Liberal economics
Economics - - Posted on April, 28 at 11:23 pm by Ken L
On the one hand, the economy is like a finely-tuned Ferrari. Or at least that was Tip ‘go away I’m still sulking’ Costello’s metaphor; and needless to say he was the only one capable of driving it.
This is borne out by Tony Abbott’s belief that Wayne Swan can creat inflation just by talking about it.
On the other hand, it seems that we are captive to the international economy after all:
Mr Turnbull says the significant cooling in the US economy will flow through to Australia.
“I think the Treasurer’s got to be very careful not to be too Scrooge-like with the Federal Budget,” he said.
“I’m saying there is a lot of grief coming in from outside Australia and this is a time for us here in economic management to be cautious.
“We shouldn’t be rushing into measures, be they monetary or fiscal, that could, in effect, overdo the downward pressure on economic activity that’s coming from the rest of the world.”
Ah yes, keep up the Howard levels of government spending fellas. That’s how they got their reputation as such superior economic managers - tax and spend. As usual, just like the dills in the Bush Administration. I wonder how long it will be before the alternative government favours sending big cheques of borrowed money to us all, just to keep us flocking to K Mart as usual and maxing out on the Mastercard. That’s the conservative version of good economic policy: inflated asset prices that keep on increasing indefinitely; easy credit; and harsh anti-union measures that keep wages down, supported by things like 457 visas.
They seriously thought it was possible to sustain a model like that forever. Even now, in their desperation, they jettison any and every longstanding plank of conservative fiscal dogma to try to keep the house of cards from collapsing. Suddenly they want to increase pensions, protect the defence budget and not be ‘Scrooge-like with the federal budget’.
On second thoughts I reckon Turnbull would have nodded sagely at Abbott’s inane comments about the causes of inflation. They’re all as mad as each other.
Posted in Economics |
April 29th, 2008 at 1:00 am
Hi Ken.
Look, this is probably going to sound like concern trolling but I promise its not. I’ve been a very happy reader of RTS since 2003. But I’m just not enjoying it any more. I’m sorry but I’m just finding your writing leaping off the page is wearing me down with what feels like an angry and bitter tone in many, maybe most, posts.
I’m not for a minute saying you can’t write however you please. And I know there’s plenty of other things out there to read on the tubes, and I should just slope off and do it, and of course I will. I just really liked and perhaps identified with (past tense?) being a frequent RTS reader.
Maybe I’d enjoy your posts more if they were more often leavened with another writer or two around here. Anyway, thanks for listening.
April 29th, 2008 at 1:29 am
“I reckon Turnbull would have nodded sagely at Abbott’s inane comments about the causes of inflation.”
I agree.
They’ll do and say absolutely anything to try and score a few political points. However, in doing so they only make themselves look foolish.
April 29th, 2008 at 2:22 am
Keep up the good work Ken. I find your pieces to be informative, witty & independent thinking.
It’ll be like a journey thru the Mountains of Madness until the Dems win the election in Nov ‘09…the Libs here, Repugs in America, & some media types laughing & nipping like insane hyenas all the way to that election day.
It’s all about RESILIENCE.
April 29th, 2008 at 8:04 am
I reckon Ken writes great stuff, slagging and bagging the pathetically unvotable Libs - as they so richly deserve. What’s their approval rating today? Two percent?
I enjoy watching rats squirming and drowning in a sewer and Uncle Ken’s biting satire should have him knighted with the Royal Order of the Fishnet Stocking.
April 29th, 2008 at 10:44 am
Your writing is great Ken. A necessary antidote to the pap smothering reason in the traditional media. You’re a joy to read. Thanks.
April 29th, 2008 at 10:45 am
I have not been able to access your site for at least 4 days some weird drop down which my it guru grandson advised not to open, what has been going on, thankfully my withdrawal symptoms are abated now
April 29th, 2008 at 11:51 am
Ken does good work. The Liberals need and deserve every barbed criticism. Especially the myth they have built about their “strong economic management” needs to be torn down and shown for the BS it is. All they were was fortunate to be in power during a mining boom and a period of unprecedented global growth.
April 29th, 2008 at 12:01 pm
Ken writing is direct and while I agree with 90% of it, some 10% I don’t, but that’s blogging!
