Seven deadly failures

Robert Manne (yes – that Robert Manne) has a good piece at The Monthly explaining what has gone wrong with the Rudd-Gillard government. There is nothing in there that cat readers would find remarkable – what makes it so good is that he doesn’t try to wriggle out of the carbon tax lie or simply blame the original ETS backflip.

The first strategic error was Rudd’s 2008 asylum seeker policy.

The second strategic error concerned a failure of administrative attention to detail during the highly successful Rudd government stimulus program.

The third strategic error of the Rudd government was to trust the Coalition and to cold-shoulder the Greens regarding negotiations leading towards its most important piece of legislation – the emissions trading scheme.

The fourth strategic error followed close upon the climate change debacle. Badly stung, Rudd now attempted to prove that he did indeed believe in something, by announcing his government’s commitment to the Ken Henry committee’s suggestion of a resource rent mining tax.

The fifth strategic error … the swift and secretive unseating of Kevin Rudd.

The sixth strategic error is the one I find most difficult to explain. Having convinced Rudd to postpone the emissions trading scheme legislation for three years, having promised the electorate that her government had no intention of introducing a price on carbon, having scrambled back to government as the leader of a minority government – Prime Minister Gillard now signed an agreement with Greens for the creation of a parliamentary committee to broker the outlines of a carbon tax/emissions trading scheme. … By talking Rudd into postponing his climate change legislation, Gillard helped destroy Rudd’s reputation. By promising the Australian people before the election that her government would not introduce a price on carbon, and then signing an agreement shortly after the election for a process leading to carbon price legislation, she helped destroy her own. Gillard outlined her carbon tax legislation in July 2011. It is no accident that it was in July 2011 that her government’s already poor public opinion polls now went into free-fall. Gillard was not only introducing a new tax whose absolutely real necessity she was incapable of explaining. She was also a “liar”.

Labor’s seventh strategic blunder came earlier this year. It was always inevitable that Kevin Rudd at some stage would make an attempt to regain the leadership of the Labor Party. …

(HT: Leon)

This entry was posted in Uncategorized. Bookmark the permalink.

103 Responses to Seven deadly failures

  1. JC

    To be honest we don’t need a washed up politics professor, who in some cases has shown he isn’t even able to follow his own arguments, tell us what’s wrong with this incompetent government.

  2. Gab

    Just because some people are slow on the uptake doesn’t mean we have to point out their failures, JC.

  3. Robert Manne is wrong:

    JULIA Gillard says she is prepared to legislate a carbon price in the next term.

    It will be part of a bold series of reforms that include school funding, education and health.

    In an election-eve interview with The Australian, the Prime Minister revealed she would view victory tomorrow as a mandate for a carbon price, provided the community was ready for this step.

    “I don’t rule out the possibility of legislating a Carbon Pollution Reduction Scheme, a market-based mechanism,” she said of the next parliament. “I rule out a carbon tax.”

    She did not promise not to introduce a carbon price in the first term.

    [Steve – http://www.youtube.com/watch?v=KMVc0IbtyAQ – your friends don’t like seeing you embarrass yourself like this. Sinc]

  4. JamesK

    She did not promise not to introduce a carbon price in the first term.

    And there you have it.

    liar-stevefb™ says that not only didn’t Julia tell us a porky but…. she apparently actually promised she would introduce a carbon tax

  5. JC

    She did not promise not to introduce a carbon price in the first term.

    Lol

  6. JC

    ….she apparently actually promised she would introduce a carbon tax

    Yea, she did. The vid of her is garbled as a result of bad static. What she actually said

    “there would be a carbon tax under the government I lead.”

  7. Max Scream

    Manne is an overly-flattered Rudd loyalist.

  8. .

    There will be carbon tax under a Government I lead.

  9. .

    Advice for pollies:

    Don’t lie about taxes.

    Bush I: Sunk by “read my lips”

    Keating: Sunk by “L-A-W Law” tax cuts that never eventuated.

