A brutal reminder of macroeconomic incompetence

The GFC was over with in 2009 and now we are at the end of 2017. So what are we to make of this, other than they have no clue what’s gone wrong:Brutal reminder of GFC still here, Treasury says, as retail stung by poor sales.

Treasury secretary John Fraser has slammed politicians for being out of touch with the struggles of everyday Australians and blamed “extraordinary political instability” for a lack of consistent policy settings that could push the economy forward.

Mr Fraser made his comments as retail figures released on Friday showed yet another month of downbeat results, with a fall in food, clothing and department store sales.

Rising energy prices and the weakest wage growth in Australian history are slugging consumers, driving anxiety among businesses in the lead-up to the crucial Christmas trading period.

In a speech at the Australian National University before the dismal data was [were] released, Mr Fraser said the country was still struggling with “the brutal reminder of the global financial crisis,” which took longer than expected to recover from and had led to a “perplexing weakness” in the economy.

The actual perplexing weakness is in the economic theories that have been used to analyse what’s gone wrong and then work out what to do to fix things.

The GFC was a worse-than-usual downturn that would have blown over in about a year, were it not for all of the Keynesian so-called “stimuli”. It is the fantastic amount of our national savings that have been blown by governments on building the education revolution, pink batts, the NBN, green energy and pretty well every other government spending program over the past decade. Obvious as the day is long, yet there is no one in Treasury who seems to understand why their road to recovery has been a road to ruin.

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45 Responses to A brutal reminder of macroeconomic incompetence

  1. As I mentioned in an earlier thread, the government (all of them) keeps doing the same things over and over again in the hope that they will get a different result. The definition of insanity.

  2. iampeter

    +1.
    I love you on economics Steve.

    If only your coverage of Trump was as well thought out and not that of an equivalent to a “political Keynesian”.

    😛

  3. stackja

    Herbert Cole ‘Nugget’ Coombs legacy continues.

  4. stackja

    Liberty Quote
    There will be no carbon tax under the Government I lead

    — Julia Gillard

  5. Snoopy

    Mr Fraser said the country was still struggling with “the brutal reminder of the global financial crisis,” which took longer than expected to recover from and had led to a “perplexing weakness” in the economy.

    It’s very perplexing. Absolutely nothing to do with what the Wombat Whisperer, KRudd and Goose Springsteen blessed us with to ‘save’ us from the fleeting GFC.

  6. John Constantine

    Demand destruction until we degenerate to a level where the economy can limp along on windmills.

    This has been signed convention binding upon the Australian proles, entered into as war reparations for racism and colonialism.

    Australia’s elites fully intend to transform the economy from one where racist men get fulfillment and satisfaction from working lives making stuff and doing things, using racist coal power.

    We are bound by signed treaties to become a ruinables disability society, where vegynsys wymynsys of diversity all have good clean State jobs, helping and saving and consoling the downtrodden of the world.

    Run on debt and windmills.

    Comrades.

    What a brilliant idea, Julie Bishop.

  7. RobK

    John,
    As I understand it, the Paris agreement is non-binding.
    The treasury: they recognized poor energy policy but put the spending problems in gobbledygook. It is painfully simple as Steve points out.

  8. Andrew

    Whenever I see an economist and ask them why unemployment plunged from 9.5% to 4% after the GOP closed off the Kenyan’s tap, I just get vacant expressions, glassy eyes and some mumbling about “it would have recovered quicker still without the austerity.”

    I then point to the speed of recovery of all 3 Baltics vs the similar Greece. Apparently 20% unemployment in the Baltics was caused by the lack of stimulus and was the worst policy error on the planet, but the 28% in Greece after stimulus was because they ended stimulus early. (Even though unemployment then fell rapidly.)

    I then point out that AUS had no recession despite having no stimulus under after the recession was over globally.

  9. RobK

    The RET is fully funded by the same base that pays tax….but that’s not all, those better off are duped into making co-payments into self interests of rooftop solar. Sodomized sophisticated investors buy into wind, geothermal, thermal solar especially with the largesse from superannuation. Not only are power prices higher but a mass of investment capital is going down the plug hole. Wake-up treasury.