I am also keen to put the myth of the ‘good economic manager’ to rest.
However I don’t think the average punter may care.
April 29th, 2008 at 1:17 pm
Mister Z, maybe you are a Royal Blue supporter and can’t stand the heat in the kitchen when Howards Hobbits have been caught lying and cheating the Australian people. The change of Government has changed the tune of the writings. We can now look back at the 11 years from hell, and accurately discount most of the myths of the Economic Management of the previous Government. There is oodles of proof, but the proof is in the contradictions from the current rabble. Mad Mal and the Mad Monk have done a 180 degree turn from the Howard and Costello hymn sheet and still their rantings have no credibility. Not even my 6 month old grandson would believe that inflation can be caused by the tongue of a new Treasurer who hasn’t even penned a budget yet.
It is interesting that the sins of the past 11 years are being thrown at the current government to fix, and I note with interest that the opposition are suddenly interested in a little social justice, this is an admission in itself that they had absolutely no interest in the Aussie punter when they were able to do something about it.
As for the defence budget, well lets ask Brylcream Brendon how he would like the budget to read, perhaps he could buy more useless fighter planes that will be outdated when and if we ever get them, just like the billions he spent on useless toys on his watch.
April 29th, 2008 at 3:38 pm
Keep up the good work Ken. We need a few acerbic wits on the intertubes to point out how stupid many of our “leaders” are. Like many of the others above, I think it is necessary before the right-wingers reqwrite history to point out that Howard was not our greatest PM ever, that Howard/Costello as a team were not wonderful economic managers, and the government as a whole was not notable for the reform it achieved. Quite the reverse in fact.
So if some think that’s aggressive, bitter, disillusioned, or even just plain nasty, keep it up. I find it already leavened.
April 29th, 2008 at 4:40 pm
A couple of points.
First of all, Tony Abbott is a clown who knows nothing about economics and his comments on Swan causing inflation should be taken in that vein. However, David Wilson’s six month old grandson (comment #9) would be wrong to believe that the tongue of a new treasurer cannot effect inflation. Expectations are a major cause of inflation, which is why the Governor of the RBA makes public comments about what the RBA expects will happen in the future.
Secondly, part of good economic management is reducing the amplitude of the business cycle. What Ken has described as a 180 degree turn is partly a response to a change in the economic environment. Turnbull is correct to say that we shouldn’t be too keen to slow the economy since there are major downward pressures in the global economic environment. It would be bad management if they government, while trying to contain inflation, acted in a way which instead caused a recession. The RBA has already put the brakes on using monetary policy. It may not be necessary to use fiscal policy too aggressively in the same direction.
The bigger risk, which I haven’t heard anyone talking about so far, is on the exchange rate. We’re waling straight into a textbook case of Dutch disease (a boom in one sector causing a recession in the rest of the economy).
April 29th, 2008 at 6:29 pm
Speaking of the turning of worms, I wish I’d been in court to see the faces of the defendants when these comments were handed down by [gasp] Magistrate O’Shane:
April 29th, 2008 at 6:53 pm
love the vitriol, love the wit and sarcasm and you sum up the whole “we are the better economic managers” lie brilliantly. I nearly went nuts from being fed the same crap from the MSM until I found RTS.
Keep it up
April 29th, 2008 at 7:47 pm
Domino, Turnbull’s just playing GAMES. He has an interest in winning by any means necessary.
I don’t believe this Rudd-led govt. is trying to slow the economy down to the detriment of the average worker, honest shareholder & small business individual.
Rather, they are attempting to redirect it into a less “rape & pillage”, BS PROSPERITY & INSANE mode that benefits overseas socially & environmentally irresponsible corporations & dishonest investors at the expense of hard working Aussie families & responsible overseas investors.
It seems to me, they are just adding a few “accountability’ measures to the overseeing of the Markets & Corporations whilst attempting to gradually deal w/ some neglected public service areas & social issues that have concerned many Aussies…and in turn, ensuring that the private sector has a “fair-go”.
If anyone is trying to turn the “R-word” into a reality it is those hoping to bring this government down in order to keep redistributing taxes to the obscenely wealthy & those less than socially responsible.
