As our biggest trading partner, Australia's economic news is very relevant. So it was heartening to read this headline today,
RBA chief upbeat on economy
RESERVE Bank governor Glenn Stevens has defied the doomsayers and predicted that Australia's struggling economy will begin to recover in the second half of this year.
Although next month's national accounts are expected to show negative growth, Mr Stevens believes it will begin to rebound within months and says Australia's key customer, China, may already be emerging from its slump.
The surprisingly upbeat remarks, delivered to the parliament's economics committee, saw financial markets back away from predictions of further interest rate cuts and pushed up the dollar.
"There aren't indications of recovery yet. That would be a bit soon," Mr Stevens said. "But I would expect that after just a little while that households who are in a reasonable financial situation will want to borrow more, and we will see that flow through into the housing sector.
"Loan approvals are already climbing. I think they will continue climbing and that will have an impact later in the year — not yet — on demand for construction of new dwellings.
Personally I am sick of the recessionary gloom but even worse, I am sick of the asinine idea that government spending can fix it. Ideas like the taxpayer funding four day working-weeks that return the same income; that in an emergency somehow central planning and greater forced wealth redistribution will produce economic growth when it has the opposite effect the rest of the time.
Unemployment is still at only 4.6 percent. In the early nineties it peaked at almost 11 percent. The UK, and Australian rates went even higher. I returned to NZ at this time and it was tough. Unemployed for the longest period of my working life, even had to go on the dole for a short period. But life went on and things improved.
The government is only going to make matters worse if it fails to heed basic advice. Get government spending down, substantially. Get tax down and compliance costs down. Make it possible for the private sector to ride it out.
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3 comments:
I couldn't agree more! Pages and pages of utter garbage has been written about this. OK so we have a recession, but it is nowhere near as bad as some ridiculous reports and media ramping suggest.
This recession is nothing like the great depression - unemployment 25%, markets lost 80% of their value, suicide rate soared etc etc.
The real world moves on - the sky is not falling.
Something else - good on you Lindsay for writing on REAL libertarian issues like abortion, religion, euthanasia and so on. You are now the only liberal blogger who does - the other high profile ones have long stopped doing so for fear of offending their conservative base.
The recession was caused by a credit crisis in the US - banks found as too many of their housing customers stopped paying for their loans, they weren't able to relend.
It looks as though the US housing market has hit bottom, sales are starting up again, banks are starting to get about 60c of the dollar they lent back.
While a big loss, having the money out of non-productive assets ('toxic loans') and able to relend will start to see the US economy start up again.
No Government infrastructure stimulus package can achieve that. A lesson learnt in the 1970s, I thought.
Thanks Ruth, I'll accept the compliment but not it's accuracy:-)
I see pragmatic acquiesing to conservativism in politics but hadn't noticed it amongst bloggers. Then again, I don't read blogs widely.
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