Beep! Beep! Get Out of The Way Malcolm

Does anyone really have the right answers for dealing with this crisis? Is doing something better than doing nothing? I think so, pull out all stops to reduce the impact of the inevitable decline in private sector growth is a good start, in my opinion. I’m just hoping we’re not in a full-blown recession when a package gets passed.

Take for example the latest figures out of the US:

The US unemployment rate reached the highest level since 1992 and payrolls tumbled in January, with millions more likely to lose their jobs before a stimulus and emergency-lending programs temper the US economy’s freefall.

The jobless rate rose to 7.6% from 7.2% in December, the Labor Department said Friday in Washington. Payrolls fell by 598,000, the biggest monthly decline since December 1974. Losses spanned almost all industries, from construction and manufacturing to retailing, trucking, media and finance.

“We are in the middle of a very severe, a violent, collapse in activity and it could go on for months,” James Galbraith, an economics professor at the University of Texas in Austin, said in an interview with Bloomberg Television. The report will likely diminish objections “that somehow the president’s recovery plan is too large and should be trimmed back.”

Ross Gittins makes a strong argument for timely action” Stimulus is Three T’s and sympathy”:

…like most of the economists, I don’t doubt the recession would be a lot worse without the various stimulus packages.

In preparing this week’s package, the Government has sought to comply with the Three-Ts rule of fiscal stimulus: measures should be timely, targeted and temporary.

The timely principle says governments should apply their stimulus as early in the downturn as possible. Because things tend to snowball (economists would say multiply) in a downturn – with my cutback in spending reducing your income and thus prompting you to cut back, so reducing my income – the notion is that the earlier you act, the less things unravel. A stitch in time …

Similarly, the targeted principle says the stimulus should go to those people or on those purposes most likely to get the money spent quickly. This favours governments spending the money themselves so that, at least in the first round of the money’s flow around our circular economy, all the money is spent on consumption or investment.

This explains the support for spending the stimulus on capital works (now grandly named “infrastructure”). Trouble is, major capital works programs such as expressways, bridges and railways can take years to plan and get approvals for.

Almost 70 per cent ($29 billion) of the $42 billion is going on capital works projects. But Swan has tried to ensure the money is spent quickly by targeting it towards lots of quite small building projects.

Half the money is going on repairing and adding new facilities to every school in the country. The rest is going on fixing black spots on the roads, building boom gates at level crossings and building 20,000 new social housing and Defence Force homes, with about $3 billion going on a small business investment incentive.

All these projects are worth doing in their own right, they should be easy to get going and they should give a boost to employment in the small businesses that dominate the building industry.

The remaining 30 per cent ($13 billion) is going on cash bonuses – transfer payments – of up to $950 to most taxpayers, parents of school children, single-income families, some students and farmers. Many households will get multiple dollops of $950.

The way to think of this is as a once-only, lump-sum tax cut. Whereas ordinary tax cuts are doled out at a few dollars a week, this one comes in an upfront lump.

Another difference is that low- and middle-income families will get a lot more (and high-income families a lot less) than had the tax cuts already planned for July this year and next merely been brought forward.

Clearly, Swan’s approach scores well on timeliness and reasonably on targeting, although this time the cash bonuses are going to many middle-income families who’ll be more inclined to save them than would poorer people.

Malcolm Turnbull’s argument that people would be more inclined to spend a “permanent” tax cut than a once-off bonus – based on the economists’ “permanent income hypothesis” – isn’t a strong one empirically.

Finally, the temporary principle says everything you do must be a once-off (even if spread over a few years) so that it leaves no impediment to getting the budget back into surplus once the economy is well clear of recession. Swan gets full marks on that bit.

Over to You

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356 Responses

  1. I’d be chewing my fingers to the bone if I were Malcolm.

    Coalition’s nervous waiting game
    http://www.news.com.au/dailytelegraph/story/0,22049,25017000-5001030,00.html
    By Laurie Oakes
    LIBERAL and National Party pollies will be testing the mood this weekend.

    Coalition MPs were full of bravado when they left Canberra after deciding to vote against the Government’s whopping $42billion economic rescue package.

    They’d taken a stand – crazy brave, maybe, but a stand nevertheless – and they were feeling pretty good about it.

    It will be interesting, though, to see whether the mood is still buoyant after they spend a weekend in their electorates.

    It is one thing to thump your chest in parliament, preach the virtues of economic rectitude, and argue against one-off cash payments to families and a big infrastructure spend.

    It is quite another to tell a constituent, face to face, why he or she should not get a $950 tax bonus from the Government or why the local school should not get a new hall or gymnasium or science lab.

    It may not be easy, either, to explain to people fearful of losing their jobs in a looming recession why the Government should – in the words of deputy opposition leader Julie Bishop – “sit and wait to see”.

    Bishop has said some silly things in her time as shadow treasurer, but that just about takes the cake.

    If your employment is at stake, you want action, not “wait and see”.

    Malcolm Turnbull talks about the three top priorities this year being “jobs, jobs and jobs”, but in its attacks on the stimulus package the Opposition has given the impression that it doesn’t quite understand the depth of worry in the community.”

  2. Lol I knew you wouldn’t be able to stay quiet Mac

    Ah, but’s there’s more:

    100,000 small firms tipped to fail according to Dun & Bradstreet
    http://www.theaustralian.news.com.au/business/story/0,28124,25019161-5018019,00.html

    MORE than 100,000 small- and medium-sized enterprises could hit the wall this year as banks tighten their lending requirements and big business customers delay paying invoices.

    According to research from Dun & Bradstreet, the country’s leading credit report company, one in nine companies have fallen into the “high risk” category of financial distress, with small businesses facing the biggest likelihood of failure.

  3. All I ask Mat, is keep it civil (wink)

  4. From the Oz at: http://www.theaustralian.news.com.au/story/0,25197,25020073-12377,00.html Wall St soars on optimism of stimulus..

  5. Gee, I was about to post that link…what gets me is the amount of business that run on an overdraft!

    This is not best practise and surely indicates there is a lot of ordinary operators out there…the first and foremost rule in business is having enough funds to operate for six months with no money coming in…but then again I started with $200 and added two zeros to that in less than twelve weeks…gloats!

    I have no trouble with most of the stimulus package but all my bells and buzzers went off when I learnt of the vast amount and the handouts being proposed.

    I look at it as a businessman…would I go into debt knowing that 27% will actually give me a minimum return, if any and there was a possibility that when the money is really needed it has already been spent?

    I don’t think so.

  6. Don’t keep it civil guys! go for each other’s throat.

    I like to be voyeuristically entertained while I learn something.

    A question John…
    As doing nothing appears to be folly (hence the admonition of Bishop) would it be fair to say that the “doing something” (as advocated by the government) is better than nothing but may be little more than a projected illusion of having the answers?

    I honestly have no firm position on this, but I’m more than a little suspicious of the Opposition’s motives given past form & their seeming adherance to the “tax cuts” [largely for the rich] paradigm; reinforced by the corresponding impediments from the US’s own conservative capital crooks.

  7. A: Losses spanned almost all industries, from construction and manufacturing to retailing, trucking, media and finance.

    B: Almost 70 per cent ($29 billion) of the $42 billion is going on capital works projects. But Swan has tried to ensure the money is spent quickly by targeting it towards lots of quite small building projects….All these projects are worth doing in their own right, they should be easy to get going and they should give a boost to employment in the small businesses that dominate the building industry.

  8. Toiletboss

    The statement reminded me of the WMD call as well

    We were told then that by doing nothing, we were helping the terrorists.

    Labor opted for the do nothing approach then, and were proved correct.

    The tables have now turned, but I am still backing the Labor approach, who this time, along with treasury, the IMF, and pretty much the rest of the world (similar, again) are proposing doing something.

    BTW John, I had just posted about htis in Friday Frolics, then saw this

    Great minds???

    be afraid 🙂

  9. Stimulus Package Composition: Tax vs Infrastructure

    More on the stimulus package that shows it is not a single sugar hit or that it has been poorly planned as the opposition attempt to make out.

    The more you start to read on this package the more there is to be impressed by the government and the less about the opposition and their proposed plan.

  10. Get Out of The Way Malcolm

    Better still, just fuck off, Liberals.

  11. Caney

    We have been warned about language on here, so please, careful with the use of the ‘L’ word.

  12. Ah yes, Adrian,

    “Our friend Possum” who has already declared the pre-Christmas package a success, even though – he admits – the results won’t be known for at least six months.

  13. News Update courtesy of: http://business.theage.com.au/business/us-stimulus-package-gets-green-light-20090207-808e.html

    Quote: US stimulus package gets green light..Obama, pointing to the Labor Department report, today urged Congress to wrap up its work, saying it would be “inexcusable” to get “bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work.”

  14. Quoting Possum as a source…no thanks!

  15. No scaper, quoting the raw facts and data from Possum and the actual policy details there that show the package is not just a single hit but a very well planned and specifically targeted decreasing phase in over several years.

    That is something very different to what the opposition and the RWDB media hacks are saying it is.

  16. Tony of South Yarra, on February 7th, 2009 at 12:38 pm Said:

    Ah yes, Adrian,

    “Our friend Possum” who has already declared the pre-Christmas package a success, even though – he admits – the results won’t be known for at least six months.

    Did you actually read what Possum had written on that, it appears not?

  17. As I said on the Friday thread…let’s wait and see how this stimulus actually averts the recession and the long term debt that will be around our necks.

    By the way what is Possum’s qualifications to be put forward as a reference in a link???

  18. Yes, Adrian. He said this:

    “Treasury estimated when the package was released that around 30% of it would be saved, 30% would be spent in the first quarter of 2009, another 30% would be spent in the second quarter of 2009 and only 10% would be spent in the run up to Christmas.”

    So if most of the money is predicted to be spent in the next two quarters, it doesn’t take a genius to work out we will have to wait six months to see if this actually happens.

  19. Toiletboss

    “A question John…
    As doing nothing appears to be folly (hence the admonition of Bishop) would it be fair to say that the “doing something” (as advocated by the government) is better than nothing but may be little more than a projected illusion of having the answers?”

    Great question Toiletboss

    This crisis seems to have so many dimensions and interconnections to it that it seems to me to be largely unpredictable. I don’t think the Rudd Government are claiming to have the answers, however, I think they do understand the important role that government play.

    Let’s face it, the free market institutions (banks etc) have had to rely heavily on the government for bailouts and guarantees, I’d say that that alone supports a much greater role for governments in setting regulations and injecting taxpayer dollars into meaningful project in order to maintain a balance of sorts in employment and economic growth instead of trying to rely on the private sector to do it all (just look at the results coming of what the Howard Government advocated) .

    Government debt was essentially transfered to private citizens to the tune of $1trillion dollars because they relied on private sector growth and contributions to far outweigh the needs of the public sector (meaning our hospitals, schools etc have gone backwards not forwards)

    In fact, the Howard Government should be condemned for not leaving a much larger surplus than they did. And I mean MUCH LARGER!

  20. Tom

    BTW John, I had just posted about htis in Friday Frolics, then saw this

    Great minds???

    be afraid 🙂

    Sorry for stealing your thunder, I just could not help but post on the subject. Indeed, great minds (wink)

  21. Min

    “Quote: US stimulus package gets green light..Obama, pointing to the Labor Department report, today urged Congress to wrap up its work, saying it would be “inexcusable” to get “bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work.”

    This is where Mal’s decided to really walk a tightrope. I think he’ll get out of the way quite frankly.

  22. Caney, on February 7th, 2009 at 12:32 pm Said:

    Get Out of The Way Malcolm

    Better still, just fuck off, Liberals.

    Actually my thoughts exactly, instead of Beep Beep I should have wrote F$#k Off Mal, And Take Your Cronies With You!

    Next time Caney lol

  23. John..I have mentioned this previously but Mal is dead meat for taking this stance. If Fielding knocks it back and everything starts going down the gurgler, then it’s Mal’s fault..if it’s delayed and doesn’t work then it’s Mal’s fault due to the aforementioned delay (Note Obama’s statement re bogged down in distraction..politics as usual). For once in a blue moon Mal has put forward a sort-of alternative plan consisting of nothing more than Yawn, tax cuts. Where is his nation building vision?

    Re Mal getting out the way..Costello is already chaffing at the bit.

  24. “In fact, the Howard Government should be condemned for not leaving a much larger surplus than they did. And I mean MUCH LARGER!
    John McPhilbin, on February 7th, 2009 at 1:13 pm Said:”

    John you have to be one of the biggest armchair critics in human history. I don’t think it is easy to run surplus budgets. Anyway your heroes the ALP had a chance to increase the surplus.

    Why didn’t the ALP in the last budget increase the surplus if it is so easy to do??? Why didn’t they cut all Howards alleged reckless govt spending and produce a $30B surplus.

    The GFC hadn’t started in Labors last budget. Unemployment was low, mining boom was still happening. Swan/Tanner had a chance to make the surplus bigger. Maybe the reckless spending didn’t exist.

    Labor was handed a $20B surplus by Costello and did not increase the surplus. Furthermore it is now gone and we have a $20B deficit.

  25. Why should Turnbull get out of the way???

    Does he not represent 41.5% of the voting public?

    I suppose you expect the opposition to just roll over on everything the PM proposes…now that’s democracy!

    I love that remark to go away too…I wonder is the brave ones here would have the intestinal fortitude to say that face to face…I suspect not if if I’m wrong then that says it all for the character of the person!!!

    I don’t particularly like the person but I wouldn’t call him the pathetic names that I see here on a daily basis either…if anyone here can do better then throw your hat into the ring instead of the gutless sniping at every opportunity!

    It’s tough here in the middle as both sides accuse each other of abuse but you are all the same…it’s like a footy supporter, no…more like zealotry of the worst kind in my opinion!

    So I expect this to get passed in some form and if the waste called handouts get through I hope you flucken choke on it!!!

  26. Adrian of Nowra, on February 7th, 2009 at 12:53 pm

    The red bit in figure two is the red cordial…it can be spent anywhere in the economy, is given pervasively among the populace, and is designed to spike the velocity of money in ways which monetary policy is failing to achieve…then drops off into a highly sectional program of capital works, which is presumably targeted at soaking up unemployment in the mining and construction sectors, but presumes the same trickle (up? around?) effects within the broader economy that worked so well previously for trickles down. It’s precisely that case which Government needs to make, imho; that the infrastructure blue bit will somehow articulate with the red bit and function like the red bit. If not, the nearest equivalent of a slow-burn red bit is…seeking a fiscal stimulus for the broader economy by changing the tax mix, unless government intends sacrificing the remainder of the economy which isn’t construction or retail, or intends to inject more red bits should the velocity of money continue to decelerate.

    Effectively, I am guessing that Government is limiting the likelihood of success for the economy as a whole by focusing on sectional interests and targeting its stimulus too narrowly. I am not certain that the purchasing habits either of select ‘tradies or of Government match the purchasing habits of the populace as a whole, and all of Possum’s churnings for the stimulus money emanate from there in ever decreasing increments.

  27. In an article apparently written in praise of Kevin Rudd’s hard work in producing the proposed stimulus package, Peter Hartcher unwittingly reveals how the plan was hatched as much for party-political considerations as for any good it would do the nation:

    But, not content to think about spending year-to-year, the ministers wanted to analyse the likely patterns of growth (under its $42 billion package) in the economy quarter-by-quarter. The reason?

    The ministers wanted to match their performance to the scorecard, seeking to prevent even one quarter of economic contraction. Growth is measured quarter-by-quarter in the national accounts. And the ministers certainly wanted to avoid two quarters of shrinkage in a row.

    Why? Most of the media, based on a hardy misapprehension, likes to report that this is the definition of a “technical recession”. This is a kind of urban myth, but it is an enduring one. The ministers did not want to bet the reputation of their Government as economic manager on the media’s ability to educate itself.

    The group, formally known as the Strategic Policy and Budget Committee (SPBC) of the cabinet, accordingly crafted a spending package to deliver a continuous stream of adrenaline.

  28. (Doh! Last four paragraphs above are blockquote.)

  29. So I expect this to get passed in some form and if the waste called handouts get through I hope you flucken choke on it!!!
    And so presumably scaper you do not agree with funding for boom gates at railway crossings, addressing of road blackspots, that you do not agree with homes being insulated, and that you do not agree with upgrades for schools, that 20,000 public and defence force homes should not be built and that small businesses should not recieve a tax break.

  30. Tony – Good to see your Rudd Rage remains in full swing!

    The ABS data shows that the December stimulus – if you cared to actually pay attention – had the outcome that the Treasury projected *when the package itself was released*.

    So the December stimulus, so far, is actually doing exactly as it was planned to do according to the actual economic data we currently have.

    Will that change in the future? Who knows -the future will tell us.

    Whether it’s a success or failure or otherwise in terms of the program itself is for others to decide, but purely in terms of the original package doing what was intended – so far it has.

    Scaper – what’s my qualifications?

    I’m an econometrician. Not that such a thing actually matters, the data speaks for itself.

  31. Min. I suggest that you re-read my post before making way off track aspersions…if you still don’t understand I was referring to the cash handouts!

    By the way, have you anything to back up your statement that Costello is champing at the bit???

  32. Labor was handed a $20B surplus by Costello

    Handed.

    The Liberals didn’t “hand” anything. It had to be clawed out of their cold dead “hands”. They had to be practically dynamited out of the government benches. How much taxpayers’ money did they spend on propaganda in the year leading up to the rodent calling the election date?

    As to what was “handed”… Costello was handed “$390 billion … in extra parameter growth in budget revenues coming off the back of the resources boom”. [Kevin Rudd, Question Time, House of Representatives, 14 October 2008 http://www.aph.gov.au/hansard/reps/dailys/dr141008.pdf%5D

    Out of that stupednous figure, Lazybones managed to “hand” on about 20 billion on as “surplus”. Big deal. Very big deal. It was about 5% of what came in.

  33. Scaper, I have yet to read any support from you re the government’s strategy.

    Ok, so how would you do it better? Giving due regard to the fact that major infrastructure cannot be implemented without at least a 2 year down time.

    The evidence re Costello champing at the bit is the fact that he suddenly organised major interviews after sulking on the backbench since the election.

  34. G’day JMc – glad to see you back!

    There are occasional fits of brightness in the gloom…

    …I have just been talking to a friend, who works in the Queensland State government and, while explaining to me that he was really busy at the moment because of the Brisbane Airport upgrade, he casually dropped a figure of 10,000 people being employed over the next 18 months to two years…this project is already underway…

    …what strikes me is that this can’t be the only project as large as this in the country…that will absorb al ot of the unemployed from the mining industry…and…

    …if these 10,000 will be employed for two years – surely that’s time to plane and budget for the next large infrastrucure project to move this workforce and management team on…sustained growth springs to mind…

    …its these large capital works that provide employment for the butchers, bakers etc.

    …someone earlier mentioned that 100,000 small businesses will go to the wall this year…

    …many always do and some always should…

    CPA website:

    http://www.cpaaustralia.com.au/cps/rde/xchg/cpa/hs.xsl/985_11930_ENA_HTML.htm

  35. ‘scuse the pun – that’s “plan” not “plane” 😀

  36. One way to get the Possum out of the box…LOL!

  37. heh! I I scuttle around the blogs – as strange as it may seem, non MSM blogs (especially the comments sections) are generally a bit of a leading (but highly partisan and polarised) indicator of broader public opinion.

  38. Possum,

    So the December stimulus, so far, is actually doing exactly as it was planned to do according to the actual economic data we currently have.

    I can’t help noticing you attribute all of the spike in December spending to the stimulus package. You made no mention of either interest rates or petrol prices. Surely they also contributed?

    So the December stimulus, so far, is actually doing exactly as it was planned to do according to the actual economic data we currently have.

    Will that change in the future? Who knows -the future will tell us.

    Exactly the point I was making. So isn’t it just a little bit early to be making emphatic declarations like this?

    “Comitatus: Economic Security Package worked. Shock.”

  39. Thank you TB, it’s wonderful to hear some good news in amongst all the negative doom-sayers. I quite like Richard Glover’s effort at: http://www.smh.com.au/news/opinion/richard-glover/kicking-an-economy-when-its-down/2009/02/06/1233423492151.html Quote: THE Australian media has become obsessed with headlining every tiny piece of economic bad news. Picking up the newspaper is like hopping on the ghost train: with every turn of the page, someone tries to scare you witless….

  40. News Break just on TV.

    Obama’s package has been passed.

  41. Neil of Sydney, on February 7th, 2009 at 1:38 pm Said:

    “In fact, the Howard Government should be condemned for not leaving a much larger surplus than they did. And I mean MUCH LARGER!
    John McPhilbin, on February 7th, 2009 at 1:13 pm Said:”

    John you have to be one of the biggest armchair critics in human history. I don’t think it is easy to run surplus budgets. Anyway your heroes the ALP had a chance to increase the surplus.”

    Shit I keep forgetting about your cabbie mate in Cairns Neil.

    I think you’ve been left feeling a little misplaced in your understanding of economic realities. You’re stuck on the idea that surplus is good and deficit is bad. Well it’s not that clear cut. Take a gender at the big, what would Howard and Costello do differently, Neil?

    The question I have is ‘how will the Howard Govt be remembered as economic managers in years to come? My guess is that they will be seen as a shining example of how an economy should be managed (wink)

    I’ve also got to say that John Howard and Peter Costello are probably very relieved that they lost the last election, for reasons that are now becoming very obvious in hindsight.

    Lets assume for a moment that the following doom and gloom assessment is true. The impact on not only jobs but government coffers is likely to be very significant (well, of course it is).

    THE AUSTRLIANs Michael Sainsbury revealed the worst case scenario for exports today, when he writes:

    “AUSTRALIA is staring down the barrel of its worst export slump in 50 years.

    It poses a bigger shock to the nations terms of trade than at any time since the 1997-98 Asian crisis.

    The nations top 10 trading partners are in the middle of, or entering, an economic meltdown, with Western and Asian economies entering a cycle of contraction that experts fear could mean up to five years of flat global growth.

    The next shock to the Australian financial system is expected to come when contract prices for our exports, particularly iron ore and coal, are renegotiated. The nations terms of trade is the difference between export prices and import prices hit record highs last year thanks to the seemingly endless commodities boom. But the news from Asia, the destination for more than half our exports hasn’t been good.

    UBS economist George Tharenou told The Weekend Australian: The main near-term weakness is going to come through export terms of trade. There will be a considerable fall from the second quarter onwards when bulk commodity price are renegotiated downwards.

    Export figures for the last quarter of last year are also shaping up as the worst for 50 years. Fourth-quarter 2008 and first-quarter 2009 exports volume will be weak. We are expecting exports in them to fall by 5 per cent for (the December quarter), Mr Tharenou said.

    If this is correct, it will be the worst for the past 50 years, beating the 4.8 per cent fall in the third quarter of 1997 as the Asian currency crisis hit Australia.”

    Therenou’s no doubting that the Howard Government were riding a very favourable wind whilst in power as Andrew Charlton puts it:

    The economy is much like a little boat on Sydney Harbour on Boxing Day. Whether the trip is calm or rocky depends much more on the weather and the wash from the bigger boats than anything that might be done internally. If the weather is bad, you cannot blame the skipper for the bumpy ride. In fact, unless you know a lot about sailing, it is hard to know whether the skipper is doing a good job in bad circumstances, or whether he’s making it worse.

    The same is true of skippering the economy. If you ask Australians about the economy in the decade or so of John Howard’s prime ministership they will remember the low unemployment rates, the low inflation, low interest rates and the general mood of affluence which suffused the nation. Howard turned this prosperity into stunning electoral success.

    The truth behind their legacy, however, is likely to end up being buried beneath a pile of rubble, especially in voters minds. Mark Davis describes the Howard Government’s laying of the groundwork for the current crisis beautifully:

    Australia’s age of prosperity, as Peter Costello calls it in his memoirs, has been underwritten by the mining boom (even as manufactured exports stagnated during his tenure) and massive increases in household debt (now more than $1 trillion – about the same as the annual national output), even as the government has wound down its own debt. The national debt has in effect been privatised while, at the same time, risk has been shifted away from government and business onto the shoulders of ordinary people, in the shape of long working hours, casualisation, and the sort of uncertainty that is written in the fact that Australians take the least holidays of any western nation.

