What a lovely recession we’re having. Or not having.

Illustration: Kudelka

This morning’s GDP numbers were supposed to reveal the recession was a close run thing, with only a handful of flat-screen TVs and school gyms keeping the economy going in the right direction.

But 0.6 per cent growth in one quarter would be pretty tidy in a normal year, let alone the year after the greatest global financial meltdown in generations.

It’s now almost certain that Australia is through the worst of it and, having evaded official recession, is now firmly embracing that other R word - recovery.
There are potential time bombs that could disrupt out little party, particularly the effect of still-rising unemployment, wobbles in the Chinese recovery and the fact that hundreds of billions of dollars of debt and toxic assets are yet to be purged from the global financial system.

But if Reserve Bank governor Glenn Stevens is thinking about putting up interest rates, and Gerry Harvey, who’s probably tapped into the Australian wallet better than most, reckons the economy is getting “stronger and stronger each day”, then things must be all right.
In fact, the June quarter, reflected in this morning’s GDP figures, was a ripper for most Australians, provided you weren’t a Storm Financial client or one of the unfortunates who lost their jobs during the great corporate panic at the end of last year.

Stimulus cheques flowed, mortgages rates were their lowest for four decades, petrol prices remained below the peaks of last year and the stock market added another 10 per cent. If that’s a recession, then more of it, I say.

We may not be out of the woods yet but we’re a lot closer to that clearing that any other developed nation on the planet. While we were spending our to 0.6 per cent economic growth in the June quarter, the US went backwards 3.9 per cent, Britain fell 5.5 per cent, Germany shrank 5.9 per cent and poor Japan slumped 6.4 per cent. China, our light on the hill, rose 7.9 per cent.

There are still potholes on the path out of the forest – the cash stimulus was a one-off sugar hit, and don’t expect the stock market to continue its remorseless rise without a few corrections – but if you’ve made it this far unscathed you’ll probably survive the GFC.
Kevin Rudd and Wayne Swan will claim a lot of the credit. But take a bow citizens for just getting on with it, in the Australian way. And remember, it was your $43 billion the generous government gave you to play with.

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    • Jane says:

      12:33pm | 02/09/09

      Australia done ok? Of course it has. The fact that that reality appears to be any surprise shows the depths of deception and success of the propaganda that the KRudd government have orchestrated. We were NEVER in any danger of mirroring the scale of the GFC here. We should have been largely immune to it so the ‘how well we survived’ faux surprise is a furphy.

      We were best placed in the developed world BEFORE the GFC hit being the only country with a surplus and our banks were regulated unlike those most effected. KRuddco and their media minions talked this up with doom and gloom and scaremongered - talking the economy down from day one - lowering expectations and creating a perception of ‘mega-crisis’ to solve…... to reap praise and credit for when it inevitably didn’t end up so bad…no thanks to them but rather DESPITE them.

      They firstly completely mis-read global warnings and mistakenly worried us with bogus ‘inflation genies’...pleading for us all to ‘STOP SPENDING’ one minute…and then, when the economy was near killed because of that and confidence eroded, then felt the need for over-kill to ‘STIMULATE’ it back to life again with over-reactive, uneccessary borrowings and record debt!!

      The GFC has been the greatest and most convenient ‘tool’ in the deceit of this incompetent, ‘govern by popularity’ farce of a so-called government.
      They have set themselves up for gratuitous re-election based on false pretences…..The REAL Rudd Resultant and downturn of our economy is in front of us still, well after the next election and will be felt for decades to come - the uneccessary debt and needlessly higher taxes thanks entirely to them.

    • Formersnag says:

      12:35pm | 02/09/09

      Last time there was a GFC, sep, 1987, stock market crash, the australian economy kept partying, and did not catch up with the rest of the world on the way down till, 2 years later in 89/90. Think about it, our economy, usually lags behind, on the way up, as well as down.

    • Nathan says:

      12:43pm | 02/09/09

      @Formersnag - Things have changed since then.
      Australia wasn’t as integrated into the Asian economy in ‘87. Now we are, and as Asia is projected to be at the centre of most of the future economic growth, the Australian economy will not lag as much. Nor will the Australian economy be dragged down as much due to financial mishappenings in Europe and the USA.

