The LA Times is reporting that the US deficit could reach $2 trillion USD in 2009 in a return to Keynsian economic.
In a measure of how quickly its options are shrinking, the United States is about to embrace an economic theory that was widely thought for most of the last generation to have been discredited: the idea that great bursts of deficit-funded government expenditure can jolt an economy back to growth.
Of course, any attempt in Australia to go into deficit will be portrayed as a bad move by the opposition, but it may be the only thing that the federal government can do. If deficits are not the answer – what is?
Now that businesses in Australia are getting back into action, we may start to see what the future is for the Australian economy. Last week the ABS released the November retail figures that showed a 0.4 percent rise where most were predicting a fall of 0.1% – and this is before the governments stimulus package (which I point out that I received no handouts!).
CommSec’s Savanth Sebastian says should the December figures due out next month also be favourable, retailers will not have to consider laying off staff before March.
“Keep in mind that further tax cuts and the Government’s infrastructure package will come through in the next couple of months and that will all help to alleviate the stress and try to improve sentiment, because in this environment it’s about improving confidence and improving sentiment,” he said.
John Mc has been posting his thoughts, and others have been giving their thoughts. I actually cannot remember hearing from the federal finance ministers lately, and so my questions are simple:
Where is Rudd? Where is Swan? Where is Tanner?
And what are they doing to save us from the worst of this financial crisis?
(PS – I think we are up to number 24 in this series).
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