This is a Nation-State & Country w/ families & individuals that expect to be treated w/ respect, and a get a fair return for their EFFORTS, investment & toil. It’s not a filthy, backwater, black market that any THIEF can come into, make a shady deal, plunder, commit crimes & sell and buy shonky wares. Nor is it a urinal for the ‘privileged’.
Wayne Swan had to mention in the early stages of the govt. that the Libs had “let the inflation genie’ out of the bottle”…it was important the Coalition didn’t get away w/ smearing Labor & finger-pointing tactics once their last term SABOTAGE & mishandling of aspects of the economy came to bear rotten fruit. The Libs are only trying to keep their OWN bathing in golden baths…& attempting to ensure Labor can’t deal w/ the problems that the people know in their hearts & minds need fixing.
Dear ‘SantaGrinch’ (give w/ one hand, take w/ the other) Costello didn’t mind trying to manipulate the economy by WORDS when it suited him:
THE Treasurer, Peter Costello, has warned of a “huge tsunami” set to engulf global financial markets, with China as its epicentre, in his strongest bid yet for the Reserve Bank not to raise interest rates next month.
(Brisbane Times: Treasurer warns of economic ‘tsunami’
Jessica Irvine and Peter Hartcher | October 26, 2007)
The TRICKY DICKS & their legion of vampiric hypocrites are on the march.
Some superb comments…David Wilson imho yours at #9 kicked arse.
April 29th, 2008 at 10:33 pm
I don’t agree with everything Ken says, but I am glad he says it. I am also glad I live in a society where he can say it and others, like mister z, can openly disagree, and do so with civility.
Now, back to my pizza. Priorities, priorities.
April 29th, 2008 at 11:38 pm
I think Ken,himself,maybe heading for some problems in the heart area.His spirit rises of out of what one reads,this is troubling,he maybe saying something beyond the mere words that are being stated.As one gets older,in the world that we now inhabit some.. take risks,in any number of ways,with the biological clock tip toeing in like it will bring some tulips,to a occasion that may seem just another case of sleeping in too late.And whilst the spirit sores out of the necessity to do so,and its communication is like a day that is so clear that others live in its ability..The tip toer,has learnt some lessons off the time and motion man. Howard was doing just that for a year or three,before he saw the relative tulips arrive of political defeat.It isnt a heart attack I am describing,but the potential for a cartoon,that replaces,the one coincidence,that, isnt able to be entirely laughed at on a personal level.I am not saying, the Liberals are right,at all, I just caution against the prevailing wind,that everything the ALP is doing meets the sentiments… true values aspirations… needs and desires,of all who yearn for a place in their clear day.
April 29th, 2008 at 11:59 pm
Ken said:
I’m not even sure what that means? If you think it means I’ve got any sympathy for either Howard or the liberal party detritus you’re quite mistaken. The only time I’ve ever put the coalition above last on the ticket has been to give Hanson and her ilk the privilege.
I dunno, I think it’s just that a decade of gritting my teeth against the government of the day has left me weary of it, low on vitrol for now, and perhaps as a result without much of an appetite for it hauling over the old coals once again. I do see your point about the ability to get down into some accountability weeds now that they’re on the opposite benches, and agree its a fairly worthy purpose, but my own personal views on the tone of it here remain.
April 30th, 2008 at 12:01 am
Sorry my mistake, that was David Wilson, not Ken.
April 30th, 2008 at 8:26 am
philip, i doubt many of us would stick up many of Labor’s policies on our walls as posters signifying “great deeds & the way to a blissful life”. It’s a marrying of pragmatism w/ hope & the feeling of “f*ck this lot have to be better than the last sneaky, dreary lot of Bush b*m suckers”. Sometimes tho it feels good to give the govt. some credit &/or show the other lot up for their hypocritical antics.
There will be no falling prostrate at the altar of Rudd from this fella…not w/ his fondness for irritating celebrities. But I will give credit where credit is due. I think he & his team are playing some very smart politics to ensure “longevity” of government…& to provide more “heartening” (hopefully) policies down the road.
Shifting this high speed, mammoth truck of an economy into a safer, more sustainable, yet efficient & productive lane during the REAL & “constructed perception” of upcoming bad economic times is not an easy thing.