    • Tim says:

      12:55pm | 02/09/09

      Jeez Jane,
      it must be bright when you take off your patented Howard Era Rose Coloured Glasses.
      Why don’t you have a lie down, it’ll be OK.

    • Patrick says:

      01:04pm | 02/09/09

      I see Jane 12.33pm is about prattling on with her drivel again. Gee Jane, it sounds like you almost “wanted” the country to slide into recession, and it’s plain to see that you are utterly infuriated the Rudd government to which you are ideologically opposed has done something right.

      Several months ago your lot where carping on about how this government had to stop blaming the previous one and take responsibility for the shape of the economy. Now that it turns out the fiscal policies of the government where the correct ones, you change tack and say that the strength of the economy is due to the former government. Make up your mind Jane. Although it’s not entirely suprising comming from the angry hate filled hypocrites who still can’t get over the fact that their man of steel was voted out of office.

      Furthermore, several months ago your lot where saying “STIMULUS DOESN’T WORK IT WILL BE A WASTE OF MONEY!!” And now that it does appear to have worked you say “STIMULUS IS WORKING TOO MUCH AND OVERHEATING OUR ECONOMY!!”. Which is it?

      I hope you enjoy living in this country for the next 10 years Jane, although if the oppositions current performance is any indicator, and if this government continues to prove itself competant and credible despite the wishes of the lunatic Right to see it fail, it might be more like 20 years.

    • Dave says:

      01:07pm | 02/09/09

      I’m guessing the 2% who lost their jobs aren’t running around saying yippeee though.

    • Jane says:

      01:28pm | 02/09/09

      Patrick and Tim, I wear your disdain and personal attack as a badge of honour. The ALP directed blog ‘silencers’ are out in force as usual but won’t succeed.

      Recession was never ( or should never have been ) any option for us….so I can hardly be dis-appointed, as you would wish me to be would I. Oops.

      Nathan, we sailed past the Asian meltdown in ‘02 with nary a blip - but then….most of Australia hardly knew it was happening - The Coalition didn’t try to point score, whip it up, scaremonger and take credit for us doing so.

    • Dennis says:

      01:31pm | 02/09/09

      Nor are the Self funded retirees after the worst super fund performances in a long long while

    • AJ says:

      01:49pm | 02/09/09

      As a Green, I have some quite large issues with the choice of direction that the infrastructure stimulus took (given I felt it was an opportunity to build the infrastructure required to move away from a ‘dig stuff up and burn it’ economy’ rather than fix a lot of schools that probably didn’t need it), however, to give credit where credit’s due, the Rudd Government’s actions have kept consumer confidence high, insulated Australian banks from the worst of the interbank lending crisis that drove up the cost of lending so much in the US and UK, and helped erode household debt.  Whilst the Right can go on talking about the recessions of years past, the difference of the size of the crash and the number of countries it hit this time around is such that comparisons to the Asian financial crisis are just irrelevant.

      And as a rather ‘meta’ comment about the comments that the Right are increasingly embracing, it worries me that they’re drifting off towards an American talk-back radio trend of ‘there’s a grand conspiracy that only we are smart enough to see, the Government has a shady agenda to trick all you fools’.  The difference between the Punch and the Fox News website is that we still cling to a modicum of reasoned debate on the effect and appropriateness of policies, rather than emotive, conjured, hateful conspiracy theories.  I wouldn’t want to see the ‘Jane’s of the Punch drag us away from reason.

    • Dani says:

      01:51pm | 02/09/09

      Jane—the Coalition never engaged in scare mongering??? (*cough* childrenoverboard *cough*). Remind me why we ended up in Iraq again?

    • Patrick says:

      02:00pm | 02/09/09


      “Recession was never ( or should never have been ) any option for us”

      Indeed, so given that the country would be in technical reccesion without stimulus spending, how do you justify your opposition to it? Presumably you will say that the country would not have entered technical reccesion even without the stimulus spending, arguing that it had absolutely no effect.

      If that where true, that stimulus had no effect on the economy, then that rather destroys the argument that it is now starting to “overheat” the economy. Stimulus cannot be doing nothing to the economy while simultaneously overheating the economy. Despite all that, the breakdown of the national accounts do seem to say that stimulus money has had an effect.