    Not exactly the perfect start the Rudd Government could have hoped for, but a perfect end for the Howard Government era.

  42. Dear Poss..so pleased to see you. Very very nice to have another fluffy friend onboard.

  43. Isn’t it true that because of the Howard neglect on infrastructure, health, education, social services, public housing etc. for 11½ years that many of the thing Rudd is now fast tracking in the stimulus package would have to be done anyway, just over a longer period with lot’s more bureaucracy piled on top?

    The longer these things are left undone the more they would have cost and the more people would have suffered in both numbers and degree. Also in the long run these things become a net asset in the way they help society which pays back to society.

  44. TB

    TB Queensland, on February 7th, 2009 at 2:22 pm Said:

    G’day JMc – glad to see you back!

    There are occasional fits of brightness in the gloom…

    …I have just been talking to a friend, who works in the Queensland State government and, while explaining to me that he was really busy at the moment because of the Brisbane Airport upgrade, he casually dropped a figure of 10,000 people being employed over the next 18 months to two years…this project is already underway…

    …what strikes me is that this can’t be the only project as large as this in the country…that will absorb al ot of the unemployed from the mining industry…and…

    …if these 10,000 will be employed for two years – surely that’s time to plane and budget for the next large infrastrucure project to move this workforce and management team on…sustained growth springs to mind…”

    Exactly TB, get the ball rolling as quickly on worthwhile projects and try to keep the ball rolling in order to reduce the impact of contraction in the private sector. We still don’t know how bad that contraction will be, but we the government can’t wait for conditions to severely deteriorate.

    By the way, on a personal note, thanks for support and encouragement It’s been greatly appreciated.

  45. “Take a gender at the big, what would Howard and Costello do differently, Neil?
    John McPhilbin, on February 7th, 2009 at 2:33 pm Said:”

    I do not know. But whatever they would have done if still in power would be 100 times better than anything Showpony, Daffy Duck and the Communist are doing.

    Howard and Costello had common sense. They made difficult things look easy so that when unemployment went from 8% to 4% all you could say is they got lucky.

  46. “Adrian of Nowra, on February 7th, 2009 at 2:39 pm Said:

    Isn’t it true that because of the Howard neglect on infrastructure, health, education, social services, public housing etc. for 11½ years that many of the thing Rudd is now fast tracking in the stimulus package would have to be done anyway, just over a longer period with lot’s more bureaucracy piled on top?

    The longer these things are left undone the more they would have cost and the more people would have suffered in both numbers and degree. Also in the long run these things become a net asset in the way they help society which pays back to society.”

    Yes, yes, yes! Well said Adrian.

  47. Shouldn’t that be furry, not fluffy Min?

    Good to see you here Poss. I’ve been a long time reader of your stuff and though it sometimes goes over my head or gets too in depth for me I always try to understand it, but most of all it is enlightening and broadens my perspective on psephology.

  48. Tony,

    Interest rates tend to take longer to impact on consumer spending (and just about everything else) than most appreciate. The RBA, for instance, looks forward about 18 months in terms of the impact of any given rate change on the economy (which is why big, sudden, external shocks like the GFC can make the RBA look like gooses – even though they are from from fools).

    On petrol prices – while they have large psychological impacts on the economy (and for large users of petrol, large cost impacts), for the overwhelming majority of households, a big petrol price reduction of 30c a litre will only make the majority of households $20 to $30 a week better off (aknowledging of course that some will be a lot higher than that, bu most will actually be a fair bit lower than that). That $20 can then flow through to the purchase of other goods – but in the broader scheme of things – $20 isnt much.

    The extraordinarily sharp spike in the December seasonally adjusted retail turnover figure was beyond the actual financial power of the size of the petrol reduction. Even accounting for interest rate reductions AND petrol price reductions, what occurred in December was a spike way beyond their combined economic horsepower, but the result did in fact match up with Treasury’s projections of the impact of the original stimulus.

    When it comes to defining whether that stimulus worked or not, we can really only define it on the basis of whether it did what it was supposed to do. So far it ‘worked’ in that it did what Treasury expected it to do.

    That’s an entirely different matter than whether or not the actual policy itself was good or bad, but in terms of it doing what it was supposed to do – in terms of it working as expected – as of the most recent data, it has.

  49. Never let a little thing like infrastructure or the national interest get between a Liberal government and pork-barrelling for its own partisan interest.

  50. Adrian..excellent point, however I suspect that Poss is both fluffy and furry.

  51. Neil

    “I do not know. But whatever they would have done if still in power would be 100 times better than anything Showpony, Daffy Duck and the Communist are doing.”

    I take it you’ve really got no idea Neil simply because you’re resorted to name-calling?

  52. So far it ‘worked’ in that it did what Treasury expected it to do.

    Fair enough.

  53. Lol, and you wonder why we nicknamed you the bulldozer Mac.

    I mean that in a good way facts! facts! facts! no wonder you pissed certain senior execs off.

  54. Neil, Howard and Costello (especially Costello) never made the difficult things seem easy, they only ever took the easy way and just rolled along letting things happen around them, with the only difficult decisions they made was how much they would spend on advertising and bribes to win the next election.

    Costello didn’t even know what the surplus or unemployment figures would be from one month to the next, that’s how out of touch he was lying back in his hammock letting the autopilot run the economy.

  55. I think the fluffy/furry thing is entirely dependent on the hair product used!

  56. [Howard and Costello] made difficult things look easy so that when unemployment went from 8% to 4% all you could say is they got lucky

    They took workforce casualisation to the highest rate of any advanced economy in the world (2005).

    Each of these record numbers of casuals counted as “employed”.

    Slippery crediting for the numbers, as we have come to expect from the Liberals.

    And with the advanced world’s highest level of casualisation comes record underemployment and job insecurity.

    That’s the Liberals’ real employment record.

  57. Possum Comitatus,

    Where did you come from Possum? Excellent points.

  58. Bulldozer? It has it’s downside for sure.

    Re: Possum, I agree – excellent points.

  59. Poss..caught you on the roof a year or so back.

  60. Good to see you, Possum. I always read your blog at Crikey.

  61. Min, on February 7th, 2009 at 1:24 pm Said:

    John..I have mentioned this previously but Mal is dead meat for taking this stance. If Fielding knocks it back and everything starts going down the gurgler, then it’s Mal’s fault..if it’s delayed and doesn’t work then it’s Mal’s fault due to the aforementioned delay (Note Obama’s statement re bogged down in distraction..politics as usual). For once in a blue moon Mal has put forward a sort-of alternative plan consisting of nothing more than Yawn, tax cuts. Where is his nation building vision?

    Re Mal getting out the way..Costello is already chaffing at the bit.”

    Lol, it’s going to be interesting to see how this all develops for the Libs Min. Costello though? I’m not sure he’s got the balls to become even the Opposition leader.

  62. Caney, on February 7th, 2009 at 3:00 pm Said:

    Good to see you, Possum. I always read your blog at Crikey.

    Okay, Possum, give me your link.

  63. Hello, Possum (and I don’t have purple hair and weird specs). What happens if it doesn’t work? How will the government go about meeting its obligations as regards welfare payments etc once the surplus and borrowing capacity is gone? How will the Reserve Bank stimulate spending when interest rates are already next to nothing? Given that the entire household savings and a fair bit more is being plunged on one horse, how can we be sure this horse will get up?

    My understanding of a recession is that those who are employed are vastly better off. They still have incomes and prices are falling. Those with mortgages are already vastly better off than before. It’s those without incomes that the government need to be looking after. And there are about to be many more of those, and no amount of populist government manipulation will change that in my view. But hey, Adrian agrees!!

  64. “How much taxpayers’ money did they spend on propaganda in the year leading up to the rodent calling the election date?
    Caney, on February 7th, 2009 at 2:16 pm Said:”

    I do not know. Perhaps you could tell me.

    As for the mining boom, i think it is overrated. You keep bringing it up because you do not want to give Costello any credit. That is you are being dishonest.

    When we were running surpluses the USA was running mammoth budget deficits. This was during the alleged era of worldwide prosperity. You just hunt around for reasons not to vote for Costello.

    Anyway your heroes are now in power almost everywhere so according to you we should be O.K.

  65. Oh and one more thing, don’t you think it’s an insult to democracy to plunge the entire nation’s wealth in one package and expect the opposition parties to simply rubber stamp it?

  66. JohnMcP. Costello may not have had the balls to go up against JWH, but I think that he senses that Turnbull is as weak as p*ss. Evidence being that Costello has not retired and has suddenly come out of the woodwork at a time when Turnbull is stuffing it up, even more than usual.

  67. http://blogs.crikey.com.au/

    The links for all of Crikey’s blogs. Some good reading there with Possum being first stop for me. Andrew Bartlett is always worth reading as well as is William Bowe (The Poll Bludger).

  68. James,

    “and I don’t have purple hair and weird specs”

    That’s what they all say!

    What happens if it doesnt work? Good question – nobody knows. What we do know will happen is that any stimulus package will reduce the size of unemployment and the size of any recession, but at the cost of having to borrow to do it, and where that money will then have to be paid back later when the economy has recovered from where it currently is.

    Even if we have a big recession – it’s still not the end of the world. Our economy isnt going to reduce from 1.1 trillion down to half a billion, so there will still be plenty of economic activity – meaning the governmet will still be able to pay welfare outlays and whatnot, most people will still be employed and life will still go on.

    The RBA still has a few percent to go in terms of reducing interest rates – hopefully we shouldnt need to go so low that it’s in danger of not being able to go any lower. If that point comes – then the world economy will be in such a dangerous shape that international events will overtake us anyway.

    If it got that bad, governments around the world would probably be forced to move to a temporary but highly controlled economy like an old style war economy – but that is extremely unlikely to happen.

  69. So let me understand this James.

    When Howard was in power you and the right wing – commentariat criticised the opposition for trying to to scrutinise many of his policies as he slammed them though parliament, especially WorkChoices. Howard promised he would not abuse power on getting both houses but then went on to do exactly that, abuse that power.

    Now the shoe is on the other foot the position also changes.

    There is holding a government to account and there is political opportunism, and what the opposition is doing is the latter as they are not wanting to scrutinise the government economic intervention but do away with entirely for their own ideological belief in trickle down economics and the policies that got us into this mess.

  70. Neil,

    Retaining ~5% of the proceeds of an almost unprecedented windfall (mining boom) as “surplus” is no particular reason for complimenting them.

    It actually invites criticism of their wastefulness, the shortsightedness of not saving prudently for the rainy day they’d have to have know would follow the boom in which fate had them “managing the economy”.

    “Managing the economy” is about more than paying off debt and spending on propaganda to buy election victories. It’s also about infrastructure for productivity growth in the current and future, and prudently setting aside nest eggs for rainy days when the sun is shining, nay, blazing down.

    Since that’s the unspun truth of the matter, I’m not surprised you don’t recognise it.

  71. And James, so how would you do it better. As I mentioned to scaper, it has to be short term projects because those requiring things as EIS would take several years to get up and running. I don’t think that we have the time to sit around hanging by our thumbs.

  72. Thanks for the links guys, and by the way Possum, any friend of Tim’s is a friend of mine. Crikey looks like an interesting source and a way to exchange ideas and leads for debate?

    Maybe joni or reb could add it to the Blogroll.

  73. Furthermore you ask what if Rudd’s policy fails, and as Possum rightly says we don’t know. But that equally applies to what Turnbull wants to do. What if his policy fails?

    There will be a lot more unemployed seeking work when things improve.
    Infrastructure will be run down and cost more to rebuild.
    We will be a dumber nation.
    We will be a sadder nation.
    We will be a less equitable nation as the wealth gap grows even further.
    We will be a more socially bereft nation.

  74. As for the mining boom, i think it is overrated.

    Oh, so 390 billion in extra government is overrated? But you bang on about the 20 billion that the brilliant Liberal managed to “hand” on as “surplus”. I think the credit you give to the wasteful Liberals is overrated.

    Anyway your heroes are now in power almost everywhere so according to you we should be O.K.

    Well your heroes are out of office almost everywhere, after leaving the world economy in smoking ruins, for someone else to try to put back together while your ilk whinges sulkily from the sidelines. Good one. Real class.

  75. LOL, I seem to have reversed the blockquoting tags in my previous post. Apologies to readers.

  76. And following from John McP likewise Poss, any friend of Matty Price’s is a friend of mine.

  77. “Retaining ~5% of the proceeds of an almost unprecedented windfall (mining boom) as “surplus” is no particular reason for complimenting them.
    Caney, on February 7th, 2009 at 3:21 pm Said:”

    O.K. But i saw on a blog that the proceeds of the mining boom was not that great. During the mining boom our service industry increased enormously.

    i do not expect you to believe me but i did see it. The mining boom was only a relatively small part of our GDP.

    Furthermore who got the prices for us??? We had strong leadership during the Howard years. Perhaps China did not want to mess with us because John Howard was leader.

    Now we have Showpony in control China knows that it can ask whatever price it wants for our minerals.

    Who got the contracts during the boom??? If labor was in power would we have got as good prices as the Libs got when in power??

    Nobody knows. The simplest explanation is that we had good government under Howard.

  78. Adrian, Turnbull’s “plan” is raises the probability of sending the economy into reverse …

    The Age, 6 February 2009

    http://www.theage.com.au/national/turnbull-plan-risk-to-growth-20090205-7yzf.html?page=-1

    The Australian economy would be at greater risk of going backwards under the alternative rescue package proposed by Opposition Leader Malcolm Turnbull, according to the nation’s chief economic adviser.

    In a blow to Mr Turnbull, Treasury Secretary Ken Henry last night said that a smaller stimulus package than the $42 billion plan proposed by the Federal Government would increase the prospect of the economy stalling.

    […]

    Mr Turnbull has proposed a smaller package of about $20 billion, including tax cuts

    […]

    Asked by Greens Senator Bob Brown what would happen if the package was half the size, Dr Henry said: “There would be greater risk of negative growth at some point.”

  79. Interesting point Caney. Was it just a few months ago that it was all over the newspapers about ‘skills shortages’, how we needed to import labor under 457 Visas and now all of a sudden thousands of Australians are about to be thrown out of work.

  80. My God the RWDB media hacks are delusional and none more so than Shanahan.

    Coalition’s surprise move on the $42 billion stimulus package turns the tablesSo according to Dennis the opposition have blindsided the government and left Rudd floundering, giving the opposition an early advantage.

    Taking into account all the other times Shanahan has said the government has been steam rolled by the opposition and reading into good poll results for the government massive defeats that have never been there, this latest effort is another comedy gold from Shanahan and the OO.

  81. Thanks folks – I’ve got to run and cook lunch for a family do.

    For any Mexicans out there – hope the 40+ heat isn’t knocking you all around too much in Vic, SA and NSW.

  82. It appears this line of attack against the government might not have been Turnull’s idea with some party room shenanigans going on and Costello being at the back of it.

    Turnbull’s mighty gamble

  83. Hi Poss..not certain where you are located but I’m originally from Hawthorn, then a shire councilor (cringe) for Lilydale. Am currently at far north coast NSW.

    Have a wonderful evening.

  84. Neil,

    So if the 390 billion in extra revenue from the mining boom alone was “just the start of it” … What about the rest of the revenue from the period in which the Liberal government must have also shared?

    I wonder how many hundreds of billions we’re talking here.

    I don’t share your gushing credit for managing to set aside only 20 billion as “surplus”.

    It’s overrated Liberal fanboy stuff IMO.

  85. Thank you for your response, Possum, I’ll formulate a reply. Suffice to say, I don’t agree.

    Adrian, if you can link to anywhere that I was critical of a political party wanting to scrutinize legislation I will be mightily surprised.

    Min, you keep asking that, and I’ve responded a number of times. I’ll give you a bit more detail this time. Shock, horror, I don’t believe a bit of a recession right now is such a bad thing. There you are, I’ve said it. Call me heartless. And yes I understand a similar thing has been said before. They have happened before and they’ll happen again. They’re not nice, not everything in life is, but the government cannot expect to run around protecting people from themselves. We have collectively over borrowed. We have collectively overspent. We’ve collectively had a great party doing it. We need to cop our hangover, if for no other reason than the memory of the headache just may extend the period between now and when we decide to overindulge again. I understand that politically the government needs to be seen to be doing something, I don’t believe that they should be blowing the bank in that exercise. And not on insulating houses that are the responsibility of the owners, not on cash handouts to people who are generally better off cash wise than they were a year ago. This money is NOT going to prevent a recession. It won’t even slow it down. What it will do is remove the capacity of the government to pick up the pieces after the event.

    If I were in government, I’d forget the short term, aside from Centrelink etc. I’d analyse corporate behaviour, prosecute where necessary, legislate where necessary. And I’d talk to Scaper and others like him about some serious infrastructure projects to secure water, food, transport and power supplies in the future, with a focus on decentralising the population. And I’d immediately legislate to allow building on on any acreage. Now there’s one that will get the builders going!!

  86. Min

    Ah, but education and training cost money!! That’s money that was to be put to better use pork-barrelling and buying votes for the Liberal Party!! {irony}

    Howard was a short-sighted little Mr Magoo, and Sleepy Costello, well, what can I say, his theme song should be:

    “I Did It His Way”

  87. “Well your heroes are out of office almost everywhere, after leaving the world economy in smoking ruins, for someone else to try to put back together while your ilk whinges sulkily from the sidelines. Good one. Real class.
    Caney, on February 7th, 2009 at 3:31 pm Said:”

    John Howard halved the unemployment rate from 8% to 4% and furthermore paid off all the govt debt created by the immoral dishonest and corrupt ALP.

    As for what goes on in the USA it is news to me that John Howard is responsible for US govt policy.

    Our conservatives paid off the govt debt and were running budget surpluses.

    The US govt is the responsiblity of the US people.

    Anyway apparently the sub-prime crisis was caused by Democrats wanting to help out poor democrat voters to purchase homes they could not afford.

    Great policy by Jimmy Carter and Bill Clinton.

    As for the Australain mining boom- yes i think it is overrated.

  88. BTW, it’s really eery down here in “Mexico”. Stinking hot, windy, but the sky is so brown you can’t see the sun. It’s not smoke, so I guess it’s dust.

  89. James of North Melbourne, on February 7th, 2009 at 3:48 pm Said:

    Min, you keep asking that, and I’ve responded a number of times. ~~ just call me a slow learner. And so James, how would you do it better.

    James, what I was looking for was practical solutions rather than waffle.

    So far all that you have said is prosecute and legislate.

    You are going into law, you need to able to provide practical solutions rather than just theory.

    Long term is not an option, it has to be infrastructure up and running and now.

  90. Re unemployment..John Howard shifted the goal posts. http://www.roymorgan.com/news/papers/2003/20030801/

  91. James..and yes I am very worried about my 84yr old mother in Hawthorn. Will keep phoning her to see if she is ok.

  92. Neil recited:

    John Howard halved the unemployment rate from 8% to 4%

    Jeez, like a Liberal Party propaganda robot.

    Did you read my post upthread about the Liberals claims on unemployment? Here, as a courtesy to you that you don’t deserve, I’ll repeat it:

    They took workforce casualisation to the highest rate of any advanced economy in the world (2005).

    Each of these record numbers of casuals counted as “employed”.

    Slippery crediting for the numbers, as we have come to expect from the Liberals.

    And with the advanced world’s highest level of casualisation comes record underemployment and job insecurity.

    That’s the Liberals’ real employment record.

    Then, in the absence of anything better as an argument, Neil went on, bullet-point style, to recite another well-rehearsed, hackneyed Liberal Party propaganda topic:

    … and furthermore paid off all the govt debt created by the immoral dishonest and corrupt ALP

    Bzzzzt. Incorrect. The Liberals left behind a government debt of their own of approximately $88 billion.

    Neil, you need to change the program chip, that one’s corrupted and obsolete. Who’s going to program you to perform that routine?

  93. Some might want to think about the fact it’s far better to spend money on training & getting young workers out to build schools, affordable houses, erecting boomgates and so on, than to have them roaming the streets & pubs/bars w/ barely a cent in their pocket & a manitou of debt on their backs…and wondering why your house looks so appealing…& what valuables are inside that might help ease the pain & bitterness or be sold for a few bucks.

    A generalisation perhaps…but once the wave of anger & bitterness hits these shores over constant news of falling Supers, cut hours, mass layoffs in private industry, super-rich cons & tax-ripoffs, falling house prices, boss bastadry, the truth behind the Howard years…we better hope that those w/ the short fuses, who are built like brick shit-houses or are slim w/ the strength of Hercules and have a tendency to consume slabs of grog per week, are still occupied in one form or another…and I imagine their wives and kids feel same.

    All the security in the world will not stop their rage…best those eager for top end tax cuts realise that.
    Unemployment benefits ease the pain but a physically demanding job can elevate self-esteem and release the welling anger.

    Better than creating a huge army that must be used…like they did so many years ago.

    N’

  94. Mr Rudd, in his mad headlong rush to introduce his inchoate stimulus package, hasn’t done his homework. We now know that part of that stimulus package, AUD$75 million, will be spent in the Greek Islands and Pennycomequick, just to name two locations. I think AUD$75 million might assist the states (Australian, that is) to rid us forever of some of the portable ovens commonly called ‘demountables’ in which children are taught (or baked).

    “$75 million of Rudd’s stimulus package will go overseas
    February 06, 2009 01:00pm

    AROUND $75 million of the Rudd government’s $42 billion economic stimulus package could go to Australians living overseas, a Senate inquiry has heard.

    A senior public servant has told the inquiry a portion of the $12.7 billion in one-off cash payments will go to 60,000 aged pensioners living overseas.

    Each would receive around $1400, meaning up to $75 million in total would potentially head offshore, Centrelink manager Paul Cowan said.”
    http://www.news.com.au/adelaidenow/stor … 01,00.html

    Mr Rudd should announce an immediate moratorium on immigration. It can’t be clever bringing 150,000 people here just to park them on welfare. We should stop subsidizing the Indonesian military/industrial complex (is that the right term?).

    “Indonesia to buy 6 jet fighters, 18 armored vehicles from Russia

    MOSCOW, November 12 (RIA Novosti) – Rosoboronexport has signed deals to sell six Su-30 Flanker-C jet fighters and 18 BMP-3 infantry fighting vehicles to Indonesia, an official at Russia’s arms export monopoly said on Wednesday.

    He expressed confidence the Russian Finance Ministry would soon approve a $1 billion loan for Indonesia.”
    http://en.rian.ru/world/20081112/118266749.html

    Why shouldn’t the Indonesian government mulct the Indonesian rich if it wants war toys? By giving Indonesia AUD$2.5 billion all we are doing is relieving the Indonesian government of the onerous task of looking after Indonesian citizens.

    “11 August 2008
    Australia Commits up to $2.5 Billion (21.25 Trillion Rupiah) to Indonesia

    Australia will provide up to AUD 2.5 billion (21.25 trillion rupiah) over the next five years to Indonesia to tackle poverty and assist it to achieve its social and economic development priorities.”

    http://www.ausaid.gov.au/media/release. … _3408_1927

  95. “Bzzzzt. Incorrect. The Liberals left behind a government debt of their own of approximately $88 billion.
    Caney, on February 7th, 2009 at 4:13 pm Said”

    What are you talking about??? Please give me a reference.

    “They took workforce casualisation to the highest rate of any advanced economy in the world (2005).”

    Do you have a reference for this??? The way unemployment is measured has not changed for 40 years.

    Even if you are correct, 4% unemployment is better than 8% unemployment.

    i think you are making things up.

  96. I think my qualifications allow me to discuss the economy with as at least as much standing as Swan, Rudd, Turnbull, Costello, Bishop, Tanner etc. Surprising I suppose.

