ABCDiamond

Absolutely correct, we have been told we are in recession, so employers take steps to protect their company, or their personal assets.

That often means people lose jobs, that means less money gets spent, then more businesses get hurt, and the downward spiral causes businesses not even affected by the original events to get hurt, and more people lose jobs.

During good times times, employers take risks and try to build.

During bad times, they take care, cut costs etc.

I suppose that I am assuming they do the same as I did, as an employer. That method worked very well for me.

If I was operating a business today, there is no way I would risk myself during times of no confidence.

I am actually itching to start something again, but no way till I see some hope at the end of the tunnel.

IvanM

When I mean events on the ground I am talking about actual demand and price drops rather than economic indicators. Australia wide I believe my employer has laid off about 500 people nationwide, shut 2 plants and deferred the building of another.

This is due to an actual drop in demand and not a perceived lack of confidence or a change in stats. Confidence is important but IMO it is one of many indicators to look at and more important for some industries eg retail than others.

If the economy ran on confidence alone running it would be easy. Sod productivity, finance, trade employment etc. Lets just borrow heaps and spend and tomorrow will never come as we are full of confidence.

moin

Just read on MSN.COM.AU that Australia isn't in recession!!

IvanM

Keynes is the right response however it is a buy now pay later method. We will pay for this with higher taxes and interest rates in the future as has every other period of Keynsian expansion. I don't think Keynes had the plasma TV bonus is mind though.

MartinLuther

I think Keynes only works over limited periods of time. Obviously stimulus payments are a modified version of his ideas.

Whether we pay for this with higher taxes is yet to be seen. Prior to the crunch Aus was running a surplus on tax receipts and had a "problem" of what to do with the money. They couldn't give it back because it would fuel inflation. And although they did put some of it to good causes like the Future Fund and infrastructure, they weren't able to spend it. It's fair to assume that if this "problem" comes back then the money can be used to pay off the debt rather than raising taxes.

High interest rates are a problem for some and low interest rates are a problem for others.

Kate2112

Yes it is - Anyone denying that Australia is in recession is a bare faced liar.

MartinLuther

Do you want to flesh that out with a bit of meat rather than invective.

Kate2112

People need to do the research themselves to satisfy their curiosity and not follow the herd. Its pretty easy to do it.

I could give you some pointers like Currency market, GDP, export/import taxes, Employment statistics but that would take away the need for people to find out for themselves.

MartinLuther

What about local experience?

Amazulu

With economics every tom, dick and harry has a say (you know the story, assholes-opinions-everyone's got one). This is why official stats are the ones to use.

I'm going with the ABS.

IvanM

If it is not higher taxes then it is cuts in government expediture. The recent QLD budget is a good example. Australia may have a had a surplus back then however it was squandered on tax cuts issued by Howard and KRudd. The future fund is more of a government savings mechanism rather then an expenditure tool.

Current Government estimates are that debt will increase at 50 billion a year.

It was also noted by the RBA that the government income levels were not in line with trend however that inconvenient truth was ignored by politicians of both colours.

My point on the interest rates is that they are normally needed when the inflationary forces of Keynsian policies come through. The inflationary aspect negates the good part for those who would normally benefit from higher rates.

Catch

Valid point,but later when Medicare is scrapped and everyone's new plasma has broken down,and the first time buyers default on their massive mortgage things may look a bit grim.Everyone's opinions are different, that i respect but still can't help thinking Rudds feel good policy is throwing fuel on the fire that got the world into this situation in the first place.Time will tell but for now" Viva presidente Rudd"

MartinLuther

But if the government starts running a surplus like it was before the crunch (and I can see that's an if) then there's no need for cuts or raised taxes (except maybe in the short term). They were getting too much money and they didn't know what to do with it. The Future Fund was a place to put the money so they didn't have to make tax cuts and fuel inflation. It does have several uses but I never suggested expenditure was one of them. It was the right decision at the time. Although I would love to have a tax cut (and I would stick it in savings) I'm not sure that the majority of the population are so prudent. Personally I would like to see the government introduce tax advantaged savings/investments (other than super) as a way of handing back the surplus.

I can see your point on high interest rates but once the economy is heading north again then the government should start managing inflation (and drop Keynes). However high interest rates is still better than low interest rates if inflation is high.

IvanM

Australia has no choice but to return to surplus. Until resource demand and prices pick up again this is going to be impossible with weak budgets like Swan gave. Something like ISAs would be good and to remove the 4 year requirment on holding the first home owners savings accounts however I suspect we are going to see spending cuts rather than tax cuts in the near future budgets.

Here is what the government is estimating its drop in revenue to be and that is considered an optimistic opinion.
http://www.bloomberg.com/apps/news?p...efer=worldwide

asprilla

http://business.timesonline.co.uk/to...cle6420947.ece

bunch of bare faced liars, I say.