Re: Does Rudd inspire confidence?
Commentary
7:47 AM, 11 May 2009
http://www.businessspectator.com.au...eeds-a-new-tune-pd20090511-RWT84?OpenDocument
Robert Gottliebsen
Rudd needs a new tune
Kevin 'GFC' Rudd may not be exactly a modern day Chicken Little, but he is part of the problem that is multiplying the reduction in Australian business activity.
Someone needs to tell him that just because the Australian skies are raining money does not mean they will fall in. The global problem is not as great as we feared and Rudd’s daily warnings of a global financial crisis have become part of the problem.
Rudd’s GFC warnings are in stark contrast to US President Obama who keeps telling Americans how he will save them. So how do we stop the Australian Prime Minister from becoming a complete Chicken Little?
Step one: let's send the mandarin speaking Kevin Rudd on a fact finding mission, first to China and then on to the US. He will discover that while the global economy is going to be tough it now seems that this GFC is unlikely to be anywhere near as bad as we first thought.
Step two: send him a DVD of President Obama’s speeches.
Step three: start a slow hand clap every time we hear him mention the words “ global financial crisis”.
To be fair to Kevin Rudd, two months ago China’s growth rate had fallen to levels that were expected to cause serious social disruption and were decimating our metal prices. Just as serious, the IMF was forecasting enormous additional bank losses and a huge decline in economic activity.
My China-watchers say that China is set to grow around 8 per cent in calendar 2009 which would be a remarkable achievement. The Chinese stimulus package, which included massive bank lending, is working. And better still, it is directed at metals-intensive spending (construction, telecommunications etc), so there is renewed demand for metals and the Chinese are stockpiling copper and other metals, sending up prices.
The US stress tests on its banks have revealed that American banks have nowhere near the problems that the IMF predicted. It is possible that the stress tests were inadequate, but that’s unlikely. The task of the US government is to get its banks lending again, but there are all sorts of signs of minor recovery (A global triumph, May 8). America is not going to go shooting upwards, but President Obama's words have played a big role in turning the economy around.
And we are seeing that changing trend in the share market rises. By contrast, I expect in tomorrow’s budget each time Wayne Swan breaks an election promise he will try to out-do his Prime Minister in the number of mentions of the “global financial crisis”.
Let me give a small example of how the Rudd rhetoric is starting to become damaging in small ways which then multiply thousands of times.
One of Australia’s largest accounting firms is doing very well but they have been subjected to so many global financial crisis warnings from our Prime Minister that they decided to do something really radical – they would stop buying fruit for executives who work long hours. So some poor contractor has had to go home to and tell his or her spouse that the family must tighten their belt. Meanwhile the accounting firm’s productivity has fallen because executives waste time to go down the street and buy their fruit. It's unfair to blame Kevin Rudd for such decisions, but nevertheless he has become part of the problem.
Having seen money rain from the sky, we are now going to get a budget that will pay for the money showers by a series of nasty measures. You could argue that the money showers were necessary, but so is confidence.
I am the first to admit that two months ago I believed the IMF and was worried about China. Kevin Rudd should be big enough to admit the same and tell the Australian people why share markets are rising. That’s what I have done (Two pillars of prosperity, April 20).
Meanwhile, don’t forget the slow hand clap each time you hear Rudd say the GFC words on radio, TV and the net, or you read them on the net and in print. It will make you feel much better.