    Many here have made observations that we are in this dire situation, at least in part, because of our profligate, debt fuelled, materialistic, greedy society.

    I recall many commenting that the previous government encouraged people to consume and go into debt. Luckily I didn’t go with the majority, I prefer to be free of debt.

    It seems incredulous to me that many are suggesting that the way out is to rush headlong, with a few days to think about it, into the biggest, hugest debt ever.

    I agree with a stimulus, I think the targeting is wrong, and I’ve posted my views on priorities previously. I don’t agree with the handouts. There’ll be a blip in the market for plasma TVs or similar, and that’s about it.

    Why would a political party allow themselves to be rounded up by the government in a few days on an issue of this magnitude?

    People here should stop barracking for one side or the other and do some independent thinking.

  97. Thank you Tom..it’s similar to trying to draw blood from a stone trying to get anyone to suggest alternatives.

    Given the premise that the money has to be spent in order to stimulate the economy and given that long term projects are not on the agenda (given EIS and similar) – then how to do it differently?

    You say, that the targetting is wrong. And so what should the targetting be?

    Sorry..it all gets a little blah blah, and so if you wouldn’t mind restating.

    I’ve stated my view, that targetting road blackspots, boom gates, insulation for older homes [aka the oldies] etc etc is a good way to spend money and to sustain jobs for the people most likely to lose them while providing benefits for communities.

  98. Tom you keep saying that the targeting is wrong, yet you seem to be missing (or overlooking) the entire scope of the package over the several years time frame and just what is targeted to narrow in on some small parts of it. There is an awful lot for infrastructure and business in there so unless you can state exactly where you would put it all in the time frame required it’s hard to see just where your objections are.

  99. Neil,

    Australia’s rate of workforce casualisation is … the highest of any advanced economy. (Sydney Morning Herald), 15 March 2005

    With that comes record underemployment and job insecurity. And each one of those record numbers of casuals counted as “employed”. That’s how the Liberals “unemployment” numbers looked so “good”.

    Government debt:

    Australian Government Budget Outcome 2007-2008

    http://www.budget.gov.au/2007-08/fbo/download/02_Part1.pdf

    (page 6)

    Australian Government general government sector expenses by function

    “Public debt interest $3,538 million”

    Assuming an interest rate of 4%, that puts the Liberal debt at $88.45 billion. Not a real flash figure considering they “managed the economy” while more than 390 billion extra was coming in to government coffers courtesy of the mining boom.

  100. Stephan I’ve answered that $75 million going overseas previously and just how many times does it have to be raised?

    That $75 million represents 0.78% of the package and not all of it will remain overseas. How much of the tax cuts will remain in Australia and if Turnbull gets his way? Then should we spend millions ensuring that not a cent of them goes overseas? Should we also bring in laws to say that the stimulus package only be spent on Australian goods and services as Obama has done with his package, only allowing it to be spent on American goods and services, but for which he has rightfully come under much criticism?

    As to overseas aid. The importance of it both diplomatically and economically cannot be stressed enough. You do know we get oil from Indonesia and other raw goods as well as investing in Indonesia?

    The same applies to the other Western countries including America, all of whom have continued their aid to poorer countries around the world whilst in worst economic shape than we are. Then what of Howard who at a time of unprecedented economic wealth in this country dramatically cut back on foreign aid and was universally condemned for it?

  101. “Public debt interest $3,538 million”
    Caney, on February 7th, 2009 at 4:44 pm Said:

    O.K. I am not an economist so i cannot argue your points but i did get this from your link.

    “In 2007-08, the Australian Government general government sector recorded an underlying cash surplus of $19.7 billion, or 1.7 per cent of gross domestic product (GDP). The fiscal balance was in surplus by $21.0 billion (1.9 per cent of GDP). ”

    and this

    “Net worth increased from $46.7 billion in 2006-07 to $71.2 billion at the end of 2007-08”

    I think the Australian govt is still issuing bonds. Perhaps the interest payments that you mention are interest payments to people who have purchased govt bonds.

    Also how come you know about this alleged govt debt and the MSM doesn’t. because if we did have Federal govt debt the MSM would be screaming abut how Howard did leave us with some Federal govt debt

  102. Adrian & Min – I don’t like the handouts, and I don’t like the blanket approach to home insulation.

    Rather than providing many taxpayers with $950, I think these funds would be better deployed to if pensioners and self funded retirees (means tested). They could receve a voucher for a several (4?) thousand dollars worth of home maintenance, or improvements.

    Some might choose to mulch their garden and save the water and have their leaking roof repaired, others would get a water tank or insulation. Painting, plumbing…

    All of these activities are as worthy as insulation, and the home repairs are very labour intensive. You get more bang for your buck. More employment will be created and the amount created will be able to be measured.

    Little of the effect of government package can be accurately measured, and if we can’t measure it, how are we votes supposed to make a judgment as to whether this HUGE expenditure has been an effective investment???

    The government has said that the type of scheme outlined above requires administration etc. The government is in the business of administration and I’d suggest it requires less administration than the redirection of social security payments in indigenous communities. They can foist this type of system on indigenous people, so presumably they have the basic administrative system in place.

    I don’t have too many problems with spending on schools, railway crossings etc. I’m very concerned about the size of the debt though.

    I think the handouts are politically motivated, and I think the idea of bringing forward tax cuts is equally politically motivated.

    They’re all politicians, so we shouldn’t be surprised by their political expediency. I do though find it revolting.

  103. Caney, on February 7th, 2009 at 4:44 pm

    ABS have these figures if you want to look, but more important than the unemployment figures were the employment underutilisation figures, not underemployment, though that was also important.

    So there are three measures as to the success of employment;

    Unemployment, Underemployment and Underutilisation.

    I also contend that employment is mostly a State based statistic with some part being Federal. So if the Howard Government loved blaming the States for all that was bad in Government, then the good employment figures must go to the States, especially the resource rich States who dragged the national average figure down, and that had absolutely nothing to do with anything the Howard Government did.

  104. Debt is debt, Neil. It’s there in black and white in the official figures as an annual federal government expense. We owe 3.538 billion per annum for interest alone. That comes to $88.45 billion debt (assuming 4% interest).

    I notice, again, that you’ve failed to acknowledge that the Liberals presided over record underemployment and job insecurity.

    Look, for both your arguments: 1) no government debt; and 2) low unemployment, as I said your propaganda program chip is corrupted and in need of replacement. (though I’ve no doubt that won’t happen; you’re a rusted-on Liberal, and spin comes second nature after a while).

  105. This is not going to be a short term recession – we are looking at 4-5 years (The Great Depression took 10 years to recover) and this financial crisis is as big, if not bigger, than 1930…

    …however, financial understanding and global development will, I believe, make the difference this time…

    Globally, I wonder if our leaders will finally consider a a world currecny – and eliminate once and for all the speculation in that area – it produces nothing and it is simply a gambling machine for the rich…if we have a global economy why do we have national currencies?

    Locally, if Australians think they are feeling the financial crisis now – most of them are in for a serious shock – it hasn’t even begun yet! (My relatives in the UK and Holland are sending some horror stories)

    Any “rescue” package should be aimed at short (immediate start), medium (within six months) and long term (within 18 months) infrastructure packages…

    …Min has named some – as for handing out $950 to “certain” groups I find that naieve and silly – it will not generate any real productivity, nor spin off services/products…just keep retailers “dreaming” that business will pick up…it is inevitable that shops will close – if we can’t generate productivity…

    One thing that’s always fascinated me (’cause I’m a lazy sod at heart) is that people want/like to work – especially when they are out of work – (the six weeks I was out of the workforce with three other people depending on me was the worst time of my life!)…

    …the trick is to keep people working ’cause then they have to buy things to work with, clothes, food, shelter (remember Maslow’s Heirachy of Needs?) – that helps the shop owners etc.

    Just handing out money is not the way, it only helps retailers maintain falsely high prices…if they want sell goods then they must sell with a “pure” market not a market that has been falsely “propped up” by a government handout…

    …I also think its about time the banks were brought deeper into the equation to demand their support and corporate citizenship – instead of thinking they are somewhere on Profit Planet and this is all just swirling around and below them…banks – and some big businesses – are just simply not pulling their weight – in fact they have become a burden on society, not part of it…

    …a good start would be for banks to remove all fees…or legislate against them…(Disclaimer: I do not pay any bank fees)…and Suncorp for one has not passed on the RBA rates for some time…maybe at least a minimum percentage should be legislated…

    =====================================
    …on a personal note – my son is an ex-Digger and, having served overseas, is entitled to a Defence Force Housing loan, at a reduced, fixed rate to the banks – or it was when he first received it – that rate is now higher than the variable rate they pay the bank for the other portion of the house loan – even the ADF can’t keep up!

  106. Tom I like your idea of a voucher system for pensioners to do things for their houses, but of course that won’t help the many who rent or who live in retirement villages.

    There was an interview with the head of one of Australia’s leading pensioner groups about a week or so ago (I mentioned it previously) and he stated that most pensioners are not too bad off at the moment because of the handout they got from the previous stimulus and one off pensioner payment. He said they can survive without too much worry until the complete reforms of the pensioner system come in in the next budget, which Swan said won’t be shoved aside because of the current financial crisis.

    Yes there are definitely pensioners doing it harder out there at this moment and maybe they can be identified and helped with this package. At the moment Fielding, Xenophon and Brown are getting amendment made that mostly help unemployment and the low income earners, so maybe Fielding if he is all caring as he claims can put your idea of pensioner vouchers forward.

    But in the scheme of the whole package that handout is just one part and surely the investment in infrastructure, which is huge, is just that a debt for investment, which is something business does all the time.

  107. Wow Adrian, that was a quick change. Not so long ago you were concerned about the welfare of kids and now you’re saying it’s OK to bake them.

    And you go on to say Indonesia has an income stream via oil. Why doesn’t it use that revenue to take itself off the mendicant list? Oh, I know, there’s too many of them. Our fault again I suppose.

  108. Adrian, I know that many pensioners don’t own their own houses, and some that do don’t need a lot of repairs.

    I think that those that don’t need repairs could return the maintenance voucher and select from a menu of labour intensive (or public good) alternatives. For exampled – motor vehicle repairs, public transport vouchers, even a domestic holiday is labour intensive…

    The key is to deploy the funds in a manner which will create the maximum employment impact, and which will provide a degree of public good. Simply providing an untargeted handout, and hoping it will create some employment is excessively wasteful. I can’t stand this type of stupid, ill directed waste of our money.

    I’m happy to spend on infrastructure; it will create jobs and be beneficial to the public. The magnitude of the spending, and the few days to consider it is very worrying.

  109. Sorry Stephan I don’t follow, what’s this about baking kids?

    If you don’t understand overseas aid then it’s not my job to educate you on it.

  110. TB re Defence Force housing loan, son is going via Westpac as it gives a better rate.

  111. I’m with you on the pensioner idea, but it would only be one small part of the total package no matter how generous it is.

    The magnitude is not a worry and that has been canvassed here and elsewhere in depth with many saying its not big enough. Putting into perspective with all the other stimulus packages around the world, Rudd’s is small to minuscule as a percentage of GDP in comparison. The figures have been posted here previously.

    The ramming through of the package is a worry as I thought Rudd wouldn’t follow Howard’s tactics in parliament, and this hasn’t been the first time he has done this. It does seem though no matter how much time he gave to scrutinise it the opposition were going to can it anyway and demand tax cuts with no compromise. Tax cuts would be worse than the handout and most of the money would go to those who would spend it the least.

  112. “I notice, again, that you’ve failed to acknowledge that the Liberals presided over record underemployment and job insecurity.
    Caney, on February 7th, 2009 at 5:14 pm Said:”

    This is news to me. Unemployment reached 11% when your heroes the ALP were last in power. I remember this very well since I was one of the unemployed. I had better job security with Howard in power.

    About your debt comments- I tend to disbelieve them. I have never heard this before. How come this is your little secret and nobody else knows about this.

    At this link

    http://www.budget.gov.au/2007%2D08/bp1/html/bp1_bst13-01.htm

    Table 3 shows nebt debt in the minus values from 2005-06 and we are getting interest on our savings.

    Also notice the numbers for 1996-97. Nebt debt, $96,281 million dollars. Interest payments of $8,449 million dollars.

    This is referring to the $96B debt in 1996 and interest payments of $8.5B per year back in 1996.

    I believe my figures and I do not trust yours

  113. TB, surely your son must be eligible for DHOAS?

    If I were to go back into the Navy now (and I’m very tempted to sign up again) then I would be eligible to have between 50% to 60% of my mortgage payments subsidised by that scheme irregardless of who I have the mortgage with.

  114. Neil of Sydney, on February 7th, 2009 at 5:36 pm

    You still in a job Neil?

    Labor have been in power for 15 months, but according to the way you frame things you should have been unemployed by now.

  115. A sidestep?

  116. Min, on February 7th, 2009 at 5:29 pm Said:

    Thanks Min, his wife works for NAB! 😉

    ==============================

    Adrian of Nowra, on February 7th, 2009 at 5:33 pm

    I agree with most of Tom’s analysis, and your assement too – I believe no tax cuts (the RBA rate is going down!) and no handouts…

    …as for “ramming” the Bill through – I wonder if anyone has mooted a Double Dissolution possibility in the corridors of power…

  117. Oh and Neil you do know that Rudd got unemployment to a figure lower than Howard and also has got interest rates lower than Howard did.

    04 July 2007
    “Interest rates will always be lower under a Coalition government than under a Labor government,” John Winston Howard, LR.

  118. Adrian, since my father died my 84yr old mother has gone from $23,504 a year to just $272 a week. And from this pittance she still has to pay electricity, gas, rates.

    I think that my mum would be happy with a voucher as this would help with the worry about having to afford maintenance.

  119. There goes Neil, wantonly oblivious to the economic failings of the Liberals, dragging the name Keating out of his breast pocket to strew as a red herring across the path of uncomfortable fact.

    For the fourth time: With the advanced word’s highest rate of workforce casualisation comes record underemployment and record job insecurity.

    That’s the Liberals’ record on employment.

  120. TB, I was pondering the DD idea a few days ago and from I can gather it is not an option…instability would cause dire consequences.

  121. Adrian of Nowra, on February 7th, 2009 at 5:37 pm

    Thanks for that Adrian.

    Unsure of details, Adrian, but he was refused entry in the Reserves (despite some “serious” assistance)…they wanted him because he was an NCO Veh. Mech…but the brass said, no…

    …you may recall we took the Defence Force on in the Admin Appeals Tribunal over his parachute accident/leg injury and won – ADF and Comcare (what an oxymoron that word is) not happy chappies…

    …he got his Defence Force Housing Loan about, mmm, 7 years ago now but it wasn’t enough to cover all the mortgage, the NAB loan is now lower than the ADF loan…he’s looking at alternatives now…

  122. As I said Min I think Tom’s voucher system is a good idea and then lets see what the complete reform of the pensioner system brings in the next budget.

  123. scaper…, on February 7th, 2009 at 5:50 pm

    Yer, mean more unstable than now! 😯

  124. It could get a lot worse…do not need confidence to ebb any lower…I hear business in my industry has slowed to a saner level…lets see the cowboys survive.

  125. Oh follow it now TB.

    With the current high pay Defence is dolling out and all the perks like DHOAS I’m surprised more people aren’t signing up. Most of my friends who were in the service have gotten back in, many as officers which is the route I can go.

    My base wage would be about what I’m getting now but with all the extras like DHOAS, sea going, overseas, meals, medical, travel etc. it would be the equivalent of a 20-30% pay rise for me for a job that’s a lot easier than what I’m currently doing, as much as I love my current job and the company I work for.

  126. “Adrian, since my father died my 84yr old mother has gone from $23,504 a year to just $272 a week. And from this pittance she still has to pay electricity, gas, rates.
    Min, on February 7th, 2009 at 5:45 pm Said:”

    Doesn’t sound so bad. But Min. My aged parents are struggling to. They are self funded retirees. The drop in the interest rates is killing them. They are generally living off the interest of their savings.

    Low interest rates are not good for old people. Great for people with mortgages. If interest rates keep dropping what is going to happen to all the older people living off their savings???

    “Oh and Neil you do know that Rudd got unemployment to a figure lower than Howard and also has got interest rates lower than Howard did
    Adrian of Nowra, on February 7th, 2009 at 5:44 pm Said:”

    Rudd was handed 4.3% unemployment and dropping. So it dropped to 4% a few months after he was elected. if you want to give Rudd credit for this you need to go and stick your head in that blow hole in Kiama near where you live for a few hours.

    Also Caney the way unemployment is measured has not changed for 40 years. if you are correct in what you say, Rudd now has the record.

  127. Neil, Howard was handed a dropping unemployment rate and an improving economy.

    Rudd might have been handed a dropping unemployment rate but he was handed increasing interest rates, a significant downturn in productivity, underfunded skills, infrastructure, health, education, social services and pensioner payments.

    So you crowed and crowed about Howard’s low interest rates and Keating’s high ones, and now all of a sudden because of your self funded retiree parents you are complaining about low interest rates.

    It seems your complaints on the state of interest rates revolves purely around the flavour of government in power.

  128. Neil distracted:

    Caney the way unemployment is measured has not changed for 40 years

    From red herring to straw man goes Neil. How shonky are these Lieberal apologists??

    Neil, I wasn’t, and at no point have I been, talking about the way unemployment is measured.

    The point I have constantly made is about workforce casualisation. I have put this phrase in writing to you at least five times in this thread, yet you have not addressed it once.

    For the fifth time:

    With the advanced word’s highest rate of workforce casualisation comes record underemployment and record job insecurity.

    That’s the Liberals’ record on employment.

  129. Agreed Neil..the oldies are all under severe financial stress. My mother is not self-funded because in spite of working for the same company (Evans Bros Accountants) for over 45 years she never was awarded superannuation.

  130. # He says he’s a leader. Real leaders know if you want people to agree with you you’ve got to be prepared to sit down, respect their views, sit down and negotiate with them and that’s what we’re inviting Mr Rudd to do.”

    That is so cheap coming from a party that just lost cause it was out of touch with the people.

  131. With apologies..must choof. Have bara, crumbed with parmesan on the go plus fresh avo and orange salad.

  132. Mac, now Mal’s calling the PM as bulldozer. He can’t do that that, it’s your nickname lol

    From scaper
    http://www.theaustralian.news.com.au/story/0,25197,25021616-12377,00.html

  133. “and now all of a sudden because of your self funded retiree parents you are complaining about low interest rates.
    Adrian of Nowra, on February 7th, 2009 at 6:07 pm Said:”

    Well, we do seem to need some interest rates. if they keep dropping this will not be good for retired people. Keatings interest rates??? i had a home loan with 18% interest and then i lost my job. Yes i remember Keatings interest rates.

    “The point I have constantly made is about workforce casualisation.”
    Caney, on February 7th, 2009 at 6:08 pm Said:”

    O.K. but maybe some job is better than no job. Furthermore i don’t think you really care. You just enjoy bashing John Howard over the head. Keating had 28 months of double digit unemployment. Give me casual work any day.

    Unemployment in the US is now at 7.6%. Spain at 14%. France, germany 8-9%.

    We are doing O.K.

  134. Mal’s done nothing but be contrary for the sake of being contrary even prior to taking over as opposition leader, now he’s carrying on like a teenage girl crying that the PM is playing foul.

    If it was John Howard doing the bulldozer job on the ALP, many ALP critics, especially in the media would be calling him a hero.

    F%$king hypocrisy

  135. scaper…, on February 7th, 2009 at 6:15 pm Said:

    News update.

    We are the real government, not you, so you must talk to us and do as we say. You only got into power because (tick box);

    1. Media
    2. Union scare campaign
    3. Media
    4. Voters are idiots
    5. Media
    6. Voters made a mistake
    7. Media
    8. Labor misleading advertising
    9. Media
    10. We let them win but are really still secretly in power

    And if all else fails let’s fall back to the good old Boo!!!

    $20 billion debt, nah $200 billion and why not a trillion or a gazillion gazillion with the whole country collapsing in a third world heap because the rich aren’t getting tax cuts.

    Listen to us, the real government and not to the pretenders on the thrown.

  136. Adrian: F#@king classic! Strange but true lol. The social elites are collapsing in a heap!

  137. I would not underplay Turnbull’s tactic…I sense more of a positioning happening here, opposed to the posturing of last week…this might be a well thought out ploy…just a hunch.

  138. Neil, the Liberals gave the Australian workforce the advanced world’s highest levels of underemployment and job insecurity.

    The Australian workforce under the Liberals became the most insecure workforce in the advanced world.

    That’s the reality that puts your propaganda about “record low unemployment” into stark context.

  139. Stop me if you’ve heard this one before.

    Fannie Mae will loosen credit requirements for home mortgages. No, that’s not from a five-year-old paper, that’s today’s Bloomberg news.

  140. Slightly different music break – this ones for the moms out there (although I’d argue plenty of dads can sympathise)

  141. “The Australian workforce under the Liberals became the most insecure workforce in the advanced world.
    Caney, on February 7th, 2009 at 7:00 pm Said:”

    Well I will have to take your word for it, but we do seem to be doing O.K. We have 4% unemployment, Spain has 14%, Ireland 9%. I would be surprised if job security in Australia is lower than in the US.

    As for underemployment, perhaps a higher percentage of our full-time workers are underemployed than other countries. But i would have to look at all the figures. We have 96 people employed and 4 people unemployed looking for work. Spain has 86 people employed and 14 people unemployed for every 100 people looking for work. Perhaps those 86 people are fully employed and Spain has no underemployed. Our figures are still better.

    There are lies, damn lies and statistics.

  142. scaper…, on February 7th, 2009 at 6:35 pm

    I fear that you are right here scaper.

    Even though both sides are using bulldozer tactics (Rudd was an idiot for trying to force it through), the libs were no different in their immediate condemnation of.

    Unfortunately, they have picked up their cheap politics of BOO DEBT and are running with it. And that will make it hard for the government.

    It is disspointing that USA have already been able to move ahead, while we are stuck here in this morass of ideological bickering. This could go on for weeks.

    And, if that happens, I hope Labor pull the plug, say screw ya, and let us sink further down with the rest of world.

    Actually, no I don’t, but the libs will have been responsible for stalling our economy, and Labor will get the blame.

    Good politics, bad leadership.

  143. The package will pass by Friday (latest, probably Thurs) with minor changes like the greening stuff for the PH bit (was always going to be, clever little Rudd thing leaving it out at the start)

    Not sure what dribble they will give that moron Fielding but it wont be anything troubling.

    It will pass this week

  144. Tom, my money is it will be passed through Senate next Thursday night in a somewhat moderated form…just a out there hunch, mind you.

  145. Tom R, I hope the Greens & others hold up this package, and provide a better focus. I think we have a scatter gun approach, and I think the handouts are designed for popularity rather than stimulus.

    The government deserves to cop some political flack for lack of economic discipline, and for cheap politics.

  146. scaper…

    You are probably right, again

    And, I do not see a week being too much problem for a package this size. Labor should have taken that into account when drafting any legislation.

    But, I hope not too much is modified in it, and become another GST fiasco.

    If Labor are going to take the fall (which they will if things go awry), it should be because of their decisions, and not because of party political manouvoring.

    Time will tell, but I hope you are right.

  147. Rarely do I pay much heed to what the IMF have to say, but on this occasion I do.

    IMF urges action on stimulus, bank clean-up
    http://news.smh.com.au/breaking-news-world/imf-urges-action-on-stimulus-bank-cleanup-20090207-80e7.html
    The roll-out of stimulus packages and the clean-up of banks must be accelerated, the head of the International Monetary Fund said Saturday, urging action to avert “a repeat of the Great Depression”.

    IMF managing director Dominique Strauss-Kahn said stimulus measures announced so far were nearing the IMF’s goal of about 2.0 percent of global GDP.

    “But the reason I’m worried is that implementation takes time,” he said, citing delays in the United States caused by the political transition, and in Europe because of the EU’s political processes.

