Second stimulus package discussion

[Calliope]

Here is a very eloquent commentary from Jeff Kennett. I cannot agree more.
http://www.news.com.au/heraldsun/story/0,21985,25009319-5000117,00.html
Unfortunately Rome burns and the writing is on the wall.
This federal government will surely be judged as the worst in Australia's history.

It's a very depressing commentary on our society. Having an old fashioned sense of values these days is regarded as an alien concept. In fact Rudd's policies are only workable when the majority have little or no sense of values.

 

[jonojpsg]

What a load of bollocks! Jeff Kennett built a strong Victoria in the 90s by selling everything he could get his hands on! And the libs while certainly working hard to pay off the government debt did very little with the squillions of surplus they had apart from...oh yes, throwing it up in the air by handing back personal tax cuts.

I completely agree though that we need to spend the money on worthwhile infrastructure like transport and communications - I'm constantly bemoaning the lack of vision of Tassies politicians, eg when there is more water than we can poke a stick at within cooee of some of the driest farmland in the state they mull over what to do about it for years and then do nothing!!!

 

[MrBurns]

What a load of bollocks! Jeff Kennett built a strong Victoria in the 90s by selling everything he could get his hands on!

Well I think he had to after Cain and Kirner bankruped the state and lost the State Bank for us

 

[Buddy]

What a load of bollocks! Jeff Kennett built a strong Victoria in the 90s by selling everything he could get his hands on! And the libs while certainly working hard to pay off the government debt did very little with the squillions of surplus they had apart from...oh yes, throwing it up in the air by handing back personal tax cuts.

I completely agree though that we need to spend the money on worthwhile infrastructure like transport and communications - I'm constantly bemoaning the lack of vision of Tassies politicians, eg when there is more water than we can poke a stick at within cooee of some of the driest farmland in the state they mull over what to do about it for years and then do nothing!!!

What? So you're saying it's bollocks to old fashion values of thrift, manage your affairs, live within your means and only spend what you have? Then I say.... bollocks to you!

 

[nick2fish]

That's years away, and besides I hardly think this last "boom" really had any lasting long term benefit for Australia. IMO it was an opportunity lost by government.

As for a "better alternative", that's not my job. But I will say that if the politicans followed Austrian economic theory rather that Keynesian, then IMO we would not even be in this mess. Although having said that, so would other countries.

There is no way we could have avoided "This mess".
Our customer base has been decimated, completely. Income levels reduced so severely that a lot of Australians that have done the normal thing and brought a house will lose their job and in consequence maybe their house.
If the country goes into debt it won't be the first time and it won't be the last, but if it saves homes and jobs, I won't be asking my kids, I'll be telling them..."This is how it is"

These proposed measures alone won't ensure that we can emerge from this period unscathed, that will rely on an combined international economic stimulus of the like we have never seen. You better hope they spend much more than what we are prepared to do.

Or probably this economic downturn is not going to effect you ... is it?

 

[nick2fish]

What? So you're saying it's bollocks to old fashion values of thrift, manage your affairs, live within your means and only spend what you have? Then I say.... bollocks to you!

YES, YES and YES and I will NEVER invest in a company which is not prepared to grow by setting an acceptable equity level for itself.

If you could give me an example of any company which has adhered to your above statement and grown please advise

 

[juw177]

^^ Why does anyone not see the simple fact that there is no "STIMULUS"? The losses have to be taken by somebody whether it is the shareholders or the taxpayer. It was unavoidable from the time the bad loan was made.

The stimulus programs can only:
- delay the losses by more borrowing. We have to pay back every dollar plus interest.
- transfer the losses to the government (taxpayer)
- transfer the risk from the corporate bonds to the AUD: dangerous when our debt is denominated in USD
- create demand by destroying future demand: That means buying stuff we don't currently need, including infrastructure.
- throw away money: hand outs, home buyer grants
- tax cuts: good if the government cuts out all the crap above!

There is no free lunch. Nothing is fixed until the debt is paid or destroyed!

 

[Buddy]

There is no way we could have avoided "This mess".
Our customer base has been decimated, completely. Income levels reduced so severely that a lot of Australians that have done the normal thing and brought a house will lose their job and in consequence maybe their house.
If the country goes into debt it won't be the first time and it won't be the last, but if it saves homes and jobs, I won't be asking my kids, I'll be telling them..."This is how it is"

These proposed measures alone won't ensure that we can emerge from this period unscathed, that will rely on an combined international economic stimulus of the like we have never seen. You better hope they spend much more than what we are prepared to do.

