Henry’s dislike of mining on show again

Ken Henry has made a speech today pointing out the obvious that the mining boom doesn’t benefit everyone and that other traded goods sectors are badly affected by the high value of the dollar.

Well, yes, but what are the policy implications?  Kill of the mining boom?  Say with a punative tax?

Or realise that the mining boom will at least level out as supply in the key resources increases from a number of sources, inside and outside Australia.  In other words, there is every reason to expect that the terms of trade are pretty close to their peak in any case.  And in the meantime, provide maximum  flexibility to allow resources to transfer to the booming sectors in order to maximize the gains from this fortuitous turn of events.

Philip Lowe of the Reserve Bank has also spoken today and made the eminently reasonable point that the best predictor of macroeconomic conditions in Australia is now the macroeconomic conditions in China and no longer the US, as was the case several years ago.

I think the best advice Henry can give to  his political masters would be to reduce the growth of government spending savagely, thereby reducing the upward pressure on the Australian dollar.

This entry was posted in Uncategorized. Bookmark the permalink.

72 Responses to Henry’s dislike of mining on show again

  1. sdfc

    Judith

    Government stimulus spending is rolling off.

    The rise in the Aussie is a function of higher interest rates resulting from better growth conditions in Australia when compared to Europe, Japan and the US.

  2. JC

    I’m sure Henry dislikes miners less than I dislike him. In fact it’s no contest.

  3. JC

    Government stimulus spending is rolling off.

    And the debt just disappears according to SDFC, Judith. Once the spending ends there’s nothing to worry about.

    Milton..We’ve been through this before. Interest rates and growth cycles are not correlated. We think they are but if you superimpose the 10 year bond rate to GDP there is no correlation value to speak of.

    We’ve spoken about this before and you were thoroughly trounced for spreading mis-information. I guess you thought you’d sneak this one in and i wouldn’t know. Please don’t this again as it’s really dishonest underhanded behavior.

  4. .

    No.

    Explain this in the context of more stimulus and QE being good for you.

    The US differential between the cash rate and 3 mth bank acceptances reached 1% back in 1-2nd quarter last year, now it is under .15%, in Australia over the same time it has pretty much doubled to .3%.

  5. sdfc

    JC

    Come back when you get a working knowledge of the issue. Your emabarrassing comments are getting boring.

    Mark

    I’m not sure what point you’re trying to make. But it is fairly obvious the market thinks there is a better chance of an RBA hike in the next three months than a Fed hike which for all intents and purposes is zero.

    QE has hardly set off a credit boom in the US, In fact far from it. CP outstanding is currently at its lowest level since at least 2000.

  6. sdfc

    If you’re trying to make a point about credit spreads it is the OIS-bill/libor spread that you should be looking at.

  7. bianconieri

    sdfc, we are projected to run our 2nd biggest budget deficit this financial year in history at a time when our terms of trade are at a record high.

    I wonder why Treasury stopped publishing data on Oz’s structural deficit?

  8. sdfc

    I agree bianconieri I think the size of the stimulus was an over-reaction to say the least with some of the spending especially ill-advised. The spending has left us with very little spare capacity labour force wise at the beginning of what looks like a huge terms of trade boom, with all the ramifications that may have for inflation down the track.

    There was a real risk in early 2009 however that the downturn could have been especially nasty here. Big declines in national income have a history of leading to substantial rises in unemployment. High levels of household debt mean the economy and financial system are particularly vulnerable to high unemployment.

  9. Corin

    Hi Judith, it seems to me that the commentary on Ken Henry is very partisan on this blog. You may disagree on points but he’s not the lackey of the Labor party. I think the speech is broad ranging and actually I think Sinclair Davidson totally crossed the line the other week in his article. Where Henry does himself no favours is to defend Treasury policy but not make public Treasury disagreements with Government (which are many I expect). Perhaps where he also did himself little favour was the leaking of 2007 speech (but who knows if it was him). The speech is actually pretty well rounded, largely covers long term challenges of which the mining boom is one.

    I’m not a major fan of the arguments for policy based on so called Dutch Disease but the speech is about understanding this not stopping the resource drift. It is also about obtaining an appropriate return from resource utilisation that deplete. I think the RSPT was a dog of a policy for many reasons but a profit based tax with a substantial increase in the tax take on mining is inevitable. I don’t know whether the MRRT is the solution but if you argue for the existing royalties you’re living in a dark age of economic thought frankly. Not even the miners want this.

    Henry has been a proponent for labour market deregulation and lower EMTRs all his life, I think you have picked up a few gripes and run with them.

    It is time to call it what it is, a vendetta on a man who can walk both sides of the street not just to the IPA piper.

    Anyone who is a major climate sceptic is frankly living in that same cave with the mining royalties crowd.

  10. .

    “I’m not sure what point you’re trying to make.”

    I don’t beleive you. Answer the question as it was asked and what I am asking will become plainly evident.

    “the resource drift”

    What the hell are you talking about Corin?

    “I don’t know whether the MRRT is the solution but if you argue for the existing royalties you’re living in a dark age of economic thought frankly. Not even the miners want this.”