      If you truly believe that “Recession was never ( or should never have been ) any option for us”, you would be supporting the stimulus measures. It is entirely useless to attempt to hold onto a surplus in a downturn, and the Howard governments $20 billion or so surplus would have been wiped out by the fall in revenue in any case. Howard and Costello where indeed good economic managers, they understood the realities of macro economics and if they where still in charge i strongly suspect they would have followed a very similar path to what the Rudd Government has taken (they where after all acting largely on treasury advice) and if they had, I strongly suspect you would be out and about championing their cause.

    • Susan says:

      02:12pm | 02/09/09

      Aaah Jane, your misinformation makes me laugh - especially the ‘02 blip in Asia. Methinks you’re talking about the Asian Financial Crisis in 1997-98, back when the UK was our second largest trading partner, and we had next to no trade with China. 2002-03 was actually the SARS epidemic.

      Peter Costello also raved about how we were pushing through the Asian Financial Crisis at the time, and tried to take credit - I think he even tried using the return to Budget surplus as a reason (though the RBA easing rates by 1.25 percentage points over 96-97 more likely helped).

      But that’s what I like about you Jane, you never let the facts get in the way of a good diatribe.

    • Colin says:

      02:48pm | 02/09/09

      Let the Rudd supporters enjoy their self-perceived moment in the sun. Little do they know a “false dawn” when they see one.

      BTW, just to preempt the rusted-on Labor supporters, I have huge issues with the Howard era’s gross economic mismanagement too.  They set us up… Rudd is just delivering the coup de grace (IMHO).

      “It doesn’t matter who you vote for, the government still gets in!”

    • Fred says:

      02:55pm | 02/09/09

      Unfortunately for this article, the comments section has degenerated into childish name-calling.  It is no longer worth anything.

    • Steve of Cornubia says:

      02:59pm | 02/09/09

      A minor point and a little off topic, but ‘just getting on with it’ (by this you presumably mean ignoring all the gloom and doom) isn’t unique to Australians. Having lived in the UK, New Zealand AND Australia, and visited around fifteen other countries on business, I believe ‘just getting on with it’ to be a common human trait.

      But hey, every other positive facet of human nature is, from time to time, claimed to be ‘Australian’ - charitable giving, competitive spirit, looking out for your friends, etc, etc, etc.

    • Patrick says:

      03:08pm | 02/09/09

      Fred. 2.55 pm

      Ironic comment is ironic.

    • pc says:

      03:11pm | 02/09/09

      So Colin, what youre saying, and let me get this straight. 1. The recession isnt over and the worse is yet to come. 2. You are not a liberal supporter. 3 Theres nothing we can do about it anyway so why dont we all just put a paper bag over our heads. Why do you need to go on with the “self perceived moment in the sun”, “false dawn” stuff. If the Ruddbott is unable to perceive anything himself he wouldnt have been elected and he wouldnt have been able to see the need for the stimulus package. Oh and colin I see there is proof that Australia is doing better than many other comparable countries and joins South Korea, Japan, France experiencing positive second quarter growth.

    • Gandalf says:

      03:29pm | 02/09/09

      The American mortgage market allows the home buyer to cut and run. The Aussie market doesn’t. Could it be as simple as making people responsible for their debts, that’s made all this difference?

    • Kris says:

      03:33pm | 02/09/09

      Yay! Wayne and Kevin saved the day again!(/sarcasm)

      Surely at some point, people will have to concede that the “boring” arguments about our system of prudential regulation and sensible economic management have merit and that much of the credit for these things is due the Howard government.

      Further, at some point people will surely have to concede that there is no evidence that the extraordinary debt we have been burdened with was the best solution. Given how well placed we were to withstand the crisis as a result of our previously strong economic governance, it is entirely possible we would have emerged in much the same state without the stimulus payments. If so, we have assumed an almost unfathomable debt for little benefit.

      That may well end up the legacy for the Rudd government.

    • Gandalf says:

      03:35pm | 02/09/09

      Oh did I forget to mention that credit card debts and personal loans haven’t been factored into this crisis. Yet

    • Colin says:

      03:36pm | 02/09/09

      (1) No, I’m not saying “the recession isn’t over”.  I’m not even referring to “recession”... as per yesterday’s thread, I’m referring to the flow-on effects of a nation having more debt than it can ever pay back (ie), inevitable sovereign bankruptcy, and/or preceded by huge / hyper inflation of the currency, in the attempt to repay unsustainable debt to foreign creditors using devalued dollars.