    “On top of that I’m worried that all this will work if, and only if, the different countries are likely to do what they have to do in terms of restructuring the banking sector,” he told a press conference.

    Strauss-Kahn said there were still losses in the banking sector that remained undisclosed, and that until the balance sheets are cleaned up confidence in the financial markets will not return.

    “Loss of confidence is now the central problem. Governments and central banks should credibly commit to measures sufficient to eliminate the risk of a repeat of the Great Depression,” he said.

    The IMF boss endorsed Washington’s stimulus package — which aims to pump at least 780 billion US dollars into the ailing US economy — saying it was the “correct size” and mix.

    But he added that it needed to be implemented at the same time as the restructuring of the banking sector.”

  148. TomM

    I do not think it is that scatter gun

    The same was said of the first package, and yet that has been successful (to a degree)

    They are taking advice from leading economists around the world, and implementing similar packages to those around the world.

    There is no gaurantee of success, but if we are going to do something, I would prefer it to be something that has been adviced by experts in the field, rather than something produced along purely ideological grounds.

    Certain areas may not be prefect, but I don’t think we can determine that with any certainty any way. The areas that are not perfect may well be the ones we are saying are great, and the ones that do the most may be those that are ridiculed.

    The cash handouts springing to mind here. They were lambasted by many economists before Christmas, who are now grudgingly admitting that they did have an effect.

  149. I won’t lie, this really concerns me simply because as conditions deteriorate (unemployment and foreclosures) housing prices are likely to tumble and many of these first homeowners could be locked in a nightmare scenario.

    In short, the Rudd Governement got this wrong, in my opinion.

    First home buyers rush to market
    http://www.news.com.au/dailytelegraph/money/story/0,26860,25012449-5015795,00.html
    * First home buyers rush to market
    * Low rates, government subsidy to help

    LOANS to first home buyers surged in January as lower interest rates, cheaper houses and boosts to the Federal Government’s grant made owning property more attractive, a leading mortgage broker says.

    Mortgage sales to first home buyers rose 25.8 per cent in the month, from 21.2 per cent in December.

    It marked the sixth consecutive monthly rise in since first home buyers accounted for 10.6 per cent of sales in June 2008.

    The outcome is the best since Australian Financial Group (AFG) started collecting the data four years ago, general manager of sales and operations Mark Hewitt said.

    Mr Hewitt said the news was positive and that now was a good time for workers with stable employment to buy property as several factors made it more affordable.

    The Reserve Bank has lowered the cash rate four percentage points to a 45-year low of 3.25 per cent in September, with the big commercial banks passing on most of the rate cuts.

    In October, the Federal Government doubled the first home owners grant for established dwellings to $14,000 and tripled it to $21,000 for newly-built homes.

    And average house prices in Australia fell 3.3 per cent in 2008, the biggest annual fall in 23 years, official showed on Monday.

    “Younger people with reasonably secure jobs have become an important force in the property market during the past few months,” Mr Hewitt said.

    “You have the Government’s subsidy, you have prices coming down, and interest rates are low.”

    “It is a good time to buy.”

    Mr Hewitt said several factors had thwarted first home buyers from buying property in recent years.

    “A combination of higher prices and rates have meant it has been very difficult for first home buyers to get into the market,” Mr Hewitt said.

    In January, mortgage sales to first time buyers were noticeable in New South Wales (at 30.5 per cent) followed by WA (26.7 per cent), Victoria (25.3 per cent) and Queensland (24.7 per cent).

    However, with more first home buyers entering the market, the loan-to-value ratio (LVRs) has risen steadily to a record high of 72.5 per cent in January, Mr Hewitt said.

    An LVR measures the average mortgage as a proportion of the average house price.

    “They (first home buyers) tend borrow 90-95 per cent, as much as they can as they tend not to have large deposits,” Mr Hewitt said.

    Mortgage holders were also moving more expensive debts from credit cards and personal loans to their home loans, Mr Hewitt said.

    The Australian Bureau of Statistics will release the housing finance data for December on February 11.

  150. Tom R

    “There is no gaurantee of success, but if we are going to do something, I would prefer it to be something that has been adviced by experts in the field, rather than something produced along purely ideological grounds.

    Certain areas may not be prefect, but I don’t think we can determine that with any certainty any way. The areas that are not perfect may well be the ones we are saying are great, and the ones that do the most may be those that are ridiculed.”

    I agree Tom. What we are experiencing is unprecedented. I’m certain that the Rudd Government has consulted with some of the most astute financial minds on this stimulus package. The argument about ideology is purely a tactic to put a wedge between both parties, quite a smart move politically, in my opinion.

    The cash handouts ensured spending remained robust and was a short -term shot in the arm. I have no problem with that. What I do have major reservations about is the increase to first-home buyers grants in this type of environment.

  151. John McPhilbin – If I understand you correctly, your worried that because the Gov encouraged people to buy first homes they may end up stuck in a trap. If that is what your saying then I agree to a point. It’s certainly a risky time to be embarking on major investments when you have little wiggle room and are quite exposed to further downturns in personal finances (ie: your fairly poor, just bought your first home and maybe you’ll get fired soon)

    That’s a worry to be sure, but I think its also reasonable for Governments to do all they can to encourage people to by new homes (with all the employment stuff that comes with building them ) and get them into home ownership with all that comes with that if they don’t bugger it up.

    The concern is the one’s that simply wont be able to make the payments and get foreclosed, that indeed is a worry. However they don’t make up a very large percentage overall

    Therefore I conclude the Gov was right to push it

  152. The government announced an unprecedented spending spree on Tuesday, it wasn’t passed into law by Saturday, and now we’re ‘stuck here in this morass of ideological bickering’????

    Come on guys, it’s called ‘parliamentary democracy’, or is everyone wedded now to the idea of dictatorship by the executive government, according to the model much favoured by the late unlamented John Howard? Let’s have some perspective here, or are we doomed to have a blogosphere of frenzied partisan hyperbole forever? Just because it suits Rudd to screech that this is the greatest emergency in the history of the world doesn’t make it true.

  153. Yes Ken, that’s why I for one am not particularly worried about the whole thing. I’m certain it will pass more or less intact (as it should, Rudd one the election) and I don’t really care if the Opp and the others stall it for a few days.

    If the minors block it completely(they wont) then that is democracy at work, our system has nice democratic ways of dealing with that too 😀

  154. The Only Ones, on February 7th, 2009 at 8:17 pm Said:

    “That’s a worry to be sure, but I think its also reasonable for Governments to do all they can to encourage people to by new homes (with all the employment stuff that comes with building them ) and get them into home ownership with all that comes with that if they don’t bugger it up.

    The concern is the one’s that simply wont be able to make the payments and get foreclosed, that indeed is a worry. However they don’t make up a very large percentage overall”

    Here’s my concern in a larger context

    Recent falls in housing prices aside, Australia still has some of the most expensive property in the world, relative to incomes, according to the Demographia International Housing Affordability Survey.

    It says the median Australian house price is 6.3 times median household income, higher than the US, Canada, New Zealand, Ireland and Britain. A median Sydney property will cost nine times the average Sydney income.

    Australia also has more debt per household than the US, with Australians owing 177 per cent of household income in mortgage and other debts compared to 138 per cent in the US.

    This is coupled with the fact Australians save an average of 0.5 per cent of their income compared to 2.6 per cent in the US.”

  155. Lol Ken and The Only One’s – It’s all a bit of a laugh. I agree with your comments. I just cannot take to Turnbull and savour every time he gets crunched!

  156. It is a worry John, but whats a Government to do?

  157. The Only Ones

    Here’s another example of why I’m concerned – It’s also likely to delay the inevitable burst of the unaffordability bubble (in terms of prices and rent)

    Seriously Unaffordable
    https://blogocrats.wordpress.com/2009/01/27/seriously-unaffordable-housing/

  158. The Only Ones, on February 7th, 2009 at 8:40 pm Said:

    It is a worry John, but whats a Government to do?

    Housing aside, I think the Rudd Government are doing the very best they can do under these extreme circumstances.

  159. Well, the whole thing will probably just turn out to be a CONJOB anyway.

    Seems the Yanks who were expecting help to maintain & improve schools & education in general have just been screwed over so Limbaugh world can get its tax cuts & more defence spending.

    Many on the Left are nought but a bunch of Corporate ar*e lickers these days.

    And Fielding’s probably just using stalling tactics to assist the stuffing up of the package.

    Let’s hope that the Labor Party don’t turn out to be the wankers that many of the Dems are:

    Friday, Feb. 06, 2009
    Bipartisan centrists’ compromise clears stimulus plan for Senate passage
    By DAVID LIGHTMAN AND WILLIAM DOUGLAS – McClatchy Newspapers

    Led by Sen. Ben Nelson, D-Neb., the centrists joined with two like-minded Republicans – Sens. Susan Collins of Maine and Arlen Specter of Pennsylvania – and produced a package that, according to senators, cuts $19.5 billion slated for school and higher education construction and half of a $79 billion fund to help states with education spending.

    Also trimmed were dozens of other programs, including Superfund, Head Start and Early Start, energy loan guarantees and historic preservation.

    The plan would retain some key features from the Senate Democrats’ bill. It would spend $45.5 billion on infrastructure, including highway projects; help fund water and sewer projects; provide $87 billion to states for help with Medicaid; and give a $70 billion break from the Alternative Minimum Tax, according to Sen. Collins, R-Maine.

    The compromise “cuts away many projects that are worthwhile projects but do not belong in a stimulus package,” she said, “because they have nothing to do with turning our economy around and creating and saving jobs.”

    Democrats who backed the original bill explained that while they disliked the changes, they had little choice.

    “I come from a state that has to build a school a week to stay even. But I also come from a state with more people unemployed than some states have population,” said Sen. Dianne Feinstein, D-Calif.
    —————

    Yea RIGHT.

    N’

  160. John

    Me too, but what do you think they should do on the housing front. This is an honest question, I can see value in your previous point, I just can’t see what else the Gov could do

  161. I can see value in your previous point

    I can see value in your point (sorry, don’t know where that PREVIOUS came from) 😉

  162. Are you AGAP posting under a new name?

  163. Spot on Ken, this has turned into ideological arguments across the blogosphere and MSM without referring to the democracy of it.

    It’s our system and though not perfect is pretty damn good in most instances, except where a party wins both houses (Kennett & Howard just two) when dictatorial like power just cannot be resisted. Fraser was the exception but it must be noted that a young Howard was urging Fraser to become dictatorial way back then.

    Being held up to the “Keep the Bastards Honest” party, Greens environmental and social wants or a religious Tasmanian with deep seated views is just par for the course and something government have to work around. Good governments can negotiate the bulk of what they want whilst keeping the minors relatively happy, the polls reasonable (or endearing a temporary glitch) and sticking it to the opposition. Good oppositions can get some of their agenda instigated or make their position well known to gain in the polls whilst sticking it to the government, and ideally stopping the government from implementing blatantly bad policy without including some safeguards.

    I believe in that last item of the opposition are failing on every front.

  164. John, I see you are reflecting on our household debt. Yet the solution is more debt?

  165. Yes Scaper, I explained that days ago in comments. There were some problems with getting my new email working which Joni and I had a number of discussions about . There’s no sock-puppetry here scaper if that’s what your after,

    Further it’s not that hard to work out, The Only One’s wrote/sang the song Another Girl Another Planet, that’s why I choose it even though I don’t like it as much as the last one

  166. Oh dear, given the time lapse, in a way I’m hoping John McPhilbin has simply step out for dinner, otherwise I fear I’m about to get hit with a lot of reading material . lol 😉

  167. Tom of Melbourne, on February 7th, 2009 at 8:55 pm Said:

    John, I see you are reflecting on our household debt. Yet the solution is more debt?

    First-homebuyers grants are encouraging people into a market that has inflated prices and rents (the high rents are no doubt partly due to investors with multiple mortgage commitments who have to increase rents in order to avoid defaulting). The solution is not more debt, which I’m sure you’re hinting at, and some of that debt will be attributed to unsustainable housing prices and when they do fall we may just have more homeowners carrying more debt than what there homes are worth.

    Households are overburdened with debt and now is the time government need to start taking up the task of helping people remain solvent by trying to maintain steady employment levels so people can continue paying down their debt.

    A better alternative at present would be for government to start developing affordable housing projects (which would generate rental returns for them anyway) and perhaps at some later date giving occupants the option to buy under more affordable circumstances.

    The Only Ones, on February 7th, 2009 at 9:20 pm Said:

    Oh dear, given the time lapse, in a way I’m hoping John McPhilbin has simply step out for dinner, otherwise I fear I’m about to get hit with a lot of reading material . lol 😉

    Cheeky bugger!

  168. TomM

    Ah, yes, it is more debt, but this time, it is being taken away from individuals and being foistered back onto the government.

    And The Pendulum Swings.

  169. John, I don’t think government funded housing projects have a history of success. I recall that research suggests that a rental subsidy is better.

    Cities are littered with poorly maintained public housing, which concentrates disadvantage.

    I’m not familiar with a single successful (long term) public housing project. Are you able to reference one?

    I think the level of debt arising from this package is excessive, it is poorly targeted, and it is outrageous that the government is herding the parliament in this manner.

  170. Tom government housing is no longer built in projects or clusters and as far as I know and hasn’t been for a while. The houses are scattered amongst the suburbs of that demographic and built to the standard and appearance of where they are located so as not to bring other house prices down.

    You love this poorly targeted mantra Tom but apart from one small part for pensioners, who are being studied for a complete reform anyway, there is little else anyone has offered except to not put in any stimulus (not go into debt which we will anyway) and tax cuts.

    The infrastructure needs to be built, school buildings need to be fixed and much of the other things in the package need to be done anyway because of over a decade of neglect in these areas. We can do them now as part of a stimulus in hard times or pay much much more at some future time when governments will be procrastinating and most likely slashing spending.

  171. Adrian, so you think that giving most taxpayers $950 cash is a better stimulus than housing maintenance for pensioners, with a better public benefit?

    Pensioners should just hang on for a bit longer, because the government will bail them out with a review?? The middle income earners deserve cash more and NOW, because they’ve had interest rate reductions and cheaper fuel.

    You really need to do better than that.

    The handouts are politically motivated, and these funds could be better targeted, as I’ve suggested.

    I’ve said several times I support investing in infrastructure, rather than tax cuts. It is entirely inaccurate of you to suggest that I haven’t indicated this support. Though I’m concerned about throwing so much at it in one hit.

  172. “Tom of Melbourne, on February 7th, 2009 at 9:50 pm Said:

    John, I don’t think government funded housing projects have a history of success. I recall that research suggests that a rental subsidy is better.

    Cities are littered with poorly maintained public housing, which concentrates disadvantage. ”

    ABSOLUTELY AGREE! I lean more to an investment in the land developments and housing not for the sole purpose of concentrating those of lower income/ welfare disadvantaged. That social experiment failed big time.

    With have a severe shortage of housing which needs to be addressed and the emphasise needs to be placed on a growing population. Rental subsidies are fine, however, a mix of various income groups with either the option to first rent and then later buy seems like a way forward.

    As it is, housing is largely unnaffordable and we can’t expect wages to increase to meet higher prices and rental demands.

    The housing bubble is yet to really burst, in my opinion, but unlike the US who have an overabundance of housing, we have a distinct shortage.

  173. “Tom of Melbourne, on February 7th, 2009 at 9:50 pm Said:

    John, I don’t think government funded housing projects have a history of success. I recall that research suggests that a rental subsidy is better.

    Cities are littered with poorly maintained public housing, which concentrates disadvantage. ”

    ABSOLUTELY AGREE! I lean more to an investment in the land developments and housing not for the sole purpose of concentrating those of lower income/ welfare disadvantaged. That social experiment failed big time.

    With have a severe shortage of housing which needs to be addressed and the emphasise needs to be placed on a growing population. Rental subsidies are fine, however, a mix of various income groups with either the option to first rent and then later buy seems like a way forward.

    As it is, housing is largely unnaffordable and we can’t expect wages to increase to meet higher prices and rental demands.

    The housing bubble is yet to really burst, in my opinion, but unlike the US who have an overabundance of housing, we have a distinct shortage.

    As far as referencing one, I can’t, I’m simply putting forward the need for increased housing without putting any more excess burden on a heavily indebted population in the current climate where housing prices and rents have been excessive and in the midst of a housing shortage.

    Lets allow for housing and rents to fall to more sustainable levels rather than encourage them to remain at largely unnaffordable levels.

    Another idea: how can lenders assist those heavily in debt by changing their lending terms to better suit adverse conditions?

  174. OOPs, double posted with an extension – my PC’s playing tricks.

  175. You know what would help the economy? If guys like McPhilbin who spend all their time on blogs like this hardened the f**k up and spent a bit more time looking for a job! That would be one less welfare payment that us workers have to cover !!

  176. Tom

    As an immigrant form the UK I spent much of my childhood growing up on a housing estate throughout the 1970’s. I know first hand the problems associated with a large concentration of people on welfare.

  177. Still at it Mac? You’ll love this. Ouch! Bad timing

    Revealed: Malcolm in middle of US donation controversy
    http://www.smh.com.au/news/national/revealed-malcolm-in-middle-of-us-donation-controversy/2009/02/07/1233423564286.html
    MALCOLM TURNBULL has taken a large campaign donation from an American billionaire closely linked to the predatory lending practices that triggered the subprime lending crisis in the United States and global recession.

    An investigation by The Sun-Herald revealed that Peter Briger, chairman and director of controversial “vulture company” Fortress Investment Group, contributed $US50,000 ($76,000) to the Liberal campaign fund for the Opposition Leader’s Sydney seat of Wentworth last year.

    Mr Turnbull previously held shares in Fortress, but offloaded them in 2007, just after US presidential hopeful John Edwards was forced to distance himself from the firm following controversy over its practices and foreclosures on victims of Hurricane Katrina in New Orleans.

  178. I’m going to step back for a bit, and acknowledge that most of these actions are being co-ordinated internationally to some greater or lesser extent via the Central Banks of the G-20. To say that the RBA was merely advised of Government’s intentions is a disingenuous account when central banks and finance ministers (and treasuries) have been working hand-in-hand since last October as partisan-political allies as a matter of necessity.

    The patient has had a heart-attack, the patient has been given a shot of adrenaline, the paddles have been charging, and now the patient is about to get a shock from a defibrillator poly-located all over the world, to get circulation happening again. Australia’s contribution is but a component in a wider agenda. The question remains whether that total package will be enough; whether there is enough juice in the paddles. I don’t know because I haven’t totalled it all up.

    On why there is no grand infrastructural gesture…because the thing is designed to be “geographically diffuse”, so that the money goes to people and communities and not the other way round…social dislocation and internal economic refugees have never been a fun part of severe and protracted economic contractions/corrections, and the idea seems to be that by putting Government ATMs into communities they act like capillaries for localised velocities of moneys and employment. On the infrastructure that is slated, it’s a way of disguising the red cordial; putting money into communities in ways which don’t look like Ben Bernanke dropping wads off cash out of a helicopter, and in which persons-as-voters can rationalise as having some tangible utility.

    I’ve already adverted to the implied opportunity costs of substituting Government’s preferred utilities for existing utilities and exigent utilities; I’m not sure that Government has an accurate meter on which sectoral components need what in a shock environment, nor that the coarse, headline numbers are any indication of what opportunities are foregone in terms of private infrastructural maintenance, or mitigation, or the sheer need for deflations within presently unsustainable sub-systems.

    On tax cuts (and the implied future tax hike to pay off government debt), I am tired of the ideological hysteria. Tax and tax mixes are tools that can achieve many things fiscally and are not the exclusive domain of the rich, nor for enriching the rich, nor of the Liberal Party…ceding a conceptual locus of control over the entire domain of taxation, whether that’s cuts or rises or changes in the mix, to the Opposition is foolhardy at best, imho.

  179. Tom of Melbourne, on February 7th, 2009 at 10:21 pm Said:

    Adrian, so you think that giving most taxpayers $950 cash is a better stimulus than housing maintenance for pensioners, with a better public benefit?

    Talk about misreading what I said, and I agreed with your idea for pensioners several times.

    The handouts are only one part (the part I like the least) but you overlook the largest part which is infrastructure spending and the next part which is to help small businesses. Are you saying these are misguided, and so we don’t go into debt they should be abandoned, meaning a whole lot more businesses will go under and long neglected infrastructure around the country will continue to crumble?

    The foisting of debt onto the next generation is raised by the opponents to this, but do they want to lumber the fixing of our crumbling infrastructure onto the next generation, which will most likely cost far more than paying off the stimulus debt?

    As to the pensioners, as I stated I agree with your idea but I also quoted what one of the heads of the leading pensioner groups said. Have you noticed that unlike before Christmas pensioner groups and advocates have been almost completely silent, and this is one of the most organised and vocal groups in the country?

    As that spokesman said, and that’s what I am going on, most pensioners are surviving fairly well at the moment in no small part due to the handouts given last year. If they weren’t don’t you think the most vocal group in Australia wouldn’t be across the media on where’s their help in this stimulus package? That silence is a very telling thing and says more than I ever could.

  180. Furthermore here is the very brief breakdown of the package as stated by Rudd’s official media release;

    Key measures funded by today’s Nation Building and Jobs Plan include:

    * Free ceiling insulation for around 2.7 million Australian homes
    * Build or upgrade a building in every one of Australia’s 9,540 schools
    * Build more than 20,000 new social and defence homes
    * $950 one off cash payments to eligible families, single workers, students, drought effected farmers and others
    * A temporary business investment tax break for small and general businesses buying eligible assets
    * Significantly increase funding for local community infrastructure and local road projects

    Now without looking into the nitty gritty of the policy and just going on that opening bit from the release look at the difference between the way you paint the $950 cash handout;

    …giving most taxpayers $950 cash

    and where the handout is going to;

    …eligible families, single workers, students, drought effected farmers and others

    , when broken down comes to;

    The five one off cash bonuses includes in today’s plan are the:

    * Tax Bonus for Working Australians of up to $950 paid to every eligible Australian worker earning $100,000 or less. This will support up to 8.7 million individuals.
    * $950 Single Income Family Bonus to support 1.5 million families with one main income earner.
    * $950 Farmers’ Hardship Bonus paid to around 21,500 drought affected farmers and farm dependent small business owners receiving exceptional circumstances related income support.
    * $950 per child Back to School Bonus to support 2.8 million children from low- and middle-income families.
    * $950 Training and Learning Bonus paid to students and people outside of the workforce returning to study to help with the costs of education and training.

    I gather you are saying that none of those five groups needs any assistance at this time or is worthy?

    And there is again displayed is Rudd’s long term planning instead of short term political gain (as you are averring) in the Training and Learning Bonus, as he uses this to begin his quest to undumb the nation that Howard dumbed down.

  181. to begin his quest to undumb the nation that Howard dumbed down

    Howard knew how to engineer a conservative voteforce.

  182. I have been following this thread and I think the quality of the comments has been amazing – a lot of positive thoughts.

    Well done everyone.

  183. Top ‘o the mornin’ to ya al!

    For Queenslanders (on real time) my favourite comedy show is about to return on ABC…Insiders @ 9:00 am …

    …followed by my favourite financial commentator Alan Kohler @ 10:00 am…

    JMC – “Don’t feed the trolls!” 😀

  184. I just turned on the TV

    That remark about “comedy” was in poor taste considering the content at the moment…

    …obviously quite unintended…

    …apologies to anyone in the Southern States who have suffered any loss in the fires…

    😦

  185. Today it is paperwork for me…the BAS has to be started and I’ve been working on the next phase of GSC…time to make my move.

    I remember someone here alluding that I work for the Murdoch press…we’ll see who works for whom…LOL!

  186. TB… I am at work and so will miss Insiders. Who is the “loner” in the single seat this week?

    And on the loss of life and property in the fires, I think that all our thoughts go out to those affected.

  187. “I have been following this thread and I think the quality of the comments has been amazing – a lot of positive thoughts.

