An intriguing story in The Australian today which they have titled, “Treasurer Wayne Swan calls for debt-led recovery at G20”. I’m amazed he feels he can show his face in public, never mind advise others how to fix their economies.
Anyway, first we see what the G20 members have actually decided to do:
In a carefully worded final statement, G20 leaders said at the weekend they were committed to ensuring ‘sustainable public finances’ and stood by their prior commitments to halve their budget deficits by this calendar year and stabilise their debt levels.
Sounds good. You have to wonder where they have found an economic theory to support taking such steps but forgetting about such things for the moment, this is what they are doing. But then we have the world’s greatest treasurer offering his own advice:
One of only a handful of world leaders and senior bureaucrats to address the elite forum last week, Mr Swan said: ‘You don’t need to slash and burn now to put your budget on a sustainable path over the medium term – in fact, cutting too hard now will rip the guts out of growth and leave you with higher debt later on.’
Well he should know. He is after all a world expert on steps to take if you want to leave yourself with higher debt later on.