    Rudd: “I’m a fiscal conservative.”

    Gillard: “There will be carbon tax under a Government I lead.”

    You can argue about if Scandinavia is better than the US or HK…but don’t bloody lie or you will get rebuked severely.

  10. Token

    I’ll ignore Liar-SoB’s moronic attempt to re-write history.

    Manne is taking Labor’s standard approach to history – i.e. re-write the history after the fact to cover up the incompetence.

    This is typical of Manne, economical with the truth and pure positioning of Labor as “the victim”:

    The third strategic error of the Rudd government was to trust the Coalition and to cold-shoulder the Greens regarding negotiations leading towards its most important piece of legislation – the emissions trading scheme.

    The fact is that if Rudd had courted and negotiated with the Greens instead of ignoring them he would still be PM.

    It was a tactical failure by an inept man.

  11. Seriously, are you all as big as non comprehending idiots as you pretend to be??

    Manne says: Gillard promised not to price carbon.

    The pre-election interview in the Australian quotes Gillard: the election would be a mandate for a market based pricing scheme.

    Manne is wrong. How much plainer can it be?

    These squiggles on the page – they mean something. Go back to primary school if you haven’t worked that out yet.

  12. Peter Patton

    I’m sorry, but Robert Manne is a lightweight whose every prognostication on the Australian polity has proven laughable, even minutes after he publishes. He has been that way ever since I started reading him in the late 1990s. He might have been Bob da anti-Commie Man during the Cold War, but he’s now just an annoying screaching bimbo. It is quite clear he was traumatised over being booted out of Quadrant, once more for his gullibility (on that occasion over the Bringing Them Home hoax), and tin-ear when it comes to ‘State of the Nation’ essaying.

  13. TerjeP

    Gillards primary excuse for the carbon tax backflip is that she had to negotiate with the Greens in the context of a minority government. However what some commentators forget is that this minority government position was a situation heavily speculated on in the lead up to the election. The Liberals ramped up pressure on Gillard by saying that she would introduce a Carbon tax in conjunction with the Greens. At the time the Liberals were drawing an equivalence between an ETS and a carbon tax (not such a long bow to draw) and saying that a minority government that included the Greens assured this would happen. Gillards promise was in direct response to this pressure. Under pressure Gillard lies. And her attempt to revise the context of the promise and her entire basis for breaking the promise are also predicated on deceit. She is a quite horrendous national leader. That said I prefer her rampant dishonesty to Rudds grand vision.

  14. Rabz

    The first strategic error was ruff’s dullard’s 2008 asylum seeker policy.

    Fixed.

  15. .

    Excuse me Steve I am not an idiot, I have shown three other well known examples of heads of Government rolling at general elections or in the party room over lying about taxes not being increased.

    You ought to apologise if you cannot credibly discount the other examples which are well known.

  16. Rabz

    By talking ruff into postponing his climate change legislation, dullard helped destroy ruff’s reputation.

    Utter bollocks.

    ruff had no reputation left at that point to salvage. People had woken up to what an idiot he was.

    Whether dullard convinced the utterly vile egomaniac to drop ‘his climate change legislation’ is of no consequence – as far as I and just about everyone I spoke to at the time thought, it was yet another desperate ploy by an utterly discredited windbag to save to his stupid, stinking hide.

    Nothing more, nothing less.

  17. dover_beach

    She lied about a carbon tax. But you are right, Steve from B, about Manne’s mistake. He simply gets even the simplest facts wrong.

  18. Max Scream

    A price on carbon could mean a carbon tax or cap and trade.

    The fact is Labor always supported the latter and not the former.

    The fact is that the former is the better policy.

    The fact is that what is legislated is a two step change.

    It was legislated for in a Parliament in which Labor is in minority.

    From an ethical point of view, I can’t see a problem.

    Howard and Abbott are self-confessed liars who even invented elaborate pseudo-justifications for not telling the political truth.