Particularly when you have so many “negative nellys” across the spectrum of media, business, enviro & political sectors creating oil slicks & throwing tons of corn husks and other hurdles onto the road.
April 30th, 2008 at 9:08 am
Very good post KenL, I too don’t always agree with some of your posts (maybe 2 or 3), however I do think that Abbott and Turnbull should be criticised for the BS they are putting out there. Abbott repeatedly telling us what a great PM Howard was and Treasurer Costello was hoping, by repeating the myth it will come true. Turnbull always sound good but if you analyse what he says, one then realise what a load of BS he says.For the last 5 months he is trying to tell us the inflation figures are not too high and that it is Swan’s fault anyway.
April 30th, 2008 at 12:29 pm
Abbott & Turnbull are jostling to be third batsman in the line up.
I doubt if either wants to be next in line to face the spin after the night watchman falls.
April 30th, 2008 at 12:38 pm
My personal apology to Mister Z, there would be nothing worse that accusing one of being a Royal Blue if you continually put them last on the ticket. Mate, take a break for a few months and we’ll be glad to see you back. It’s been a long and harrowing road over the last 11 years and it has worn many down. It’s hard not to stay excited for just a few months more though. It’s posts like yours that make us step back and have a look at both sides of the coin. Therev is nothing surer than that we’ll need to keep the current Government honest, we havent a credible opposition.
April 30th, 2008 at 12:57 pm
Muskiemp, you have to admit that Abbott and Turnbull are practising what they preach, ie that if you keep saying something it makes it true, so I guess we shouldn’t get too stuck into these two honest peasants wot have been deluded by their demon rodent master.
However, if that is the case why haven’t I been successful in my bid to be a xlotto winner and can I sue the above two for false advertising?
April 30th, 2008 at 1:09 pm
Just don’t say to yourself ‘that parking spots mine’ when there’s a car already there ala Chaser.
April 30th, 2008 at 3:46 pm
Speaking of other posters…where are Helen, Aussie Bob & the others? I thoroughly enjoy their posts. And that has no bearing on Ken’s cracker efforts whatsoever. I dig his work just as thoroughly.
How’s the UK mister z? Anything to report on PM Brown or Sky News…:)
April 30th, 2008 at 4:57 pm
I’ve thought the same thing for a while Nasking. Ken does a great job with his posts but I reckon RTS would be even better with more posters.
April 30th, 2008 at 7:49 pm
To clarify I meant soar,rather than to fester.I guess Nasking,who seems a highly intelligent person,hasnt as yet been able to define the essential problem,that Labor can come or go as far as I am concerned… I couldn’t give a rats arse.But to make it simple for him,as he expresses something about hard times,in my defence,if it is that upsetting for him, and I have repeated this before,54 years of age,doesnt allow one to be a recruit for these people who change the nature of their theories of what the party is,as much as it keeps dreaming up failed processes.I dont want to offend Nasking,but,I have seen so much already from this Labor Government,that is redredged design with a few old paint tin lids thrown on top,its scary knowing my memory still works.I dont feel my brain is on Viagra,when I notice the ALP is in power.I am over the ALP,and that’s that.
May 3rd, 2008 at 2:18 am
Well mister Z in response to your lament about economic illiteracy hereabouts, here’s the thin ice our fearless leaders are all skating around on right now-
http://www.atimes.com/atimes/Global_Economy/JE02Dj05.html
They have only 2 choices now that the giant Ponzi scheme set up and fuelled by central bankers the world over is coming to its inexorable conclusion, albeit with the complicity of elected govts who found the game highly attractive as well. After all it saved any real fiscal discipline on their part for many years. Now current govts can either bite the bullet and allow the recessionary forces to unwind the consequent years of malinvestments to date, or allow the inflationary forces already in the pipeline with all that funny money, to make the overdue adjustments instead, or perhaps some mix of the two. That’s the tune they all have to dance to now. In Australia’s case, we now face our creditors like Chinese sovereign wealth funds wanting to redeem our funny money for real commodities with the funny money we gave them all these years for the objects of their toil. Since we don’t have gold to redeem all their dodgy dollars, they’ll happily take other real commodities for it, namely those that our resource companies currently have access to. That’s exactly what they’re in the process of doing right now you’ll notice. Of course our new, warm fuzzy, all embracing, multicultural leader, might have to do some real fast talking in Mandarin to explain to our Asian brothers why they can’t. Either that ot some fast talking Strine as to why they can. Now that will be fun.