    Well done everyone.” (joni).

    Too right joni. You’ll notice that I haven’t contributed – the intellect displayed is far too great for me to even try to keep up with.

    But they do say that a man learns more by keeping his mouth shut and his ears open. My ears have been well and truly open.

  188. Miglo

    Same here – out of my depth.

  189. Adrian, the principal purpose of this package is to stimulate the economy. The secondary (but important) objective is to have a beneficial social impact.

    Providing a cash handout (what’s the report on the cost? about $8bn?) is misdirected. It is not targeted to be anything other than a general stimulus, and providing that (HUGE) amount to a more focussed employment creating program is better use of our money.

    The problem with giving a general handout is that we cannot accurately measure the impact on jobs. Providing the money as a maintenance or service voucher will have the means that the direct employment impact can be measured. You know, $8bn/$50/hr= x hours of work = EFT employment of y less cost of materials etc, quite basic. Indirect jobs created can also be quantified. We know what we get for our money, and some disadvantaged groups will get a better quality of life.

    Handing out $950, how many jobs do we get for our $8bn??

    I think this type of proposal would have been put by the government by clever advisors, but it would have been rejected on political grounds. The government would have been nervous about being labelled “socialist control freaks” or something like that by the opposition. They were politically driven, rather than being driven by good policy.

    Similarly with the home insulation package, a one size fits all approach. Easy politics, rather than good policy. Victoria needs water infrastructure more than insulation. The expenditure of $4bn (?) on this is poorly directed. The spend should have been directed on a regional basis, but this leads to political squabbles.

    So politics again gets in the way of good policy and effective expenditure or our money.

  190. Migs and Joni, do not sell yourselves short please. You’ve both got a very practical and down to earth style which I respect immensely.

    Sure there appears to be a lot of complexity around the subject and that’s simply because most people are confused and trying to fathom an issue that has no real easy answers.

    When I get a little bamboozled I go into question mode, rather than trying to offer up answers to something for the sake of offering something. And truthfully, I often get stumped on things that at first appear easy to understand yet turn into a nightmare when multiple elements are introduced.

  191. Shit Legion! As funny as it may sound your comments make real sense. A coordinated approach, emergency measures, an attempt to first stabilise the system from a broader viewpoint all come to mind.

    Obviously the $42billion is the opening phase of government action that will lead to further actions as the system responds favourably or unfavourably perhaps?.

  192. I’ve also got to say that the comments and view expressed so far are a real goldmine of legitimate opinions, concerns mixed with various facts.

    Agree or disagree, understand or don’t quite understand, or simply clueless, in the end the process of attempting to clarify opinions around a subject that affects us all is priceless I think.

    Keep hammering away I say!

  193. TB

    lol JMC – “Don’t feed the trolls!” 😀

    Can’t help himself!

  194. “Obviously the $42billion is the opening phase of government action that will lead to further actions as the system responds favourably or unfavourably perhaps?.”

    John, the problem I foresee is that if this package is ineffective in attaining the desired result there will not be any more $42 billions to put on the table…this could be the only roll of the dice as all bets have been placed!

    Would you place all your chips on one roll???

  195. I don’t thin anyone should underestimate just how bad this crisis will get here. More extremely bad news!

    Recession bites Japan
    http://www.news.com.au/dailytelegraph/story/0,22049,25020489-5014099,00.html
    THE global crisis is piling pressure on Australia’s biggest trading partners, spelling trouble for the domestic economy and particularly our resources sector.

    Japan, our second-biggest trading parter after China, is falling into a vicious recession which is spiralling downhill even faster than that in the US.

  196. John Mac @ 10:41.

    Thanks John. That was very kind of you.

    Truth is, after 2 degrees and 10 years of high level policy development in the public service I just like to chill out in my spare time . . . now that I get some. Hence my dearth of intellectual contribution. I’m too busy chilling out.

    I do like getting involved in discussions on Indigenous issues though, it being one of the few topics I believe that I am able to contribute effectively.

    Somebody should test me one day.

  197. Scaper

    “John, the problem I foresee is that if this package is ineffective in attaining the desired result there will not be any more $42 billions to put on the table…this could be the only roll of the dice as all bets have been placed!

    Would you place all your chips on one roll???”

    Mat’s just mentioned Japan and that’s a real concern. How would you proceed if you had the option of allocating $42 billion under current circumstances Scaper?

  198. Miglo, I’ve contributed and read many threads on the Aboriginal issue but have yet to see a workable solution to the problem.

    If you have any ideas then we could discuss this on the weekend thread.

  199. Good on you Migs, hence the reason to respect your opinion or questions even more when you do feel the urge. You’ve not once struck me as someone who views themselves as either above or below anyone.

    Chill out Migs, that’s an entitlement you deserve.

    Joni and reb note: Migs on indigenous issues? Excellent source for future discussions I’m sure.

  200. John, the problem I foresee is that if this package is ineffective in attaining the desired result there will not be any more $42 billions to put on the table…this could be the only roll of the dice as all bets have been placed!

    Not at all. Part of this package involves an increase in the amount the government can borrow to $200 billion, up from $75 billion.:

    The worrying part about that is that the government thinks such further borrowings may be required. That is, they want more money available if this program doesn’t work. That, in itself, gives me no confidence that anybody in government or treasury is confident this will work:

    “Let’s throw $42 billion at the problem and see what happens. If it doesn’t work, we’ll be able to borrow even more money to try again, or do something else.”

  201. “Miglo, I’ve contributed and read many threads on the Aboriginal issue but have yet to see a workable solution to the problem.” (scaper).

    Scaper, that depends what the problem is, or whether it is even a problem in the first place.

    I moved on from Indigenous affairs because of the political football that Howard made of Aboriginal people. Where there was a problem, he’d sensationalise it. Where there was no problem, he’d create one.

    I do shy away from talk on the NT intevention because it has been hacked to death, and I’m sick of hearing the opinions of people who lack any indepth knowledge of it. My forte is in Aboriginal customs and history, and racism.

    As much as I look forward to a big meaty blog on the subject, I must decline today as it is Jedda’s birthday and she has many hours of slavery planned for me.

  202. “As much as I look forward to a big meaty blog on the subject, I must decline today as it is Jedda’s birthday and she has many hours of slavery planned for me.”

    Migs, Too hot today for starters (wink) I’m going for a dip. I’d look forward though to anything you have to offer on the subject in the future.

  203. Thanks Tony, and the package (along with future packages) is complex and I simply cannot believe that the Rudd Government have being throwing darts.

    I do, on the other hand, understand Scaper’s concerns but these are extraordinary times we live in.

  204. John, for starters I would not proceed with the handouts or this free insulation either.

    I would proceed with the rest of the package though but add hospitals to the agenda.

    I would reserve the rest of the money to assist when we are genuinely in recession to assist in the bounce.

  205. I’m seeing a lot of thought and consideration. Phase 1, I tend to agree. Lets see what shakes out!

    Who gets what from the package?
    http://www.news.com.au/dailytelegraph/story/0,22049,25013672-5018705,00.html
    CUT through the confusion with our complete guide to who’s entitled to what under the Federal Government’s $42 billion stimulus package.

    And for the latest news – including the states’ agreement to the schools deal – click here.

    Public Defender’s blog: What happened when we called the “hotline”

    $950 Single Income Family Bonus

    Am I eligible?

    If you already receive Family Tax Benefit Part B. Payments are per family not per child.

    When do I get it? March 11 to 20.

    $950 Back to School Bonus

    Am I eligible?

    If you already receive Family Tax Benefit Part A. The bonus is paid per child, so a family with three children will get $2850.

    Payable between March 11 and 20.

    Farmers Hardship Bonus

    Am I eligible?

    If you already receive one of the following payments: Exceptional Circumstances Relief Payment, Transitional Income Support, Interim Income Support (small business and farmers) or Farm Help Income Support.

    When do I get it? Between March 24 and April 6.

    Training and Learning Bonus

    Am I eligible?

    If you already receive one of the following payments: Youth Allowance (Students and Australian Apprentices), Austudy, Abstudy Living Allowance, Sickness Allowance, Special Benefit (excluding people of pension age who received the December bonus payment), recipients of Family Tax Benefit Part A with a child aged 21-24 years who is a full-time student, recipients of the Education Entry Payment Temporary Supplement.

    When do I get it?

    Between March 24 and April 6.

    Tax bonus payment (of up to $950)

    Am I eligible?

    You receive the full amount if your income after deductions is under $80,000, $650 if $80,000 to $90,000 and $300 if $90,000 to $100,000.

    When do I get it? Early April.

  206. Scaper

    “I would proceed with the rest of the package though but add hospitals to the agenda.”

    I really can’t disagree. Perhaps health will be considered a little down the line, I know schools are in for a major boost.

    I tend to agree with Gittin’s

    Stimulus is Three T’s and sympathy
    http://business.smh.com.au/business/stimulus-is-three-ts-and-sympathy-20090206-801i.html?page=-1

    In preparing this week’s package, the Government has sought to comply with the Three-Ts rule of fiscal stimulus: measures should be timely, targeted and temporary.

  207. I know that the opposition keeps harping on that the tax cuts should be brought forward, but doesn’t that present a problem on many levels?

    – How can income tax changes be brought in part way through a financial year? Imagine the complexities for companies in calculating the correct rate?

    – What would the cost be to business to implement mid-year tax changes?

    – Imgagine the complexities for the ATO in implementing these changes?

    And so – isn’t the best way to get the reductions into the economy with the least amount of pain is through the one-off payments?

    I have been chatting to some mates over the last few days, and all of us miss out on any of the bonuses, but all of them have said that it is best for the money to go to people who really need it – that is, the low income and families with children.

    And scaper – I agree – hospitals should be getting more.

    And what about carers? They should be getting some money too.

  208. Tom of Melbourne, on February 8th, 2009 at 10:12 am

    Victoria needs this, NSW needs heaps more, Queensland needs that, SA needs the lower Murray fixed, WA needs more reliable water, Tassie needs large environment remediation, NT needs growth and Canberra needs all the hot air released, plus so much more that it all adds up to way more than any handout could cover. There has to be a one size fits all that can be quickly implemented for an emergency stimulus otherwise it won’t work at all.

    Some of the $950 handout puts money into retail which is a large employer.

    ———————–
    For all those canning this as being too much and poorly targeted always adding “what happens if it fails?”, I ask what if the government is frugal, doesn’t spend more than it has, carefully and deliberately works out all projects and policy actions, and then that fails because an immediate stimulus was needed 12 months earlier and now it’s too late?

    What if the opposition gets its way and that policy fails?

    Tell us just what is the right action and policy that is certain not to fail?

    You can play this “what if” forever on everything, and then nothing is more certain that if the government was frugal and careful and it all goes to shit in 9 to 12 months the RWDBs and other anti-government commentators would be severely chastising Rudd for not doing anything and/or not enough earlier.

  209. joni, on February 8th, 2009 at 11:34 am Said:

    I know that the opposition keeps harping on that the tax cuts should be brought forward, but doesn’t that present a problem on many levels?

    Absolutely. Quick, simple, and targeted! Tax cuts don’t meet the criteria at this stage simply because of their complex administrative requirements.

  210. joni, carers got a handout in the last pensioners package. It may not be enough now and they may have gone backwards since then but I have not heard anything from their lobby groups yet.

    But with all these in need groups, just where do you start and where do you end, who do you include and who do you exclude?

  211. joni, re Insiders – just another Libera media tart, Glenn Milne 😀

  212. Just me and as everyone knows, I am way off being an economics person however, to me a sudden $950 payout will help to retain jobs and homes in the short-term until other projects can be up and running. Was thinking that many people these days rely on the wife working in order to meet house payments and that a good portion of women work in retail.

  213. “who do you include and who do you exclude?” (Adrian).

    Adrian, it always amuses me that the excluded ones scream blue murder at the thought of some less fortunate person being assisted withTHEIR taxes, while they get zilch, purely because, they earn much more.

    As a nation are we now that selfish that we find the thought of helping someone in need a most appalling gesture?

  214. Mat Forstat, on February 8th, 2009 at 11:25 am

    Mat,

    Those replies seem to limit the handout quite a bit…

    =====================================

    I noticed (personal interest) that Julia Gillard deliberately avoided the first part of Barry Cassidy’s question – “…what about self funded retirees…and those already unemployed…”

    I’m trying to come up with some smart arse alternative for SFR’s (Sweet F#@K ????)

  215. “Min, on February 8th, 2009 at 11:52 am ”

    I reacall reading earlier in the blog someone asking ‘how many jobs do we get for the $950 handouts’.

    This appeared to imply that they wanted to see a defintive return of X number of jobs created per dolloar. But I think this money is more to retain jobs, not create them. We are in for massive job losses, and trying to minimise this is part of the game. The more saved, the less that are needed to be created.

    And I do not see this as being the last package eaither. The news just keeps getting worse from overseas, which is why Labor are looking to extend the debt capacity to $200 billion. It is the only responsible thing to do. If you knew you were coming into real hard times, and that pehaps extending the credit card might tide you through, would you not take it.

    The libs have been behind this for years on a personal level, but baulk at the government doing similar. They told us that debt was a sign of prosperity even? This does not mean that the government will use the option, but the option is there, as nobody knows what is around the corner.

  216. Thank you Tom R, you say it so much better than I do.

    Re insulation: the product is already available, helps with immediate employment (rather than years of retraining), cuts power bills, assists the elderly/lower income families who would not normally be able to afford insulation in older homes.

  217. Min, on February 8th, 2009 at 12:32 pm

    re: insulation

    …and it works, we spent $1200 and have never regretted it!

    The recycled newspaper, fire retardant and insect repellant – I personally tested fire resistance with my blowtorch – amazing stuff! 😈

    Installed in half a day!

    I’m not in favour of the $950 handout – could be better spent on say health & hospitals ( I think, scaper suggested earlier)

  218. TB, am inclined to agree. Goodness knows I saw the effects of years and years of neglect, of a system run down to the bone when my father passed away 11 months ago. For example, 2 nurses on the floor at the hospice when 2 were needed just to lift a patient, and so bad luck if there was an emergency re a different patient.

    My however is, however a one-of is better than Turnbull’s taxcuts.

    And re insulation, I used to work for Australian Gypsum.

  219. I think the insulation is a stupid idea!

    Lets ride out the recession on the back of the mighty insulation industry…LOL!

    No prizes for the person that thought up that idea.

  220. Just watching Landline and the wool industry is ready to roll out tons of lower class wool for insulation. It has the double whammy of also helping farmers as well as the insulator installation companies (say that three times quickly).

    Listening to the spokesperson it seems a very good product with some superior attributes for insulation.

  221. Wool batts have been around for quite a while Adrian. An excellent product and a big help for farmers having to offload livestock during this dreadful drought..at least they get some money back. That is, as long as they can find shearers and the fleece isn’t too thin.

  222. scaper…, on February 8th, 2009 at 1:21 pm

    So from Adrian says, we are gpoing to ride it out on the back of a Sheep

    Who could have seen that happening.

    Hang on, perhaps they did think about it

  223. I think insulation is a good idea because:

    It can use recycled products.

    It keeps small to medium businesses operating.

    The business employs people who do need a lot of training (eg kids who don’t want to go to college) or people just out of work.

    It can be easily applied throughout the country…country towns to cities.

    The businesses are already operating.

    It will have an immediate impact on greenhouse gases (less heating and/or airconditioning).

    They use trucks and compressors that need servicing fuel, tyres etc.

    Insulation products require no maintenance – once its in you can virtually forget it – no ongoing costs for people who can’t afford it.

    It will make the lives of some people happier.

    …and it should be applied into schools as well…

    Now, scaper, why is it a “stupid idea”…

  224. typo “…who do NOT need a lot of training…”

  225. More like the taxpayer’s back to prop up a miniscule industry!

    I suppose we have to cater to Mr Original’s whim.

  226. Here we go, bad debt charges are really starting to mount.

    Bad loans reach an 18-year high
    http://business.smh.com.au/business/bad-loans-reach-an-18year-high-20090206-800y.html
    THE nation’s biggest banks have warned shockwaves are spreading into most reaches of the economy more quickly than expected and lenders such as National Australia Bank are facing a bad debt charge in excess of $3 billion if losses continue at the current rate.

    The lending giant and ANZ have added to the slew of bad news this week from the banking sector, which is grappling with the highest level of bad loans since the 1991 recession, slowing lending growth and an increase in funding costs.

    “The economic outlook is clearly not getting any better and we face a challenging market environment. The future is very uncertain,” said NAB’s chief executive officer, Cameron Clyne.

  227. Scaper..insulation is used throughout industry as well, eg tanks and vessels. Examples of this ‘miniscule’ industry are Bradfords and Boral, this is aside from retailers and numerous small businesses.

  228. Adrian & Tom R, retail is a large employer, obviously. But stimulating industries such as retail is a very inefficient way to get economic activity that creates jobs.

    Services, such as home maintenance, are labour intensive. The people that are engaged in services will spend their money in exactly the same pattern as everyone else, but jobs will be directly caused. Under the government program the initial round of government spending will not be on plasma TVs etc, whare most of the benefit accrues outside Australia.

    By spending the $8bn on stimulating the service sector, the government could generate tens of thousands of jobs directly, each person then spending in with reasonable confidence in retail etc, buying their plasma TVs and propping up the retail sector. The government MUST try to get more bang for our buck.

    I think you both seek to defend the position of the government, without adequate rationale. The decision on a handout is simply an easy one politically. The decision on insulation is expedient. Both are less than optimum, but you excuse the inefficiency.

    They need more encouragement to try harder, not encouragement to come up with more political slogans, opposition blame and excuses.

  229. TB, if I was going to put money into one of these so called green initiatives I would have gone for solar as this industry has a more sustainable future than batts!

    Oh, that’s right…the government pretty well put a blowtorch to that industry already…and the PM can not go back on that because he would be considered weak, judging by some comments here lately!

  230. John McP

    I remember just two weeks ago and even now if you listen to real estate agants talk all this down so much.

    The point is if you question them over there thoughts you get more then you bargined for with 400 words spoken a second to fill in the gaps of crap they left open.

    Thank goodness i have some off you lot to turn too for good honest opinions and ideas on the matter, The one thing we all have in common is we want the best for our country and its residents.

  231. Scaper your sounding a little angry buddy. Hope your not working your nuts off again.

  232. John, no sympathy for the banks in my household…the reporting season will justify why!

    http://www.theaustralian.news.com.au/business/story/0,28124,25018357-643,00.html

  233. TomM

    I will tell the government when I feel they are doing something stupid. I have not seen that with this package.

    I will however, when possible, point out faults in peoples accussations against what is being done. Much of what is presented is no better than what the government has on offer. In fact, the oppositions postion is laughable. They jhave no alternative, except bringin forward tax cuts. Apart from that, they are nothing more than obstructionist. There are arguments against the insulation and the payouts. These all have counter-arguments just as persuasive.

    At some stage, We need to say, OK, I do not believe in these proposals on an ideological ground, but in a factual sense, there is nothing wrong with them.

    Also, in regards to your point about retail, I guess you skimmed over my previous post where I highlighted that this portion of the stimulus was not to CREATE jobs, but to RETAIN them.

  234. The insulation idea seems to be a lot more tangible & practical (not forgetting that it’s only a facet of the much larger package) than certain other “ideas” which are regularly purported to be “just about to get off of the ground”.

    .pur⋅port⋅ed   /pərˈpɔrtɪd, -ˈpoʊr-/
    –adjective reputed or claimed; alleged: We saw no evidence of his purported wealth.

  235. Why stop there…lets put carpet on every floorboard in the nation and a curtain on every window too while we are at it!

    Got to support the carpet and curtain industry too.

  236. Aquanut

    “Thank goodness i have some off you lot to turn too for good honest opinions and ideas on the matter, The one thing we all have in common is we want the best for our country and its residents.”

    I agree Aqua, in fact, I was just recently thinking about why I enjoy coming here and it’s for similar reasons. I know my key motivation is education whether I’m imparting what I know or receiving what I don’t know and many things in between.

    Hence disagreements and opposing opinions don’t worry me in the slightest because somewhere along the line a ‘light bulb’ usually turns on.

  237. John McPhilbin, on February 8th, 2009 at 1:34 pm

    …here comes a bit more truth dribbling out, JMc

    …and I reckon, next cabs off the rank are the insurance companies (I think I might have mentioned that before 😉 ) …floods in the North, fires in the South…and have the insurance companies lost too much on the markets to pay up?

    I reckon once the insurance (reinsurance) companies come clean and the banks finally ‘fess up the dregs of their gorging…we might be able to start rebuilding the world…

    scaper, you didn’t dispute one of my reasons and I only need one, BTW!

    Will GSC need any government support (ie taxpayer monies) to work?

  238. Will GSC need any government support (ie taxpayer monies) to work?

    Cheap shot if I ever saw it…GSC won’t get off the ground for at least three years.

  239. Scaper

    At the time I posted the thread below questions were only just being asked about some significant liabilities that may yet bring the banking system undone.

    The $55 trillion question: Will this be the next disaster?
    Posted on October 14, 2008 by johnmcphilbin
    https://blogocrats.wordpress.com/2008/10/14/the-55-trillion-question-will-this-be-the-next-disaster/
    Yesterday we learned that our big banks ignored sub-prime troubles

    What I didn’t raise was another article by SMH’s Michael West exposing another major potential liability that banks face, that to date, has gone largely unnoticed. West writes:

    Australia’s Big Four banks are all exposed to the default of Lehman Brothers via credit default swaps (CDS) – a noxious bull-market derivative which threatens further contagion in the ailing global financial system.

    National Australia, ANZ, Westpac, Commonwealth Bank and the nation’s biggest insurer AMP are listed on the ISDA’s (International Swaps and Derivatives Association) Lehman Protocol. The five have written “adherence letters” to the ISDA asking the Association to act as their agent in settlement negotiations arising from the Lehman default.

    This Wednesday is the deadline for lodging settlement notices for CDS trades and October 20 is the date for settlement.

    Little known is the fact that the amount at stake in the credit default swap [CDS] market is actually greater than the world’s annual economic output.

    In fact, On the 30th of September, Fortune Magazine asked the question:

    The financial crisis has put a spotlight on the obscure world of credit default swaps [CDS] – which trade in a vast, unregulated market that most people haven’t heard of and even fewer understand. Will this be the next disaster?

    As Congress wrestles with another bailout bill to try to contain the financial contagion, there’s a potential killer bug out there whose next movement can’t be predicted: the Credit Default Swap.

    In just over a decade these privately traded derivatives contracts have ballooned from nothing into a $54.6 trillion market. CDS are the fastest-growing major type of financial derivatives. More important, they’ve played a critical role in the unfolding financial crisis. First, by ostensibly providing “insurance” on risky mortgage bonds, they encouraged and enabled reckless behavior during the housing bubble.

  240. “I reckon once the insurance (reinsurance) companies come clean and the banks finally ‘fess up the dregs of their gorging…we might be able to start rebuilding the world…”

    Shit TB!, there is so many potential liabilities floating around it makes my head spin. You’re right in my opinion, it could get much more nastier.

  241. Tom of Melbourne, on February 8th, 2009 at 1:44 pm Said:

    I think you both seek to defend the position of the government, without adequate rationale.

    I think you seek to attack the position of the government without adequate rationale to be honest, and I believe on ideological grounds rather than any real concern about how the money is being utilised in the package.

    We keep coming up with what we believe is rationale for Rudd’s package, and like insulation give the sources for the widespread benefit of doing this. You come up with some scatter gun alternatives (whilst accusing the government of being scatter gun) that also have downfalls and shortcomings.

    There are positives and negatives in all suggestions and these need to be weighed up against what the package is attempting to achieve in the timeframe it needs to achieve it. If you want to spend the next few weeks doing an analysis on all the requirements for implementing a wide scale home maintenance scheme listing the shortcomings, overheads and difficulties against the benefits and positive outcomes then go ahead. For me I have to take it that the government has looked at their proposals and gotten advice on then along with anything else that might have been raised and rejected (which we know nothing about) and have made the best decision they could in the circumstances.