    Just adopt the WA system. Did Henry suggest this at all?

  11. .

    “Big declines in national income have a history of leading to substantial rises in unemployment.”

    You’re pulling figures out of your arse sfdc.

    Even if the stimulus was responsible for as much growth as its proponents say, we would have had positive GDP growth, just at a very low level. The year to year change in growth fell, as was expected.

    Never mind that Rudd’s 120 000 jobs were all temporary, inflated to 500 000+ with no evidence, no claims of any multiplier figure have been made and hidden unemployment reached 190 000 which happened AFTER the implementation of the stimulus, which was AFTER we returned to positive quarterly GDP growth, which then also increased the decline in cap ex which was, pre stimulus, recovering.

  12. Corin

    Hi, Anonymous but obviously annoyed by me individual, you guys all live in a parrallel universe where John Hewson was PM for a decade or more and more than this climate change is rubbish just because a couple of UN report were ‘sexed up’. It’s ok to play the man, ask Sinclair Davidson about it, re: Henry. Not everyone who disagrees is evil and trying to take your freedoms! The blog is starting to look like a tea party function quite a bit.

  13. sdfc

    So you don’t know what point you were trying to make either Mark.

    I answered your question as to why the spread between the cash rate and the bill rate is wider here than in the US. I would have thought the explanation was obvious.

    Not understanding these things is no crime, I understand your knowledge of the money market is only minimal. But the attitude you display just makes you look like a petulant little boy.

    I’ll be back tomorrow. Please try harder.

  14. sdfc

    Just spotted your last comment.

    Firstly – You doubt big declines in national income are historically associated with higher unemployment? If you do that’s almost JC level embarrassing.

    Secondly – the national accounts show government spending was the major contributor to YOY GDP growth in JQ.

    Thirdly – the stimulus is supposed to be temporary.

    You continue to argue this subject without getting even the basics right.

  15. JC

    Corin,

    Go suck a few eggs. You have nerve defending Henry after what he’s done. Not only is he a two faced lackey but he is an integral part of the ALP doing their bidding for them at every turn.

    ………………………”Perhaps where he also did himself little favour was the leaking of 2007 speech (but who knows if it was him). The speech is actually pretty well rounded, largely covers long term challenges of which the mining boom is one”

    He did himself little favors. Lol.. Oh but he also champions the Treasury too, does he? I little tear came to my eye reading that last para.

    Here’s a little test for you. Compare and contrast the speech he made attacking the current government in their attempts to peddle the NBN without publishing a CBA and pushing it out there in the public domain. Oh that’s right he didn’t. Oops.

    Stop the bullshit, you partisan hack.

    ………….”a profit based tax with a substantial increase in the tax take on mining is inevitable.”

    Inevitable? Are you hiding your brown uniform and brown boots, sport? You can take the My-fair-share-tax and shove it. These profits belong to the shareholders, not you, or any other grubby labor zombie. If Henry was honest about the profits based tax he would have made the suggestion to the states rather than try and hand the Liar’s party billions of dollars to buy votes. That isn’t your money and it’s not the Liar’s Party’s either, so get your mitts off it.

    ………..”Henry has been a proponent for labour market deregulation and lower EMTRs all his life, I think you have picked up a few gripes and run with them. “

    Oh yea. We heard about that speech he gave to the 300 hundred faithful when Rudd and Gillrudd announced the re-regulation of the labor market. It was one of those secret speeches he makes to the department when he’s really pissed. Oh that’s right the he didn’t.

    ………………”It is time to call it what it is, a vendetta on a man who can walk both sides of the street not just to the IPA piper. “

    No it’s time to call it a day. Henry and the senior ranks of the Treasury need to go.

    …………..”Anyone who is a major climate sceptic is frankly living in that same cave with the mining royalties crowd.”

    There you again trying to steal money again, Corin. It doesn’t belong to you so stop it with the analogies, you dickhead. It’s not your money, so stop trying to pretend that you have any claim other than the fact that your parents had sex one night and you were born in Australia by accident. You have as much claim to the money as you do to cash held behind the counter in the store.

    Oh and by the way, Sinc didn’t write the piece, dopey.

  16. JC

    SDFC;

    Nice try at role reversal. As a Keynesian zombie , do I need to remind you that you’re the only person on this blog who has ever been so stupid and self destructive as you have when you defended Homer’s “knowledge and expertise” in economics.

    My guess is that a failure recognizes another miserable loser through safety in numbers. It doesn’t work, sport.

    Not only single person before or after you has ever tried that.

    Now do you have any response to the link I posted last time providing evidence that spending stimulus doesn’t work or are you going to evade the issue with bullshit and lies again?

  17. JC

    Corine says:

    Anyone who is a major climate sceptic is frankly living in that same cave with the mining royalties crowd.

    This takes the prize chook in the raffle.

    This fucking idiot is now equating the My-fair-share-tax with climate change beleif. FFS where the hell did this moron come from?

    Corine is a keeper. We need to keep him here as a reserve in case Homer or SDFC take leave of absence as he’s got real attitude too for a nut ball.