  10. candy

    It is perplexing. We have high numbers of people in public servant jobs too, very well paid, very good working conditions, and for a lot of the rest is low wages and much more vulnerable to high energy and grocery bills.

    Almost just a two tiered working society – public servants and non-public servants, the elites and non-elites almost. Ms Palaszczuk is relying on her strategy of increasing the number of public servants to keep her in government. It’s all she’s got.

  11. John Constantine

    Technically the Paris agreement is non binding, but we see the last desperate, flailing days of their team turnbullites debacle, and they grasp onto just one thing.

    Every turnbullite feels it was all worth it, because they will always have Paris.

    Even if it humiliates and destroys their government and they lose their political career, all of them agree that whatever the cost, Australia will abide by the Paris obligations.

    Effectively the most binding, non-binding capitulation document ever signed.

  12. RobK

    Yes John, it’s binding cos the vibe.

  13. Squirrel

    “Treasury secretary John Fraser has slammed politicians for being out of touch with the struggles of everyday Australians and blamed “extraordinary political instability” for a lack of consistent policy settings that could push the economy forward.”

    The policy settings have been remarkably consistent and effective in punishing the productive and the prudent – savage marginal income tax rates for lower-middle and middle income earners, negative real interest rates for savers, year after year of galloping increases in utilities and other government controlled charges which are essentially unavoidable for most households – that’s the consistency Australians have had in spades.

    The middle is being slowly but surely crushed, that’s why they’re not spending the way the idiot elites need and want them to.

  14. Neil

    We have high numbers of people in public servant jobs too, very well paid, very good working conditions, and for a lot of the rest is low wages and much more vulnerable to high energy and grocery bills.

    Not sure if i should say this but at least prostitutes, sex workers, porno workers get their money from hard work and not from the govt.

  15. Sextus Empiricus

    Indeed Steve. I would put it to you that the GFC wasn’t a downturn ‘we needed to have’, but was an asset bubble caused by sub-prime mortgages and consolidated securities. As such, it was caused by the US government in the first instance, and then triggered by interest rate policy from 2005.

    The response to bail out the banks was wrong, the drop to very low interest rates was wrong, and the spending of vast amounts of borrowed money on government stimulus packages, so called, was also wrong.

    Since 2009, growth has been stunted by government debt, weak government in general, the Carbon Tax, over- regulation, high energy prices and what is just about an investment nvestment freeze.

    Only

  16. Sextus Empiricus

    Only an upturn in private sector investment will create wealth, jobs and new work. Look to the US Enery industry, cutting green programmes, cutting corporation taxes and simplifying tax bands…. all of this works and is already producing an aggregate growth rate of 3%. Wages and salaries will follow.

  17. RobK

    “Not sure if i should say this but at least prostitutes, sex workers, porno workers get their money from hard work and not from the govt.
    Probably classified as a discretionary spend, they’re likely feeling the pinch more than Treasury.

  18. egg_

    Even if it humiliates and destroys their government and they lose their political career, all of them agree that whatever the cost, Australia will abide by the Paris obligations.

    Their only uniting “principle”?

  19. Waz

    Terrible indictment of Treasury provided inadvertently by Head of Treasury.

  20. In my (bitter) old (retired) age, I’m rooting for a recession starting 2nd half of 2018.
    I hope this recession is deep and strong so that my fellow citizens get it deep, get it hard and get it strong so that they wake up to themselves.
    I’m especially rooting for this recession to effect the “save the environment”, “save the children”, “diversity is our strength” brigade, forcing them to go back and live with mom in their 30s 40s and beyond.

  21. anonandon

    You know Steve, I’m starting to think that you are on to something here.

  22. Rayvic

    “The GFC was a worse-than-usual downturn that would have blown over in about a year, were it not for all of the Keynesian so-called “stimuli”. It is the fantastic amount of our national savings that have been blown by governments on building the education revolution, pink batts, the NBN, green energy and pretty well every other government spending program over the past decade. ”

    And there’s more extravagance in the pipeline: committing to the NDIS bottomless pit, and sinking at least $50 billion into yet-to-be-designed submarines that could have been bought off the shelf for a third of the price.

  23. The only thing that got the American economy out of the self-inflicted misery of the Great Depression and the New Deal disaster was WWII. Just sayin’.