    Take your home maintenance. It is a one off that only aids one sector. Some of it requires skills that are in short supply and it’s a lot harder and more complicated as well as more expensive to plan, implement, oversee (QA), inspect and follow up on. There are so many opportunities for shonkiness in an area that is already full of shonks that keep the so called current affairs programs at the top of the ratings.

    So how much of the $8 billion would be wasted in regulating that initiative?

    Whatever is implemented has to be simple, use existing resources without adding to government and be easily measured as to QA or not need to be measured for QA.

    So I have no problems with what the government have done in these areas with the exception of the idea of helping pensioners fix their places, but that comes back to the considerable complexity of doing this. Repairing hospitals might be easier as the faults would have already been well documented but we still have the problem of the complexity of implementing it and overseeing it for quality and safety.

    So what is the answer outside of what the government has proposed?

  242. “Cheap shot if I ever saw it”

    Talk it up! Every divergent opinion isn’t a cheapshot or sniping to moralise over.
    Drop the self aggrandising scaper-centric condescension & editorialising of what you see here as some sort of collective disagreement with your singularly inspired agenda & motivations.

    That you have above characterised yourself as “middle” is noteworthy in light of your almost hourly oscillations between extremes.

  243. Good points TB re: Glenn Milne (sickens me) & the importance of funding home “insulation”.

    As for the handout, I will receive nil even tho I have fck all income but i’m willing to miss out, as i’ve said before, if it leaves more money for health & education.

    But my wife is eligible…and she deserves it…she’s paid heaps of tax over the past decade & plenty like her got screwed over during the Howard/Costello years…paying more than their fair share of tax whilst “top end of towners” like Frank Lowy, Packer & many others used their influence & wealth to avoid paying appropriate taxes. My wife really needs to have the top of her car painted & that money will come in quite handy. And provide a job for someone.

    Don’t begrudge the HARD WORKERS this one chance to recoup some of the money that was ripped out of their hands by a Neo-Liberal govt that robbed the low & middle income workers to provide for THE FEW.

    N’

  244. And it seems I’m not the only one disappointed by the efforts of the Democratic Party in America…& outraged by the cuts that were made to the stimulus plan, including many billions for education & assisting the States to repair schools etc:

    ——————–
    The Conscience of a Liberal

    Paul Krugman (NY Times)
    February 7, 2009, 5:36 pm

    What the centrists have wrought

    I’m still working on the numbers, but I’ve gotten a fair number of requests for comment on the Senate version of the stimulus.

    The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.

    According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

    Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

    My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

    The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad.

    N’

  245. scaper…, on February 8th, 2009 at 2:14 pm

    Mate, many industries get a boost from the government from time to time – that’s all I was trying to point out…

    …why so agro with everyone?

  246. nasking, on February 8th, 2009 at 2:41 pm

    The focus is still on feathering their own nest(s)…N’

    …these turkeys (deliberate pun!) still live in their Ivory Towers in LaLa Land far above the madding crowd, have no responsibility and believe that they are the Chosen Ones destined to lead us all to the promised land of Ultra Capitalism (once again!)…and…

    …where we will all been reduced to serfs (once again!)…

    …and where they can feed on our children and children’s, children…

    …time to stop the merry go round…

    …we need a better system! The Robber barons need to go!

    ———————————————————–
    Prosperity With Integrity!

    (Should be writ large on every banking portal!)

  247. “…we need a better system! The Robber barons need to go!”

    too true TB…justice needs to be done.

    Here’s a rant that made alot of sense to me:

    http://www.smirkingchimp.com/thread/20163

    (All The Comforts of Home: Republicans Destroy, Democrats Serve Cookies, David Michael Green, Smirking Chimp, February 6, 2009)

    N’

  248. A rather sobering view on the economic downturn:

    (Two years recession, or ten years of hell?:
    US economy has been hollowed out over the last 15 years and debt load is staggering:
    interview w/ political economist F William Engdahl:
    The Real News Network, February 6, 2009)

    http://therealnews.com/t/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=3260

  249. nasking, thanks for both links (loved the smirking monkey!)

    Both sites now in my Favourites!

  250. That old buffoon Piers has an opinion on this and he doesn’t sound happy. I suggest he leaves the country or has another snort.
    http://www.news.com.au/story/0,27574,25020465-5007146,00.html

  251. Paul Krugman on the Senate “Centrists”

    Look at the graph and how scary it is.

    This is more on what the Republicans along with a handful of Democrats (calling themselves “Centrists”) have wrought on the US by forcing Obamas package to be more about permanent tax cuts to the rich whilst cutting key employment creating schemes to accommodate those tax cuts.

    Turnbull painting himself as a Centrist want to do the same here.

    The sheer greed of the right knows no bounds, and even in a financial crisis of their making because of their greed they want to be more greedy.

  252. You’re quite welcome TB. It’s good to promote the indie blogs & sites…we need diverse opinion & new ideas in this troubling times…

    I just watched the last Christmas episode of ‘Extras’…it was marvellously critical of the celebrity merry-go-round & the obsession w/ shallow things…and in the end promoted friendship & finding value in the little things in life, not taking your mates and freedom for granted…sorta like Dickens’ moving ‘A Christmas Carol’. Got me thinking about how truly selfish we can all be sometimes…led by ego-maniacs, sociopaths & psychopaths, and corporate mobsters…

    I imagined a picture of the elite mob standing outside parliament house, faces covered in frowns, eyes glaring, heads red like beetroot, mouths open in a captioned scream:

    “WHAT ABOUT ME?”

    And I’m finding it hard to get out of my mind the image of an old, grizzled, work & time-worn Chinese man w/ his head in his hands, a look of absolute despair and frustraion on his face as the talking head on the news informed viewers that 20 million migrants had lost their jobs in China.

    And the nagging anger when I think about American bankers & Wall Street thieves being shovelled money to keep up their lavish lifestyles whilst others are forced to beg for social security and are told they must not have more than 2000 dollars in assets to be eligible. And declare & repay any income over 25 bucks.

    WTF have we become.

    N’

  253. The sheer greed of the right knows no bounds, and even in a financial crisis of their making because of their greed they want to be more greedy.

    Why not make some more hysterical generalisations, Adrian? I’m sure someone here will buy them.

  254. When they illustrate it so spectacularly Tony they do the job for me.

  255. “Obama is going to cap executive pay at $500,000in response to burning public anger over Wall Street largesse.” according to the Adelaide advertiser’s New York correspondent.
    He plans to wind back perks and generous severence payments for financial firms putting the squeeze on Washington for financial help.
    Obama said that people are furious that executives are being rewarded very handsomely for failure, especially when it’s taxpayers money they’re pocketing.
    These buggers took home more than $28.23bn last year! But Wall Street is furious that the gravy train is being halted.
    Scott Talbot, senior VP of government at the Financial Services Roundtable, insisted that good talent was hard to find and feared the move would force top executives to quit.
    “So these numbers look large,” Mr Talbot said. “But the market value for these executives – there’s a very small talent pool of individuals that have the education, experience and knowledge to operate a global, international services firm in this day and age.
    “It’s being paid what you’re worth -would you be willing to work for far less than what you think you’re worth?”
    Last week, Citigroup, which pocketed a $77.8bn taxpayer handout, dumped plans to buy a $77.8m corporate jet and Bank Wells Fargo, which had it’s hand in the taxpayer’s pocket to the tune of $40bn, cancelled a Las Vegas casino junket for 40 workers.
    Obama is determined to take the air out of these golden parachutes.
    There is a lot more of this report, but for the life of me I haven’t been able to find a link to it.
    Apparently our news providers think it’s far more important for us to read about some moron who wants a really huge family subsidised by the long-suffering US taxpayers because she was mentally scarred by being an only child, than Obama’s plans to deal with these unrepentant freeloaders!
    So even though these bastards have driven the US economy to the brink of bankruptcy, their hubris is undimmed! I can’t f@cking believe their bloody sauce!
    The report was in Friday’s ‘Tiser on page 31, but apparently wasn’t important enough to eclipse Obama’s reaction to his first ride on Airforce 1 and the single moron’s whinge about being an only child who now has 14 children and is bludging on her mum and the US taxpayers!!!
    God give me strength!!!!!!
    Once again, sorry about the length of the post, but I’m spitting chips.

  256. Jane, how can you lower yourself to read that joke of a rag, The Advertiser. When is it going to change its name to the Crow’s Daily?

  257. Jane

    Our own Macquarie Bank is a real concern as Ian Verrander points out:

    No place for mega salaries in new era of bank protection
    http://business.smh.com.au/business/no-place-for-mega-salaries-in-new-era-of-bank-protection-20090206-801j.html?page=-1

    Allan Moss, the previous chief executive, and Nick Moore, the current boss, are the only two Australian corporate leaders to have cracked the $30 million a year pay bracket, even though the company has never been anywhere near the biggest or most profitable company in the country.

    Moss has gone. And Moore this year has indicated salaries will be cut. But it will be a measure of just how far removed from reality Macquarie really is when it releases its annual report in a few months’ time.

    It is almost certain Moore will be paid a multimillion-dollar salary in a year when taxpayers have propped up his organisation and when shareholders have suffered a 70 per cent fall in the value of their shares.

    The Macquarie story could have been very different. Back in mid 2006, as debate raged across the empire about the best way to plunder financial markets, there were serious considerations about whether or not the group should bother with a banking licence at all.

    All those rules and regulations were holding the organisation back. Prudential requirements, monitoring by the Australian Prudential Regulation Association, and the Reserve Bank on top of the normal palaver from the Australian Securities and Investments Commission and the Australian Securities Exchange was making compliance a nightmare.

    It hardly seemed worth it. After all, the real money was to be made outside of traditional banking and the prudential regulations meant that valuable capital was being locked away that could otherwise be used for far more profitable ventures.

    And anyway, a number of big investment banks offshore didn’t need banking licences. Take Bear Sterns or Lehman Brothers, for example. Ultimately, wiser heads prevailed and instead, the company split itself in two, with a traditional banking business and an investment business sitting beneath a holding company.

    The banking licence was retained and right now, it is that licence keeping Macquarie’s bilge pumps operating quickly enough to keep the operation afloat. And it is a gift from Australian taxpayers that is providing the power for the bilge pumps.

    As a bank, Macquarie has been the beneficiary of the Federal Government’s decision to provide a guarantee over bank deposits and their borrowings offshore.

    That guarantee is money in the bank, if you’ll excuse the pun. What it has done is pave the way for our banks – including Macquarie – to raise money offshore and to raise it at a far cheaper price than it otherwise could have.

    This has been a godsend. In the past few months, since that guarantee was granted, Macquarie has raced onto offshore debt markets to secure about $10 billion – money it may have had difficulty accessing and money that would never have been available to it at the price at which it was raised.

    As a bank, Macquarie has been the beneficiary of the Federal Government’s decision to provide a guarantee over bank deposits and their borrowings offshore.

    That guarantee is money in the bank, if you’ll excuse the pun. What it has done is pave the way for our banks – including Macquarie – to raise money offshore and to raise it at a far cheaper price than it otherwise could have.

    This has been a godsend. In the past few months, since that guarantee was granted, Macquarie has raced onto offshore debt markets to secure about $10 billion – money it may have had difficulty accessing and money that would never have been available to it at the price at which it was raised.

    So what’s the problem with that, you ask. Taxpayers haven’t actually kicked any money into the Macquarie coffers.

    Technically that’s true. But that guarantee comes at a cost because it carries a risk. And the risk for Macquarie is higher than the risk for the big four banks who also benefit from the guarantee. Macquarie was rated as A grade by most of the credit ratings agencies.

    While the agencies’ usefulness and performance is worthy of another column, let’s just say they correctly calculated that Macquarie’s risk was higher than the big four’s, all of which were rated AA.

    The Federal Government is rated AAA and it is that rating that has been conferred on all our banks courtesy of that guarantee.

    That’s not the only leg-up given to Macquarie. It is one of the main beneficiaries of the ban on short selling in financial stocks which, when you consider for years it has been actively short selling shares in other companies, is a bit rich.

    This week, Macquarie wrote down another $900 million worth of assets, taking total write-downs to $2 billion this year and conceded profits would halve. As a result, the executive share of profits will be way down, the group said.

    Way down from what, though?

    Executive remuneration is only partly about paying the mortgage and putting food on the table. Once in the multi-millions, it becomes a competition, a statement about where you stand in the pecking order.

    For the upper echelon at Macquarie, it reflected an arrogant, unwarranted and ultimately deluded belief they were intellectually and socially superior – but not too proud, it seems, to be propped up by taxpayers.

  258. Miglo

    Once the footy season proper gets going

  259. “For the upper echelon at Macquarie, it reflected an arrogant, unwarranted and ultimately deluded belief they were intellectually and socially superior – but not too proud, it seems, to be propped up by taxpayers.”

    Well said John.

    “He plans to wind back perks and generous severence payments for financial firms putting the squeeze on Washington for financial help.”

    Unfortunately Jane it seems the rules have no teeth…& those like Citigroup & Bank of America that received mega-billions under the original stimulus plan will not be caught up in this net from what I hear. It’s not applied retrospectively. Clawing back the money & restraining future greedsters is going to be nigh on impossible if the American government doesn’t bite w/ real legislative teeth. The honor system just doesn’t work over there much of the time…think Texas pollution regulations.

    Look, I’m pleased the tone has changed and Obama seems outraged & is articulating it…but talk is cheap.
    I found this to be an enlightening read:

    http://www.counterpunch.com/

    (Obama’s First Bad Week
    By ALEXANDER COCKBURN)

    N’

  260. Jane, on February 8th, 2009 at 6:28 pm

    …paying for talent – what f**kin’ talent…they screwed up FFS! LaLa Land!

    ++++++++++++++++++++++++++++++++

    After doing a bit more research on The Great Depression this weekend something began to dawn on me – I had had the thought before but this just gelled it…

    …I read military history (and that’s political anyway)…

    …I hope this crisis doesn’t end like TGD…

    … ’cause it ended with WWII…! 😯

  261. Reminds me of a discussion a couple of years ago….

    http://blogs.news.com.au/news/blogocracy/index.php/news/comments/kevin_rudd_to_rule_known_universe/asc/P40/

    TB, I had exactly that thought last night. For all our arguing, we’re relatively ok in this country, but others are not.

  262. John McPhilbin, on February 8th, 2009 at 10:31 am

    Half the fun are the abstract concepts, John; especially for visual thinkers who get to fly around inside and outside the mental models and understand how lenses and frames of reference operate.

    On Nasking’s links at 4:06 and 4:22…

    Example statement: the GFC is a crisis in (il)liquidity.

    Example statement: the GFC is a geo-political crisis of legitimacy for dollar hegemony and a currency empire.

    Also gotta remember that ‘the system’ is poly-telic; there are ends within means, means which serve ends, ends and means which mean different things to different people, games within games, and fires within fires.

  263. And a blast from the past…Where have all the financial risks gone?

    Risks have shifted from banks; but where to? Has this reduced systemic risks or merely moved the location of their trigger point. Are these risks in a better or worse place than before? What are the wider implications for financial markets and economies of this risk transfer?

    Financial innovation has enabled risks to be sliced and diced, and for these slices to be separated and traded on their own, or joined up with other slices and traded together. By itself, the new ability to mix and match risks is a positive development. Those who can best arrange a loan – perhaps because of historical relationships or local expertise – are not always best able to carry the loan on their balance sheets. By selling the slices of a loan they do not want to those that do, originators of a loan can arrange more loans than might otherwise be allowed by their balance sheet, or regulatory capital adequacy ratios, or internal risk management systems. This suggests that there will be greater specialisms in, and a more efficient allocation of, the individual components of risk; and that there will be more risk-taking.

    If these risks are better matched and spread, the financial system could end up with more risk-taking and yet lower systemic risks. My father, Professor Bishnudat Persaud, taught me early on in my economics training that individual risk-taking is the life-blood of economic dynamism, but that it can also be quickly killed off by systemic crises. More individual risk-taking, but with more spread risks could lead to less systemic risks and that would clearly serve an economy well. I fear we have missed-out on this particular utopia, partly because the main motivation for the growth of credit derivatives had little to do with the spread of risks…..

    One of the key lessons to be learned from this experience is that in today’s fluid financial markets, the spread of risks has less to do with exactly who owns the risk, and more to do with how risks are treated. The more risks are valued, traded and hedged in the same way, in the same markets, the greater are systemic risks. As they turn their attention to insurance markets, the current mantra of regulators that we need high and common standards, could not be more dangerous. We need high and uncommon standards. We need diversity. If the transfer of risks from banks to insurance companies is to make the system safer, we need insurance companies to behave like insurance companies and match their long-term liabilities with long-term assets, with long-run valuation and long-run risk management.

  264. It’s all good, Miglo, I’m going to glue Michelangelo Rucci’s fingers together and trash his keyboard. Then I’ll make him kowtow to Tredders 3 times a day until he gets it RIGHT!!!!!

    TB, nas & john, I know, I know. We’re p*ssing in the wind if we think these complete and utter f$ckwits will at least have the decency to hurl themselves out of a 20 storey building or at least admit they got it spectacularly wrong.
    Along with you, their arrogance, stupidity and utter lack of conscience or sense of accountability makes me so furious I could stomp on their faces!
    Even worse is the thought that when we’ve dragged ourselves out of the mess they’ve made, they’ll be lined up to give us all the benefit of their experience and advice and primed and ready to fleece us all over again. Sodding Gordon Gecko was an amateur compared to this mob!!

  265. Legion

    “Half the fun are the abstract concepts, John; especially for visual thinkers who get to fly around inside and outside the mental models and understand how lenses and frames of reference operate.”

    Love it! Systems thinking, mental models … This is classic

    “My father, Professor Bishnudat Persaud, taught me early on in my economics training that individual risk-taking is the life-blood of economic dynamism, but that it can also be quickly killed off by systemic crises. More individual risk-taking, but with more spread risks could lead to less systemic risks and that would clearly serve an economy well. I fear we have missed-out on this particular utopia, partly because the main motivation for the growth of credit derivatives had little to do with the spread of risks…..

    One of the key lessons to be learned from this experience is that in today’s fluid financial markets, the spread of risks has less to do with exactly who owns the risk, and more to do with how risks are treated. The more risks are valued, traded and hedged in the same way, in the same markets, the greater are systemic risks. As they turn their attention to insurance markets, the current mantra of regulators that we need high and common standards, could not be more dangerous. We need high and uncommon standards. We need diversity. If the transfer of risks from banks to insurance companies is to make the system safer, we need insurance companies to behave like insurance companies and match their long-term liabilities with long-term assets, with long-run valuation and long-run risk management.”

    Soros’s is one I’ve come to really respect over the years:

    http://ftalphaville.ft.com/blog/2008/01/23/10373/soros-the-worst-market-crisis-in-60-years/

    Another, less-than-happy view of today’s financial world comes in the form George Soros’s comment article in Wednesday’s FT. No less relevant for having been written before the Fed’s rate cut on Tuesday – and for reiterating as well as adding to recent comments, he likens the current financial crisis to other upheavals that have wracked markets and economies since the end of the second world war at intervals of four to 10 years.

    The key difference this time, he says, is that the current crisis marks the end of a “super-boom” that has lasted for more than 60 years. While global recession could be held off by strong growth rates in the developing world, the resulting political tension from a rebalancing of international economic power risks plunging the world into “recession or worse”, he warns.

    Examining the roots of the current turmoil, Soros says the periodic crises that punctuated the era of credit expansion based on the dollar as the international reserve currency were part of a “larger boom-bust process”.

    Boom-bust processes usually revolve around credit and always involve a bias or misconception – “usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral,” he notes:

    Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.

    Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what Soros calls “market fundamentalism” – ie, the view that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest.

    In fact, he reminds readers, it was only intervention by the authorities that prevented financial markets from breaking down, not the markets themselves.

    By 2006, the US current account deficit reached 6.2 per cent of gross national product. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.

    The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.

    Everything that could go wrong did, says Soros, and moves now by central banks to inject unprecedented amounts of money and extend credit on an unprecedented range of securities to a broader range of institutions than ever before have “made the crisis more severe than any since the second world war”.

    Credit expansion must now be followed by a period of contraction, he predicts, because some of the new credit instruments and practices are unsound and unsustainable.

    The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves… If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end.”

  266. Go Jane! Shit I’d hate to be on your bad side (wink)

  267. We’ve been reading economic gobblygook for many a year now Legion…and look where it has got us…tho i do agree that currency & liquidity factors have contributed to the present malaise (some might say socio-economic transition) & are essential in understanding pre-conditions and navigating the road ahead…

    but I see it more as a capitalist system that had potential but was under-mined by over zealous deregulators…a redistribution of capital & assets to far too many unwise & hedonistic individuals due to a lack of fail-safes & effective accountability measures in these so called Democratic governments…a reliance on organisations like OPEC w/ its oft narrowly focused member economies, war machinery & eminent domain bullying tactics to control energy pricing, resource accumulation & property development …an emphasis on secrecy & gambling in the financial markets…far too many uncompetitive practices, vertical integration & monopolisation of industries leading to less diversification and far too much reliance on individual corporations that became overly burdened by pension & healthcare commitments considering the lack of accountability of many CEOs & execs caught up in the race for “bonuses’ & the archaic & redundant nature of their business/service….and a mainstream media news outlets that are dictated by advertising needs and the interests of moguls over the common good & objectivity.

    N’

  268. Phew naskings I dare you to say all of that without taking a breath (wink). I agree though.

    If there was one quote that sums up the importance of viewing economics primarily as a social science it comes from a timeless quote by Adam Smith:

    In the courts of princes, in the drawing rooms of the great, where success and preferment depend, not upon the esteemed intelligence of well informed equals, but upon the fanciful and foolish favour of ignorant, presumptuous and proud superiors: flattery and falsehood too often prevail over merits and abilities…This disposition to admire, and almost worship the rich and the powerful, and to despise or, at least, to neglect persons of poor and mean condition…is…the great and most universal cause of corruption of our moral sentiments.

    The Theory of Moral Sentiments (Adam Smith 1759)

    Where money and power are concerned the inherent tendency toward corruption needs to be monitored and regulated against.

    Economics should be all about serving the greater good, and not just the self interests of wealthy business executives, politicians and the more affluent of society. In short, the invisible hand of free markets needs a guiding hand.

    Money is a means to life and not not an end game.

  269. An effective cathartic explosion Jane…it had me nodding my head in agreement.

    “I dare you to say all of that without taking a breath”

    lol…there are those in my past who probably wish I had taken a breath or twelve during a few pontifications…not quite as intense these days…much more prepared to listen…:)

    The quote from Adam Smith is an apt one…speaks volumes about his intellect & moral complexity.

    Here’s a couple of quotes from another observer of the political & social economy:

    “If we have chosen the position in life in which we can most of all work for mankind, no burdens can bow us down, because they are sacrifices for the benefit of all; then we shall experience no petty, limited, selfish joy, but our happiness will belong to millions, our deeds will live on quietly but perpetually at work, and over our ashes will be shed the hot tears of noble people.”

    Marx, Letter to His Father (1837)

    “History calls those men the greatest who have ennobled themselves by working for the common good; experience acclaims as happiest the man who has made the greatest number of people happy.”

    Marx, Letter to His Father (1837)

    …a sad day for so many…puts the whinges of the GIMME GIMME GIMME types into perspective. Good on Rudd for hitting the ground so quickly & showing appropriate compassion.

    N’

  270. Adrian, I’m not at all motivated by ideology.

    I think this is the biggest off budget expenditure in our history and the government thinks it is fine to give everyone a few days to think about it. Then just agree.

    I think there are a range of better options for some of the non infrastructure related expenditure, but the government has made an expedient decision. It wants to be able to have a blanket, simple, political answer. Rather than properly target the expenditure.