  19. Adrian

    “there will be no carbon tax under a government i lead”

  20. Hanyu

    Manne is right to recognise the lack of talent on the front bench. The truth is that these guys are actually performing at their peak; they really can’t do any better.

  21. Rabz

    There are also deep factors threatening the future of all parties within the social-democratic tradition.

    Expanding on that li’l observation would make an ‘interesting’ future piece, bobbsy…

  22. Max Scream

    Manne was too busy chasing reds under beds at the time when Labor had some genuinely left of centre programmes.

  23. Peter Patton

    Manne has not the slightest experience, history, or even intuition about the ALP. He is a blow-in following the Quadrant sacking. His instincts are cringe-inducing. He sounds as comfortable and confident with all this banging on about “the social democratic tradition” as Keating would be talking to a bunch of wharfies about pig shooting.

  24. Peter Patton

    Hanyu

    Manne is right to recognise the lack of talent on the front bench. The truth is that these guys are actually performing at their peak; they really can’t do any better.

    We should draw a lot of comfort from this. Australia is not ‘run’ by politicians and governments. It is run by the interactions of the citizenry, and civil society.

  25. Winston SMITH

    Beyond belief.
    The 12 dimensional pretzels of logic the trolls are tying themselves into, would confuse even Hawking.

  26. Peter Patton

    Oh, and of course, Lord of the Proles, Luvvie Kwigg’n.

  27. MikeH

    I really need my eyes and ears tested. I have rewatched the clip “there will be no carbon tax under a government I lead” numerous times but I am obviously wrong,along I believe with the majority of Australians. Perhaps we need “Medicare Gold”? Then we can all have sight and hearing tests at govt expense so we can understand Julia’s dulcet tones telling us “there will be a carbon tax under the government I lead”. We all seem to have heard a “no” that wasn’t there.

  28. Neil

    Steve of Brisbane posted this link

    http://www.theaustralian.com.au/national-affairs/julia-gillards-carbon-price-promise/story-fn59niix-1225907522983

    The paragraph finishes with

    “I don’t rule out the possibility of legislating a Carbon Pollution Reduction Scheme, a market-based mechanism,” she said of the next parliament. “I rule out a carbon tax.”

    You will often find this link on leftoid blogs. Labor supporters use this link time and again as proof that Gillard did not lie. I really try and understand what point Steve and other supporters are trying to make when they post this link.

    But I do not understand what they are trying to say. Unless what Gillard has legislated is not a tax but a carbon price.

  29. Max Scream

    The one and only biggest deadly failure of Labor – the intended surplus:

    Wayne Swan’s determination to deliver a budget surplus, regardless of the state of the economy, is seriously reckless. Labor has chosen to risk sending most of Australia into recession in order to keep a promise it should never have made.

    No Australian government has ever proposed such a huge withdrawal of spending from the economy. On his own published figures, Swan plans to take us from a deficit of $37 billion this financial year, perhaps more, to a $1.5 billion surplus in 2012-13.

    On Treasury’s estimates, that would take at least 2.6 per cent of GDP out of the economy in 2012-13. That is equivalent to shutting down the entire electricity industry, all arts and entertainment venues and all airline travel for a year.

    Why on earth would you do this in an economy that has added just 10,000 jobs in the past year, where the growth rate is just 2.5 per cent, and most of that is in mining and related industries, and with Victoria and south-eastern Australia on the verge of recession?

  30. JamesK

    A price on carbon could mean a carbon tax or cap and trade.

    The fact is Labor always supported the latter and not the former.

    The fact is that the former is the better policy.

    The fact is that what is legislated is a two step change.

    A price on carbon could mean a carbon tax or cap and trade.

    The fact is Labor always supported the latter morphing into the former.

    The fact is that merely asserting the former is the better policy is bollocks.

    The fact is that what is legislated is a two step change and so was the cprs.

    The facts are that Shane Wand and the Lying Slapper lied

  31. JC

    The one and only biggest deadly failure of Labor – the intended surplus:

    Bob the finance major and agronomist.

