Where is the Global Financial Crisis monster hiding?
Most Australians believe the global financial crisis is just another horror movie that will scare the bejesus out of us for a little while before the hero emerges covered in blood and the credits start to roll.
That’s the only conclusion you can draw from the latest Essential Report that finds more people think Australia’s economic conditions will get better rather than deteriorate over the next 12 months.
GFC fear reached its high point in February, when 65 per cent of people expected conditions to get worse, compared to 19 per cent expecting it to get better; now its as if the battle is over and Kevin 07 has slayed the beast. Following last week’s news that Australia had avoided technical recession, 43 per cent of people now believe the economy is on the up and up, compared to 37 per cent who see harder times to come.
Optimism is a great thing and the experts say confidence is a factor in avoiding deep recession, but there seems to me to be something slightly unhinged in our collective response to this crisis and crises in general.
When the problem first hits we scream like a teenager in a cinema front pages of our papers bellow of the impending doom where the evil (insert relevant crises) will rip away our way of life and leave us broke/sick/dead.
Then we enter a period of pfaffing and obsessing every available column inch is dedicated to the threat; our leaders condemn its existence, columnists bang their keyboard and cite it as proof of whatever worldview they favour.
Then we create the relevant bogey-man - big banks, coal miners, Victorians - and devise plans to isolate, vilify and ultimately conquer the beast. And then we lose interest and forget what we were scared about in the first place as our exaggerated fears fail to materialise.
The GFC was always slow-burner as the credit squeeze washed through the US, through Europe and into Australia. Companies are still shedding staff and the economy is slowing down, several hundred thousand Australians are expected to lose their job.
But the walls have yet to come tumbling down, the government’s stimulus package is propping up spending and jobs and the long-term investments in education and broadband are well-targeted.
My concern is that the early resolution of the crisis, at least in the public’s mind, will be matched by a backlash in the coming months when people realise there is a sequel - a Son of GFC II.
The Opposition has set up the dynamics for this sequel, the villain will be the PM for pumping the money into the system that has kept the economy afloat to date. This is where the plot will get really messy a crisis bought on by the failure to regulate, will be blamed on government being too interventionist.
The political debate will turn to the size of the deficit, rather than the number of people who have been kept out of work; and a government that has used the tools at its disposal to avoid high unemployment will be attacked for their success.
The Global Financial Crisis is complex, much of its impact is still unknown and here¹s the scariest thing we are all participants; this is not a show we are watching, it is something that will touch all our lives.
Let’s hope the majority of Australians who think the worst has passed are right; my instinct, though, is that this movie is far from over.
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