    Corine.. remind me which site do you normally post comments because i recall seeing your “name” but I can’t remember exactly.

  18. Corin

    JC, so you know: http://www.theaustralian.com.au/national-affairs/commentary/replace-this-partisan-treasury-with-an-independent-budget-office/story-e6frgd0x-1225910613675

    And by the way should the tea party thing have been premature, right on call the next blog post.

    The point is Henry is a straw man for Catallaxy. You guys had Howard (who was apparently your guy) but he didn’t reform anything aside from the GST and that Work Choices well that was just ill conceived. Abbott is an poor mans version of Howard. He’s even more into state intervention than Labor. You’ve been disappointed since Keating left (oh, but wait he’s Labor, despite being the last reformer, oh but worse he killed off your great hope Hewson). There’s no hope of another people!

    That tea party is frankly the biggest bunch of lunatics ever in US politics. Just when you thought Bush had bankrupted the society, along comes an ever more stupid version.

  19. JC

    …………………”Hi, Anonymous but obviously annoyed by me individual”

    Corine, you should have a full stop, not a comma after the last word. Did you miss it because you’re stressed out here?

    No one’s annoyed with you. At the end of the day the site often has leftwing visitors like you who end up with their tail between the legs, run off to the safety of their left wing friends elsewhere and start crying because of their treatment. You’re no different if perhaps a great deal stupider. I’ve haven’t seen anyone yet equate for or against the My-Fair- Tax with belief in climate change. But hey, the stupidity of leftwingers such as you never surprises. You’re always amusing entertainment to the people here.

    …………….”you guys all live in a parrallel universe where John Hewson was PM for a decade or more and more than this climate change is rubbish just because a couple of UN report were ‘sexed up’. “

    Dude, you gotta stop it with the weather reports as it’s getting a little boring. And you also need to ‘sex” up your sarcasm too as that shit don’t work.

    ……….”It’s ok to play the man, ask Sinclair Davidson about it, re: Henry.”

    How many times do I have to tell you that it wasn’t Sinc’s thread you fucking idiot? How many?

    …………..”Not everyone who disagrees is evil and trying to take your freedoms! The blog is starting to look like a tea party function quite a bit.”

    And that’s a bad thing? You moron. Thank heavens you said it doesn’t look like the front bench of the ALP, as that would be truly offensive. LOL.

  20. Corin

    JC, perhaps you read my stuff in the Oz. I don’t really do blogs, they’re just staffed by crazies in my view. LP is just as bad as this blog.

  21. JC

    Corine.

    Are you injecting heroin? Scouts honor, I always try to predict the next stupid thing a leftwinger says but I could never in a million years have predicted that some nut cake would have equated criticism of the My-fair-share-tax with belief in climate change.

    Congratulations. You are now lead in the stupidest leftie for 2010 award.

  22. JC

    …….”JC, perhaps you read my stuff in the Oz. I don’t really do blogs, they’re just staffed by crazies in my view. LP is just as bad as this blog.”

    Are you suggesting that someone pays you a salary to write stuff? Frankly I don’t believe it because I can’t believe anyone that suggested opposition to the My-share-tax is like denial in climate science.

  23. The troll formerly known as Tom N.

    OPEN MINES vs BLACK HOLES

    Corin is pretty close to the mark here. Henry was pointing out some of the GE effects of the mining boom – this is an observation, made by many economists many times over the years, and tells us nothing per se about appropriate policy responses, or whether the observer considers that mining or the mining boom is good or bad. According the post writer though, and most of those in the comments thread, this is evidence that Henry “dislikes” mining!

    Of course, conspiracy theories about Henry and Treasury tend to flourish in the funny oxygen of the Cattallaxy parallel universe, as JC’s latest bunch of disturbed rants demonstrate once again.

    (That’s one community service that Cattallaxy does do, though – draws the ‘intellectual’ enerergies of RWDB types like JC away from public fora populated by people with open minds and into this intellectual black hole.)

  24. Corin

    No salary …. but I do write here and there for the Op Ed pages. You may even agree with some of it …

    I’m simply saying a profit tax is better and 99% of economists will agree, how big that tax is, starts to divide people.

    Climate change is happening according to 99% of thinking people, again it is the scale of the problem which divides.

    Left-wing is relative to tunatic tea party – about the centre-ground. I like that. Keep the names going.

    I suppose you vote LDP or some other crazy group.

    Why do I bother with such drivel from you!

  25. JC

    Oh no, see what you did Corin, you awakened Tommmy-from-the-government-bureau to post an abusive comment here. Great work sport.

    Tommy normally hibernates in the winter coming out only in the early spring and autumn.

    Yes, you’re right Tommy. Ken Henry is actually a liberal hack who jsut pretending to be a Liar’s party hack (such as yourself) and eventually (like superman) will come out and save us. lol

    Hey Tommy, on a serious freaking note. I send a cheque each quarter dripping with tears (mine). At the very least you could show some fucking humility and be ever thankful to schleps like me and other people in the private sector making sure you still get the RDO each coupla weeks to enjoy instead of all this attitude you’re giving.

    Now let me guess, you’re siding with Corine that disagreeing with the My-Fair-Share-Tax is akin to climate change denial?