      (2) Correct.

      (3) No, I never said that.

      pc, Rudd got elected in the same way every pollie does… by LYING more effectively than his opponent. Simple as that.

      You are seemingly obsessed with “growth” and (technical definitions of) “recession”.  Go study up on Australia’s Foreign Debt situation… ramped up by Howard, kicked into overdrive now by Rudd - http://www.brisbanetimes.com.au/news/business/foreign-debt-hits-the-trilliondollar-mark/2008/06/03/1212258856816.html

      Then consider how we are being screwed (silently) by devaluation of our currency already - http://www.economagic.com/em-cgi/charter.exe/rba/dmammb+1975+2009+0+1+1+290+545++0

      There’s far more to “doing better” than simplistic “growth” numbers and rhetorical comparisons, pc.  You can only learn by doing some research for yourself, rather than just accepting the bollocks pumped out by the MSM and politicians’ media HQ’s.

    • Daiden says:

      03:40pm | 02/09/09

      Excuse me for being a little slow off the mark but I can quite get a hold on the thread of this article. Seems a little on the fence neither dissecting the argument for not against, nor making real point for or against. Maybe the blog name needs a makeover to better reflect the quality of journalism. How about “the Puffff”.

      I mean, I hear the words, the reference to figures and data that evident the statements about not being in, and avoiding a recession, even that recovery is afoot.

      Somehow, running a small business that is down 50% - 60% on turnover and struggling to make ends meet, I can;t bring myself to be convinced that 1 plus 1 = 42. The worry for me is this. If on one hand the treasurer thInks that by talking up recovery he will make it happen he is deluded. On the other hand if he actually believes it and the fact is otherwise we’re being lead by the blind down a ally of pot luck. God help us and our precious economy!!!

      I know for fact the figures of my business are not isolated and the slump seems pretty much across the board. How about interviewing the man on the street, not your nose in the air director who doesn’t know what the street looks like. This country is built, or was at least once, on being in touch with the man on the ground. Now it seems we have given over to the executive with the head in the clouds. How about reporting something real about this tough time we are in? Please!!!

    • Alex says:

      03:41pm | 02/09/09

      At the end of December every developed country including Australia took a tail spin dive following the Lehman brothers and GFC .. we should have gone into recession by March as everyone was saying. Technical or not… the Reserve Bank acted quickly and together with the stimulus packages stopped the slide and now the downward arc is rebounding quite strongly. It may hurt a lot of Howard and Costello plaudits… but Rudd’s actions have prevented a recession and a deep one at that.  Unemployment may only rise marginally over the next six months. Can I remind you all that prior to the mining boom that artificially skewed the true rate,  the unemployment rate was actually 7%.

    • pc says:

      04:34pm | 02/09/09

      Colin, we dont have a date we cant pay back. (See how I only need one line)

    • pc says:

      04:58pm | 02/09/09

      Sorry Colin, I meant debt instead of date. Freudian slip. sorry mind elsewhere.

    • Colin says:

      05:02pm | 02/09/09


      Perhaps the reason you only need one line is because you have zero facts or supporting evidence.

      You claim that “we don’t have a date (sic) that we cant pay back”?

      Consider a chart of Australia’s Fed Budget surplus/deficit going back to 1973, taken from the Reserve Bank’s onw dataset - http://www.economagic.com/em-cgi/charter.exe/rba/eagbhsd+1973+2009+0+0+1+580+1090++0

      What is the greatest one year budget surplus we’ve ever had, pc? Let’s call it $15B.

      $15B per annum ... every single year ... would NOT service the repayments @ 7% on total borrowings of $214.285B.

      Rudd & Woin have openly admitted they will reach total debt of $315B.

      Do the maths, pc. Even if we achieved BETTER than our best ever Fed Budget surplus… every single year! ... we can not service the Interest-only on $214B of borrowings (@7%). Much less $315B.

    • pc says:

      05:51pm | 02/09/09

      Colin, I am not obsessed with growth figures , I am much more interested in how people are managing to cope with what may not be a recession but are still tough times. No maths needed. your position: “If there isnt a recession, How will we get malcom turnbull elected.” simple and short, just like pc.