  24. mareeS

    The so-called GFC did not affect us at all. It’s the aftermath of panic that has done us in.

  25. OneWorldGovernment

    I think IT’S TIME to SACK the top third of all so called Government Departments.

    Show me how any so called Government Department has helped Australia.

  26. Ragu

    The middle is being slowly but surely crushed, that’s why they’re not spending the way the idiot elites need and want them to.

    $50 for a carton of beer, $400 a quarter electricity bills for two bedroom apartments, $300 fines for travelling 1kph over the speed limit, $20 000 paid in tax and no discernible improvement to anything.

    A sceptic might say that this country is fucked. A more entrepreneurial soul might grow a bit of dope and sell car parts just to get ahead

  27. cynical1

    How to reduce your emissions.

    Lesson 1.

    Squeeze the plebs into survival mode.

  28. Senile Old Guy

    It is the fantastic amount of our national savings that have been blown by governments on building the education revolution, pink batts, the NBN, green energy and pretty well every other government spending program over the past decade. Obvious as the day is long, yet there is no one in Treasury who seems to understand why their road to recovery has been a road to ruin.

    The policy settings have been remarkably consistent and effective in punishing the productive and the prudent – savage marginal income tax rates for lower-middle and middle income earners, negative real interest rates for savers, year after year of galloping increases in utilities and other government controlled charges which are essentially unavoidable for most households – that’s the consistency Australians have had in spades.

    Add in taxes on superannuation; something that the LNP said they would never, ever, ever, ever do. Anyone with any sense is making sure that the government cannot get their money. The rot started long ago but it got an injection of steroids when Abbott bought into every ALP thought bubble, including the NDIS. Abbott pledged our billions to win an election and get stabbed in the back by the utterly useless and incompetent Turnbull.

  29. Allen

    Perhaps the Governments of today learned from this playbook

    The Goon Show
    The Jet-Propelled Guided NAAFI
    Series 6, Episode 19
    Broadcast 24th January 1956, written by Spike Milligan.
    SEAGOON: Needle nardle noo. Now, as a strolling Prime Minister of no fixed address, I must protest at this gross mis-spending of Public Funds. This-this-this building in Ceylon was supposed to cost twenty five thousand pounds! In fact it cost fifty-nine thousand!
    BLOODNOK: We mustn’t stand for this.
    SEAGOON: We’re not going to! We’re not going to indeed! To teach those concerned with this disgusting waste a severe lesson, I’ve ordered the building burned to the ground, and a new building put up at the proper price.
    (Shades of The School Hall Fiasco)

  30. Bruce

    Senile old Guy:

    “Obvious as the day is long, yet there is no one in Treasury who seems to understand why their road to recovery has been a road to ruin.”

    Could it just be that they are in in the “game”?

  31. Empire

    Adam
    #2543284, posted on November 5, 2017 at 1:19 am
    The only thing that got the American economy out of the self-inflicted misery of the Great Depression and the New Deal disaster was WWII. Just sayin’.

    http://catallaxyfiles.com/2016/04/17/how-keynes-caused-wwii/

  32. Louis Hissink

    “for a lack of consistent policy settings that could push the economy forward”

    AKA the command economy. If they but would understand why the economy is suffocating and stop wringing its metaphorical neck, matters might improve.

    Damn, I should have taken red pill, not blue one……….

  33. H B Bear

    $50 for a carton of beer, $400 a quarter electricity bills for two bedroom apartments, $300 fines for travelling 1kph over the speed limit, $20 000 paid in tax and no discernible improvement to anything.

    This. Government is now largely a mechanism for stripping resources from the few remaining sectors of the economy and tipping it into the black holes of health, education and welfare. And they wonder why productivity and wages are flat lining?

    Once the immigration/property Ponzi scheme falls over this place is stuffed.

  34. Empire

    Keynes in correspondence to his mother, Christmas Eve 1917:

    My Christmas thoughts are that a further prolongation of the war, with the turn things have taken, probably means the disappearance of the social order we have known hitherto. With some regrets I think I am on the whole not sorry. The abolition of the rich will be rather a comfort and serve them right anyhow. What frightens me more is the prospect of general impoverishment. In another year’s time we shall have forfeited the claim we had staked out in the New World and in exchange this country will be mortgaged to America. Well, the only course open to me is to be bouyantly bolshevik; and as I lie in bed in the morning I reflect with a good deal of satisfaction that, because our rulers are as incompetent as they are mad and wicked, one particular era of a particular kind of a civilization is very nearly over.