    And here I was thinking we’re paying you well. Jeesh is enough never enough with you taxeaters?

  26. Ev630

    “99% of thinking people…”

    God, what a cunt.

  27. .

    Corin – I’ll ask you again nicely – WTF is “resource drift”. There is no need to prattle on that we’re in 2003 and Hewson has been PM for 10 years.

    Answer the question. You don’t have the moral right to call someone else a lunatic when you’re making up economics and peddling influence for the likes of Joan “Economic Meltdown” Kirner. Do your readers know you are a fantsay writer rather than an economist?

    sfdc holds some fantastically mutually exlcusive views:

    # The Australian stimulus saved us from negative GDP growth (and massive unemployment growth), even though it didn’t (when you ACTUALLY look at the figures and not pull them out of your rear end).

    # The Australian stimulus was wasteful, but it was efficient. We can write off losses.

    # The US should have had a bigger stimulus even though their bigger stimulus lead to “worse growth prospects”.

    # The US stimulus worked better because their economy was more stuffed.

    # The Australian stimulus was temporary but the jobs were permament.

    # We can ignore the larger rise in hidden unemployment even though *I* said it was a ridiculous thing to look at over a year ago before data was available.

    # Let’s continue to ignore the fact the stimulus was late before it started and it accelerated a decline in cap ex growth.

    # The stimulus has no long term effects.

    # Therefore, the Australian stimulus lead to a hgiher long term growth path.

    “Can’t get the basics right” LOL. Coming from the dude who thinks that neoclassical economics assumes all consumers etc have exactly the same preferences because the real business cycle theory is too lazy to do better than the representative agent.

    LOL freaking LOL. What a pathetic joke. Make up some more figures to support your fraud sfdc. We’re laughing right along with you, you giant fraud.

    “Henry was pointing out some of the GE effects of the mining boom”

    Bullshit Tom, if someone else brought up GE, you’d prattle on about it being theoetical BS and quote the Belgian Genuine Progress Journal vol 82 April 2003 about how “thinking twats” such as yourself know how GPI infers we need a comparative advantage destroying tax.

    “and tells us nothing per se about appropriate policy responses, or whether the observer considers that mining or the mining boom is good or bad.”

    Admit it, you are ambivalent or disapproving of growth. It’s alright Tom. Go hug a rock. It’s more valuable in your loving, “happy” arms then as part of a steel girder in Tianjian.

  28. Sinclair Davidson

    We live in universe where Hewson was PM for ten years??? Don’t know about that. The view around here is that Australia dodged a bullet in 1993.

  29. dover_beach

    Yeah, its funny when strangers pop-in here and pretend they’ve known you since Prep.

  30. .

    I’ll defend Henry: he’s just a common man, not a great man. John Stone stood up for what he beleived in. Henry was diddled by the uneducated and utterly incompetent Swan.

    Compare Swan’s RSPT to the WA royalty system.

    Light years of difference.

    Corin: do you think the mining boom will last? If it won’t the best thing we can do is dig it up before the price falls. The firms pay a quasi profit tax anyway.

  31. The Madus

    Spending is being pared if one looks at the budget papers.

    What needs to be done is that all tax revenues boosted by the commodity boom be banked.

    If this occurs ,Remember the previous Government did not do this, then part of the increase in income will be dissipated.

    The $A is rising because of the rising terms of trade and the interest rate differential which is related.

  32. Judith Sloan

    See the IMF authors (2008), Ricci, Milesi-Ferretti and Lee, who estimate that for every one percentage point increase in the ratio of government consumption to GDP there is an associated appreciation of the exchange rate of close to 3 per cent. My point precisely. Reducing the rate of growth can be insufficient to lower that ratio.

  33. DavidJ

    Corin McCarthy was an adviser to Rudd Labor in opposition and government.

    Is that you Corin?

  34. JC

    Yea i think think so, David. He’s the clown that posts regularly at the Trop.

  35. Labor Outsider

    Judith, presumably what matters in that paper is the relative ratio of government consumption? Or put another way, the paper estimates the impact of an increase in government consumption holding changes in government consumption in other countries constant. Over the past 2 years the ratio of government consumption to GDP has been rising in most countries. But not all of them can experience an appreciation of their nominal exchange rates.

    Btw, Corin’s main point was that the rhetoric on this site against Henry seems to have become a little unhinged recently. If you look carefully at a number of Treasury papers you will see that think the resource reallocation necessitated by the commodity boom should be facilitated, not resisted. Where you part company with Henry is in thinking about the impact of his proposed mining taxation regime on mining activity and the broader economy, and you probably think he is too close to the government. But I guarantee the internal advice that Henry gives is not always supportive of the current government’s policies.

    And JC, one of the reasons why so-called lefties don’t often comment here is that your particular style of debate is so vituperative that it puts people off. Few people take any joy in being attacked viciously in an online forum.

  36. Michael Sutcliffe

    Few people take any joy in being attacked viciously in an online forum.

    We only attack the stupid ones.

  37. .

    “But not all of them can experience an appreciation of their nominal exchange rates.”

