Second stimulus package discussion

[juw177]

Rudd and Swan are convinced that they can spend their way out of recession, and they admit they don't know if it will work.

It won't work. They tried last Christmas and it didn't do anything so they throw even more money the second time? Sound like the ever increasing bailouts in the US?

Unfortunately, we cannot borrow near as much money as the US (the US are getting away with it for now because US treasuries are a perceived flight to safety). If we try to borrow and spend like the US, we must pay a high interest yield, and the AUD will be destroyed. The kicker is that all our USD denominated debt will increase with it and then we will probably spiral into a depression.

 

[cashcow]

Half the nation in flood and with typical rainfall way in excess of what they can catch, and use, year in year out; the other half in extended drought. It'd be ambitious but I wish they'd have a crack at solving that one in the flurry of spending.

Regarding the handouts to the masses, I can't see that doing much good, partly because lots of people don't seem to make very smart choices on what to spend their money on (something I've done in the past), and partly because our economy is so heavily service-geared. If people, for example, go and buy a plasma, then the retailer gets some, and maybe some goes into the supply chain, and then the rest goes overseas. If we had a decent manufacturing sector still, it might pass through more Australian hands and keep more of us gainfully employed.

Just my but I'd be interested in people's comments and rebuttals

 

[Julia]

The only result I can see after spending $4 billion on insulation is that all the businesses that were created as part of the exercise will fold afterwards, all of the people that were working putting in the insulation will be out of a job afterwards, and all that will be left are some well insulated homes.

I suppose it's his gesture towards coping with 'climate change', i.e. less need for air conditioning/heating if houses are insulated. I think the principle is reasonable but it does not deserve the amount of money spent on it he has suggested. It will also spawn many rip off merchants.

Nothing to pin any kind of future on, nothing to build on, nothing to utilise, no seeds of growth planted, its highly unlikely any innovations will have resulted from it, nobody reskilled or educated as a result of it.

I'd hoped that the funds destined for Education might have been some attempt to employ more teachers, or improve teacher education so that we produce teachers who are actually properly equipped to teach. But no, it's to go to creating splendid new assembly halls, music auditoriums etc. These are great if there's plenty of spare money but hardly seem a priority for borrowed money.

Geez build the railways up in the Northern territory to exploit the minerals out of there.

Or expand the ports so that when the mining resumes at full levels there are not the bottlenecks causing ships to wait at sea for days before loading/unloading.

Or build a gas pipeline up to Asia. Solve water and erosion problems. Spend on a complete overhaul and consolidation of health administration in Australia and related health services which are back in the 19th century in a lot of instances - this will encourage all sorts of innovation - health is an area crying out for innovative ideas and any significant spending will result in all sorts of side benefits and will likely create lasting, internationally competitive businesses. It will also help out all of the ageing Australians that will need those health services.

Yes. Even put funds into new nursing homes for the ageing population, at the same time introducing a level of user pays for upper levels of care.

But no lets put the money into pokies, alcohol and insulation bats - in quantities unheard of.

What a disgraceful waste of years of Australian productivity and savings - current and future. Banana republic here we come.

Someone wake me up ... or is it April 1st? ... or did the Chaser team somehow manage to take over the Australian media for a day?

It's certainly feeling like some sort of bad dream.
But are all of us wrong? Most of the country's economists seem to be in favour of it.

I agree this is all aimed at confidence. The Govt simply havent got the money to bail us out of this, problem is their lame attempts will burden future generations with enormous debt, Rudd doesn't give a root , this is his moment in the sun.

I think he's actually revelling in all the drama.

Reckless borrowing and spending is what caused this problem. And what do we do? Spend more money we don't have.

Deficit spending is extremely short sighted. It assumes that someone will lend us huge amounts of money and that we can pay the interest on it. You would think that the current rise in US treasury yields market may be of some warning to Rudd?

We need to do the opposite, that is, encourage savings and cut back public sector spending. There is no other way to weather this out.