    • Colin says:

      06:47pm | 02/09/09

      I’m concerned for those struggling now too, pc.  But I’m more concerned with how they/we will all cope over the coming years.  Hence my trying to present simple facts to counter the short-sighted media-driven view that Uncle Kev has saved the day, and we’ll all live happily ever after.

      BTW, your parting shot re “your position” is “how will we get Malcolm elected” speaks volumes.  There’s clearly no point my bothering to reiterate AGAIN my negative views of BOTH sides of politics, is there… you won’t take the slightest notice.

    • Farness says:

      07:20pm | 02/09/09

      Daiden is telling it like it is and the October numbers will prove it. Here are four points about economic indicators applicable to my business.

      I. A major truck dealer’s sales completely died at 30th June when the 30% investment allowance under the stimulus package ended.

      2. My business services the mechanical workshops in Perth and people are servicing their vehicles less.

      3. I have two trucks sitting idle with the drivers sent for holidays.

      4. My local sales have dropped 70% and expected to recover very slowly.

      Spread these type indicators across the board and we are in recession now. Swan is honking about data which ended two months ago.

      With 30 years experience in watching the ups and downs, chances are that I’ll know before most people on this board if and when the economy is recovering, including Mr’s Swan & Rudd. So will Daiden.

    • Colin says:

      07:32pm | 02/09/09

      Oh, nearly forgot - Best wishes with your date, pc ... or is that “debt”  wink


    • Shane From Melbourne says:

      07:32pm | 02/09/09

      I foresee a debt semi trailer next election year. Maybe even two !!! And I keep telling people that it’s CHINA’s stimulus package that mattered, not Rudd’s but no one seems to care.

    • Karen says:

      11:08am | 03/09/09

      As the next few months and years come along there are going to be alot of red faces in the Labor party. Thanks to a PM who is more concerned about his own popularity and winning votes for the next election. An arogant PM out of control, down goes the ship with it’s phoney leader! Turnbull is looking sweeter everyday,

    • Colin says:

      12:45pm | 03/09/09

      Don, ever heard of the “appeal to authority” fallacy?

      Did you notice that not a single one of those “authorities” you cited actually predicted the GFC in advance?  Why should we put stock (pardon the pun) in their opinions now?

      Even I… with zero “economic” qualifications, was able to see it coming thanks to independently researching and learning the basics, thus enabling me to pull out of the sharemarkets entirely (including super into cash) in May ‘07 ... just a couple months before it all started going pear-shaped in the USA.

      Not self-congratulating at all, just making the point… why would you trust any of these “authorities”, none of whom saw / forwarned of the crisis coming, when anyone who takes the time to research, learn, and look at the data for themselves… can?

    • Don Clark says:

      02:37pm | 03/09/09

      “Did you notice that not a single one of those “authorities” you cited actually predicted the GFC in advance?”

      The cited texts were selected -and noted- as starters for *current* analysis on the topic at hand.

      Whether, and to what extent, reputable national and international agencies offered warnings *prior* to the collapse would be worth “taking the time to research, learn, and look at the data for themselves”, by working deeper from the links provided. 

      As opposed to starting by flat assertion lacking any supporting evidence.

    • Don Clark says:

      03:33pm | 03/09/09

      As for the “appeal to authority fallacy”, the previous poster stretched his point to the very limit.

      For those interested, it most often arises from deliberately misrepresenting a source of some authority in one field as though they were an authority in another, unrelated matter. Or by presenting a genuine relevant authority as infallible.

      I noted plainly that the remarks quoted were all current and all in broad agreement. I make no apology for their international standing. I made *no* claim that they were infallible.

      More “Appeal to authority” Notes:

      Turning now to an ealier post on the maths of it: 
      “$214B of borrowings @7%”

      In the absence of a reputable source or a working link, the 7% rate immediately caught my eye as needing a check. No such rates are being paid around the world at present and it may be well be some time before they are. Further, the net debt sum is not in fact $214bn but some 5%less at $203bn.

      As a parallel - and open to further qualification - let us look at Government Bonds - a means of raising funds by government. At no time in the past decade have Aus bonds paid 7% or anything like it, and from 2008 to date, Gov bond yields range between 3% and 5%.