    Why is this good LO?

    “Btw, Corin’s main point was that the rhetoric on this site against Henry seems to have become a little unhinged recently.”

    Yeah maybe. I think we’re too hard on the Parliamentary arrangements. Pm Abbot would want them too. I’ve defended Henry as I beleive he was stiffed by the dunce Swan.

    Corin does go on with some utter shite, like “resource drift”. Optimisation arguments are rubbish if you think the mining boom is a cycle and not structural.

    LO – maybe. I blame Bird. He shit on the culture here. LP may not use robust debate but they are full of bigots who defend their bigotry as a form of prgressivism. Plus the fact I have no idea what they are banging on about 1/2 of the time.

  38. JC

    LO

    Leave the violin, as I don’t have any Kleenex.

    Corin’s an idiot with serious delusions of having something worthwhile to say and the attitude he displays is beneath contempt.

    Any idiot that says this (below) deserves contempt at the utmost level it can be dished out:

    ………………..”Anyone who is a major climate sceptic is frankly living in that same cave with the mining royalties crowd.”

    The moron is associating opposition to the My-Fair-Share-Tax with climate science sceptism.

    From that point on Corine doesn’t deserve niceties, as he’s just another idiotic leftwinger.

    Like you, Corine was also defending Henry. The blog has demonstrated time and time again that Henry is an appendage to the Liar’s party and the Treasury is captured territory. If you want to go on defending Henry and those labor zombies be my guest. But let me remind you that if your starting and end points are that Henry “Oaky”, you’ll have to do better than that and present evidence against the facts brought here up about the jerk.

    Lastly Please… take a look at leftie sites like Pure Poison and LP, which are basically, hate sites. You comment at LP, don’t you?

    There’s no wishy washy with me, LO. If you make a stupid comment it will be defined as a stupid comment without remorse.

  39. dover_beach

    ”Anyone who is a major climate sceptic is frankly living in that same cave with the mining royalties crowd.”

    The only thing wrong with that statement is the reference to a cave; we live in houses with ocean views for the most part.

  40. JC

    ……………….”Judith, presumably what matters in that paper is the relative ratio of government consumption? Or put another way, the paper estimates the impact of an increase in government consumption holding changes in government consumption in other countries constant. Over the past 2 years the ratio of government consumption to GDP has been rising in most countries. But not all of them can experience an appreciation of their nominal exchange rates.”

    Different things impact on the exchange rate, LO. I would have thought you’d be the first person to highlight the fact that the large economies of the world been quantitatively easing whereas as we haven’t. Don’t you think that would impact the exchange rate and confuse the various currents affecting rates, or perhaps that has never crossed your mind?

    A large shock like demand for capital has in itself an effect on the exchange rate all things being equal. It is not however the only thing that does or can influence exchange rates. Please tell me that you’re not in SDFC’s camp that thinks money just appears out of thin air. Are you?

    Btw, Corin’s main point was that the rhetoric on this site against Henry seems to have become a little unhinged recently.

    Corine’s a freaking idiot as his comment showed. He’s like you seem to be: just an apologist for the Treasury head ALP appendage.

    ………………….”If you look carefully at a number of Treasury papers you will see that think the resource reallocation necessitated by the commodity boom should be facilitated, not resisted.”

    Then go ask Henry why he’s implicitly condemned mining for causing the Dutch disease.

    ……………”Where you part company with Henry is in thinking about the impact of his proposed mining taxation regime on mining activity and the broader economy, and you probably think he is too close to the government. “

    That would be understating how I feel about him.

    …………..”But I guarantee the internal advice that Henry gives is not always supportive of the current government’s policies.”

    Oh so you’re a fly on the wall now, LO?

    .

  41. .

    ”Anyone who is a major climate sceptic is frankly living in that same cave with the mining royalties crowd.”

    Beyond the pale and beneath contempt.

    Piss off Corin. Join Kev in his delusional world.

  42. Labor Outsider

    JC, Judith’s comment I thought pertained to the impact of government consumption on the exchange rate holding all other things constant. I of course agree that interest rate differentials matter as well.

  43. JC

    more from Corine..

    …….”a profit based tax with a substantial increase in the tax take on mining is inevitable.”

    Inevitable? It’s certainly not.

    Here’s a novel idea. Maybe leftwingers ought to stop thinking about raping and pillaging profits away from shareholders and other DIRECT only stake holders like the workers and begin earning a little more money through a second job, or even heaven forbid, performing well at the present or prospective job earning promotion or a higher salary.

  44. JC

    LO:

    Judith’s comment was correct as it pertains to Australia because the main drivers for the exchange rate influence from the Aussie end of things are…

    1. a giant swing in the terms of trade

    2. Capital hunger caused by the fiscal calamity of the stimulus.

    3. Interest rate setting caused by 2 and mostly 3.

    from outside

    Easing monetary policy to outright quantitative easing. This is perhaps the biggest liquidity injection we’ve seen in world history.

    Judith is right thought the score the ALP fiscal calamity as having an exchange rate influence and interest rate driver.

  45. JC

    oops Judith is right to score….