May 3rd, 2008 at 2:48 am
Not surprised that someone’s knocked on Observa’s crypt & told him to haunt RTS again. Once the government starts airing the idea of reducing a few benefits for the obscenely
(un)needy, comes the UNDEAD, pretending to be tolerant of the Ruddster & his garlic, yet in reality they plead w/ vacant eyes the case for the blood suckers who sucked the RED of the people upwards into their ever-voracious maw…
Obs spooks again…here to start blowing chill air into the room…”the economic end is nigh…repent, repent”…& BTW whilst yer at it chum, forget the TAX CUTS for the WORKERS. If WE get none then NONE all around it should be…whooooo…whoooo…run for the exits…don’t worry, i’ve got your wallet…whoooo…
Thanks Obs…but the tsunami bit is so passe…useful for awhile…but i’m over it.
We’re goin’ GASSY, didn’t ya know it…& commodity prices are on their way up.
And Kevin is taking us down the road to a more secure future…
well, i’m sure the truth lies somewhere in-between…
& all the seeds of doubt that have blown into these blogs just as the BUDGET is about to arrive are meant to grow as poisoned seedlings bearing Labor destroying fruit…but i’m not tempted ANYMORE to bite from that stankin’ thing.
But America…now that’s a different story.
May 3rd, 2008 at 10:37 am
No room for family crypts around here any more Nasking. Like the Great Mogambo I’ve had to clear out all those useless family bones to make way for the food and ammunition in the new bunker, not to mention the Billiton, Rio and Woodside shares, etc. Good God, with the price of food going the way it is it’s hard for a bloke to afford any Perth Mint gold warrants nowadays. The PrimeAg shares will just have to suffice in a crisis I guess.
Priceless isn’t it Nasking? A Labor Govt with all that funny money surplus at their disposal and they daren’t spend any of it, other than to make spending cuts to honour Johnny and Pete’s profligate promises with those LAW tax cuts and on top of that they’ll soon be forced to explain via the FIRB why all their precious yellow reds can’t have the farm. Well only at a politically tolerable pace that is and leave that delicate balancing act to the Great Mandarin, or orange as the case may be. Gotta go, as there’s work to be done airing the bunker and dealing with all those cobwebs.
May 3rd, 2008 at 5:04 pm
Obs, good to see you didn’t get screwed on those U.S. penny stock ‘PUMP AND DUMP’ OPERATION scams before your bunker mentality took hold:
The reason for all this relentless promotion of penny stocks is because of the profits to be made through illegal pump and dump schemes. The SEC explains how it works:
“A company’s web site may feature a glowing press release about its financial health or some new product or innovation. Newsletters that purport to offer unbiased recommendations may suddenly tout the company as the latest “hot” stock. Messages in chat rooms and bulletin board postings may urge you to buy the stock quickly or to sell before the price goes down. Or you may even hear the company mentioned by a radio or TV analyst. Unwitting investors then purchase the stock in droves, creating high demand and pumping up the price. But when the fraudsters behind the scheme sell their shares at the peak and stop hyping the stock, the price plummets, and investors lose their money. Fraudsters frequently use this ploy with small, thinly traded companies because it’s easier to manipulate a stock when there’s little or no information available about the company.”
(lazily…Wiki pedia)
Aren’t mandarins in season…? I don’t mind them now & then…can be quite refreshing…but i like a bit of diversity when it comes to consuming in Australia.