  32. No Australian government has ever proposed such a huge withdrawal of spending from the economy.

    Max could it possibly be because no government has ramped up spending so quickly either except in a time of war.

  33. Max (Bob?),

    From an ethical point of view, I can’t see a problem.

    If this ‘policy reform’ was announced before the election, truly revenue neutral, the rate proportional to temperature and put off until the rest of the world joined, it might ‘look’ more ethical.

    What is ethical about forcing us to participate in a dodgy UN backed international derivitives market?

  34. thefrollickingmole

    Funnily enough, its easier to return to surplus BEFORE you expand government programmes, build overpriced/low value school crap, engage in $900 giveaways, and install a bunch of house burning pink batts.

    I dont know if wayne “Megamind” Swan realises we escaped some of the worst of the GFC because of WHERE WE STARTED, rather than spending up big.

    Its easier to get out of a hole if you stop digging it. Its even easier if you realised 3 years ago you didnt need to dig it anyway…

  35. Max Scream

    Costello wasted the long boom and he wasted the mining boom.

  36. .

    Max that is just a myth. At least be more specific.

  37. JamesK

    Costello wasted the long boom and he wasted the mining boom.

    Bollocks

  38. Peter Patton

    Costello wasted the long boom and he wasted the mining boom.

    How? By enjoying a wildly successful career in Australian politics, including a decade as the federal Treasurer? Why, what valuable pursuits and achievements can YOU boast during “the long boom and mining boom”.

  39. Max Scream

    The mining boom is not a product of the last five years, it has only accelerated. A small surplus in a boom is not much use in the midst of the great recession.

  40. Max Scream

    I know you think its all about me, PP, but you might be wrong this time.

  41. Rafe

    You could say Costello and Howard wasted $18 Bil by leaving it to the ALP instead of giving it back to the rightful owners.

  42. Carpe Jugulum

    Mr Manne (yes i konw he is not here) – these were not errors in jugement or even strategic errors. They were in effect bald faced lies accompanied a lack of oversight and by a level of incompetence that would have seen those responsible prosecuted if they were in the private sector.

    The 2 main protagonists, Gillard and Rudd, do not have the collective life or executive experience to manage a light bulb change. Let alone their insane clown posse of conroy, combet and wong.

    Mr Manne i think you have been too kind to these folk, torture would be too kind for the damage they have done.

    Cheers

    The Jugulum Family

  43. sdfc

    You could say Costello and Howard wasted $18 Bil by leaving it to the ALP instead of giving it back to the rightful owners.

    How Rafe? By more inflationary tax cuts.

  44. JC

    How Rafe? By more inflationary tax cuts.

    Excessive money in the system is the RBA’s problem. Sweep it out if they’re worried about inflation and maintain steady NGDP.

  45. Max Scream

    No, I think he means that the Liberals should ransack the Treasury before they leave office so that Labor can’t spend it on their agenda.

    This is what any party habitually does by spending big before an election. If they win, it worked. If they lose, they win.

  46. Biota

    It’s just the twang that has confused people….

    There will not be carbon tax under a Government I lied.

  47. Matt

    Ransack the treasury = give the money back to those it was taken from and tax cuts = spending in lefty-speak obviously

  48. sdfc

    JC

    The RBA regulates the demand for money through cash rate targeting.

    Easier fiscal policy demands a higher cash rate if the central bank is tightening. I lay the blame for the inflationary breakout largely at the feet of the RBA.

  49. johno

    Peter Patton

    We should draw a lot of comfort from this. Australia is not ‘run’ by politicians and governments. It is run by the interactions of the citizenry, and civil society.

    If only this was true. Governments directly control around one third of all spending in Australia and has a big influence over how the other two thirds is spent. Most of our non-spending decisions are also heavily regulated by government.

    So while the interactions of the citizenry and civil society might ‘run’ Australia, the government still controls how these interactions are runned. (Is that a word?)

