It was the stimulus that did us in not the GFC

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It’s only the headline writer, but it is the most common of all economic illiteracies. From The Australian: Growth rates slashed as GFC fallout lasts decade.

Normal economic growth rates won’t resume until at least 2017, the Reserve Bank declared yesterday as it slashed its growth forecast for next year, leaving Australia with weak growth for almos­t the entire decade since the global financial crisis began.

The Reserve Bank’s vision, outlined in its quarterly review of the economy released yesterday, now stretches for another 18 months, with a 0.5 percentage point downgrade in growth estim­ates for next year, to 2.5 per cent, casting a shadow over budget forecasts.

Let me couple this from Drudge today:

Record 93,770,000 Americans Not in Labor Force…
Participation Rate 38-Year Low…
Record 56,209,000 Women Not Working…

The only relationship between the GFC and the dismal economic outcomes today is that the GFC led one government after another to put in place a Keynesian stimulus. As I said at the time, we will be lucky to get out of the problems created within a decade. If you would like more of the same, Policy in the Pub on Wednesday the 19th.

UPDATE: The photo added later. Seriously, what is the case for the stimulus?

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16 Responses to It was the stimulus that did us in not the GFC

  1. Andrew

    Rising unemployment, higher spending, higher taxes, higher debt, growing deficit and lower growth. Where is Ken Henry when you need him?

  2. billie

    South Australia are the beneficiaries of the greatest welfare cheque ever written in Australia, the Navy shipbuilding contract.

    We’d be better off giving them the money and getting the ships built overseas, they are crap at shipbuilding since they do it reluctantly to get their welfare.

    Having been weaned on GM, Mitsubishi and Sub building welfare, they behave now to this as entitlement not opportunity.

  3. H B Bear

    Where is Ken Henry when you need him?

    If only Henry confined himself to molesting wombats and left the rest of us alone.

  4. Art Vandelay

    With the exception of Judith and Henry’s columns, the Australian is a bastion of economic illiteracy these days. The question they should be asking is “why is it taking Australia such a long time to recover from an economic downturn?”.

  5. Tel

    Having been weaned on GM, Mitsubishi and Sub building welfare, they behave now to this as entitlement not opportunity.

    Hey buddie, they sold their votes fair and square.

  6. Entropy

    Tel, I suspect they will take the money and still vote for the other mob. They saw him coming.

  7. Rabz

    Keynesian stimulus

    The greatest diffusion device in human history.

  8. Lem

    Normal economic growth rates won’t resume until at least 2017, the Reserve Bank declared yesterday as it slashed its growth forecast for next year, leaving Australia with weak growth for almos­t the entire decade since the global financial crisis began.

    Like……duuhhhh!!! Try getting out on the street a bit more, idiots.

    All statistics are lies and the reality is much worse than governments pretend

    Since the dodgy accounting of the government is based on daydreams by morons, we will never see a balanced budget in our lifetime.

  9. Bruce of Newcastle

    Actually I think the stimulus didn’t do much of anything in net terms.

    The catastrophe of the stimulus was actually that it gave an excuse to politicians not to do painful reforms. Especially pollies on the left who raised minimum wages and restricted companies from hiring and firing. Plus oodles and oodles of green tape and boondoggles like the RET.

    That is the biggest problem with “Keynesianism”. By giving them a shiny they can wave around it lets them do what they want, not what the nation needs.

    Companies are still not investing because they can’t see how to do so and make a profit, any profit. Despite record low interest rates. That is damning of the political class, especially the ALP whose tenure it was during the GFC fallout period.

  10. Tel

    Actually I think the stimulus didn’t do much of anything in net terms.

    Other than dump us into debt, which wasn’t an issue before.

  11. .

    Actually I think the stimulus didn’t do much of anything in net terms.

    It did terrible things. It accelerated a decline in capital expenditure.

  12. Andrew

    Since the dodgy accounting of the government is based on daydreams by morons, we will never see a balanced budget in our lifetime.

    I called that one while the Goose was still pretending we HAD a surplus. Sure had a lot of people telling me I was on drugs for that one.

    Fact is, ex mining we were in recession from 2009. The Goose – Wombat stimulus was specifically designed to kill the mining boom by taking all construction resources into the BER catastrophe. Now commodities are in a GFC.

    It’s a miracle unemployment isn’t 10% again.

  13. Andrew

    Actually I think the stimulus didn’t do much of anything in net terms.

    Imagine a parallel universe where Gillard had been Minister for Natural Resources instead of Edumacation.

    Now in deciding how to reward the building unions for future rissoling of any non EMILY persons in her way she comes up with this:

    During the economic emergency, any mine of project with state environmental approvals has AUTOMATIC Fed clearance to proceed.

    Mine construction would have recommended 2009, coming on stream from late 2010 in time for the once in a lifetime bubble. A666ot Point terminal was built. She never declares 98% of the coastline a “marine park.”

  14. How could anyone with a face like that have hubris? Surely a simple mirror would be cure?

  15. johno

    Yet another reason not to bother with the once great Oz.
    As Robert Conquest noted, any organisation that is not explicitly anti-Left, will eventually become captured by the Left.

  16. Sydney Boy

    As of this week, all new Euros are to be printed on Greece-proof paper.

    Syria has appealed for international assistance today, after a boatload of 500 Greeks arrived seeking a better life.

    What are the first three letters of the Greek alphabet? I.O.U.

    My son asked me what it was like to live in Greece, so I took his pocket money off him.

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