  46. Labor Outsider

    Well JC, I assure you that the RBA doesn’t think that fiscal policy has been the main driver of the exchange rate. But what would it know?

  47. dover_beach

    a profit based tax with a substantial increase in the tax take on mining is inevitable.

    How can this or any other human achievement be inevitable?

  48. Infidel Tiger

    It is written in the scriptures, my son. On the 8th day…

  49. JC

    LO:
    Central banks are there to be gamed, because although they’re pretty good in seeing the future they are not perfect and they all have blind spots.

    For instance the RBA pays almost no adherence to money supply these days, as though stock of money doesn’t exist and money is neutral of all intents and purposes. It’s not!

    Let’s not forget that just before the Clusterfuck called the GFC -in fact a month before- the Fed was talking about the inflation bogey man. The ECB actually raised rates and the RBA did so as well while 4 weeks later they were all racing to the accelerator faster than a Domino’s pizza delivery dude.

    Can I also say in the “nicest” possible way that your argument (relying on authority) sucks big time.

    Why is it more important what the RBA thinks than the reality of what economics teaches us about the effect of a sudden fiscal shock to the system? Anyone,-RBA included -that suggests going from a surplus of $20 billion to borrowing $60 billion ($80 billion turn around in the space of several months) doesn’t have an effect is either bullshitting or doesn’t understand economics. In fact it directly contrary to the first principles taught in economics. It’s as though scarcity (in this case) if money (resources) doesn’t exist when it applies to the government or an arm of the state.

    It’s like living in La LA land.

  50. Labor Outsider

    Dude, calm down. I can assure you that the RBA still pays attention to money. However, the importance of money has been downgraded relative to credit, interest rates and other indicators because the relationship between different definitions of money (M1, M3, broad) and the indicators the RBA cares about (GDP growth, inflation, the exchange rate) is highly unstable.

    Nobody at the RBA thinks that money is neutral with respect to inflation so I don’t know where you got that idea from.

    As usual you are doing a lot of talking without actually paying attention to what the institution you are talking about is actually saying and doing.

  51. .

    “Nobody at the RBA thinks that money is neutral with respect to inflation so I don’t know where you got that idea from.”

    Sure they might have a research paper on that, but where is this evident in their policy?

  52. JC

    I’m very calm, Lo. .. in fact a few of your comments brought giggles.

    As usual you are doing a lot of talking without actually paying attention to what the institution you are talking about is actually saying and doing.

    Umm like what exactly?

  53. Corin

    JC, My guess is the RBA is better than you at making money as well as i-rate decisions!! They actually hold onto foreign exchange and make money when the time is right.

    I wasn’t suggesting that tax-to-GDP should greatly increase and over time in a growing economy it should decrease. However, lower income and business taxes need other taxes to support health services in particular in a growing economy. Hence more efficient taxes like a profit based mining tax, higher GST or carbon tax. Hence lower company, payroll and income taxes can occur as well.

    Base broadening defined tax reform in the 80s and it should define it now.

    BTW – I agree with LO, re: reallocation of resources from manufacturing and other sectors to mining. The Treasury has always argued for facilitation but that doesn’t mean a more efficient tax system on mining exploitation isn’t needed. I just find that people who cling to past policies like royalties end up outside of the debate that is going toward a different outcome. Wouldn’t it be better to define the tax rate of a profit tax than to argue it is wrong. That’s what the MCA want, BHP, Rio … even small miners mostly.

    BTW 2 – royalties will keep going up (because states will want the revenue – like it or not) and then you have a bad tax with a high rate – so you end up with the worst of all worlds.

    BTW 3 – I can’t believe I’ve been drawn into this exchange …… and no I’m not a Labor adviser any more.

    BTW 4 – you can’t win either way on blogs having worked for the ALP, most say hack, won’t get out of bed without focus group, why don’t you get some passion, then on this type of blog, commie, taxeater, regulate it before it moves etc. The truth is, Labor is the party that does stuff that counts, even now. The Libs are just friends of business not competition and markets. The Nats are just the worst wasters of money since Whitlam (even including Kev).

    BTW 5 – blogs are simply communities of people who wish for something (like Thatcher for Oz) and then it never comes. This blogs is even worse than LP on that score.

    BTW 6 – this is kind of fun ……

  54. sdfc

    Mark

    1. sfdc holds some fantastically mutually exlcusive views:

    # The Australian stimulus saved us from negative GDP growth (and massive unemployment growth), even though it didn’t (when you ACTUALLY look at the figures and not pull them out of your rear end).

    What figures have you looked at? Certainly not the national accounts which show government spending was responsible for around 60% of domestic demand growth. Show me a period where RGDI has fallen even close to 2.5% yet has not led to a sharp rise in unemployment. Bullshit rhetoric won’t cut it. It’s time to put up or shut up.

    # The Australian stimulus was wasteful, but it was efficient. We can write off losses.

    Some stimulus was wasteful I agree but that is completely different to your indefensible argument that it didn’t promote business activity. Again it’s time for you to put up or shut up as to why it didn’t.