  50. Peter Patton

    Hey sdfc, pissed yet? 🙂 Did you read about Ben Cousins? Honestly, I don’t know if he is the unluckiest, or dumbest, drug-user ever born. I know/have met lots and lots and lots of people in my time who are party people and can gobble and snort at elite levels, but are never pulled over by the cops when they’re off their tits. Bennie boy can’t seem to piss without the cops turning up.

  51. sdfc

    Not yet Peter.

    Cousins is a sad story. All will power on the footy field and none off it.

    It looks like it is not going to end well.

  52. Mk50 of Brisbane

    it’s time to ask Sinc to rid us of Maxie the NSDAP Squealboy.

    He has become merely tedious and banal with this ‘wander in and sh*t on the kitchen floor’ routine.

  53. it’s time to ask Sinc to rid us of Maxie the NSDAP Squealboy.

    if he was really serious he could demonstrate with a 50m dash.

    make a real statement, aim for 60m, I know you have it in you

  54. brc

    during the highly successful Rudd government stimulus program

    I wish people wouldn’t write stuff like that while I am sipping on a drink. Spurting out your nose onto the keyboard is unpleasant.

    Pray tell, what exactly was successful about the ‘stimulus’.

    Can anyone point to something and say – well there’s $40 billion worth of money well spent.

    The answer is no. If he had just stuck to sending out $900 cheques at least people would have got to spend it on whatever they wanted. But I guess the unions don’t like just anyone getting their snouts in the trough.

  55. sdfc

    Government spending ends up as deposits in private sector bank accounts.

    That unemployment peaked at 5.8% despite a 3.1% slump in real gross domestic income was an extraordinary result.

  56. Peter Patton

    sdfc

    Yeah, it sure looks like a switch has been hit on Bennie’s trajectory, and it is a steep accelerating descent. Apparently, this time he’s been nabbed not just for possession, but intention to supply. Grim.

  57. JC

    The RBA regulates the demand for money through cash rate targeting.

    Easier fiscal policy demands a higher cash rate if the central bank is tightening. I lay the blame for the inflationary breakout largely at the feet of the RBA.

    Which means you think NGDP is too high. So the central bank acts to lower NGDP through money market actions.

  58. thefrollickingmole

    Peter Patton
    sdfc

    I have a cousin who was in with the “bad boys” group at West Coast…

    Lets just say some of them believed certain “colorful northbridge identities” really were nice blokes who gave them free piss and drugs for just hanging around them..

    Now they want the same lifestyle… but the piper wants payment now.

    The Eagles as a club failed miserably to protect their players.

  59. sdfc

    Absolutely mole, would a fringe player have been afforded the same leeway? Some of the Eagles’ top players had been off the rails for years if you believe all the rumours.

    JC

    I reckon NGDP growth is a faior proxy for hte natural rate of interest. Anytime you keep the cash rate below NGDP growth for an extended period monetary policy is too easy.

    I don’t extend that to a post crisis world though.

  60. What a pity Max comes out with some absolutely spot on stuff occasionally, but talks bullshit 99 point nine nines percent of the time.

    If Swanny can’t deliver on this grossly artificial surplus, after virtually raping the budget to do it, this government is finished as a legitimate entity. It will have shown that it can’t even win by cheating.

  61. Peter Patton

    the mole who frollicks

    The Eagles as a club failed miserably to protect their players.

    Look, I have a lot of sympathy for anybody who gets into Ben Cousins’ position, but FFS, they are grown men. What does a football club have to do with it? Surely they already have a mother?

  62. nelson

    Robert Mannes analyses are always one of two things. It is either a long and boring stating of the obvious or it’s a paranoid rant about how Rupert Murdoch is out to get him.

  63. John Comnenus

    Only seven deadly strategic sins?

  64. sdfc

    Peter

    It is in a club’s interest to look after its players, particularly its leaders. West Coast turned a blind eye it seems and paid the consequences.

