Whiskers
It's a small world
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ABC 7:30 Report, 13 November, PM interviewed.
I like Leigh Sales, who unfortunately is at the pointy end of the usual ABC 'loaded' set of questions, as Tony Abbott pointed out tonight.
The PM was very restrained tonight, but has my permission (he'll be so grateful) to unload on the 7:30 Report in future.
Bugger it. I will go on.
You don't seem very keen to address the substance of Labor's folly.Are you are loosing your cool, dr!
You also haven't figured it out yet, the difference between the 'structural' budget balance and the 'actual' budget balance and the things that contribute to each!
The other significant point is WHEN the structural deficit started. You might deny... but the history books clearly document it started in the middle of the Howard Costello era.
It's a sick and suicidal argument for politicians to accuse others of what you are guilty of yourselves.
Go to bed
You don't seem very keen to address the substance of Labor's folly.
You forgot to mention when Rudd/Labor took over our country was DEBT FREE ! Australia’s net Government debt was $96 billion in June 1996. By June 2007, Australia had net financial assets (negative debt) of $29 billion.
Oh dear
Seriously, the Howard Government welfare handouts had no impact on the budget? Tax free super had no impact on the budget? The terms of trade falling with the resulting drop in GNI has no impact on the budget? Both previous Govts have plenty of responsibility for the current structural deficit of the budget.
So you're saying a 33% increase in the limit is not OK, but a 66% increase is, yet voted for the party that has surplus in it's DNA, would have run surpluses through the GFC, but has yet to announce any decent level of welfare cuts, and doesn't believe it can balance the budget within 3 years.
The Gillard/Rudd governments ran an efficient, tight economy. As economist Stephen Koukoulas has noted:
In its budget settings, the Labor government implemented the largest tightening in fiscal policy ever recorded. The budget tightened by 3 per cent of GDP in a couple of years and 2012-13 saw the largest cut in real government spending ever.
Lets put this into prospective because I think it's often forgotten. The Howard government sold approx $55 billion in public assets to acquire this figure. Now you didn't but its often said that they inherited $96 billion in debt from Labor but $40 billion of that was from the Fraser government. My point is any government can make its books look an economical marvel when you sell off public assets. Don't get me wrong they certainly moved our books in the right direction which undoubtedly helped us get through the GFC better than most countries however it's kind of like paying of the mortgage by selling the car and all furniture. The Abbott government is already at it looking to sell Medibank. http://www.finance.gov.au/property/asset-sales/past-sales.html
In saying all this though Labor must take responsibility for current debt ceiling.
In that article I note this particular comment on terms of trade,You forgot this bit everyone ignores
The broader historical context is in the following graph.It has not been widely reported that over the past two years, the Australian economy confronted a 20-year low for Chinese economic growth. This bad luck (for Australia) obviously dragged the terms of trade lower and the Labor government had to deal with this unfortunate turn of events. In late 2012, it made the prudent decision to let the budget automatic stabilisers to work which of course meant less revenue and a budget deficit, but it kept the economy growing at around a 2.5 per cent pace and as we saw last week, the unemployment rate in September was just 5.6 per cent.
Haven't they found the budget emergency yet? (lets fix it with another 66% of debt increase)
You forgot this bit everyone ignores
But regardless the Coalition arguments are becoming more convoluted as they are still running in opposition rather than government.
It remains to be seen how long they can keep saying one thing and doing the exact opposite before the momentum shifts as the argument its all Labor's fault will die out eventually likely some time next year I would think.
What about this for a theory then?
The RBA sharply lowered the official interest rate which facilitated the exchange rate depreciation, and scope existed for further interest rate reductions.
The national accounts show it was not fiscal stimulus that prevented recession in the March 2009 quarter, but net exports, boosted by a massive exchange rate depreciation and strong demand from China for Australia's commodity exports. Thank goodness for all those greedy mining companies up in the Pilbara eh?
You forgot to mention when Rudd/Labor took over our country was DEBT FREE ! Australia’s net Government debt was $96 billion in June 1996. By June 2007, Australia had net financial assets (negative debt) of $29 billion.
Oh dear
Actually it was the GFC that "facilitated" the RBA to lower interest rates.
It was the GFC that caused the AUD to crash, which caused the RBA to sharply lower interest rates. See the middle chart that clearly shows interest rates following not leading the RBA cash rate.
Indeed... just your THEORY!
This is the trouble people (including me as explained earlier under Howard) get into when you don't properly understand the economic numbers.. when you trust blind faith in your political advisors.
If you want to avoid us going bankrupt like the US... think carefully before giving the government a blank cheque.
So lets get the facts... and cause and effect, straightened out.
Actually it was the GFC that "facilitated" the RBA to lower interest rates.
It was the GFC that caused the AUD to crash, which caused the RBA to sharply lower interest rates. See the middle chart that clearly shows interest rates following not leading the RBA cash rate.
As above, net exports (in $) see top chart, did not offset the other adverse effects of the GFC, collapsing AUD, it just partly compensated for it.
Net exports was not a net "boost" to the economy.
Second, demand (volume) from China fell flat with the GFC and never fully recovered the previous rate of "strong demand" as the bottom chart shows.
For instance, the standard textbook model of an open economy with internationalised capital markets and a floating exchange rate proposes that fiscal stimulus fully crowds out net exports, while another perspective originally suggested by classical economist David Ricardo implies higher public debt stemming from increased government borrowing crowds out private consumption.
Higher public debt implies higher future taxes not just for households, but for firms.
Private firms essentially drive the economy, but their share market value languished due to policy induced uncertainty. Slow asset price recovery in the wake of the financial crisis also reflected weak business and consumer confidence stemming from fiscal overkill.
Why Australia, an economy highly dependent on foreign borrowing, deployed fiscal stimulus more aggressively than most other G20 economies remains a mystery.
In that article I note this particular comment on terms of trade,
The broader historical context is in the following graph.
http://www.tradingeconomics.com/australia/terms-of-trade
Actually it was the GFC that crushed the massive spike in inflation that Howard had caused with his fighting the RBA leading up to the 2007 election.
Seems like people have forgotten mortgage rates peaked at around 9% under Howard because he couldn't stop handing out the candy.
P.S. BTW I never said it was "my theory" ... I said it was "a theory" I believed in.
A theory you believe in and put up as an argument with passion is your theory.
I precluded it with this statement "Funny how these economists come up with these theories."
So a professor of economics is incapable of understanding the economic numbers as per your statement?
And just for comedy purposes only:-
As the Reserve Bank notes, "from 2003 to 2011, global prices for Australia’s resource exports (in US dollar terms) increased by more than 300 per cent.
http://www.rba.gov.au/publications/rdp/2011/pdf/rdp2011-08.pdf
You might want to read this to understand economic numbers.Or has the RBA got it wrong as well?
So a professor of economics and the RBA is wrong and Whiskers is right?
My bad
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