      It may be better to cite some measure other than yield, but that was convenient to hand from a reputable source, http://www.rba.gov.au/ChartPack/interest_rates_australia.pdf
      There’s plenty more on Gov Bonds on the RBA site as such, for those who have the time to extract and analyse the spreadsheets.

      For my part, I’m content to finish by quoting Ross Gittins again, op cit:
      “At the projected peak in the net debt of $203 billion in June 2014, it will be equivalent to just 14 per cent of the nation’s annual income (which is the gross domestic product).

      Such a modest, manageable debt - a fraction of the relative size of the net public debts of all the major developed countries - will not take generations to pay off, not that it would matter “

      Although he is very experienced and well qualified, I don’t claim Mr Gittins to be infallible. Nor does he. I do find him helpful, to the point, and even-handed, as his long history of online columns suggests.

      Off now for the usual afternoon cycle.

    • Voxpop says:

      10:58am | 04/09/09

      Don Clark your information and summation is superb - I always read your posts with great interest.  And while you bring a lot more to the debate than I possibly could I would just like to repeat an analogy I heard on radio from a reputable economist though I don’t remember his name.
      The level of Government debt can be compared to that of an average household borrowing $100,000
      Now I’m damn sure that there’s plenty of households with debt 3 times that level and have no problem.

    • Colin says:

      05:29pm | 04/09/09

      Hi Don,

      You’ve made good points re the specific net debt claim by the government, and of course, the key point regarding government bond yields.

      However, a few counterpoints in clarification… just as food for thought:

      (1) Even we take the lowest of those Govt bond yield figures you mention (3%), and assume (BIG assumption) that yields offered in future will not exceed that, then you’re still looking at $203B x 3% = $6.1B per annum minimum, in Interest alone. Of course that is simplistic, but you obviously understand enough to get my point surely?  Again, looking at Australia’s historic Fed Budget surplus/deficit numbers, AND considering even the Govt forecasts slow growth in the near term (at least), what are the odds this (or any AU Govt) can manage to return a $6B per annum surplus consistently… just to service the Interest, never mind the principal?

      (2) Given the ever-increasing deficit-spending and nett Foreign Debt position of Australia’s national finances, do you really think that the Govt will be able to continue selling bonds with only a 3-5% yield in coming years?  History shows that the deeper you go into national debt, the greater the deficits run, the more inevitable it is that you must offer ever higher yields to raise capital.  Thus pushing up interest rates, thus beginning a vicious cycle.

      The govt and media spin doctors are out in force with the simplistic analogies as per Voxpop above, to “manage expectations”.  But it seems clear to me, at least, that the reality of our attempting to pay down this debt wil be a far cry from that being projected.

      Very little needs to vary from the “ideal” “return to trend growth” scenarios being spun… and just consider Bill Gross @ Pimco’s latest views on global growth in the next 10-20 years… for it all to look far uglier than is being painted.

      Just take the top of th bond yield range you quoted (5%)... suddenly you’re looking at $10.15B per annum just to pay the interest.  It just ain’t gonna happen… if anything, I suspect in due course that our Govt will be in a not dissimilar situation to the USA regarding difficulties in raising funds via bond sales.

      Still, who really knows, right… we’ll all see in due course.  Meantime, I remain DEEPLY sceptical.

    • Don Clark says:

      07:33pm | 04/09/09

      Thanks VP, if of use that’s good.  Indeed, the whole point is to be of use and to show sound sources for anyone to follow for the topic at hand.

    • Don Clark says:

      07:10am | 05/09/09

      The estimated net debt by 2013 is a projection and subject to revision as circumstances change. So how much the gathering pace of recovery will reduce that remains to be seen. How much of the ultimately required borrowing is issued at 3% or at 5%, or otherwise, remains to be seen.

      Ross Gittins a spin-doctor? Hardly. Not a credible imputation, at all. His view was “find something else to worry about”. 

      It’s true that Warwick McKibbin (Director, ANU Centre of Applied Macroeconomic Analysis; Professorial Fellow, Lowy Institute; Senior Fellow & co-Director, Climate Change,  Brookings Washington) reportedly has a rather different view about the Government’s overall strategy. He also sits on our Reserve Bank board.

      For interest, McKibbin was previously adviser to the former Prime Minister, who rejected his Carbon Trading proposal.  Mr Turnbull’s expressed views on the Government’s GFC response seem to be in fairly close accord with McKibbin.

