New York State of Mind

From his comfortable abode in New York, the best leader any nation has every had ever since man stood upright, has spoken.   And no, Spartacus is not talking about Malcolm Turnbull (the second best leader any nation has every had ever since man stood upright).  It is Kevin Michael Rudd who has written in the AFR How we staved off recession and the GFC.

Spartacus does not really want to dissect another of Mr Rudd’s attempts at legacy building beyond noting the absence of a very important 5 letter word in Rudd’s essay.  That word being more than a word; it being a country.  China.  Yes.  The middle kingdom land of rat f*ckers.  Funny how China expert Rudd seems to have forgotten China’s role in the GFC recovery.

What saved Australia was not what Rudd, Swan and the Wombat man did.  It was the Chinese government’s stimulus, a stimulus equivalent to US$586 billion, that dragged Australian commodity prices to record levels and Australian exports to record levels which in turn contributed to dragging the Australian dollar to record levels – contributing to cheap imports and lots of money swirling in the economy.

To be fair, when the crap is flying everywhere, Rudd and crew can’t be faulted for trying.  But in the cold hard light of history, it is clear that most of what the Rudd government did was for nil, but it did leave a nice legacy of debt and government profligacy.

The issue here is not who to blame (or who should try to take credit), but what to learn.  And as long as the myth of the Rudd government’s economic skills is maintained, Australia will be vulnerable to another government flight of stimulus folly.

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12 Responses to New York State of Mind

  1. Roger

    But in the cold hard light of history, it is clear that most of what the Rudd government did was for nil, but it did leave a nice legacy of debt and government profligacy.

    A chap called Guy Debell begs to differ – the stimulus saved us.

    Next governor of the Reserve Bank.

    We’ve learned nothing, and now we’ve got nothing in the tank for the next one.

  2. Speedbox

    When the next GFC happens, and it is inevitable in one form or another, the armory to fight it is severely depleted as we labour under crushing levels of Government and consumer debt. Moreover, those ratf*ckers won’t help like last time because their requirements and our capacity to supply has changed. Australia’s survival of the last GFC was a happy coincidence (for us) of a number of factors due principally to us being in the right place at the right time to supply China with their requirements.

  3. Entropy

    I think speedie, is the answer is not to do the same thing next time. And the answer is not do nothing. The political reality is that any politician that got up and said that in a crisis would lose their job. The media narrative would destroy them.
    Maybe instead of consumer spending, the pollies talk about an export led recovery. Remove impediments to exports (temporarily of course!). Just about any impediment an exporter can think of and tell the politician. Even add some token export subsidies (who gives a rat’s about WTO, really). It is all about animal spirits apparently.

  4. Norman Church

    The response by the Key government in NZ to the GFC provides an interesting counterpoint.

  5. Speedbox

    Entropy – sure, agreed. There are numerous solutions that could de-shackle us but under our current leadership, and what’s coming with Shorten, I will be astonished if Australia actually takes those initiatives.

    Perhaps I am too cynical but I dread the outcome as interest rates jump, unemployment spikes, defaults rise, banks foreclose, crime levels spike coupled with increased family breakdown and greater number of suicides, our political leadership will reach into the treasury from assorted ‘pump priming’ exercises only to find bugger all. Governments always have solutions to gain more money (increased borrowings, taxation or seizure) but this will just add other problems.

    (maybe I am just having a bad day – perhaps I should go and have a lie down).

    I agree with you but think we will be crucified because we have, or will, leave our de-shackling too late.

  6. Warwick

    They most certainly can be faulted for trying. They squandered a farken fortune and achieved nothing.

  7. O’Conner, Maher and Noonan will direct Bowen to take us to $2 trillion debt by 2027.

  8. max

    Australia’s GDP in 1980 was $150 billion and household debt was $60 billion — 40% of GDP.
    Today our GDP is ~ $1.6 trillion and household debt has grown to $1,920 billion –120% of GDP

  9. Peter Greagg

    Norman Church
    #2816352, posted on September 14, 2018 at 12:41 pm
    The response by the Key government in NZ to the GFC provides an interesting counterpoint.

    Yes x 100

  10. Bruce of Newcastle

    China. Yes. The middle kingdom land of rat f*ckers. Funny how China expert Rudd seems to have forgotten China’s role in the GFC recovery.

    That would be the same China that is in the process of tripling their CO2 emissions, as agreed under the Paris Agreement. Nice Mr Rudd called them amorous ratophiles during a previous round of climate craziness: the Copenhagen round. It’d be fun to ask him what he thinks now about the Chinese who are already emitting twice as much CO2 as the next highest climate sinner. I suppose their extra carboniferous flatulence by 2030 is just icing on the climate cake.

  11. Gan Do

    I thought that the 5 letter word from Krudd should have been SORRY…

  12. Pyrmonter

    There’s another 5-letter word that Rudd (and others) often overlook: money.

    source: tradingeconomics.com

    Our money supply was better managed than elsewhere

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