  65. Peter Patton

    sdfc, sure, if the subject is West Coast’s business acumen. But Ben Cousins has an existence beyond being a football club’s asset; especially several years after that asset has rusted beyond repair.

  66. Abu Chowdah

    I am reversing my judgment on Crap Stream. This, and several comments now make me agree that it is, after all, that buffoon Bob Ellis:

    Manne is an overly-flattered Rudd loyalist.

  67. sdfc

    Cousins’problems began when he was playing, which is kind of the point of the references to the Eagles.

    The trainwreck since is all his own.

  68. .

    How Rafe? By more inflationary tax cuts.

    This is nonsense sdfc.

    Tax cuts are not inflationary.

    Keynes is mathematically flawed junk economics.

  69. sdfc

    You do argue the most bizarre positions Dot. Inflation is a monetary phenomenon. You don’t really have a clue what the term disposable income means do you?

  70. Peter Patton

    Oh goodie. The dot vs sdfc Friday night, ‘I’m more pisseder than you are’ show!

  71. Le Chiffre

    Gillard and Rudd….. Let alone their insane clown posse of conroy, combet and wong.

    I give the insult of the evening to Carpe Jugulum.

  72. thefrollickingmole

    Peter Patton

    I cant say a huge amount, but during his time at the eagles there were at least 2 main player group splits.

    My older cousin died of an “anaphalactic reaction” in his backyard shortly after a visit from..Mr Cousins… No real reason… His last words as his father tried to drive him 30km to town were, dont let me die daddy… So no Im extremely not fond of the drug dealer Mr Cousins.

    My other dickhead cousin (the eagles player) joined Cousins’ little clique AFTER that. Hes had his shed set on fire and nearly lost his house after his speedboat was set on fire next to his house..

    This is all the result of about 6-7 years of allowing certain “talent” members of the club to do whatever they wanted. To his credit Worsfold has removed (as far as Im aware) all the “bad seeds” as quickly as he could.

    Yes they are men now, but allowing 17-18-19yr olds unlimited poon and not keeping an eye on those who will exploit them is being negligent as an organization.

  73. Peter Patton

    the mole who follicks

    Holy Moly. Clearly things are a bit more complicated – and sinister – in the wild west than I ever knew. Soooo, tell us more.

  74. Infidel Tiger

    I’ve got a fair idea who your cousin is Mole. He certainly fucked his life up.

  75. sdog

    Let alone their insane clown posse of conroy, combet and wong.

    Insane Clown Posse: http://www.insaneclownposse.com/icp2010/

  76. sdog

    I’ve got a fair idea who your cousin is Mole. He certainly fucked his life up.

    “7 Ways Wildly Successful People Screw Up Their Lives”

    And the winner is…

  77. .

    You do argue the most bizarre positions Dot. Inflation is a monetary phenomenon. You don’t really have a clue what the term disposable income means do you?

    Tax cuts are a fiscal phenomenon. FTFY.

  78. .

    Let us remind us how bizarre sdfc’s ideas are.

    Tax cuts are inflationary.

    Not does the Government think it can spend out money more wisely than us, we also have more money when it takes more of ours away.

    The logical step to a financial perpetual motion machine would be to raise taxes to 100%.

    I am forever in awe of Keynes and this party trick he played on thousands of fairly intelligent people.

  79. Peter Patton

    sdog

    That story’s a pretty good update moral parable of the 7 deadly sins.

  80. Boiling Frog

    How people regard political leaders and their parties who lie?
    Refer, Qld election, 2012.QED

  81. Gowest

    Fairwork has and will continue to be the biggest strategic error by far. When Abbot told his crew “let it get past the senate” I knew what we were in for. Abbot was going to teach the eastern states a lesson for voting for a union propaganda campaign.

    The state elections have shown that some have learned their lesson.

  82. sdfc

    Dot

    Fiscal policy has monetary effects. A tax cut is a reduction in the cash flow to the public sector from the private, raising private sector disposable income.