Or probably this economic downturn is not going to effect you ... is it?

Nick, unfortunately you are probably correct in that we, as in Australia, could not avoid this mess. By and large it was caused by outside events, although our huge debt to overseas interests is not helping anyone around here. I was simply expressing the opinion that Keynesian economic theory is flawed for these circumstances. And the end result will be significant inflation and massive sovereign debt.

This currect handout is just playing politics. It is not necessary from an economic viewpoint as it will have no impact. And when the shan hits the fit, where is the government going to get money from to assist people really in need.

As for whether this economic downturn will affect me? Well yes, my super has tanked, my shares are buggered and my fixed savings are being devalued (lower interest rates). Whether I will have a job? Dont know. Also, dont know what might happen 1-2 years down this track. Doesn't look good though.

 

[Julia]

And the RBA didn't help with pushing interest rates up so high. Was it timed right? Or did it put economic activity in a tailspin considering how low it has gone now? Did they just get it wrong?
I suppose it did reign in debt and stop people splurging but now they are trying to do the opposite

It seems they don't wait long enough to assess the effects of previous decisions before jumping in and repeating the process. Hence the overshoot we saw on the way up and no doubt the same will happen on the way down.
Far too much fiddling and manipulation by all aspects of government, RBA especially.

Swan's an idiot, totally clueless.

Agree. But he gives the impression of perhaps a bit more sincerity than Rudd.
Come back, Costello.

The commentators, as usual, as slamming Turnbull. Of course, they have all lived through a recession/depression and have the wisdom of Solomon. But politics aside, it strikes me that this man has more credibility in finance and Australia's future wellbeing than this lot.

I'd have thought so too.

What really worries me though is that the great unwashed out there think that krudd/duck/and the woman with the horrible voice, are doing a good job. Have a look at the newspaper polls. Just shows how easy it is to corrupt the Australian dumbed down population via bribery.

And the more cash that is thrown at them the more they will grin and say "Hey, thank you Mr Rudd". And tick the "I love Labor" box on the next survey form.

Here is a very eloquent commentary from Jeff Kennett. I cannot agree more.
http://www.news.com.au/heraldsun/story/0,21985,25009319-5000117,00.html
Unfortunately Rome burns and the writing is on the wall.
This federal government will surely be judged as the worst in Australia's history.

That is a brilliant piece by Jeff Kennett. Sums it up so accurately.

How is it, though, that seemingly all the economists/financial commentators, business groups etc are all in favour of the Rudd Plan Version 2?
Is it a bit like the story of the Emperor's New Clothes?
For those who are too young to know this cautionary tale from Hans Christian Anderson it goes roughly like this:

An emperor of a prosperous city who cares more about clothes than military pursuits or entertainment hires two swindlers who promise him the finest suit of clothes from the most beautiful cloth. This cloth, they tell him, is invisible to anyone who was either stupid or unfit for his position. The Emperor cannot see the (non-existent) cloth, but pretends that he can for fear of appearing stupid; his ministers do the same. When the swindlers report that the suit is finished, they dress him in mime. The Emperor then goes on a procession through the capital showing off his new "clothes". During the course of the procession, a small child cries out, "But he has nothing on!" The crowd realizes the child is telling the truth. The Emperor, however, holds his head high and continues the procession.

Do all the economists so much in agreement share a fear of speaking out against the whole stimulus philosophy because they believe they will look foolish amongst their peers?

 

[moXJO]

There is no way we could have avoided "This mess".
Our customer base has been decimated, completely. Income levels reduced so severely that a lot of Australians that have done the normal thing and brought a house will lose their job and in consequence maybe their house.
If the country goes into debt it won't be the first time and it won't be the last, but if it saves homes and jobs, I won't be asking my kids, I'll be telling them..."This is how it is"

These proposed measures alone won't ensure that we can emerge from this period unscathed, that will rely on an combined international economic stimulus of the like we have never seen. You better hope they spend much more than what we are prepared to do.

Or probably this economic downturn is not going to effect you ... is it?

Refering back to mofras post:

What I don't understand is - he hope to create 90,000 with the package, yet is spending $466,667 per job created with this new package.

How is that sensible spending? The idea of spending money for the sake of spending money is daft. Didn’t this package go out before the results of the first stimulus came back in?
Also the fact the labor govt is using every means possible to rush this package through without it being scrutinized also smells fishy. Yes the country will need to go into debt. But I question the amount being thrown around. And the fact that TBull is demonized for asking questions that are very relevant for all Australians.

