The Falling U.S. Dollar and the APA bid..

[DutchRoll]

Originally Posted by Pass-a-Frozo

Or did you prefer it when back in 1990 US interest rates where 8.25% and Australian interest rates where 17%??

There's a very interesting Boyer lecture transcript from former reserve bank governor Ian Macfarlane about the 1990 recession and all the speculation about who or what was to blame. Even Keating's stupid remark gets a mention, although in a perverse sort of way, it was basically true (still a very dumb thing to say to the electorate though). The whole situation was rather more complex than "Labor - bad, Liberal - good", and even most economists hadn't really decided what monetary policy should really be trying to achieve at that stage.

Part of it, for example, was to do with very heavy gearing in the corporate sector persisting right through the late eighties, Macfarlane stating that its borrowing was still rising at 17% PA in 1989 despite rising interest rates! GDP growth was strong (5%), as was domestic demand (8%).

Of 17 larger OECD countries to have a recession in 1990 (only one didn't), 10 of them had an even bigger fall in GDP than Australia. Australia was very much in the middle of the field, with Canada, New Zealand, UK and other european countries being worst affected, and the US (as you implied), Japan, and a couple of luckier European countries being less affected than us.

So, dumbing down the argument for political purposes doesn't really reflect the full (or even real) story, though we tend to see this done ad-nauseum in right-wing commentary in the papers, etc.

[speedbirdhouse]

Some perspective on the howard legacy???

http://blogs.theaustralian.news.com....onomic_legacy/

[cobber_digger_buddy]

as we're at it, I would much prefer the current government to have spent a lions share of the surplus (which is a symptom of a poorly managed economy anyway - why have a surplus unless you intend to invest it abroad or count it each night like a sad beancounter) on public transport infrastructure, education and health and formulate some bloody consensus on a water and energy strategy TOGETHER instead of sniping incessantly and wasting time.

and Not squander it on ineffective tax treats to buy votes.

[speedbirdhouse]

Too bloody right !!!

[404 Titan]

cobber_digger_buddy

I would much prefer the current government to have spent a lions share of the surplus (which is a symptom of a poorly managed economy anyway

Rubbish. A surplus is way more beneficial economically than a deficit. Do you run your household where you spend more than you earn? Maybe you would like to ask the state premiers why they aren’t getting the full benefit of the GST collected by the Fed on their behalf.

why have a surplus unless you intend to invest it abroad or count it each night like a sad beancounter) on public transport infrastructure, education and health and formulate some bloody consensus on a water and energy strategy

To pay off debt. You know that thing that happens when you spend more than you earn. Australia still spends way more than it earns. All these things you have mentioned are state responsibilities. The Feds could give them more money but they would probably just piss it up against the wall. The states have also reneged on the pledge to remove all stamp duties and charges when the GST was introduced. Why should the Feds give them a cent more until they honour their agreement?

[cobber_digger_buddy]

Rubbish. A surplus is way more beneficial economically than a deficit.

404,

true, but only when the rates are high, holding a surplus during a low interest rate period is foolish, because it does not work for you. There is no point. It is incumbent on our government policy to make the best choices, declaring a whoopee about surplus (which is tax collected) and then giving it back as a freddo treat is momentary, it does not last, it's a squandering of a potential to convert that surplus into a long lasting capital change, or a better education system.

FYI During low interest periods, it pays to spend more than you earn and gear the debt, (look at some of macbanks crazy vehicles) to take advantage of the low cost of borrowing, now is the best
(well actually three years ago) would have been the best time to commence large cap ex projects, bridges, rail, etc etc I think you would agree we have seen this.


I spent quite some time at (and I agree that they are state problems) state government level and I can tell you that they do not plan for surplus, they plan to spend exactly what they say.

Any amount of money , +/- over or under is poor management.

Why should the Feds give them a cent more until they honour their agreement?

true, but why more importantly , do we have three levels of government , when two would do, fed and local, ditch the states.

I don't care about state or federal, I just want a government that works without having to bicker

[Chimbu chuckles]

Couldn't agree more....3 levels of beaurocracy for 20 million population is just an obscene waste of taxpayers money.

[Sunfish]

As for surplus and deficit budgeting, let me introduce you to Lord Keynes, the inventor of Keynesian economics.

At present, the economy is tight as a drum through capacity constraints. There is no way the government can spend the surplus without creating inflation - yet they are spending it - in tax cuts and election promises.

The Reserve Bank has just put a shot across their bows (both parties) by raising interest rates - which is a not so subtle message to the community and government "Stop spending".

Now when the economy turns down, say the US and then China tank, thats the time for the Government to open its cheque book and start spending - to take up the slack or overcapacity in the economy by building dams, roads, airports and other needed items. Since the government has no debt and is running a surplus, it can borrow bigtime overseas without affecting the dollar either.

Keynes worked all this out in the 1930's and got us out of the depression as a result.

Chimbu, three levels of government is about right, since you want decisions to be made at the lowest practical level (closest to the people affected).

I for one, do not want the decisions about paving my street etc. made in Canberra.

I suggest to you that the real problem is the massive overlaps and cost shifting games and the hundreds of thousands of public servants who have a vested interest in perpetuating them.

For example, I once had colleagues in the Federal Industry Department working here in Melbourne, supposedly to "help" manufacturing industry. Their one goal, stated many times in private, was to get a posting back to Canberra to get as close to the Minister as possible and suck themselves further up the tree.