    # The US should have had a bigger stimulus even though their bigger stimulus lead to “worse growth prospects”.

    I’ve never said the US should have had a bigger stimulus. Retorting to verballing again once again demonstrates your lack of credibility on this issue.

    The US stimulus worked better because their economy was more stuffed. Once again verballing, you really are struggling aren’t you.

    # The Australian stimulus was temporary but the jobs were permament.

    Of course the stimulus was temporary that is the nature of stimulus packages. For someone who thinks they are a bit of a guru you sure are clueless.

    # We can ignore the larger rise in hidden unemployment even though *I* said it was a ridiculous thing to look at over a year ago before data was available.

    Labour force under utilization rises in all downturns, it has been less of an issue in this slowdown than previously because of monetary and fiscal stimulus. See point one.

    # Let’s continue to ignore the fact the stimulus was late before it started and it accelerated a decline in cap ex growth.

    Stimulus started in DQ 2008, why you think it was late is a mystery. Stimulus did not accelerate the decline in cap-ex growth. Business scales back investment because they can see falling returns not because of undergraduate notions of crowding out.

    # The stimulus has no long term effects.

    Only if you don’t count loss of income and bankruptcy.

    # Therefore, the Australian stimulus lead to a hgiher long term growth path.

    Given the evidence from the national accounts GDP is higher today it’s safe to say than it would have been in the absence of the stimulus.

    “Can’t get the basics right” LOL. Coming from the dude who thinks that neoclassical economics assumes all consumers etc have exactly the same preferences because the real business cycle theory is too lazy to do better than the representative agent.

    Neoclassical theory rests on that premise. You should obtain a deeper understanding of the philosophy you are defending or provide a reference to show me I’m wrong.

    LOL freaking LOL. What a pathetic joke. Make up some more figures to support your fraud sfdc. We’re laughing right along with you, you giant fraud.

    I don’t make up the national accounts figures so that is obviously just more hysterical claptrap as usual from someone out of their depth.
    [I counted 11 times that you put the “i” before the “/” meaning that you would have italicised the whole blog. That is why you were in moderation. Sinc]

  55. sdfc

    Why am I in moderation?
    [I counted 11 times that you put the “i” before the “/” meaning that you would have italicised the whole blog. That is why you were in moderation. Sinc]

  56. dover_beach

    The truth is, Labor is the party that does stuff that counts, even now. The Libs are just friends of business not competition and markets. The Nats are just the worst wasters of money since Whitlam (even including Kev).

    You might have a future in comedy.

    BTW 5 – blogs are simply communities of people who wish for something (like Thatcher for Oz) and then it never comes. This blogs is even worse than LP on that score.

    What do I wish for, Corin?

  57. .

    “They actually hold onto foreign exchange and make money when the time is right.”

    No. They lost about 4-5bn years ago. It was a major shitfight. Of course they make money when the time is right. They don’t always know when that time is.

    ANY trader can say “I make money if I execute trade x at time y…the problem is execution – knowing what x is and when y is.

    “I can’t believe I’ve been drawn into this exchange”

    Then don’t shoot your mouth off calling people loonies when you’ve made up new economic terminology you haven’t explained. “Resource drift”? C’mon.

    You’ve moderated out the silliness in your response since you got whacked a little.

    “Labor is the party that does stuff that counts, even now.”

    Oh come off it. I bet you a copy of the worst book wirtten by an Australian blogger (you choose) that the NBN will cost more than $43 bn before “completion” and will not live up to the original design standard and will take more than 10 years to build, which after faster connections from other technoligies will be cheaper.

    I mean seriously, was Rudd’s idea about passing a new tax without the consent of Parliament “doing stuff that counts”?

    Hawke and Keating maybe, but the current mob are incomeptent. Plain and simple. Howard jumping the shark from about 2004 onwards isn’t an excuse.

  58. MarkL of Canberra

    Corin: That tea party is frankly the biggest bunch of lunatics ever in US politics. Just when you thought Bush had bankrupted the society, along comes an ever more stupid version.

    WHich only goes to show you get your worldview from memes in a rather biased (and extremely shallow) media. (And Bush bankrupted the USA when Preshizzle Obamacles has run up four times the Bush era debt in a quarter of the time?? Lay off the moonshine, Corin.)

    Hit the link and get a clue, this is a lot deeper than some doltish lefty meme: http://www.nationaljournal.com/njmagazine/cs_20100911_8855.php

    Corin: ”Anyone who is a major climate sceptic is frankly living in that same cave with the mining royalties crowd.”

    Dover Beach: The only thing wrong with that statement is the reference to a cave; we live in houses with ocean views for the most part.

    DB – I nearly drowned in my tea. That’s just hilarious. BTW, as a card-carrying member of the VRWC Sceptical Deniers and baby-eaters Association, I have a copy of Plimer signed by both him and by Monckton 🙂

    Corin (again): Labor is the party that does stuff that counts, even now.

    Comment: Yeah, sure. $96 Bn piddled down the grate last time these clowns were let loose on the public finances, and already twice that with massive waste, deaths of my fellow citizens, and more debt to come. The ALP never just tires of spending other people’s money and stiffing my kids with the bill.

    Corin: The Libs are just friends of business not competition and markets.