That's my natural inclination also. But wasn't this what happened in the Great Depression and as a result all the umm experts have resolved to do the opposite now?

Quite apart from whether massive spending does work for more than five minutes, the whole concept imo encourages the population to continue in the belief that it's just fine to go on spending more than you earn, and that there is no day of reckoning.

No. Infrastructure spending is only good if there is a demand for it and right now there is little. Every dollar the government spends is one less dollar for more essential social services later. We taxpayers will end up paying it all back plus interest.

Building bridges to nowhere will only make the recovery take longer.

Perhaps there is sense in building infrastructure now which will be needed when the recovery occurs. I don't see that assembly halls in schools fit into this category.

I dont think he was saying that. More that we might need to do something else in 6 months time and if we spend all the money now - where do we go next? Borrow another trillion $???

And how do we pay it back?

Personally, I earn and pay tax and would like to understand a few of the details. Given that I am working and paying tax, I dont have time. So I am glad Turnbull is sticking his knackers on the line to do it for me.

I couldn't agree more. The urgency with which Rudd & Co expect the Senate to pass this legislation is quite obscene. I also would like a detailed account of just how all this proposed spending is going to create exactly how many jobs and details of how long these jobs will last, e.g. the fly by night batt installers.

The whole thing smacks of panic by a government who is high on fear and low on expertise as to how to fix the problem. They seem to be taking the view that if you slap around enough money something positive might come out of it.

Malcolm Turnbull has significantly risen in my estimation with his preparedness to take such an unpopular stand. He may find he has more support than he may have anticipated.

Did anyone see the Lateline interview with Peter Costello last night?
Back to his old fiery self. I can't help wishing he was still Treasurer right now.

 

[jet328]

It's amazing how quick Kev & his buddies are to tell us how many jobs they will 'create' but never mention how many jobs they will destroy.

When the government raises $40bn from its bonds, thats $40bn that productive private companies won't be able to access. Like its not hard enough already to roll over finance, Kev is going to make you compete against him now. How is a private business meant to compete against someone with their own printing press?

So we're going to destroy real, efficient, productive private sector jobs to create phoney inefficient temporary jobs. I'm sure glad Kev isn't 'just doing nothing'

 

[cashcow]

Dangle a $1900 carrot in front of my face, and now Turnbull wants to take it away - one can only imagine these sorts of feelings are amplified across the voting public. The man has just commited political suicide, I'm afraid.

Maybe, or maybe he's thinking, "Hmmm, this government was elected by a fair majority, but there's still another ~2years until the next Federal election, what have I got to lose by playing devil's advocate?"

 

[Julia]

Maybe, or maybe he's thinking, "Hmmm, this government was elected by a fair majority, but there's still another ~2years until the next Federal election, what have I got to lose by playing devil's advocate?"

Or is it just possible that - as someone who presumably has a few more clues than Kev about things financial - he genuinely believes in what he is saying and knows Kev's package is poor. Thinks it's worth sticking his neck out politically in the hope of a more responsible approach?

 

[ghotib]

Does anyone else remember that Turnbull heartily commended Hank Paulson's original US stimulus package? The one that the Bush administration got through in double quick time and which turned out to be hopelessly inadequate. I distinctly remember hearing Malcolm talk about his old friend Hank and what a very smart man he was; I wonder what he thinks now.

I don't think the national interest is in Turnbull's mind much at all right now, except insofar as he thinks that a coalition government after the next election would be in the national interest. Maybe he's right about that, but we've got to get through the next year or more first and I for one would appreciate some sign that Her Majesty's Loyal Opposition is prepared either to propose some alternatives or to make its opposition constructive.

I had hopes that Turnbull would raise the level of policymaking in the coalition and or debate in the Parliament. He's a big disappointment.

Ghoti

 

[juw177]

Someone needs to show Rudd our exponential increase in foreign debt. It had been used to fuel the boom, and now that's over, we are left with over $1 trillion in debt denominated in (mostly) US dollars.