Can you imagine what "Help" these people were to Victorian industry when they couldn't even navigate the city without a map, nor find half the towns in the State? They regarded a posting to where their customers were and away from Canberra as a demotion to be avoided at all costs. Do you want a bunch of Ivory tower people in Canberra making decions at a local level?

And don't point to Britain or America either. Britain has massive County Councils that play the same role as State Governments here, and of course America has fifty State Governments, complete with their own legislatures and tax systems, and it seems to work for them. If you want to know how it feels to have a central Government responsible for everything, read the "Clochemerle" series of comedy novels about the fictional French town, and a few "Yes Minister" scripts for good measure.

If Rudd continues his apparent plan to reconfigure State/Federal relations to end these overlaps and cost shifting games, he'll get my vote.

[404 Titan]

Sunfish

Regarding surpluses and deficits, I couldn't have put it better myself.

[mach2male]

Why Go to School?

PPruNe Can be so educational at times.
The way ideas and concepts are distilled is outstanding.
I particularly enjoy the way misconceptions regurgitated are debunked.
Concepts and understandings that I held to be true for years have been shown to be erroneous and resulted in a rethink.
To keep up with what is said here I continually do research and its an interesting journey to re educate youself regarding recent political history and economic cycles.
One thing is obvious....We never bloody learn from past mistakes
Sorry about the corny philosophizing..the intent is sincere

[surfside6]

Well Well

The googling pseudo economist returns.
Do you ever have an original thought?

[surfside6]

Egocentric Assumptions

Like most self absorbed little people you make assumptions about others.
You assume that Cabin Crew are not educated and therefore could not possibly understand Macroeconomics.
I do understand IS and LM curves,J curves and Phillips Curves.I also understand the concept of Imaginary Numbers.
Your innate stupidity is underlined by these assumptions.
Naughty little Frozo dont make that mistake again

[travel thickness]

Question?

Is PAF Geoff Dixon in bad drag?

[lowerlobe]

Your becoming a little pretentious there PAF.You must be a lot of fun to have a drink with considering that only you can understand anything more complicated than a grain of sand.

Hang on though....Your only a driver!!!!!

[surfside6]

Naughty Little Frozo

There you go making assumptions again.Tsk Tsk
I dont google regarding Economics...I dont have to.
Six years of slogging my guts out late at night in Fisher earnt me my degree.
Where did you do your B.Goo?

[surfside6]

You Are Really Naughty

You dont have a degree do you?
No wonder you are coy about your credentials....You dont have any.
I`ll make a valid point... pure economics has little association with reality.

[Butterfield8]

Housecleaning PAF

Either PAF has thought better of his previous posts and deleted them or the Mod has done it for him.
Never really came clean about his creds did he?

[lowerlobe]

As I've always said. Unions raise unemployment. i.e. Pilot unions attempt to raise wages for those who are currently working for airlines like QF, at the expense of everyone else.

This is a quote from PAF...It is either extremely biased or naive but certainly myopic.

So to put it simply are unions the only group in society that look for pay rises?

How about the corporate world?

Are their pay rises and bonuses achieved out of thin air or do they come out of company profits?

How about politicians?....Who pays for their pay rises?..do they come out of the treasury in some sort of magic way without the need to pay for them?

If we extend your logic (or lack of) then anyone who seeks and achieves a pay rise raises unemployment!!!

Have you ever had a pay rise?

[Sunfish]

Friedman and "freedom to Choose", my my. Have a look what laissez faire economics are doing in America at the moment.

As for the good old american "choice" argument its a merely a rhetorical device unless the choices are real and the people making them are fully informed - which most are not.

This argument is usually trotted out to blame people for the state they are in as in "He chose to become a gang member, and now has to take the consequences of his decision." - when handing out a mandatory sentence or whatever.

The flaw in the argument is that if a kid grows up in a gang infested neighborhood, where all "successful" people are gang members, and no alternatives appear to present themselves, it's not really an informed choice between alternatives is it? For example, could the kid have chosen to go to medical school?, or law school? Definitely not.

As our poet laureate Les Murray said, "the ultimate crime in Australia is to give people a rotten education - and then blame them for it."

Good to see you doing something about your education Frozo.

[cobber_digger_buddy]

I think bickering amongst ourselves and saying Labour did this , Liberals did that , distracts us from the one key truth.

All politicans are liars

All Governments (now a days) will generally have strategic fiscal policies quite similar to each other, what differs is usually in the detail.

Howards Tax giveaway last month was very dumb, as so is his AWA policy , I could comment on his lack of an independent foreign policy, but why change after two hundred years, I suspect we will wait another two hundred to see a change.

I was quite amused last night watching a "plumb" in mouth Toorack grass castle 60 year old Aussie on the SBS discussion programme, declare with such a Grace brothers Mrs slowcomb "are you being served" voice that she did not trust Kevin Rudd because of his diplomatic background, and there in the studio like a pink fat baby Indian elephant at Christmas, festooned with fireworks was the king of diplomatic double talk and foreign office smugness, billy bunter Downer himself.

I don't think the electorate are very clever, if the vote the liberals out, then labour will have to contend with a "cooked" economy, if the keep the liberals in, then debt will soar, until we do it all again at the next election.