    Being an ALP adviser and all you might not understand this, but it’s the businesses that makes the wealth and the jobs.

    Corin one last time: The Nats are just the worst wasters of money since Whitlam (even including Kev).

    Oh, of COURSE! The Nationals have wasted immense sums since winning the 2007 election. Just LOOK at the Nationals stupid Pink Batts fiasco and the billions of waste in the BER program! And they have will waste more with their $43Bn ridiculous NBN.
    Oh, wait….

    Corin, has it ever occurred to your titanic, nay brobdignagian intellect to look at two things:

    1. The percentage of Australian population living in rural regions, and

    2. The percentage of Australian export earnings that come from rural regions.

    Sunshine, it makes sense to look after the small minority that pays the damned bills for the rest of the country.

    Obviously, you disagree.

    MarkL
    (who loathes)
    Canberra

  59. Sinclair Davidson

    They actually hold onto foreign exchange and make money when the time is right.

    Central banks are the ultimate insider traders.

  60. JC

    Corin Says
    My guess is the RBA is better than you at making money as well as i-rate decisions!! They actually hold onto foreign exchange and make money when the time is right.

    Wrong context sport. Take any of the senior guys, take them out of that setting, give them a Bloomberg and I bet they wouldn’t be any good.

    You leftwingers really fuck up analogies don’t “youse”.

  61. .

    sfdc – you’re running excuses and abusing year on year statistics to justify stimulus when the economy was already growing, at the time, in the present.

    If you honestly beleive in this deficient analysis, you’re inummerate.

    For someone who “doesn’t believe” in the pap I challenged, you have a strange habit of supporting it until challenged and popping up elsehwere, verballing me and others. Such as the following.

    “neoclassical economics rests on that premise”

    Bullshit. Neoclassical economics existed before the representative agency model. It did not rely upon this for completeness. Nothing in standard microeconomics uses a singular endowment or preference set shared by the populace.

    Keynes simply averaged everything across the entire economy. (Oh dear this looks like a simplistic RA model – with virtually no microfoundations). A closed economy you dolt, which is a major hint why the stimulus would have never of worked here.

    So what if you looked at the antional accounts? What is the value of the multipler? Unless you get a really awful multiplier, then of course the stimulus is going to look like it “created” growth when it merely shuffled things around.

    You believe in a sleight of hand as a means of increasing real output.

    Get an education.

  62. JC

    Corin says:

    I wasn’t suggesting that tax-to-GDP should greatly increase and over time in a growing economy it should decrease. However, lower income and business taxes need other taxes to support health services in particular in a growing economy. Hence more efficient taxes like a profit based mining tax, higher GST or carbon tax. Hence lower company, payroll and income taxes can occur as well.

    Base broadening defined tax reform in the 80s and it should define it now.

    what the fuck are you on about Corin. No kidding this swill may be good for a presentation to Rudd, but babbling incoherent crap doesn’t work here. WTF are you trying to say?

  63. JC

    Oops. this should be italicized

    I wasn’t suggesting that tax-to-GDP should greatly increase and over time in a growing economy it should decrease. However, lower income and business taxes need other taxes to support health services in particular in a growing economy. Hence more efficient taxes like a profit based mining tax, higher GST or carbon tax. Hence lower company, payroll and income taxes can occur as well.

    Base broadening defined tax reform in the 80s and it should define it now.

  64. JC

    SDFC;

    Honest ask. Would you mind please working out the multiplier from this new story that’s out about the stimulus.

    Two Los Angeles departments have received $111 million in federal stimulus funds yet have created only 55 jobs so far, according to a pair of reports issued Thursday by City Controller Wendy Greuel.

    http://www.latimes.com/news/local/la-me-stimulus-audit-20100917,0,3706864.story

  65. C.L.

    Wow. 55 jobs for just $111 million.

    Bargain.

    Were they Keynesian penis washing jobs or what?

  66. JC

    I don’t think this was included in the genital stimulus washing program, but another part of the spending that wanted to focus directly in providing more jobs to Americans 🙂

  67. JC

    Corine:

    For a person to be knocking LP you sure are posting there a lot and on good terms with Mark which contrasts pretty badly with the comments you’ve made here about that blog.

    good prediction by the way:

    Ok, I’ll go out on a limb:

    Tories in Britain will win a good majority (probably 360 to 375 seats) but no Blair-like landslide;

    Rudd will win 92 seats (so historic but not the landslide the current polls tip) – I just hard see them winning 100 seats or more (Labor has never won like Howard did in 96 or Fraser in 75 or 77);

    Go out on any more limbs dude and you’ll end up a torso.

  68. MarkL of Canberra

    Has Corin has run into the middle distance, weeping?

    Back to the closed worldview circle LP and CT, perhaps?

    MarkL
    Canberra

  69. Ev630

    The truth is, Labor is the party that does stuff that counts, even now.

    And then there’s the truth.

  70. Infidel Tiger

    The truth is, Labor is the party that does stuff that counts, even now.

    It’s true. Everywhere you go you hear people demanding their houses be burnt down and billions to be blown on white elephants.

Comments are closed.