If Rudd continues to flood the economy with money and cutting interest rates, the AUD will suffer. As a result, foreign debt servicing goes up. Then the government / banks will need more liquidity to service the debt which causes the AUD to fall even more. Ultimately, the Australian economy will spiral into bankruptcy. With the cost of borrowing increasing, this can happen sooner than people think.

 

[GumbyLearner]

Does anyone else remember that Turnbull heartily commended Hank Paulson's original US stimulus package? The one that the Bush administration got through in double quick time and which turned out to be hopelessly inadequate. I distinctly remember hearing Malcolm talk about his old friend Hank and what a very smart man he was; I wonder what he thinks now.

I don't think the national interest is in Turnbull's mind much at all right now, except insofar as he thinks that a coalition government after the next election would be in the national interest. Maybe he's right about that, but we've got to get through the next year or more first and I for one would appreciate some sign that Her Majesty's Loyal Opposition is prepared either to propose some alternatives or to make its opposition constructive.

I had hopes that Turnbull would raise the level of policymaking in the coalition and or debate in the Parliament. He's a big disappointment.

Ghoti

Funny you should mention that Ghoti. He used to work for Goldman Sachs too, just like Paulson did. Hypocrisy..anyone? Well at least he approved Paulsons cash to bankers and wooden toy arrow makers. Why on earth would he want to support this stimilus package? Targeting the wrong people obviously!

 

[CoffeeKing]

This was the way...

http://www.youtube.com/watch?v=5ifip7u-3Ks&feature=related

This is now the way...

http://www.youtube.com/watch?v=3fgXf6HAk38&feature=related

 

[Calliope]

I'd hoped that the funds destined for Education might have been some attempt to employ more teachers, or improve teacher education so that we produce teachers who are actually properly equipped to teach. But no, it's to go to creating splendid new assembly halls, music auditoriums etc. These are great if there's plenty of spare money but hardly seem a priority for borrowed money.

Exactly. But they have to find projects they can throw money at quickly, even if it won't improve the children's education one iota. Before you build magnificent libraries children need to be educated to to level where they will use the library

The quality of the teachers (and the teachers' teachers) is so poor there is no short term answer, and the tragedy is that after this spendfest there will be no money left for long term solutions.

 

[Prospector]

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.

 

[knocker]

Bugga the insulation . what australia needs is .........LAMB CHOPS !

AND VB lol especially south of the border.:

 

[knocker]

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.

Don't worry about the water, gravity will see it arrive in Vic eventually lol

 

[Aussiejeff]

Someone needs to show Rudd our exponential increase in foreign debt. It had been used to fuel the boom, and now that's over, we are left with over $1 trillion in debt denominated in (mostly) US dollars.

If Rudd continues to flood the economy with money and cutting interest rates, the AUD will suffer. As a result, foreign debt servicing goes up. Then the government / banks will need more liquidity to service the debt which causes the AUD to fall even more. Ultimately, the Australian economy will spiral into bankruptcy. With the cost of borrowing increasing, this can happen sooner than people think.

In addition, Australia's AA international credit rating is sure to take a big hit. That won't help the AUD going forward either.

I seem to remember some problem with Gough's Labor gumint trying to obtain international loans for Treasury back in the 70's (the notorious Khemlani Affair).

IT WAS known as the Khemlani affair, but for the Whitlam government the money trail started in Adelaide with Greek emigre Gerry Karidis, 37. Thirty years later Karidis, a rich Adelaide builder who now specialises in retirement villages, is adamant the $4 billion "funny money" stream of petrodollars promised by shady Pakistani businessman Tirath Khemlani really was there, and more.

Speaking for the first time in 30 years about his role in the loans affair, Karidis says up to $8 billion in Middle Eastern oil money was waiting to be tapped and could have helped the Whitlam government realise its grand vision, which included major new infrastructure investment and a plan to take up a strategic interest in Australia's mineral wealth.

