Who can you trust with the economy?? (1 Viewer)

[loquasagacious]

Costello shrugs off trade deficit
18:07 AEDT Mon Nov 29 2004

The days of the banana republic have returned with Australia's trade deficit hitting record levels and foreign debt breaking the $400 billion mark.

New figures released by the Australian Bureau of Statistics showed the current account deficit reaching a record $13.7 billion for the September quarter.

Australians now owe more than $20,000 for every man, woman and child, with the current account deficit back at the level that prompted former treasurer Paul Keating to warn the nation was on its way to becoming a banana republic.

Treasurer Peter Costello shrugged off the figures, putting down the big deficit to the stronger Australian dollar and a weakening rural sector.

But economists said the results were a concern, warning expected gross domestic product figures out this week would be down while international investors may mark down the Australian economy.

The current account deficit spiked 16 per cent in the September quarter, due to a fall off in exports and a slight rise in imports.

Looks like P-plate Peter Costello who claimed to have racked up 50hrs of economic helmsman experience is leading us onto the rocks.

Note: Sorry for the mixing of the metaphors.

 

[Not-That-Bright]

When you have a growing economy of course debt levels are going to grow up... the fact is people's ability to pay off these debts and their real incomes have increased

 

[Ziff]

The Americans have a big problem too with their CAD. Some reckon that some nations might stop servicing America's debts and when that happens - recession.

 

[Phanatical]

Older people mostly voted for the Liberal party because (in my opinion), Older people are all of a sudden millionaires, or close to it, and they think the Liberal government is responsible for that. They don't realise that that money ain't actually worth as much as they think it is, considering the fact that houses are a Half million to buy nowadays. Fifteen years ago, what's worth $700000 in property was only worth $70000, but fifteen years ago doesn't seem anywhere near as long for somebody older than anybody here.

 

[daiana]

i remember the first economics lesson. the grandest teacher said to me:

"If anything goes wrong, blame the government!"

 

[neo o]

I swear, this crappy thread leaps out of the woodwork at least once every few weeks. Haven't you people ever had an original thought in your lives?

1) The government has the second lowest level of debt in the OECD, and is now actually a net lender.

2) Explain please, why it is the government's responsibility to control the activity of businesses. Please. Should the government come out and say, "BUSINESSES NO MORE BORROWING, AND THEREFORE INVESTMENT PLZ".

You won't be able to, since obviously the government can't.

I also challenge the creator of this thread to explain to me why a sustainable CAD is a problem, considering that it's merely an indication of the strong economic growth the Australian economy has experienced under the Howard government. I suppose the creator of this thread believes that economic growth is a BAD THING?

The government has put in place some measures to correct the structural imbalance of I/S (the other contribution to the CAD being cyclical factors, which government policy (such as free market policies leading towards a diversification of the export base) has somewhat alleviated, as commodity exports, which were our main exports tend to have a cyclical value.) and thus have attempted to alleviate the CAD somewhat, I don't know what a Labor government would have done, they may possibly have racked up more debt like previous Labor governments. (The Howard government worked on retiring the debt left to them by previous Labor governments, which contributed to the CAD - unlike the current government.)

Older people mostly voted for the Liberal party because (in my opinion), Older people are all of a sudden millionaires, or close to it, and they think the Liberal government is responsible for that. They don't realise that that money ain't actually worth as much as they think it is, considering the fact that houses are a Half million to buy nowadays. Fifteen years ago, what's worth $700000 in property was only worth $70000, but fifteen years ago doesn't seem anywhere near as long for somebody older than anybody here.

Yes, that pension enriches the elderly beyond belief. While, I dispute you're crappy logic, assuming it's true - older people usually aren't first homebuyers, and own a house which has also increased in value, they tend to be asset rich etc.

 

[= Jennifer =]

simple. hand everything over to ross gittens (smh man) he seems to have all the answers to life's economy problems

 

[neo o]

simple. hand everything over to ross gittens (smh man) he seems to have all the answers to life's economy problems

Thanks for that extremely well thought out post.

 

[Not-That-Bright]

It's because the economies so shit... i mean seriously my parents 15 years ago used to live in a fibro espestos filled house and are now moving into a 2 1/2 million dollar house while basically being a tradesman.

Damn bastard governments.

 

[nick1048]

I swear, this crappy thread leaps out of the woodwork at least once every few weeks. Haven't you people ever had an original thought in your lives?

1) The government has the second lowest level of debt in the OECD, and is now actually a net lender.

