Post By TampIt
Post By robusto
Post By Barry O'Speedwagon
Post By OCD
Post By Andy
Is Australia in Recession?
Are we going through the recession we might have to have, in the could-be words of former prime minister Paul Keating who infamously presided over our last one in 1990?
The truth is, we cannot know until sometime in February at the earliest.
It takes 2 consecutive 3-month periods (quarters) to define a recession. Four of them, and we have a depression.
So....we narrowly escaped a negative June quarter. If we are negative this current September quarter we won't know until the GDP figures are released around October-November.
If it's a negative print, we need the December quarter to also be negative to qualify as a recession.
And those figures won't come out until around February.
So enjoy the alleged boom times like a drunk for now and hope you don't wake up with a hangover in five months.
Originally Posted by robusto
If you use per capita GDP in lieu of gross GDP we are already in a depression.
I just wish someone would inform the current lot in Canberra that if average wages are flat (shrinking slightly in most industries) then the whole money - go - round slows and the whole economy goes backwards.
I am getting to the point of throwing something at my TV if any other "economically illiterate pollie" rabbits on about cost cutting and reducing services to balance a federal budget and create a surplus. Ever heard of Greece? Works for SME business and the small end of town, not national governments.
Were it not for government spending, the June GDP figure would have been negative already.
From watching the Reserve Bank's activities over the last 30-40 years, the board is usually clueless and lagging on what to do and when to do it.
Governments are also usually clueless, driven by misdirection or winning elections instead of doing the right thing.
In trying to make housing affordable by cutting interest rates, the RBA usually achieves the opposite by creating a frenzied seller's market.
In 1990, by trying to cool Keating's "overheated" economy by forcing up interest rates, it drove companies to bankruptcy and had me and almost everyone else paying 18% interest on my home, while newcomers --was it 14%? A two-tiered social economy.
Banks became some of Australia's biggest property owners as they foreclosed on companies.
After cutting interest rates during the GFC, while everyone else from the US reserve to the EU central bank kept cutting, ours started raising. Again, the lagging decision.
Now it will most likely keep cutting -- though this time there will be no likely frenzied seller's market in housing because people could be jobless and won't buy.
Federal and the West Australian governments happily raked in taxes and royalties from the mining boom as if it would indeed be "stronger for longer" but made no plans for when it collapsed. When the boom began to collapse 6 years ago...all left with pants down.
The expectation was other industries would step in to fill the void...Oh, you mean like the car industry which became extinct? The RBA's only policy was to aim for the Australian dollar to be around 73 cents to the US as if that would be a panacea. It is now significantly under -- 67 cents.
In Victoria the Andrews Government began splurging scores of billions on infrastructure, with some 40% of government revenue coming from stamp duty from the housing boom, driven by unsustainable population growth. No sooner had it begun the drunken sailor spending than the boom collapsed and now the government is pants down with no revenue, a cut in population growth and public servants demanding pay rises.
So, that's how governments of all political colours, and the RBA cannot be relied upon to handle economies.
That's all fair comment. But.....what do you want them (the RBA for instance) to do? A lot of the factors affecting our current recession (and that is what it is) are driven by factors that we don't have a lot of control over. All we can do is limit the damage.
G'day Barry O'Speedwagon
Originally Posted by Barry O'Speedwagon
Unfortunately we are now wearing the brunt of (say) 70 years of bad government decisions from Tweedledumber and Tweedledumberer (yep, both major parties are to blame).
The two real underlying issues are that the states ceded taxation to the Commonwealth (at Federation) so the people who run the services (states, local gov) have to go cap in hand to the federal government for money. That is a long term funding disaster. The next issue is the "James Buchanan" ideology that the federal government should be small and not involved in earning money - that should be left to the free market... You can read "Democracy in Chains" and see how that current chain of events started and is unfolding.
Selling off all income earning (revenue) activities and expecting to balance a budget is a fool's errand. Clear examples: I have yet to see how ANY privatisation of the power industry (Oz state gov) has ever saved consumers money - and those figures are worldwide. That makes sense - changing from a minimal profit business model to the corporate "maximise profits at all costs" only leads to increased power prices. Then look at the banking industry (fed gov) - privatising Commonwealth Bank allowed all the current peccadilloes to flourish by removing the brakes on profit making.
A good example of how the funding disparities work:=
The Pilbara was responsible for 35%+ for most of the last few decades of Australia's export income. You would expect their only funding issue would be whether to build their third or fourth university alongside their world class resources. Nothing could be further from the truth. Port Hedland council was technically insolvent for years - a combination of "fly in / fly out" workers not contributing to the local communnity plus chronic underfunding by both state and federal governments - who distributed the export earnings to everywhere and everyone else. "Who wants to live there?" is a self fulfilling prophecy if you starve the place of funding.
Closing down our space, black box and microchip industries (Menzies - the "wannabee English PM" that we never had as an Oz PM) followed by Commonwealth Aircraft (Howard) and then nuking the car industry (all post war governments after Menzies culminating in Abbott) are further factors. Limiting our technical expertise whilst restricting education budgets is nothing short of crazy.
The car one really hurts. Bolwell (Oz guy Campbell Bolwell) started winning races and setting lap records in the early '60's. So ADR 27A was legislated meaning that Campbell had to get his 100th car of each crash tested (i.e. provide 6 of them to be wrecked at his cost). Then CAMS (Confederation of Motor Sport) legislated that you needed to sell 500 cars a year to be able to compete at Bathurst. That meant he could never expand beyond 99 cars a year AND never get a racing profile on the main stage. Having raced a Falcon HO phase 3 and driven a Bolwell Nagari (Bolwell's street sedan, not the actual racing cars) both in the same year, there is no way the Bolwell would not have taken Bathurst out (in record time at that). Think of multiple lap margins by the end.
Tamp(venting a little)It
PS: Roslyn Fuller's excellent book "Beasts and Gods" also explains why we do not have an Athenian Democracy - it is a Roman republican model. That is why the government does not match the people's wishes very often. Also, the Roman model did not end well - there was this guy called Julius... (Trump, Johnson, Abbott, Morrison... are in waiting).
Last edited by TampIt; 10th September 2019 at 10:05 AM.
I think I have a solution. First we address some of the more objectionable human predilections. You know, like greed, gluttony, lust, envy, anger, pride, sloth, stupidity...
Originally Posted by TampIt
To name but a few...
(car discussion moved to a different thread)