    Let’s not forget it was Keynes (the confessed Bolshevik) who negotiated on behalf of Britain, the terms of the Anglo American Loan Agreement.

    https://www.newstatesman.com/economy/2008/11/bretton-woods-keynes-british

  35. Crossie

    Perhaps the Governments of today learned from this playbook

    The Goon Show

    Well of course, Yes, Minister and Yes, Prime Minister didn’t run long enough to cover every eventuality. That’s why the smart people have to go to the source materials.

  36. Natural Instinct

    Guests:
    Andrew Charlton. Co-founder of AlphaBeta; former economic advisor to ex-Prime Minister Kevin Rudd.
    .
    Andrew still thinks he saved Australia, and the ABC RN network still gives him a platform to say so
    .
    ASX tops 6000 but remains far from peaks a decade on from GFC

    It’s tried and failed many times over the past few years to breach the psychologically important 6,000 point mark — but yesterday the stock market finally got there — for the first time since the GFC.
    The All Ordinaries index — which includes around 500 stocks — closed 29 points higher to end the day yesterday at 6,006 points.
    But the market is still a long way from its all time high of nearly 6,900 points reached in November 2007 — and it still lags its global peers.

  37. egg_

    I’m rooting for a recession starting 2nd half of 2018.
    I hope this recession is deep and strong so that my fellow citizens get it deep, get it hard and get it strong so that they wake up to themselves.
    I’m especially rooting for this recession to effect the “save the environment”, “save the children”, “diversity is our strength” brigade, forcing them to go back and live with mom in their 30s 40s and beyond.

    It’s slowly sinking in to the talking heads on the ABC box that things like ‘Energy security’ are reality, that reality bites, and that the Climageddon Religion that tickles the vanity of our elites is a very costly venture to the community.
    More sacrificial goats, anyone?

  38. EvilElvis

    $50 for a carton of beer, $400 a quarter electricity bills for two bedroom apartments, $300 fines for travelling 1kph over the speed limit, $20 000 paid in tax and no discernible improvement to anything.

    A sceptic might say that this country is fucked. A more entrepreneurial soul might grow a bit of dope and sell car parts just to get ahead

    Yep, and after paying for all your overpriced, over regulated necessities you’re supposed to have a wad of cash left over to spend keeping the ‘thriving’ service economy going. Fuckwits…

  39. EvilElvis

    It is perplexing. We have high numbers of people in public servant jobs too, very well paid, very good working conditions, and for a lot of the rest is low wages and much more vulnerable to high energy and grocery bills.

    Almost just a two tiered working society – public servants and non-public servants, the elites and non-elites almost. Ms Palaszczuk is relying on her strategy of increasing the number of public servants to keep her in government. It’s all she’s got.

    It’s straight up fucked Candy, that’s what it is. The PS needs cutting and government hands need breaking to give our pockets a rest.00

  40. Jannie

    Its a lot harder to save a dollar than it is to spend a dollar.

    But that doesn’t matter if you borrow it, somebody else pays the debt in the long run.

    We can still borrow $50B a year for at least ten years, maybe 20.

    In the long run we are all dead, except JMK lives in universities and treasuries everywhere.

  41. John Constantine

    Australia’s banking sector has written a million mortgages that are now in debtor stress.

    Who knows how close another million or so bank created debacles are to crushing their prole liability holders.

    Too big to fail.

    The crony millionaire socialists running Australia’s banks have profited massively from the population Ponzi property scheme.

    The massive number of wymynsys hired to diversity and Stalinise the banks have had their well paid childless dreams come true.

    The real economy is a squeak away from the collapse of their Ponzi scheme.

    Anti trust split up the banks and Rico the management.

  42. Lutz

    Fraser seems to ignore the fact that non-discretionary expenses such as utilities, insurances, hidden taxes and so on, are using up an ever increasing portion of our income. It is not a surprise that retail spending is down as the money has disappeared before discretionary spending even has a chance.

  43. Mr Black

    Their salaries depend on them not understanding it. It’s as simple as that.

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