Midweek Mayhem!!

Hello

Good afternoon and welcome to Midweek Mayhem. Our middle-of-the-week chit-chat thread.

As Joni has alluded to earlier, reports are coming in that Australians spent a record $19.3 billion in March, coinciding with the Government’s stimulus cash handouts.

Figures released by the Australian Bureau of Statistics indicate that retail trade at current prices rose by 2.2 per cent in March to a seasonally adjusted $19.3 billion. This was well above the market expectations of just a 0.5 per cent increase.

By all accounts, the media and economists are overwhelmingly attributing the increase in consumer spending to the Government’s stimulus handouts.

Now what was it that Malcolm Turnbull was saying the other day about the majority of Australians saving the cash handout rather than spending it?

In other news, Wolverine has opened to crap reviews but this hasn’t prevented Hugh Jackman from making a motza at the box office. Send some of it my way Hughie baby..!

Now I know that everyone here would have been watching the Logies with baited breath so feel free to elaborate on any lasting impressions…

Today’s youtube clip is an absolute classic which you simply must watch – even if you’ve seen it already.

Go on, watch it…

WATCH IT…!!!!!!!

Mick Keelty has decided to step down.

About time if you ask me.

More later as the story develops.

Keelty is going to stand down on the 2nd Sept as the AFP Commissioner.

From the OO:

Mr Keelty has been under mounting pressure over the case of former Queensland doctor Mohammed Haneef, arrested in 2007 on suspicion of terror-related activities.

A report into the arrest, detention, charging, prosecution and release of Dr Haneef by former NSW Supreme Court judge John Clarke SC presented to the government late last year found the evidence against the Indian-born physician was “completely deficient”.

Keelty has been involved in other controversies covering matters ranging from his 2004 comments on the Madrid train bombing to the AFP’s involvement in the case of the Bali 9 that has left Australian citizens facing the death penalty in Indonesia.

In my opinion, he should have stepped down after the Haneef affair.

China will save us again.

Recently the mainstream media (MSM) has been whipping itself into a frenzy over Prime Minister Kevin Rudd’s apparantly “too cozy” relationship with the Chinese Government.

Firstly, we had Rudd’s conversations in fluent Mandarin with Chinese leaders much to the chagrin of his Liberal Party counterparts who, by comparison, would struggle to order Yum Cha in Haymarket.

Mr Rudd’s familiarity with Chinese culture and in particular his fluency in Manadrin should not be underestimated. Such things are greatly appreciated by the Chinese and will prove a tremendously powerful ingredient in building and strengthening our future ties with this emerging superpower.

Mutual respect, maintaining “face,” diplomacy and the way in which China “does business” are things that Rudd understands.

In contrast, the gobsmacked and floundering Liberals, sought to pick holes in Rudd’s familiarity with the Chinese “Modus Operandi.”

We had reports of the “mysterious Chinese Businesswoman” funding overseas trips – which soon disappeared from the headlines, and more recently fearmongering over China’s military build-up – while Australia prepares to do exactly the same thing.

As America’s economy goes down the toilet, there is little wonder that China is readying itself against any external threat.

Arguably, China will soon emerge as the world’s major economy. Personally, I believe the collapse of the financial sector and the US economy has been the tipping point in this respect.

Reserve Bank Governer Glenn Stevens has also signalled the important role that China will play in rescuing Australia from our economic doldrums.

According to The Australian, the Mr Stevens has refreshed the prospect that traditional safeguards of China and commodity prices will lead Australia’s recovery from recession in the next year.

The bank met the expectations of the financial markets yesterday by leaving interest rates on hold at 3 per cent despite some economists expecting a 25-basis-point cut.

The RBA has cut 425 basis points from the official cash rate since September last year, taking rates from a peak of 7.25 per cent to the current rate, which is a 50-year low.

The majority of economists expect rates to be pared back to 2 per cent before the end of the year, but the RBA indicated future reductions would not necessarily be automatic.

In a statement, RBA governor Glenn Stevens said the Australian economy and the world economy as a whole were front-loaded with stimulus through the co-ordinated rescue package led by the G20.

“The global economy contracted further during the first few months of this year. While the near-term outlook remains weak, there are further signs of stabilisation in several countries,” Mr Stevens said.

“The Chinese economy in particular has picked up speed in recent months and many commodity prices have firmed a little.

“The considerable economic policy stimulus in train in most countries should help contain the downturn and support an eventual recovery.”

The Australian dollar strengthened on the rates decision, given that the move to stay on hold maintains the differential between Australia and US, where the official interest rates are virtually zero.

The currency moved from US73.80c up to US74.20c before it was sold off slightly. At the local close it was at US73.96c.

The interbank futures market is now tipping that rates could stay on hold for the rest of the year.

UBS economist George Tharenou said the RBA’s emphasis on China showed the central bank thought the return of the world economic superpower could propel Australia’s prospects in the next few years.

“We think the RBA is seeing some signs of the outlook improving globally and stability in several places,” he said. “They are placing more weight on China given our trade experience and they are seeing improvement in commodity prices.

“There are signs China is picking up and if there is the same pick-up in commodity prices then that would give a direct boost to the income side of the Australian economy.”

So it seems, that Australia’s future prosperity will once again depend on our relationship with China, and its future growth and development.

Budget Looms. What are your Predictions?

All will be revealed by Wayne Swan in next week’s Budget and, by all (media) accounts it’s going to be a “horror” Budget.

We’ve already been warned that “Middle-class” welfare will be targeted and that the looming Budget deficit may take several years to restore itself to the black.

Interestingly, we’ve had very few “precise” Budget measures leaked to the media as in previous years.

The budget is expected to record a deficit for next financial year of at least $50 billion but probably closer to $70 billion.

In a search for savings, and the billions needed to increase pensions, the budget will target those on higher incomes.

According to The Sydney Morning Herald, Such measures will include the means-testing of middle-class welfare, probably at a combined income level for families of $150,000.

The Government could means-test the $3.5 billion-a-year health insurance rebate, reducing the 30 per cent tax break for those on high incomes.

That would breach Labor’s election pledge but the Government could argue that high earners would benefit from tax cuts of up to $41 a week.

For the first time, the budget will contain long-range revenue and spending projections, beyond the standard four-year estimates, to plot a path back to surplus. It will pledge that once growth returns to trend levels, spending growth will be capped at 2 per cent and all tax revenues directed to pay off the deficit.

Speaking from a position of great experience, Shadow Treasurer Joe Hockey has said that “Kevin Rudd will never deliver a surplus budget.”

So what would you like to see in next week’s Budget?

(Next week, I’ll post an analysis of The Budget and what economists think of it).