 

[knocker]

"Australians planning to spend Prime Minister Kevin Rudd's promised $950 bonus on holidays, new drum kits, Wii games, tattoos and weekend-long benders have flooded into a new Facebook group."
http://www.theage.com.au/national/facebook-fury-over-turnbull-no-to-cash-splash-20090205-7yo0.html

Totally indicative of the level of intellect Australians display now days.

Cracking the sh!ts because they can not get tattoos or Wii games.

I reckon let this country rot along with the knuckle dragers that seem so rife.

 

[Buddy]

"Australians planning to spend Prime Minister Kevin Rudd's promised $950 bonus on holidays, new drum kits, Wii games, tattoos and weekend-long benders have flooded into a new Facebook group."
http://www.theage.com.au/national/facebook-fury-over-turnbull-no-to-cash-splash-20090205-7yo0.html

Totally indicative of the level of intellect Australians display now days.

Cracking the sh!ts because they can not get tattoos or Wii games.

I reckon let this country rot along with the knuckle dragers that seem so rife.

I said something earlier about the dumbed down great unwashed Australian masses. Seems this proves me correct. These people really do need protecting from themselves, let alone the politicians. So why spend all the money on schools, education doesn't seem to have worked too well with these cretins.

Maybe we should rename krudd "the leader of the cargo cult". Move over Mugabe, Zimbabwe here we come.

 

[MrBurns]

As I've always said -

Just give the great unwashed a pair of oversized breasts and a happy ending, and they'll 'oink' for more every time.

 

[joeyr46]

Cannot beleive what is going on they must be panicking but not al agree this says it all very well

http://www.ipa.org.au/news/1789/the-bail-out-disease

 

[drsmith]

Anyone wish to place odds on the the income tax cuts slated for 2009/10 and 2010/11 surviving the May budget ?

Abandoning them is one way the government could shore up it's revenue base post stimulus package#2 and improve the potential for further one off handouts in the lead up to the next election.

It would be interesting to know Malcolm Turnbull's thinking on this. By bringing forward the 2009/10 tax cuts as he has suggested the option of the government reneging on them in the next budget would be much more difficult.

 

[IFocus]

Realistically the $42 bil will delay the lost of jobs which is a good thing but not much else.

As for the dept amount compared to our GDP its nothing and wont be the last to get spent.

As Keating pointed out the 1st government ever to run a surplus was the Hawke / Keating government up until then ever Australian government ran deficits, shock horror that Liberal icon Bob Menzies yes ran deficits.

Turnbull's opposition to the package is political and about positioning the Libs for when things get ugly then they can say they were right as the Labor strategy failed.

Fact is nothing will stop the inevitable don't want to sound like a doomsayer but its just reality.

 

[bunyip]

Anyone else find it frightening to look at the professional qualifications of the Labor Government. Rock star, professional politicians, lawyers, trade unionists. So exactly how many of them have had any experience in running a business? Let alone a business facing financial pressure.

Let alone the business of running Australia!

Put the infrastructure into channelling the flood waters from NT/FNQ into Victoria and South Australia. Will cost billions I know, that is always the catch cry, but we seem as though we have billions to spend anyway. Solves many problems.

Pity people didn't more carefully consider the 'professional qualifications' of Krazy Kev and his loony club before voting them into power, eh Prospector?

Your water diversion idea has merit. I've always believed in that plan, and could never see that cost should have held it back. Over time the cost would be returned many times over, not to mention the obvious spin-offs from such a project during the construction phase.
Australia has plenty of water.....it's just that it's not getting to the places where it's needed most.

Now, who said you and I never agree!

 

[bunyip]

http://www.pm.gov.au/media/Release/2009/media_release_0778.cfm

How will this "SUPPORT" my employees if I can no longer afford to keep them as staff?

OK, here's a bit of background... My company is a consultant in the engineering construction/mining industry. In the past 3 months we have seen a decline in quotes by about 60%. The work we have ongoing is slowly finishing and with nothing much coming through the door things are not looking good.

http://www.pm.gov.au/media/Release/2009/media_release_0782.cfm

Further the government is adding insult to injury with it's pathetic small business stimulus providing tax breaks for new computers and backhoes. Who in their right mind is going to go out and buy anything in this economic environment? Most employers in my industry i have talked to are all in the same boat, some say they are slow, others say they are desperate. One thing for sure is that no-one is looking at growing in the short term.

At the end of the day my employees get some cash but will probably lose their jobs because nothing the government has done today is going to help me get more work through the front door or reduce my running costs which are only going to get higher (thanks to environment policies).

just my

The article below strongly supports what you're saying.
I suspect that the unfolding crisis will be much bigger than Rudd and his grandiose plans to combat it.