2) Explain please, why it is the government's responsibility to control the activity of businesses. Please. Should the government come out and say, "BUSINESSES NO MORE BORROWING, AND THEREFORE INVESTMENT PLZ".

Well they obviously have a say in terms of protectionist policy and they do have influential power. They make policy and enforce it, if anyone was to blame for national foreign debt it would be them. Infact the fact that the Aussie government backs the concept of globalisation which immediately has a short term mass CAD is enough alone to blame this "banana republic" idea on them. Yes they are at fault, and secondly addressing your first point. Our debt level is second lowest according to which statistics? The governments right?... Did the budget assessment last year, I would hardly call our foreign debt low, even in relative terms. :uhhuh:

 

[Not-That-Bright]

The current account deficit is high because foreign investors are investing in australia... we have relitively higher interest rates and a strong economy.

 

[neo o]

Well they obviously have a say in terms of protectionist policy and they do have influential power.

Are you an advocate of protectionism?

They make policy and enforce it, if anyone was to blame for national foreign debt it would be them.

Oh sure, they make policy, but they don't borrow the money that contributes to the debt. I think it's fair to blame the government for increased levels of economic growth and improved living standards that have lead to increased borrowing and a higher CAD.

Infact the fact that the Aussie government backs the concept of globalisation

It's so ironic that leftists tend to favour insular economic policy, yet whine about our foreign relations.

which immediately has a short term mass CAD

I'm sure you could have phrased that better, I invite you to try again.

is enough alone to blame this "banana republic" idea on them.

Banana republic -> failed pacific, agricultural exporting state.

Globalisation and government policy assaid before has caused a diversification of Australia's exportbase as we are exposed to more competition, it's actually both inaccurate (and rather stupid) to call Australia a banana republic.

Yes they are at fault

DAMN ECONOMIC GROWTH.

and secondly addressing your first point. Our debt level is second lowest according to which statistics? The governments right?... Did the budget assessment last year, I would hardly call our foreign debt low, even in relative terms. :uhhuh:

Australia has public sector debt of about 5% of GDP, opposed to Japans debt of about 120% of GDP, Brazil's public sector debt of about 50% etc. The Australian government doesn't contribute to the CAD. And WOW, you did the budget assessment? good job! I'd love to see you're figures.

 

[Not-That-Bright]

The bananna republic of the 80's was caused by the labor governments moves and there not being an independant reserve bank.

 

[Nick]

espestos filled house and are now moving into a 2 1/2 million dollar house while basically being a tradesman.

too bad they couldn't afford to give you an education

 

[neo o]

too bad they couldn't afford to give you an education

OH FUCK, A SPELLING ERROR! CALL THE INTERWEB POLICE!1!11!1!111!!11 Well argued, nick - thanks for your contribution.

 

[Not-That-Bright]

anyway, nick wanna tell us why u feel howards done a bad job with the economy?

 

[loquasagacious]

The CAD that we have teeters on the edge of sustainable eg we are one percentage point or so (CAD as a % of GDP) away from what economists generally regard as unsustainable and bad things happen.

Our Balance of payments is in a similarily bad position.

Government policy has a huge effect on things like this.

 

[Not-That-Bright]

addymac, you find me an article from an economist telling us how bad our economy is at the moment and how good it was under labor please.

 

[loquasagacious]

I'm not suggesting that it was rosy under labor what I am saying is that the economic scare campaign mounted by the liberal party was a gross mis-representation of the facts.

Howard himself said in 97-98 (I can not recall exactly when) that the strong performnace of the economy at the time was largely due to the hard reforms Keating engaged in.

 

[neo o]

I'm not suggesting that it was rosy under labor what I am saying is that the economic scare campaign mounted by the liberal party was a gross mis-representation of the facts.

What facts? I've already explained to you why the CAD isn't a problem.

If you are referring to the interest rate campaign, interest rates were extremely high under Labor governments (WHEN THE GOVERNMENT STILL SET THE RATES , so those interest rates were the direct responsibility of the Labor governments), that's indisputable. It's also indisputable that the under the Howard government interest rates have been low.

Hypothetically, since Labors policies weren't costed properly, and they proposed policies that would increase inflationary pressures such as deregulation of the labour market (which would lead to increased inflation therefore force the RBA to up interest rates).

Howard himself said in 97-98 (I can not recall exactly when) that the strong performnace of the economy at the time was largely due to the hard reforms Keating engaged in.

Examples of what Keating did please? I think he may he presided over the accords, that's it. Measures like the Trade Practices Act and WorKplace Relations are respobsible for present day increases in productivity. btw Keating was only in for a term, he didn't actually do much