    Costello’s tax cuts fed into a pre-existing inflationary enironment.

  83. JC

    Fiscal policy has monetary effects. A tax cut is a reduction in the cash flow to the public sector from the private, raising private sector disposable income.

    Costello’s tax cuts fed into a pre-existing inflationary enironment.

    I explained nicely to you that deflation and inflation are monetary issues dealt with by the central bank, so if a CB thinks there is too much money in the system it can sweep it out.

    Stop talking about cash flows as it’s a nonsense argument.

  84. sdfc

    Monetary policy is relatively ineffective during a financial crisis, or has the zero interest rates and tripling of the US monetary basee escaped your attention.

    The budget is a cash balance, when the government runs a deficit it is injecting cash directly into the economy.

  85. wreckage

    Costello’s tax cuts fed into a pre-existing inflationary enironment.

    And within months the new government was frantically shovelling money about to create more inflation. Waste of time voting the Libs out, really, given that.

  86. JC

    Monetary policy is relatively ineffective during a financial crisis, or has the zero interest rates and tripling of the US monetary basee escaped your attention.

    No it hasn’t escaped my attention. Look at how markets reacted to the global stimulus. They fucking sank. Look at how they have reacted to the two US QE’s, the two most recent ECB QE’s and the most recent BOJ QE. Markets are telling you something you hammerhead.

    Additionally markets will discount and will react even to talk of QE if the central bank offers credibility.

    The budget is a cash balance, when the government runs a deficit it is injecting cash directly into the economy.

    I don’t know how many fucking times I have to explain this to you SDFC.

    The “cash balance” as you call it, is money borrowed from the private markets, which means less capital is available for the private sector. It also impacts the entire capital structure of the economy and in our case it caused the exchange rate to move far away form fair values causing further hardship.

  87. sdfc

    GFC wreckage. In case you missed it the RBA was slashing rates in late 2008.

  88. JC

    GFC wreckage. In case you missed it the RBA was slashing rates in late 2008.

    that was changing the price of credit. Money however was extremely tight and they didn’t impact the volume as much as they should have. It was the terms of trade that turned things around.

  89. sdfc

    The market was already sinking JC, hence the stimulus.

    Government borrowing does not reduce available capital. Debt creates money.

  90. sdfc

    Are you trying to separate the financial crisis from the recession JC?

  91. JC

    The market was sinking as the stimulus was being announced and continued to sink as it was passed into law.

    The only thing that turned things around was when the Fed understood the damage they had caused and acted quickly by QEing. It was only then when things stabilized.

    The stimulus was a waste of money and saddles future taxpayers with untold bills. It’s a disgrace.

  92. sdfc

    The market was alrady sinking.

    The major drivers of the increase in the deficit were increased transfer payments and lower tax revenue, a direct income injection to the private sector.

    Without the deficit private income would have continued to fall, adding to the deflationary forces.

  93. JC

    Are you trying to separate the financial crisis from the recession JC?

    The financial crisis became a full blown crisis/recession as the Fed and other central banks were fighting a non existent bogey. They lost control of the situation and allowed NGDP to collapse.

    If you honestly think that monetary policy is ineffective you must think that central banks have no control over the quantity of money in a fiat regime when of course it’s unlimited.

    That’s the trouble with fucking economically illiterate Keynesians. You basically have no understanding that Keynes’ advice about stimulus was offered in a gold link situation and where countries had low debt levels.

    You really don’t understand how the system works in a fiat regime and simply rote learned his swill without really getting it.

  94. sdfc

    The bogey existed alright, it was a credit boom created by easy Fed policy earlier in the decade.

    Banks create money through their lending activities. If reserves aren’t backing deposits (loans) they are pretty ineffective in stimulating growth.

  95. sdfc

    As for noit understanding a fiat money regime that’s funny coming form you who seems to believe the money supply exogenous.

  96. JC

    The market was alrady sinking.