A cabbie in Brisbane was telling me last night that the taxi business has become very quiet in recent months....according to him it's always one of the first industries to start feeling the pinch in the early stages of a recession.

Global leaders are planning on capital expenditure programs to promote employment and tax cuts to stimulate consumption. Neither will be effective unless consumer confidence is restored. In 1929 President Hoover implemented similar measures, but with little effect. Confidence had been shaken by the rash of bank failures and soaring unemployment (exacerbated by a commitment to maintain high wages and attendant tariff protection). Consumers increased savings and paid off debt to protect themselves from uncertainty, while business adopted a similar defensive strategy: cutting costs, reducing debt and deferring new capital projects. Their priority was survival.

Herbert Hoover was undoubtedly one of the most capable and business-focused leaders to have graced the White House. A professional engineer with a reputation as an efficiency expert, by the age of 35 he had become financially independent and devoted his life to public service. Serving as Secretary for Commerce under presidents Harding and Coolidge, he earning a reputation for thorough research and a bias for action that made him the obvious successor to Coolidge. Despite this, his efforts to rescue the economy from recession failed dismally.

While Hoover is often blamed for the Great Depression, as Secretary for Commerce he had criticized the Federal Reserve's expansionary (cheap money) policy. His attempts to intervene were thwarted by the independent status of the Fed. Bankers serving on the board of the New York Fed (in those days more dominant than the Federal Reserve Board) resented this interference from an outsider. They also sought to preserve the margins enjoyed by borrowing at artificially low interest rates and lending on brokers loans secured by stocks ”” at call rates between 15 and 20 per cent.

As Secretary for Commerce, Hoover had prepared the economy for a future recession. He planned to smooth out any fall in consumption with increased capital spending programs by government, railroads and other large corporations over whom he had influence. The increase in capital spending was, however, outweighed by an overall decline in private sector investment and in residential construction. Tax revenues also fell as the economy declined, hampering further federal, state and municipal spending programs. Consumption continued to fall, leading to more business and bank failures, more job losses and declining tax revenues. The downward cycle became self-reinforcing. The economy was only rescued by World War II: increased war production and, later, conscription helping to solve the unemployment problem.

In the present crisis, as in the 1930s, neither business nor consumers are likely to be lured into new capital investment or increased consumption until stability is restored. Stimulus packages treat the symptoms of a recession, but they do not address the underlying cause. Rebuilding confidence requires more effort than increasing government spending and a few media releases. Only when concerns over bank solvency, inflationary monetary policy, ballooning federal debt, business failures and further job losses have been settled are we likely to witness a return to normal consumption and investment patterns. The task requires exceptional leadership as well as a deep understanding of the underlying issues. Otherwise we could end up in a worse position than Herbert Hoover.



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[Julia]

Cannot beleive what is going on they must be panicking but not al agree this says it all very well

http://www.ipa.org.au/news/1789/the-bail-out-disease

Thanks, Joey. Excellent article.
This excerpt re Ansett correctly sums up the principle that should be taking place at present.

Does anybody doubt that if the Government was presented with the imminent collapse of Ansett that it would have quickly ponied up the cash? At the time, the Howard government resisted the howls of Ansett executives and the unions and let Ansett die the death it deserved. Nearly a decade later, flights have never been cheaper and it is safe to assume that most of those who were laid off at the time have been able to find work in a more productive enterprise.

We should be allowing non-competitive companies to fail.

 

[nick2fish]

How is that sensible spending? The idea of spending money for the sake of spending money is daft. Didn’t this package go out before the results of the first stimulus came back in?
Also the fact the labor govt is using every means possible to rush this package through without it being scrutinized also smells fishy. Yes the country will need to go into debt. But I question the amount being thrown around. And the fact that TBull is demonized for asking questions that are very relevant for all Australians.

What is the use of having a debt facility if you never are going to use it.
We need government to spend money that they have saved now and if that spending is not enough ...borrow. But spend it on infrastructure, build an irrigated food bowl in the North, do it and do it now. Build the rail facilities to port so desperately needed, just do it now, not tomorrow when the boom is back, today even though there is a lesser need. Build just one road in Sydney that has enough lanes so that it doesn't turn into a gas chamber. Build a few more dams around the place so we don't have to watch so much water running out to sea and then start thinking about taking the salt out of it.

The time to do something is now and debt is not a problem if your countries economic fundamentals are strong. Ours Are IMO