six trillion yuan is likely to be a refinancing project for local government hidden debts which is risk mitigation, not growth stimulus.

Four trillion yuan can be used to reduce excess property inventory but that only shifts empty apartments to cheap rentals so it does solve the crisis.

Only one trillion yuan is likely to be growth positive and much of that will be into not traditional infrastructure but technology and commodity-lite investment.

The stimulus is targeted very much at de-risking asset markets rather than increasing growth.

Property still pancaked

Early indications suggest a muted response to the property stimulus that is a key driver of commodity demand.

Sales have responded much the same as in previous rounds of failed stimulus:

And leading indicators are already fading:

Given there is still a huge backlog of sold but unbuilt, built but not sold, and sold but empty apartments, it is very unlikely that property will deliver any boost to steel demand for years to come.

Chinese demand for steel is likely to keep falling at roughly 2 per cent per annum for years as the apartment construction wind down continues.

This reduces demand for iron ore by 50 metric tonnes per annum before any offsets elsewhere.