    Yes, correct, it was sinking because markets realized the Fed wasn’t acting and the incorrect policy was being introduced.

    The Stimulus was the biggest global fuck up in the world’s financial history.

    If the Fed hadn’t fucked up the Ssub-prime saga could have been localized.

    Secondly, take a look at the US markets straight after Lehman. Markets actually didn’t fall with the Lehman bankruptcy which was imminent all of August and up the the filing date 15 sept.

    They fucking collapsed after the Fed meeting and various announcements when it became obvious the Fed wasn’t understanding the problem and was actually talking about inflation!

    Without the deficit private income would have continued to fall, adding to the deflationary forces.

    Nonsense. Deflation is monetary problem for the central bank to deal with. It has nothing directly to do with fiscal policy

  97. JC

    As for noit understanding a fiat money regime that’s funny coming form you who seems to believe the money supply exogenous.

    Exogenous from what varaible(s): from the impact of a borrowed stimulus? Well no as I think it tightens up money even more.

  98. sdfc

    The Fed acted hard and early.

    There was a widespread belief that the Fed would broker a deal for Lehman, unfortunately Merrill was going belly up at the same time.

    Money is created by banks. Monetary policy relies on bank lending to pump up the money supply. When the transmission mechanism is bust monetary policy become less effective.

  99. Driftforge

    On Treasury’s estimates, that would take at least 2.6 per cent of GDP out of the economy in 2012-13. That is equivalent to shutting down the entire electricity industry, all arts and entertainment venues and all airline travel for a year.

    Why on earth would you do this in an economy that has added just 10,000 jobs in the past year, where the growth rate is just 2.5 per cent, and most of that is in mining and related industries, and with Victoria and south-eastern Australia on the verge of recession?

    Because a recession isn’t actually the real concern here. It’s not actually the worst that can happen.

    Because a recession would probably actually help sort out some of the problems.

    Because that money shouldn’t have bloody well been spent in the first place. Financing a lifestyle by putting it on the tab is idiocy.

    Government and debt do not mix. Government is the cornerstone of national stability and isn’t something that should be ‘leveraged’. Ever.

    And yes, Costello did oversee the establishment of the most historically obscene private debt levels, largely tucked away into unproductive, parasitic, housing price increases. Constantly decreasing interest rates will do that, especially tied to market distortions. It teeters like a bloody Jenga tower over the economy, and will for another decade or two, if by some miracle it doesn’t collapse in the meantime.

    At some point we, as a nation, have to man up and pay off the bloody debt. The government has to be part of that process, not it’s opponent.

    Just set a date. No real estate debt to have a mortgage dated past 2032. And don’t move the date until after it has past. System reset.

  100. JC

    The Fed acted hard and early.

    Not true. The Fed acted to lower the price of credit. It didn’t act to change the demand/Supply/quantity of money and thereby raise NGDP. It allowed it to collapse like in the 30’s.

    There was a widespread belief that the Fed would broker a deal for Lehman, unfortunately Merrill was going belly up at the same time.

    Lehman filed for bankruptcy on the 15th. The market started to collapse on the 19th which is 4 days after the filing and after it became obvious they didn’t understand the seriousness of the problem. In fact neither Bear Stearn nor Lehman needed to fail if the Fed had acted earlier and understood the problem.

    Have a looksee at the Fed announcements. They still thought it was a liquidity issue and never twigged it was much more serious than that.

    http://www.federalreserve.gov/newsevents/press/monetary/2008monetary.htm

    Money is created by banks.

    No, credit operates through the bank credit multiplier and the movement comes first from the monetary base. Money is not created through the banks because credit is not money, you idiot. I’ve told you this numerous times but it never seems to sink in.

    Monetary policy relies on bank lending to pump up the money supply.

    You’re explaining a monetary expansion. A credit expansion has to always come after.

    When the transmission mechanism is bust monetary policy become less effective.

    Not if the central bank is able to distinguish the difference between money and credit which are different.

Comments are closed.