    I’m against politically motivated, below optimum programs, but I’ve also pointed out that I don’t support the tax cut proposal either.

    On the other hand, you say –

    “For me I have to take it that the government has looked at their proposals and gotten advice on then along with anything else that might have been raised and rejected (which we know nothing about) and have made the best decision they could in the circumstances.”

    This seems to ignore the fact that the government is full of politicians, and all any politician can be relied to do is to act in their own narrow political interests. And that’s exactly why this package is dumbed down, they want is simple, rather than effective.

    Tom R – of course I read your comment, and I suppose I could have referred to your retail jobs preservation comment. But mine was already too long. Retail will get the same stimulus by targeting/creating jobs directly rather than spending BILLIONS on a politically motivated handout.

  271. Interesting discussion took place on Meet the Press (you need to download a word document)

    MALCOLM FARR, THE ‘DAILY TELEGRAPH’: Let’s just, remembering those kiddies, were the Government to abandon its measures and immediately adopt yours, how much debt would that involve?

    MALCOLM TURNBULL: Well, Malcolm, what we have said is that there should be a package.

    MALCOLM FARR: You must know how much debt your scheme would involve. How much?

    MALCOLM TURNBULL: Malcolm, it would involve at least – somewhere between $22 billion and $27 billion less debt and less spending.

    MALCOLM FARR: So we’re talking $180 billion versus $200 billion.

    MALCOLM TURNBULL: This is, this is, this…

    Somehow, from both parties, we would be at least $180 billion in debt. Not a good sign.

    I thought the $200 bilion was an extension on the amount that could be borrowed. But reading this, it appears that we are that screwed no matter what.

    Which sort of makes all this scare-mongering from the opposition kinf of pathetic.

  272. NewsPoll : 58- 42 2pp… 48 -36 primary’

    According to the latest Newspoll survey, taken exclusively for The Australian at the weekend, primary vote support for Labor jumped five percentage points to 48 per cent – the same as in December – after the $42 billion economic stimulus package was announced last week.

    A large majority of those surveyed, 63 per cent, also think the Rudd Government is doing a good job managing the economy during the global financial crisis and only 33 per cent think the Coalition would do a better job.

    Labor’s primary vote jumped from 43 per cent to 48 per cent and the Coalition’s fell from 39per cent to 36 per cent.

    On a two-party-preferred basis, Labor leads the Coalition 58 per cent to 42 per cent – close to its record margin just after winning the election.

    http://www.theaustralian.news.com.au/story/0,25197,25026302-2702,00.html

  273. Mumble has some interesting observations on the latest Newpoll .

    http://www.mumble.com.au/

    I kinda agree with some of them and no doubt Labor fans will be cheering. Personally I think it’s just back to normal with perhaps a 1-2 point lift. Turnbull wont be happy with these figures but wont be surprised either.

    Looking forward to that lovely Possum taking a look later today at the NP. I expect he will provide the usual top class analysis of what it all means and where it’s all going.

    http://blogs.crikey.com.au/pollytics/

  274. Milton Friedman – Greed

  275. Tom of Melbourne, on February 8th, 2009 at 11:23 pm

    It’s now revealed that the opposition would also put us into massive debt, only 20 to 25 billion less, and that is supposed to be the whole difference that matters. Not only that, Malcolm said if required he would also spend the 20 to 25 billion, only he won’t do it now, which again is supposed to be the big differentiation.

    Turnbull has a shot at big spending too

    THE Opposition Leader, Malcolm Turnbull, conceded yesterday that his alternative plan for an economic stimulus package would still require government borrowing of up to $177 billion, compared with the Federal Government’s proposal to borrow up to $200 billion.

    Mr Turnbull has argued that the Government’s $42 billion plan would saddle taxpayers with an unsustainable level of government debt and has proposed a scaled-back package.

    Now he’s having a dummy spit because the government won’t negotiate with him whilst it’s negotiating with the Greens, Family First and is waiting for Xenophon’s requirements. Julia Gillard hit this on the head;

    “When you say you are going to vote against something, what is left to talk about?”

  276. Tom R, on February 9th, 2009 at 5:47 am

    That’s because ~$150 billion of that debt is unavoidable and will happen even if the government doesn’t spend a cent extra, and that doesn’t matter who is in power.

    Of course government could go into a huge slash an burn cutting spending to just about everything and all but shutting down Federal government, but that is unrealistic.

    Malcolm’s argument now seems to be about 20 to 25 billion it seems he might spend anyway, so as far as I can see his entire objection comes down to the timing and the spending not being in bringing next years tax cuts forward, which he said he would not negotiate on.

  277. Worth pointing out that the entire Liberal party owns this decision not just Turnbull, in fact from what I’ve read he’s just gone along with the rest of them. They seem to have wanted nothing more then to stand up and fight Rudd hard over something important to massage their bruised egos. Whats best for the country was never part of the thinking and I’d suggest that will be one politically expensive pissing contest when it’s all said and done.

    I figure they will release some type of alternative package later this week(now that’s “hastily assembled!”), for all the good that will do.

  278. The Only Ones

    “Worth pointing out that the entire Liberal party owns this decision not just Turnbull, in fact from what I’ve read he’s just gone along with the rest of them. They seem to have wanted nothing more then to stand up and fight Rudd hard over something important to massage their bruised egos. Whats best for the country was never part of the thinking and I’d suggest that will be one politically expensive pissing contest when it’s all said and done.”

    Lol I don’t think I could say it any better. Well said.

  279. TomR

    MALCOLM FARR: You must know how much debt your scheme would involve. How much?

    MALCOLM TURNBULL: Malcolm, it would involve at least – somewhere between $22 billion and $27 billion less debt and less spending.

    MALCOLM FARR: So we’re talking $180 billion versus $200 billion.

    MALCOLM TURNBULL: This is, this is, this… ”

    The Only Ones comment about an expensive pissing contest seems about right. The Libs seem to be going along just to get along with each other – their unity versus the good of the country, perhaps?

  280. Tony

    Milton Friedman – Greed

    Excellent find

    The father of modern free-market fundamentalism. The classic comparison with communism, socialism was a powerful Friedman tool. We know who popularised the ‘greed is good mantra’.

    Communism and socialism have been discredited. A re-thinks is definitely needed. The free market philosophy has always needs to be balanced with regulations designed to protect the interests of the greater good, rather than been able to operate like a casino.

  281. Adrian, I’ve already pointed out that I don’t like the measures advocated by the Liberals. They’ve missed the mark by about 180 degrees. The ALP have missed it by about 90.

    But the ALP is in government, so the position they adopt is what matters in practice. The idea of accepting their position and assuming that it is based on the best advice is naïve. They would have had a range of options presented, and chosen the easiest political path. Options that may have delivered more, but with a little more complexity, would have been rejected.

    Governments don’t want to have to explain any complexity to the public, they want a 20 second news grab.

  282. Not linked to any report but surely this cannot be so..

    Via: http://blogs.crikey.com.au/pollbludger/2009/02/09/newspoll-58-42-3/#comments

    ShowsOn
    Posted Monday, February 9, 2009 at 1:50 am | Permalink

    Finger on the trigger … Mr Turnbull starts the heats for the Bondi Beach Ocean Race yesterday.

    Ahh, so that’s where Turnbull was yesterday!

    And…

    Judith Barnes
    Posted Monday, February 9, 2009 at 9:22 am | Permalink
    funny that Glen, it may be a Victorian tragedy but Victoria does happen to be part of Australia and Turnbull is the federal leader of her majesty’s Australian opposition, yes Glen if he went there today after the delay and a bit of public bitching it would be playing politics, YESTERDAY HE SHOULD HAVE BEEN THERE, Rudd and other leaders were—where was Turnbull? at a nice cool beach firing the starting gun for a bloody swimming race!!!

  283. Sorry, I should have been more specific. The link provided via the SMH comes up with a HTTP 404 error.

  284. “Governments don’t want to have to explain any complexity to the public, they want a 20 second news grab”Tom

    I agree, but unfortunately 90% of the public wouldn’t pay attention if it was explained to them & if they did listen most wouldn’t “get it” anyway.
    Still no excuse for not giving a “complex” public explanation though.

    As evidenced by the Newspoll’s (unsurprising) findings over the weekend…”we’ve” been trained to salivate like Pavlov’s voters if Master stands above us & pats our wallets with juicy handouts. The sense of entitlement appears to be ingrained after the last decade.

    Can anyone tell me precisely who stands to pocket the $950 sweetener? I’m guessing that we won’t all be eligible.

  285. Exactly Mr Lavatorymaster.

    When we are in an “emergency” the government has a responsibility to act effectively, without regard to the politics.

    The government hasn’t shown anything like this type of leadership.

    The fact that the opposition hasn’t either is of a much smaller consequence. It is the government that we have entrusted to look after our interests.

    As for who gets the $950 – most taxpayers. But the vital question is – how many jobs will be created or preserved for this $8bn?

  286. “As for who gets the $950 – most taxpayers”

    By “most” do you mean the group who received the pre-Xmas handouts only?

    As for how many jobs it will create, I personally have no idea but seeing as how we don’t live in NuNuLand I’d be surprised if it made much difference to stimulating employment.
    How much positive political mileage it will generate however is easier to gauge…plenty in the short term I’d suggest.

    Not sure of the veracity of his claims but Bolt is this morning inferring that the hastily cobbled together & largely unscrutinised “package” is a devious ruse by the government to prompt an “ambush election” later this year!
    All a part of the VLWC I suppose.

  287. “The fact that the opposition hasn’t either is of a much smaller consequence. It is the government that we have entrusted to look after our interests.”Tom

    An important differentiation.

  288. I love this furry little guy

    Possum does NP = http://blogs.crikey.com.au/pollytics/2009/02/09/newspoll-turnbull-flame-out-edition/

    Toiletboss.

    I got this from Crikey,

    There are five groups of one-off cash bonuses.

    1) The Tax Bonus for Working Australians

    Who gets it? Australian resident taxpayers who paid tax in the 2007-2008 financial year, depending on income.

    How much do I get?

    $950 — If your taxable income was up to and including $80,000

    $650 — If your taxable income exceeds $80,000 and is up to and including $90,000

    $300 — If your taxable income exceeds $90,000 and is up to and including $100,000

    Do I have to apply to get the money? No.

    How will it be paid? The Australian Taxation Office will make the payment automatically, the same way that you get your tax return.

    When do I get it? The payments will be made starting in April.

    What if I didn’t file a tax return? You have until the end of June to file your Tax Return and still be eligible.

    2) Single Income Family Bonus

    Who gets it? Families who were receiving the Family Tax Benefit Part B on 03 February.

    How much do I get? $950.

    How will it be paid? Automatically by Centrelink into your nominated account (where your other Centrelink payments go).

    When do I get it? In the fortnight commencing 11 March 2009.

    3) Farmer’s Hardship Bonus

    Who gets it? People who, on 03 February 2009, are receiving one of the following:

    Exceptional Circumstances Relief Payment for Farmers;
    Exceptional Circumstances Relief Payment for Small Business;
    Interim Income Support for Farmers;
    Interim Income Support for Small Business;
    Transitional Income Support; or
    Farm Help Income Support.
    How much do I get? $950.

    How will it be paid? Automatically by Centrelink.

    When do I get it? In the fortnight commencing 24 March.

    4) Back to School Bonus

    Who gets it? Families who are eligible for the Family Tax Benefit Part A (FTB-A) on 03 February 2009.

    How much do I get? $950 per eligible child of school age (4-18 at 03 February 2009). This is separate from and in addition to the Education Tax Refund.

    How do I get it? Automatically through Centrelink.

    When do I get it? In the fortnight commencing 11 March, except if you receive the FTB-A as a lump sum, in which case you get the payment next year.

    5) Training and Learning Bonus

    The bonus consists of two categories:

    Category 1

    A one-off $950 bonus for recipients of: Youth Allowance (students and apprentices); Austudy; ABSTUDY and related payments
    The one-off bonus will also be available to recipients of Sickness Allowance and Special Benefit (under age pension age)
    If a student attracts the Government’s Back to School Bonus they are not eligible for the one-off $950 Learning and Training Bonus
    Category 2

    A temporary supplement (from 1 January 2009 to 30 June 2010) to the Education Entry Payment (EdEP) of $950. This is in addition to the existing EdEP payment of $208, which provides assistance with the costs of training courses, for income support recipients who are returning to study.
    A temporary extension (from 1 January 2009 to 30 June 2010) of the EdEP to Youth allowance (other); and
    A temporary relaxation (from 1 January 2009 to 30 June 2010) of the requirement that recipients must have been receiving social security payments from 12 months to 1 month

    The big questions:

    Can I double dip? Yes. For example, if your taxable income was less than $80,000 and you are receiving the Family Tax Benefit Part B, you get the $950 Tax Bonus AND the Single Income Family Bonus (also $950).

    I’m a student not on Youth Allowance or a related payment, can I get the Training and Learning Bonus? No, you get nothing unless you filed a Tax Return for 07-08. In that case you get the Tax Bonus.

    I am a casual/part-time worker; do I get the money? If you filed your tax return, then yes.

    I’ve got three kids; do I get $950 for each? If you get the Family Tax Benefit Part A, then yes.

  289. Thank you OnlyO..was about to post with the stats above. And note, it’s upside down..Howard always gave the wealthy the biggest tax cuts/benefits re the theory of the filter down effect.

  290. Thanx O1’s, much appreciated.
    I’ll have to have a thorough look at the link but I suspect that I’ll get nada, depending upon whether the
    “Tax Bonus for Working Australians” is based upon solely my own income or a combined total of mine & my cohabitator.

    One things seems clear, a lot of people are gonna pocket a LOT of free money. Very effective gilding of the Lily.

  291. Toiletb..I suspect that one might have to think about what is in it for my community rather than what’s in it for myself. Boom gates, road black spots, an upgraded toilet block (some over 50 years old) at your local primary school.

    I’m not certain whether hubby and I will receive anything, but I certainly do not begrudge lower income earners including drought effected farmers receiving a one-of payment.

  292. There’s a better one at the Gov site somewhere but buggered if I can find it this morning 😀

    Min, perhaps that is the one you have by chance? if so would love the link 😀

  293. “One things seems clear, a lot of people are gonna pocket a LOT of free money. Very effective gilding of the Lily.”

    Very true Leaderofahumanwastedisposalreceptacle, and don’t you think we could do a bit more with $8bn worth of debt? Just borrowing to hand out lots of cash is hardly effective targeting, in my opinion.

    Though others seem to think that this is the result of the best advice and economic modeling available, I’d prefer to err on the side of skepticism about anything a politician says. The previous government would have said the same thing no doubt.

  294. Hello OnlyO, the one at the government website is at:
    http://www.alp.org.au/media/0209/mstres030.php

    I enjoyed your input because you padded out the basic stats.

  295. Tom of Melbourne, on February 9th, 2009 at 10:20 am Said:

    The government hasn’t shown anything like this type of leadership.

    How have they not shown leadership? An emergency occurred and they certainly didn’t sit back and do nothing. They consulted with the experts in the relative departments (which is more than Howard did), sought advice and acted, then didn’t cave in to the protestations of the opposition’s poor alternative, nor listen to the lambasting from some of the MSM. All traits of leadership. Then they began negotiations with the minor parties (and would have with the opposition if it had done things correctly) who are currently scrutinising the legislation and proffering amendments, some of which appear to be aimed along the lines of what you have suggested. Again that is leadership.

    But the vital question is – how many jobs will be created or preserved for this $8bn?

    How long is a piece of string? That isn’t a vital question at all Tom and you raise it as a beating stick nothing more. How many jobs does any fiscal or monetary government policy produce? That is never fully known until after the policy has washed through the economy but even then it is partly guesswork as there are so many factors to job creation and job dissolution. The better way of putting it is that more jobs will be retained because of this stimulus than if nothing were done.

  296. I agree Min & I don’t need it, just curious. I certainly don’t begrudge my taxes going to the genuinely needy, my memory of what it’s like to struggle must only be cast back a couple of years.

    I’d definitely prefer it to be spent upon tangible, longer term projects rather than instant gratification “play money” though.

    I’m a little cynical that the handouts are more of an exercise in political expedience than a true attempt to help out the unfortunate many. I can’t rightly condemn (as I have in the past) the transparently opportunistic profligacy of the Howard governments M.O. & not detect similar sentiment in the current government.

  297. “The previous government would have said the same thing no doubt”Tom

    That’s what makes the hair on the back of my neck stand on end.

    Having said that I certainly agree with Adrian when he says…

    “The better way of putting it is that more jobs will be retained because of this stimulus than if nothing were done.”

    …in as much as it’s impossible to accurately deduce the outcomes until well after the fact.

  298. Thanks for the links all.

  299. Toiletb..re handouts being a cyncial political exercise. Perhaps the proof is in the pudding..it’s not a pre-election handout (as per Howard), it’s aimed at stimulating the economy.

    Hubby and I spent 6 years on the disability pension and the memory rings loudly re having to glue eldest shoes together because we couldn’t afford to buy new ones/of having to work the markets including having to sell my clothes and jewellery just to be able to pay the rent and buy food.

    I am prepared to give Rudd’s package a try, plus figure that Turnbull hasn’t any ideas that will make things any better.

  300. Toiletboss,

    And as I mentioned earlier in the thread, I think the reason that handouts are being made is because the administrative costs of bringing the tax cuts forward would be large in both financial and logistical terms.

    And the reason that governments around the world are putting money into their economies is because the flow of money has dried up, and they need to keep the money flowing to reduce the effects of the GFC.

    Sort of like a pacemaker – which keeps the heart beating when it wants to stop.

  301. Adrian, if you put $8bn into the type of program I’ve suggested, and presumed about 50% (which is probably the top end for the type of home maintenance I’ve suggested) would be spent on materials, you would directly create 40,000 jobs.

    The types of skills utilised are identical to many of those that are currently loosing their jobs in construction, mining and manufacturing.

    The 40,000 will spend on retail and general services. There will be a similar effective down stream stimulus as the $8bn percolates through the economy, but with the advantage that we have actually, directly created 40,000 jobs.

    I think that represents something we are able to measure.

    My view is that if the government was exercising genuine leadership if would target specific programs on a regional basis, rather have a one size fits all insulation lead recovery. It could commit to a per capita program, and identify the criteria against which state government proposals would be assessed – eg – effective job creation, social benefit… It could require states to identify their proposals within a week.

    As I’ve said previously, I’m not totally opposed to the package. I don’t like the handouts or the home insulation program. They are adopted by the government because one is political and the other is simple to explain. I think this represents bad leadership.

    Min – I think $10bn of the $42bn is poorly targeted, and that a lot of money to “give it a try”.

  302. Tom, you say that the $10bn is ‘poorly targeted’ and so how can it be better targetted? This is giving due regard to the fact that this is money that must be shovelled into the economy asap rather than longer term projects (eg requiring an EIS/acquirement of land etc).

  303. Min – I’ve repeated my suggestions on several occasions, and I know that you’ve read them because you commented favourably.

    Unless you can measure the impact of a policy you have to question whether it is effective expenditure.

    Creation of jobs causes confidence, and keeps people spending. The ad hoc polling I’ve seen suggests that most people will squirrel away the money, save it up for when things get worse.

    This seems logical for individuals. It is a behaviour that Keynes noted about the depression. That’s why direct job creation is a better stimulus.

    I’m not supporting the position of the Liberal, quite the contrary. They don’t go for the direct intervention model. But that doesn’t mean that I’m not entirely entitled to be critical of the government, they’re in charge, and they’re not doing as well as they should.

    Politicians only react to pressure, and people should keep more pressure on their performance, rather than excusing them.

  304. “squirrel away the money”

    Correction – squirrel away the handout

  305. Me too Tom. I suspect that the debate is running dry and that we will just have to sit and wait until what happens this week.

  306. I tend to agree with, Tom

    Projects that have tangible outcomes (eg water tanks, solar power, insulation) are much better than “hoping’ people will spend the $950 or more…

    …even government grants for particular projects would “target” the money far more effectively than allowing the “market” to decide…

    …isn’t that how we got here in the first place? Allowing greedy people to spend, spend, spend?

    …this time I have to give them part of the money (my taxes) instead of the silly buggars borrowing it…

    …their debt is becoming mine…

    …and I’ve avoided debt like the plague for 25 years (and paid well over my fair share of taxes as a small business owner)…where’s the fairness in that?

    With infrastructure spending I gain, my kids gain and my g/kids gain over many, many, years…

    …what could you build for $8 billion?

  307. “Politicians only react to pressure, and people should keep more pressure on their performance, rather than excusing them.”Tom

    Too true. 8billion$ in handouts will buy a lot of breathing space & temporary good sentiment; pressure abated.

    A bit of a Catch22 considering the implied urgency for action…ie, need to get the $ in the system pronto balanced against a more clearheaded imperative to spend the excrement of our labour wisely.

  308. Eeek..fellas (and gels). It has to be an IMMEDIATE injection of $s into the economy.

    The criticism of Howard’s Handouts is that it went to the wealthy who were far less likely to spend it. This time it goes to the lower income earners who will as (Shane??) suggested would use it to fix the car/home maintenance.

    If I had my ‘rathers, it would be hospitals, and jobs creating infrastructure, however these all take years to get off the ground.

  309. “It has to be an IMMEDIATE injection of $s into the economy.”min

    On balance it does appear, to me at least, that the gov is doing what’s necessary. I doubt that a rock solid strategy for dealing with this exists anywhere in the world at the moment without some sort of unavoidable attached risks.
    No doubt, if they were to sit on their hands the clamour of criticism would be far greater & perhaps more justified.

  310. Toiletb..as usual you are spot on. We are venturing into unknown territory. Someone (an important someone but can’t remember straight off) said that previously we had a depression which was ‘cured’ via a war (via industry/employment). And this is certainly true.

    This time we have a money guzzling war followed by a recession/depresssion. Hopefully peace will follow.

  311. So Min, what will they spend it on? And how much will they spend?

    Many will buy a new TV, how much stimulus is in that?

    Some might get some home repairs done, but how many jobs?

    This handout component of the stimulus has no direction. We have no idea what will happen with our $8bn. How much saved, how much spent and where??

    With the type of proposal I’ve suggested, we’d know that we are getting 40,000 jobs and the down stream spending will percolate through the rest of the economy.

  312. TB Queensland, on February 9th, 2009 at 12:09 pm:

    Will say this yet again so it sounds like I’m labouring the point as Tom keeps labouring his.

    The $8 billion component is to stimulate retail and hopefully cause far less job losses there as retail is a large employer, especially of females, young people and lower income earners. If you can come up with any other way of stimulating across such a wide sector of goods and services I’d like to hear it as all the other suggestions so far have been narrowly focused on just one or two specific goods or services that require considerable implementation and/or oversight to achieve?

  313. Tom of Melbourne, on February 9th, 2009 at 11:34 am

    Where do you get the 40,000 jobs from and that is purely speculative as there are many other factors.

    Also you have not addressed the large overheads in oversight that is needed to implement your proposal, and they are considerable. Your proposal has to go from canvassing complaints (which could take many months or longer), inspections, planning, prioritisation, ILS, sourcing, purchasing, skill or not skill finding/matching, implementation and inspection, all with QA and OH&S every step of the way and constant inspections and oversight across the whole scope to insure the myriad of shonky operators out there don’t rip off both the government and the place having the work done.

    Oh I see where the 40,000 comes from, a lot of that is the Fed, State and Local governments who will be needed to oversee the program.

  314. And so Tom, maybe a better idea is a voucher system?? I was thinking about this, but then one can’t buy veg at the local farmer’s market.

    This is aimed at people on the lowest/lower incomes and farmers requiring drought assistance.

    The direction (just me Tom) is that it is aimed at the lowest paid of our society then they through necessity will use it to buy the necessaries of life which compares with the Howard Handouts aimed at the wealthiest who either sock it away or used it a small donation towards the next os jaunt.