      However, I’ll close for the weekend by referring to the recent (7 Aug) IMF Executive Board summary view for Aus:
      “Directors welcomed the targeted, temporary fiscal stimulus, which is expected to support domestic demand in 2009 and 2010. Given low public debt, they generally considered that there remains scope for further fiscal stimulus if warranted by circumstances, while stressing the need to exercise prudence in light of the contingent liabilities associated with exceptional support provided to the financial sector. Directors welcomed the government’s commitment to a deficit exit strategy, aimed at returning the budget to surpluses over the medium term. They recognized, however, that further fiscal adjustment could be needed to achieve this objective if trend growth and the terms of trade are lower than assumed.”
      More: http://www.imf.org/external/np/sec/pn/2009/pn09101.htm

      It will certainly be interesting to see what views the Treasury, the Reserve Bank, the OECD, the World Bank and the IMF take on the level and reduction of net debt as the recovery gathers pace.

      Uncertainty is ever present in such things and no responsible analyst would ever suggest otherwise.  There’s no point in trying to make that a sneer, thanks.

    • Don Clark says:

      07:47pm | 05/09/09

      After a full-on day ride, time on hand to do a little more pondering and digging on current economic issues.

      This first paper goes some way to debunking the myth that government debt in Australia is some-how other than modest and manageable. From a recent (March) issue of Treasury Economic Roundup, by Treasury staff

      A history of public debt in Australia
      Katrina Di Marco, Mitchell Pirie and Wilson Au-Yeung

      “This article has shown that Australia has undergone several periods of debt accumulation, followed by periods of fiscal consolidation. Periods of strong economic growth following episodes of debt accumulation have helped support relatively quick improvements in the public sector’s net debt position. Australia has a low level of net debt both historically and when compared with G-7 economies.”

      In full:
      Treasury Economic Roundup Issue 1, 2009
      Date: Saturday, 7 March 2009

      This second piece, from the latest issue of Treasury Economic Roundup is a more recent speech, quite readable and to the point, by the Executive Director, Macroeconomic Group at our Australian Treasury, Dr D Gruen.

      His speech summarises the various causes of the financial crisis while reflecting on the national and international context. Tellingly, he summarises the several warnings that did indeed emerge *before* the crisis arrived, and goes on to answer the inevitable question, why those warnings went largely unheeded. Sadly, the prevailing commercial “fashion” was tone-deaf to the warnings.

      Economic Roundup Issue 2, 2009
      Date: Saturday, 4 July 2009
      Reflections on the Global Financial Crisis
      Dr David Gruen
      Address to the Sydney Institute, 16 June 2009

      After a long day awheel in the Spring sunshine, these brief summaries will just have to do. Anyone who is interested can follow through to the full text. The point is, these papers effectively rule a line under two quite persistent furphies that have gained some unwarranted currency by mere repetition.

      1) The supposed “debt monster”. 
      Nup. Not so. Modest, and historically matched and countered.

      2) “None of the experts saw it coming”
      Nup. Not so. A number of warnings over some time. But the warnings were indeed largely ignored, by those with an interest in taking the greater risks implied by a more fashionable view.

      Does this matter?
      Yep. These sources I’ve shown are freely available to *all*. There’s no need for any of us to put up with bodgy argument and bodgy claims laced with insult, ignorance and self-interest. The major bodies of the day are doing their best to put their professional cases fairly and fully, in places where any of us can take a look and have a chance of forming a view. 

      Don scripsit.
      Written by and posted in good faith under his own name by a private citizen and non-Labor voter, not in the employ of any political Party or interest group.

    • Stella says:

      06:36pm | 23/06/10

      It will certainly be interesting to see what views the Treasury, the Reserve Bank, the OECD, the World Bank and the IMF take on the level and reduction of net debt as the recovery gathers pace.
      Uncertainty is ever present in such things and no responsible analyst would ever suggest otherwise.  There’s no point in London hotels trying to make that a sneer, thanks.
      The level of Government debt can be compared to that of an average household borrowing $100,000
      Now I’m damn sure that there’s plenty of households with debt 3 times that level and have no problem.

    • Ashly says:

      10:57pm | 24/04/12

      the main reason for Recession is government wrong policy, money are going to pocket of big business man and 99% people are jobs less. Government should create more and more govt jobs


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