"Khemlani mentioned $4 billion, he even mentioned $8 billion, and the money was there. I knew from another source $5 billion was there just from one person; we weren't blowing hot air," says Karidis.

http://www.theage.com.au/news/natio...-blowup-of-1975/2005/10/28/1130400363882.html

Sound familiar? Big loans needed to pay for Labor's grand vision for infrastructure & mining developments? LOL

I'm also pretty sure we will see a massive blowout in the "official" gummint deficit figures over the next 12-18 months. They have guessed (intentionally?) WAY under the real figure to date, so I have ABSOLUTELY NO CONFIDENCE in their current rubbery projected figures.



chiz,

aj

 

[CAB SAV]

Someone needs to show Rudd our exponential increase in foreign debt. It had been used to fuel the boom, and now that's over, we are left with over $1 trillion in debt denominated in (mostly) US dollars.

If Rudd continues to flood the economy with money and cutting interest rates, the AUD will suffer. As a result, foreign debt servicing goes up. Then the government / banks will need more liquidity to service the debt which causes the AUD to fall even more. Ultimately, the Australian economy will spiral into bankruptcy. With the cost of borrowing increasing, this can happen sooner than people think.

Yesterday our news bullitin friends here, Compare Shares, reported that US senators were trying to explain to the average Joe how much a trillion dollars is. So they gave the example that laying dollar notes end to end would go around the Earth over 38 times. I suggest Mr Rudd should use Uranus as an example for Oz.

 

[juw177]

In addition, Australia's AA international credit rating is sure to take a big hit. That won't help the AUD going forward either.

I seem to remember some problem with Gough's Labor gumint trying to obtain international loans for Treasury back in the 70's (the notorious Khemlani Affair).

Frightening.

Difference is the government has guaranteed our bank debt. For now the banks have had no trouble raising more money abroad (ie, getting into billions more debt). But how long can this continue before conditions take a turn and the government is left with a bill of epic proportions?

Watch the US treasuries and the AUD. These two dictate the cost of our borrowing. Notice US bond yields are increasing? This is an indication that interest rates have bottomed out.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=tnx&sourceid=Mozilla-search

 

[glenn_r]

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.

I agree with the quality of Labour MP's but irrigating the Darling - Murray with Northern Australia's floodwater would create a world food bowl creating many more permanent jobs for our kids future not just the current drop in the ocean effect, the typical Labour management of finances is to spend now on anything and pay later with increased taxation etc.

The only good thing about Rudd and Swan hitting the panic button is it has woken up Costello from the back bench.

 

[inrodwetrust]

Rudd rescue bonds expected to draw global cash

Up to $24 billion worth of Commonwealth bonds will be issued in the next five months, compared with the annual $5 billion in the past four financial years.

The new debt will also compete with government-guaranteed commercial paper from the banks in a market flooded with at least $30 billion in the past few months.

What if they can't raise the funds after making all those promises.Although I not suggesting they won't or have any reason to think they can't..out of my area.

But how much will capital raisings be affected....will it be counter productive to the corporate sector?

Hypothetically speaking ... if Chairman Rudd can't raise the dough....maybe we could do our patriotic duty & put our multiples of $950 into the new Aussie Bonds?!.....would that then be like 'feeding the hand that feeds you"?

 

[cuttlefish]

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!

It would seem not - but I don't think Rudd has had much real life experience at anything except textbook diplomatic theory and maybe some textbook economics.


Someone should physically restrain these idiots from getting their hands on Australia's chequebook.


This plan is like someone with a credit card bill and no job going and buying a flat screen TV from Harvey Norman on two years interest free, and then selling it to pay off the credit card debt. What happens in two years time? Buy two flat screen TV's and sell them to pay off the first one? Roll forward 10 years of doing the same thing ... thats about where we're at now.

The Australian dollar will be a historical relic at this rate.