May 4th, 2008 at 7:00 am
Here’s the Central bankers’ problem in a nutshell Nasking.
http://www.news.com.au/adelaidenow/story/0,22606,23638736-5006368,00.html
Cranking the printing presses just won’t make their Ponzi scheme keep running any longer. The problem is now huge because of the time period it has been building up, due top some exceptional circumstances these shucksters didn’t count on. You see the last time they ran the printing pressesd on the early 70s, a young baby boomer demographic turned it straight into monetary inflation as the Austrian economists rightly predicted it would. Fast forward to the last decade or so and the Austrian’s predictions were delayed by those same demographics. This time round, that same demographic began to ‘invest’ all that funny money for their retirement, simply inflating asset prices, but inevitably that had to end as it is. That demographic(mine)is fast discovering that those savings are illusory (ie not real spending power), because selling them down to realise that spending power in retirement, will be lost to inflation. The only answer now is to try and turn it into real commodities to protect its purchasing power and thereby create the very inflation all that funny money was always destined to do. It’s a case of the earlier the better now in order to inflation proof those nominal savings. The early adopters of Austrian economic truth are now driving the price of commodities. None bigger than the SWFs of the ME and Asia now. My advice is to buy gold, iron ore, oil, gas, well watered agricultural land or any other future commodity stream you can lay your funny money on now. Otherwise as the Mogambo Guru would say- ‘You’re all freaking doomed!’
May 4th, 2008 at 7:14 am
“The reason for all this relentless promotion of penny stocks is because of the profits to be made through illegal pump and dump schemes.”
No Nasking, you’re looking at the symptoms of the disease rather than the root virus that caused it. What did you expect finacial institutions and entrepreneurs to do with all that funny money rolling off Central Banks printing presses for the last decade, other than to go looking for increasingly dodgy borrowers to lend it all to? Cause and effect meboy, cause and effect.
May 4th, 2008 at 10:07 am
Nice to see you’ve discovered the Asia Times obbie. Out of curiousity, do you also accept the logic of their writers’ analysis of US foreign policies or are you up on a high wire trying to do an extemely difficult balancing act?
May 4th, 2008 at 1:41 pm
Obs, here’s an investment for you:
The Saudi company KADCO
http://www.medea.be/index.html?page=2&lang=en&doc=138
Since then, Egypt has undertaken the huge “New Valley” scheme (see also Amir Al Waleed) which was officially inaugurated on 9 January 1997 by President Moubarak. This project aims to deviate 5 billion m³ of water a year from Lake Nasser through a canal (the Sheikh Zayed canal) being dug in the direction of oases located in the western desert (the Khaerfa, Dakhla and Farafra oases). The canal will follow a series of depressions and should allow about 420,000 hectares of desert land to be irrigated, and finally be cultivated by private operators according to Egyptian government plans. If all goes according to plan and on the basis of the most optimistic forecasts, the surface area of the country’s arable land should increase by 28%. The cost of the project is estimated at $30 billion per year, of which $6 billion are financed by Egypt and the rest is awaiting investors. However, many experts have expressed serious doubts about the scientific validity and the economic viability of the project.
The Saudi company KADCO, headed by Prince Al-Waleed, purchased 350,000 acres of land in the “New Valley development zone”. The plan of KADCO is to give over more than 50 per cent of its area to wheat and cotton but the bulk of its revenues are supposed to come from the export of grapes (30%) and citrus (20%) which could hit the international market earlier than other producers because the region is so far south. The KADCO scheme is the largest and most advanced in the Toshka project and is the major asset to the whole project’s credibility.
—————
Hopefully that scheme will bring some peace & prosperity to parts of the Middle East. Will be handy too if they can grow wheat during our droughts & citrus during blight periods.
May 4th, 2008 at 11:44 pm
“Out of curiousity, do you also accept the logic of their writers’ analysis of US foreign policies or are you up on a high wire trying to do an extemely difficult balancing act?”
Been dropping in regularly on the AT for a couple of years now as it’s got some interesting takes and insights on world politics from time to time. Of course it’s flavoured a bit like lefty papers here. While the leftys grumble about the Great Satan US largely for its big apple success status, the AT has a similar flavour due to its Mussie/Asian inferiority complex with we Western infidels, none more so than them Murrikans. Hence they like the Austrian economic analysis which suits their notion that Western infidel culture is ‘freaking doomed’ as Mogambo likes to say. He is a bit monotone Tim Blairish, but he does take the piss really well out of those that need it and he reports some real gems on the nonsense spouted by those who are subsidised to know better. Chuck in their resident RWDB in Spengler too. They like him as well because he’s so critical of Western liberals and that suits their overall outlook. as I say, I don’t mind sifting through the usual chaff for some nourishing grains of wheat.