Debt

Watching Kevin Rudd exhort the nation to work harder to deliver greater national productivity reminded me of a university attack that humanities students used to level at graduating students in the engineering faculty.

Arts students used to mock engineering graduates for what they claimed was an inability to communicate beyond formulas and equations. 

They used to assert engineers would say on graduation: “Last year I couldn’t spell enganeer, this year I are one.”

Continue reading "Hard lessons Rudd is learning about the economy" »

More data today suggest the national economy is in a holding pattern. More than 21,000 people found themselves out of work in June, a rise of just 0.1 of a percentage point in the national unemployment figure.

The Reserve Bank cut interest rates to 3 per cent in April and hasn’t budged them since. And this week the Fair Pay Commission,  in defiance of the government and unions, effectively gave low-income earners a pay cut when it froze the minimum wage. The commission argued that it would cost jobs and, as Clive Mathieson pointed out this week, jobless people can’t help the economy as they have zero money to spend.

These consumer sentiment figures show that significantly more Australians are feeling upbeat rather than gloomy about the economy. This is despite a range of forecasts - from banks and the federal government - predicting significant job losses over the coming year.

The unemployment figure today was 5.8 per cent. The crystal ball-gazers say it’s heading for around 8 per cent. Clive also pointed out recently that economists’ predictions are often useless and change tack with the economic winds.

There may yet be some nasty surprises as cuts in business budgets for the new financial year, which started just eight days ago, start to bite. Today, though, I’d like to ask where you think the economy is heading over the next six months. Are we out of the woods yet?

The debate the government deficit reminds me of the slogan that The Sheep from Animal Farm chanted in support of The Pigs: “Four legs good, Two legs bad”. Anything The Pigs did was OK, because they were Animals, and therefore good. Anything Humans did was not, because they walked on two legs and were therefore bad.

Ditto the debate over the debt levels being accumulated by the Federal Government in response to the Global Financial Crisis: it seems that Government debt is “two legged”, while private debt incurred is “four legged”.

Continue reading "Private debt is the muddy pig in the farmyard" »

I often get asked what will be the lasting effects of the Global Financial Crisis and the Australian recession on Australian attitudes and behaviours. What will be the lesson to be learnt from all this?

In many ways, it is early days for Australian consumers. Sure the finance media has been full of bad news for over twelve months.

But up until the end of January we were still finding that consumers were taking a cautiously optimistic approach to the economy.

Continue reading "Paying off credit card better than $10,000 payrise" »

The battle lines in national politics have now been drawn along a fault line summed up by two four-letter words: debt and jobs.

In the one corner we have the Rudd Government, justifying an audacious program of pump-priming in order to protect jobs; in the other we have the Opposition, telling us it’s all about debt.

The key to understanding the jobs versus debt debate is that this is not an argument about economics – it is a battle to manage the national agenda.

Continue reading "Debt versus jobs: battle lines drawn for next election" »

Update: watch Rudd’s limp Lateline performance here

HERE’S a quick test. Read the following words out loud:

Three.
Hundred.
Billion.
Dollars.

Did you succeed? Congratulations! You could be in with a chance of doing a better job at levelling with the Australian people than the current Prime Minister.

Kevin Rudd was collared on Lateline when asked to name the peak level of debt that Australia would face according to the current plan as outlined in the federal Budget last week.

Continue reading "It might be a bad number, but surely the PM can say it" »