  315. Adrian – let me labour my point!

    There are many businesses already operating that could be boosted by targeting particular spending – eg alternative energies, house maintenance etc that keeps the tradies and labourers working – the low paid ones – these people need to eat, drink and be merry – they spend their wages – the merry go round continues – but this makes sure that it is not just retail – its the Economic Cycle that is supported – people earn money rather than just spend…

    Support those in need with targeted products and services – to help those businesses in need to pay their employees in need – who will buy goods and services from retailers who are also in need…and round we go again…

    The governments plan is to give some people (not all in need BTW) $950 + and hope they spend it – some won’t – they’ll “squirrel” it away…

    ===============================
    Min, on February 9th, 2009 at 12:42 pm

    Min thanks for the compliment… 😉

    TB Queensland, on February 8th, 2009 at 7:36 pm

    …’cause it ended with WWII… 😯

  316. Adrian, an hourly labour rate of around $50 is reasonable for a trades level employee. A lot won’t need to be trades qualified, so my calculation is conservative.

    Their personal hourly rate will be around half this ($25/hr). The other half is to pay for accounts clerks, their supervision and management, overheads such as payroll tax and workers compensation. My back of the envelope calculation is entirely capable of covering the various overheads and administration costs.

    It is also conservative because I’ve allowed for half of the cost as materials. I think home maintenance- painting, roof repairs, probably even installation of insulation – is probably more labour intensive and materials are unlikely to be half of the cost.

    That’s why I think a voucher system for home maintenance by pensioners, SFRs, other disadvantaged groups will create 40,000jobs directly.

    I’ve suggested that you only get one job for $200,000. Good administration will probably result in more jobs.

    I’m not necessarily saying it must be this system, but I want a targeted job creating stimulus, with outcomes capable of being measured, you seem to think this is unreasonable.

    I’m sure other, brainier people could come up with an even better direct stimulus that would deliver.

    And in my own defence, this interventionist stimulus is the antithesis of those the Liberals advocate.

    And yes Min, I’ve continued to advocate a home maintenance voucher for various groups, mainly pensioners. The main purpose is the creation of jobs, the secondary purpose is to do some good for people that need it. So they can’t buy fruit & veg with it.

    But I still think it is a better idea than just throwing money at people without knowing whether it will result in jobs for people.

  317. Tom…min rolls over laughing (hopefully tummy tickled, but sadly no takers). Choke, choke $50ph. In what country are you living???

    The rate is about $35 with all expenses paid by the employee.

    Hubby is a tradie having entered his 4 year indenture in the year 1962. He’s a fitter and turner.

  318. Min – $35/hr may be the direct hourly rate for your husband, inclusive of the various personal related overheads. But as Adrian pointed out, there are administrative costs – accounts to pay, follow up, supervision etc. $50 is the total cost of providing a tradesperson with one hour of work.

    I haven’t included all the jobs created in the supervision and account bureaucracy in the 40,000, but Adrian is correct, there may be thousands more. The point remains, my calculation pays for them.

    I think I’ve tried not to overstate the number of jobs that could be directly attributable to this type of package, and 40,000 jobs would be directly created by reallocating the cost of the $950 handout. And pensioners would get a better standard of living.

  319. I really like your idea Tom but I can’t see how it overcomes all the requirements I stated. Just take the very first thing that needs to be done and the follow up to that first step. There has to be a canvassing of complaints to see where, what and how much has to be done, then an audit needs to be undertaken.

    So you have to mass post out a questionnaire asking what’s wrong with your place or if you have any complaints. Mass post outs are something government is good at and setup to do. Or you have to set up mass phone outs using a call centre.

    Then you have to wait until the replies start coming in to begin to prioritise, inspect and allocate resources. It could take months before the first tradie or odd job person gets to a place. Then if the government is smart and wants to do it efficiently for the best cost it will roster and stagger jobs, saving on labour.

    Then there will be those who won’t or don’t reply to the questionnaire so an audit of all those places will have to be undertaken.

    There is no way that this good idea could be setup and run within a short time frame and it requires a lot of logistics and organising, whilst still only benefiting a small sector of the retail industry, that dealing with the tradies.

    I think it would be good as a second wave with a longer term roll out if things continue to decline, but even outside of a financial crisis it should be part of a standard government policy or election platform.
    ——————————–
    TB is saying it will employ out of work or underemployed tradies and labourers, you say it will swallow up the out of work miners. Methinks one or other of this groups will have to miss out in part.

  320. Tom: re inclusive of the various personal related overheads. Will have to run this one by hubby re his ‘various personal related overheads’. This is once he has kicked off his boots and does the washdown following coming offsite.

    Can you please talk Australian? I forwarded above to daughter who is completing her PhD and she is trying to nut it out what is meant.

  321. Adrian

    Miners skills translate very easily into the major capital works/infrastructure spending…and some tradies of course…but…

    …labourers and tradies can install water tanks, repair roofs, fix electrical problems, repair fences, repair cars mow lawns etc in country towns OR cities

    give the businesses a choice – a voucher they can redeem from the government for money…

    …or a tax break for the same amount – either way the poorer get help…and it must be spent…on value goods and services…

    …vouchers should not be spent on lollies and ice cream etc…

  322. Obama gets the nod from Buffett, very interesting

    US in economic Pearl Harbour: Buffett
    http://au.biz.yahoo.com/090119/2/243bb.html
    Billionaire investor Warren Buffett says the US is engaged in an “economic Pearl Harbor”.

    In an interview on Dateline NBC that aired on Sunday, the chairman and chief executive of Berkshire Hathaway Inc said the nation’s economic situation is not as bad at World War II or the Great Depression, but it’s still pretty severe.

    Buffett said Americans are in a cycle of fear, “which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We’ll break out of it. It takes time.”

    Buffett’s interview centred on President-elect Barack Obama and the tough task he faces in fixing the US economy.

    “You couldn’t have anybody better in charge,” the Omaha resident said of Obama, who’ll be sworn into office on Tuesday.

    As one of Obama’s economic advisers, Buffett said the president-elect listens to what his advisers say but ultimately comes up with better ideas.

  323. TB I really am for the system and like the voucher idea but I just can’t see the logistics of it being the answer right now.

    Does it help the economy: Yes
    Does it help those who need help: Yes
    Is it good for employment: Yes
    Is it good for retail: Yes
    Is it appropriate immediately: No
    Is it easy to implement: No
    Is it simple to implement: No
    Should it be implemented at sometime: Of course
    Should it be standard government policy: Of course

  324. Exactly TB, an individual deals directly with the tradesman. They pay with a voucher, the tradesman/repairer then redeems the voucher.

    This type of proposal would stop service companies dismissing their workers now, and would be capable of taking up some of the mining, construction, manufacturing workers that will soon loose their jobs.

    There is really no need for an excessive overlay of bureaucracy. There is no oversight of the $950 handout, to make sure recipients are spending it to good effect.

  325. There doesn’t have to be oversight of the $950, it’s just a handout with nothing attached.

    There has to be oversight and administration of a repair scheme and all the quality, safety, inspection and policing that is required because of that.

    Just how do you keep the shonky tradies and suppliers out of your idea Tom?
    How do you not inspect any work undertaken that is a requirement for it to be passed for government jobs?
    How do you prioritise, allocate and resource without bureaucracy?
    In fact how do you actually find out what repairs are needed and where they are needed without bureaucracy?

  326. Adrian – “There has to be oversight and administration of a repair scheme and all the quality, safety, inspection and policing that is required because of that.”

    The pensioner decides whether they need roof repair, plumbing, painting, a new shower screen or some combination.

    They look in their local yellow pages or community directory for a service trade, and call a few. They get a few quotes if they want.

    They then choose one. If the job isn’t done to their satisfaction they withhold payment, they contact consumer affairs, they go on one of the TV shows that specialise in pensioner being ripped off.

    Pensioners get quotes all the time, they are really quite capable of arranging this, and there are existing mechanisms and agencies to help prevent pensioners from being ripped off. There is no need to duplicate these services.

    In any event, I’ve allowed $200,000 total cost for each job created, don’t you think that there is enough padding in this for a little more bureaucracy?

  327. Tom, which tradesmen will be able to access this voucher..fitters and turners, mechanical fitters, tube and instrument fitters, electrical fitters.

    I keep getting the impressing that when townies think ‘tradie’ they think of the person who comes to trim their hedges rather than people with over 20 years technical experience. You know, the ones that tell the university trained engineers how to do it.

  328. Tom R Thank you for that comment. It answered so much for me and now feel much more comfortable about my original stance.

    The only ones
    Lol i like the way you summed that up

    Turnbull, do you hear the axe being sharpened yet.
    He has the view of a blind man.

  329. Min – this doesn’t have to be complicated. If you have electrical work performed around the house, you’d use an electrician. Plumbers usually plumb. Roof repairers….

    But there is little work for a special class fitter or instrument technician around the house. But some may prefer to work at a skill level a little lower for a while, rather than be unemployed.

    The types of skills that perform this work at the moment is a fair indicator of those that will do it in the future.

    Do you wish to make this more complicated? No tradesperson will be conscripted to do this type of work.

  330. Tom: believe me, it’s complicated. You say, you need electrical work done then hire an electrician – you need plumbing done then just hire a plumber. Tom skips off into the sweet glades.

    I hope that you do realise that there are stages of expertise. For example that electricians cannot work on sites without X amount of qualifications and without years and years of training – likewise for plumbers – and then you have dual tradespersons.

    You want a home-style electrician to try to be the person to run over the plane that you’re about to fly on?

  331. Min, I spent 16 years in the auto trade (did my apprenticeship, in more ways than one) and I can tell you that the motor vehicle repair shops often struggle from month to month anyway…this would help…

    …as for Mr Min I think you know that even if the poorer people are handed an open cheque they wouldn’t employ him – its the bigger companies…

    …frankly I have no axe to grind here – its just that I’m the sort of person who expected my kids to work for their pocket money…and they were rewarded with a bonus for exceptional work…

    …handouts are still handouts…

    …I remember being told that there are two ways of making money – labour (heads & hands) – or money (investment)…

    …I have always preferred the former…

    …this handout doesn’t make the money work hard enough…!

  332. You are quite right TB when the job finishes then hubby will not have a job as who is going to employ a 61 year old bloke with post-polio. We may indeed lose our house.

  333. Min, on February 9th, 2009 at 12:25 pm

    That’s the fun bit, Min. Governments all over the world are about to skew myriad micro-economies in myriad ways to ‘stabilise’ the system. While I’m sure the measures satisfy a marginal rate of substitution for a political economy transitioning from laissez faire to interventionism, and will address headline figures like GDP and (un)employment in the real macro-economies, I remain uncertain whether those micro-economies will or won’t be more or less ‘skewered’ as a consequence in myriad unforeseen and unmeasured ways, given that most markets (especially markets comprising the political economy which filter information based on political, and not necessarily economic, imperatives) are operating as highly incomplete markets under situations of highly imperfect information and extreme uncertainties, which is a wee problem for Keynesian approaches and welfare theories when it comes to measures and projections of ‘aggregate welfare’, aka the common good, envisaged by interventionists.

  334. Min @ 4:13 pm.

    Min, I’m not a relgious person but I pray that neither befall you.

  335. Min – I’m not sure what you’re on about. I’m not taking about aircraft maintenance. You’re probably aware that this is a specialised trade, and CASA approved anyway.

    If a pensioner needs a power point replaced, what trade does the work? I think an a grade electrician usually gets the job. He wouldn’t replace the circuitry or avionic components on an aircraft. Not the last time I looked anyway.

    If a pensioner needs some painting, the dual trade electrical/instrument technician usually doesn’t get the job. He’ll probably do the guttering!

    I don’t think Jim’s style services employ many dual trades. They tend to use more of the domestic building sector skills. Many from mining, manufacturing would be over qualified, but I think it is better than the unemployment that they’ll face without some direct intervention.

    Nonetheless, please feel free to continue…

  336. Tom, I’m not about nothing in particular. And yes, I do feel free to continue.

  337. More ideas are already being thrown on the table. Perhaps the $42 billion is just not going to be enough for starters. I’m betting the government end up getting very close to $200 billion very quickly.

    Stimulus package ‘won’t help jobless’
    http://www.news.com.au/dailytelegraph/story/0,22049,25028474-5001021,00.html
    THE federal government’s $42 billion economic stimulus package will do little to help the 300,000 people expected to join the dole queue in the next 16 months, an independent thinktank says.

    The Australian Institute says that while the package is a welcome and timely injection into the economy, it does not do enough to create jobs.

    “For a relatively small additional spend, the government could get more ‘bang for its buck’ and provide more help to those people who will be the most adversely affected,” the institute’s executive director Richard Denniss (Denniss) said.

    In a submission to the Senate inquiry into the National Building and Jobs Plan, the institute recommends an employment bonus of $5,000 for employers who provide fulltime work to people who have been on the Newstart Allowance for more than six months.

    It estimates the cost of such an initiative at between $250 million and $500 million.

  338. John McPhilbin, on February 9th, 2009 at 7:19 pm

    And, using yet another frame of reference, that’s where Malcolm would be right on the politics of “jobs, jobs, jobs”…it’s not the technical recession the pollies need be afraid of, it’s the actuality of unemployment as it creeps towards double-digits and the fun budgetary things that would do for Governmental incomings and outgoings. It’s why Government has a ‘self-interest’ and ‘needs to intervene’ beyond the socio-political reasons it likes to proffer for its actions. A government which signs off on 2 percent growth for itself while its economy is growing at 1 percent or less, while assuming that the economy will return to its long-run average of 3 percent growth sometime up-when as Government’s considered mechanism to repay the shortfalls necessarily accrued through a temporary co-option of marketplace machinery and effective extension of Government (and hence disguised actual Government growth), prolly ain’t going to work well for too long.

  339. Legion

    Agreed. How to restore greater stability? It is all about jobs, jobs, jobs especially the need to maintain employment levels satisfactorily enough offset the record levels of personal debt many of us are carrying.

    In fact, the level of debt saturation would be hard to offset in even relatively stable conditions. We were allowed to go too far for too long.

  340. Legion

    Here’s some sobering news:

    “NEARLY half of China’s toy factories closed last year as the financial crisis tightened its grip.

    The country started the year with 8,610 factories producing and exporting 70 per cent of all the world’s toys. By the end of 2008, only 4,388 remained _ a decline of 49 per cent, figures from the Customs office showed. ”

    One of the major reasons global inflation has remained low for so long has been largely because of China’s ability to mass produce and export at much cheaper levels for a sustained period.

    Ben Simpfendorfer, China strategist for the Royal Bank of Scotland, puts it succinctly: Where China was a deflationary influence over the last 10 years, it will be an inflationary influence over the next 10 years.

  341. Legion

    I’m betting Hyman Minsky’s Instability Hypothesis will start getting the credit it deserves and will help us better understand the current crisis and why it was inevitable .

    I think you’ll appreciate this article

    Minsky’s theory of financial crises in a global context
    By Wolfson, Martin H
    Publication: Journal of Economic Issues
    Date: Saturday, June 1 2002
    http://www.allbusiness.com/accounting/1082161-1.html

    Hyman Minsky’s theory of financial crises was developed in the context of a domestic economy. Recent financial instability in the international economy, however, suggests that it would be useful to examine his theory in a more global environment. After briefly discussing the main themes of Minsky’s domestic theory in the first section, this paper then attempts to identify how the theory would need to be modified to take account of the international setting. In the last section, institutional changes in the global economy are investigated and their relevance to financial crises is evaluated in light of the theory discussed in the second section.

  342. TB of Queensland,

    This seems to sum-up what you’ve been saying:

    Over-borrowing and overspending got us into this fix. It stretches the paradox of Keynesian economics to believe that even more borrowing from a less bountiful future to consume now provides the solution, even if the stimulus comes from the Government on behalf of households, rather than from households directly.

  343. Henry concedes: stimulus is a guess

    A Senate inquiry has been told that Australians may never know if the Federal Government’s $42 billion stimulus package has worked…

    But he has told the inquiry that he may never be able to say whether or not the stimulus package has had the desired effect on the economy.

    “It will always be difficult … in making that assessment,” he said.

    “We’ll necessarily have to make a judgment about where the economy would have been without these measures and that’s difficult. That’s even more difficult.”…

    http://www.abc.net.au/news/stories/2009/02/10/2486796.htm?section=justin

  344. Not exactly inspiring confidence in the spendathon, is he Tony?
    Seems to be an honest, sobering appraisal…just not the concrete guarantee that people want in regard to how efficiently their money is spent.
    I doubt that any “qualified” person of integrity could give such a concrete guarantee though.

  345. I suppose the same question should asked of Turnbull and co., such as:

    Will the oppositions suggestion for stimulus work better than the governments proposal?

  346. I have watched the following programme on Wal Mart aired in the USA in 2004.

    I suggest all of us who comment on the economy with differing reasons for laying blame at ismply borrowing and spending have a look at this site and click the ‘watch the full programme button’

    It provides interesting insight into how things changed and how these decisions also could have effected the economy over the last 5 years.

    http://www.pbs.org/wgbh/pages/frontline/shows/walmart/

  347. Thanks for the link ToSY

    Its becoming more and more obvious that most economists aren’t really creative – they just burble the mantra of one text book or another.

    Just as an aside my degree in adult learning was “in-service” (you had to be plying the trade to get a place)…and took me five years p/t..

    When I started in 1987 there were supposedly five differences between andragogy (adult) and pedagogy (child) learning – reasoned by academics – by the time I graduated in 1992 – my fellow learners and I had demolished all but one of them (“…adults bring life experiences to the learning experience…)

    …my point – theorists are just that…you need to work at the dirty end to see if your theories really work…

    …and it strikes me that a lot of economic theories don’t…

    …these economists (shiver) are still using theories that are a century old…or more…

    …even the military doesn’t do that!

  348. TB

    “This seems to sum-up what you’ve been saying:

    Over-borrowing and overspending got us into this fix. It stretches the paradox of Keynesian economics to believe that even more borrowing from a less bountiful future to consume now provides the solution, even if the stimulus comes from the Government on behalf of households, rather than from households directly.”

    Spot on TB! If I’ve been good at one thing TB that’s I’ve been consistent in my view.

    It’s shouting all around
    http://blogs.theaustralian.news.com.au/geoffelliott/index.php/theaustralian/comments/us_news_media_is_dominated_by_shouting_matches/

    John McPhilbin
    Wed 29 Aug 07 (05:21pm)

    I, like yourself, Geoff, have been expecting an economic slowdown and some major correcting for some time now.

    The obvious and increasingly prevalent the use of debt to fuel economic growth (including the staggering use of credit cards for daily living expenses) has been used to create a number of bubbles (i.e. stocks, housing, and consumer spending) and needs some serious attention by way of effective government intervention and controls.

    Just how deep and wide these corrections will be is hard to really tell.

    We seem to have been lulled into a false sense of growing affluence which is ironically the same phenomena that preceded the Great Crash of 1929 and the Great Depression that followed.

    Jacob Saulwick of the London Telegraph wrote on June 26 something that really caught my attention:

    “THE risk of a 1930s-style economic slump” he claimed “has been heightened by “euphoric” markets tapping cheap global credit, one of the world’s pre-eminent financial institutions has said.

    In its annual report the Bank for International Settlements noted that the conditions which led up to the Great Depression of the 1930s and the Asian crises in the 1990s were reflected in the current environment.

    “Each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a ‘new era’ had arrived,” the bank said.

    The BIS, the central bankers’ bank, pointed to a confluence of worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.

    “There is a high degree of complacency, coming out of the long period of low interest-rate environment, and a low volatility environment,” Singapore’s Second Finance Minister, Tharman Shanmugaratnam, said.

    John McPhilbin
    Wed 29 Aug 07 (05:32pm)

    Geoff, Just to add to my previous comments we here in Australia need to start considering whether our stock market’s reaction (yes, it’s taken a another pounding on the back of falls in the US) is more than a simple reaction to US markets. Or do we have similar issues with growing and doubtful debts? It’s easy to get bogged down in detailed theory or political debate over the economy in general, including interest rates and our growing prosperity rather than making hard-nosed assessments of the sustainability of growth fueled by easy money, namely debt.
    Mr Howard’s response recently to the fact that household debt has reached the $1 trillion figure was: “Debt levels are rising, but we are choosing to use the debt more productively to buy assets that traditionally rise in value, like shares and property.” Personally, I think his assessment is too simplistic and politically convenient (it is an election year). For me, the lights really came on when I recently came across an insightful assessment of what seems to be one of the primary causes of the emerging economic picture and potential financial crisis in the US.

    Unfortunately the same elements and conditions that are causing distress in the US also seem evident, in large part, here in Australia. Former US Federal Reserve chairman Alan Greenspan comes in for some major criticism because of his policy that sought to promote greater consumption as a way to increase prosperity through the use of easy money and artificially low interest rates.

    Another concern is the role of tax systems and their failure to encourage saving and investing. Economics author Jim Rogers wrote in 2003: “The current bubble that Greenspan does not see is the consumption bubble he is causing. He has the lunatic idea that a nation can consume its way to prosperity although it has never been done in history.”
    In America, if you have a job, you pay taxes. If you buy a stock and you get a dividend, you pay taxes. If you have a capital gain, you pay taxes again. And when you die, your estate pays taxes. If you live long enough to get social security, they tax your social security income. Remember: you paid taxes on all this money when you originally earned it yet they tax it again and again. These policies are not very conducive to encourage saving or investment. They promote consumption.

    By contrast, the countries that have been doing well the last 30 or 40 years, are the countries that encourage saving and investing. Singapore is one of the most astonishing cities in the world. Forty years ago it was a slum. Now, in terms of per-capita reserves, it’s one of the richest countries in the world. One of the reasons Singapore was so successful is its dictator, Lee Kwan Yu, insisted that everyone save and invest a large part of their income. Whatever Lee’s policies toward personal freedom, at least he forced people to save and invest. History shows that people who save and invest grow and prosper, and the others deteriorate and collapse.

    Artificially low interest rates and rapid credit creation policies set by Greenspan and the Federal Reserve caused a bubble in the US stocks of the late 1990s, policies now being pursued at the Fed are making the bubble worse. They are changing it from a stock market bubble to a consumption and housing bubble. And when those bubbles burst, it’s going to be worse than the stock market bubble, because there are many more people who are involved in consumption and housing. When all these people find out that house price don’t go up forever, with very high credit card debt, there are going to be a lot of angry people.

    No one, of course, wants to hear it. They want the quick fix. They want to buy the stock and watch it go up 25 percent because that’s what happened last year, and that’s what they say on TV. They want another interest cut, because they’ve heard that’s what will make the economy boom.

    John McPhilbin
    Wed 29 Aug 07 (07:34pm)

    Geoff

    Another form of risk-taking that was widespread in the 1920’s was lending on margin (margin lending), guess what? It’s seem a revival in recent years.

    Recently, here in OZ, many people entered agreements with various banking institutions, I’m led to believe, to borrow ‘on margin’ money to combine with their existing superannuation balances in hope of creating a larger nest egg for the future by investing larger sums in superannuation funds of their own choosing.

    Here’s a disturbing reality for these and other investors and a factor that helps trigger market volatility and large financial losses – it’s called ‘Lending on Margin’ It was reported last week “BORROWING to buy shares has more than doubled to $36.2 billion in the past two years, accounting for $88.8 billion worth of Australian stocks and helping to exacerbate the sharp falls on a highly geared market. We didn’t see this coming: LENDING ON MARGIN TO INVEST IN STOCK MARKETS IS AN HISTORICALLY DANGEROUS THING TO DO – taking on debt in the hope of making a profit in an historically high stock market has brought ruin to many an investor in the past.”

  349. And utterly true to form Malcolm and the opposition backflip two weeks after taking an unmoveable stance on an unshakable belief.

    Opposition backflips on stimulus package

  350. A new thread on the backflip is going up now…. will fill it out more later.

  351. Go for it Joni, lets get the show on the road. My other blog is mainly an educational piece for those who are interested.

    Cheers

  352. I will close this thread now that Turnbull has jumped from the 10m board.

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