How do we come out of this alive?

The wages shortfall has been replaced by benefits and then some. Picture: Supplied.

Taken from JobSeeker, JobKeeper ending will reveal massive recession crisis.

The core concept of Jobkeeper was all right, to make sure no one was deprived of the ability to buy because they had lost their income. The data in the graph are however insane. Does no one any longer have a sense of proportion, and can no one any longer look forward for more than a day at a time? And it comes with this, also at the link:

How much the recession will cost you

It comes from the Commonwealth Bank of Australia and it shows how much more money Australians are making than the year before. It’s a lot. We’re flying.

The black line is now at 16 per cent, which means we’re making 16 per cent more money in 2020 than last year.

Think about it like this: Australians who were banking $1000 per week last year are banking on average $1160 now. That’s a lot of extra money each week.

Where is the cash is coming from? Up until the start of the pandemic, the black line was being held up by the blue bars: earnings from work, i.e. salary and wages. We were 4 or 5 per cent richer than the year before, because more wages were being paid.

Then the COVID-19 pandemic starts. The blue bars turn slightly negative – wages and salaries went down (they would have gone down even more if not for JobKeeper!). But the red bars shoot up. That’s Treasurer Josh Frydenberg turning on the money taps.

JobSeeker is the big one, and the two $750 payments that went to pensioners.

We’re paying out 16% more in incomes while productive output must have fallen along with business profitability by some massive percent! If these numbers are anywhere correct we are heading for the rocks.

I will add that if the government, any government, still believes that the level of demand is what keeps the economy moving ahead or adds to job numbers, they are about to find out once again just how wrong that is. Not that they will learn, but they will find out all the same.

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39 Responses to How do we come out of this alive?

  1. MPH

    We come out alive by surviving a private debt crisis precipitated by a private income crisis, public debt crisis precipitated by the private debt crisis, currency crisis precipitated by the public debt crisis, high interest rate crisis precipitated by the currency crisis, while the rest of the world looks on in amazement at how we threw away every single advantage we had as a nation.

  2. Gavin R Putland

    Yeah, but what fraction of the jobs that have disappeared or gone into hibernation were #BSjobs? In other words, what fraction of them were not actually part of the production system, but part of the redistribution system?

  3. feelthebern

    I was at a virtual conference yesterday on central bank actions/policy since COVID19.
    Australia & the RBA is sticking out like dogs balls with their lack of action.
    It’s actually made me quite depressed.
    I haven’t felt this bad since the Rudd resource tax was announced.
    Australia is screwed.

  4. feelthebern

    Part of it, it’s the global investment community is starting to focus on Australia being a wounded beast.
    If it turns into the RBA versus hedge funds, Australia could face some serious dislocation.

  5. feelthebern

    The last time a policy caused a sleepless night was the Rudd resource tax.

  6. egg_

    Part of it, it’s the global investment community is starting to focus on Australia being a wounded beast.

    But, but… we HAD TO save some Grannies back in March!!11!

  7. egg_

    what fraction of the jobs that have disappeared or gone into hibernation were #BSjobs?

    ZERO.

    Only Bullsh1t Jobs can “work from home” for TWO MONTHS.

  8. egg_

    Australia being a wounded beast.

    We had a 6 month seasonal advantage on the beer bug “crisis”, yet chose to commit hara kiri on our Economy.

    SloMo is the biggest dolt to have ever run this Country.

  9. John Comnenus

    A lot poorer before we die. All courtesy of a “Liberal” government. The ALP would not have been this reckless.

  10. Mak Siccar

    Henry Ergas is on fire in today’s Oz. The last sentence is brilliant.

    https://www.theaustralian.com.au/commentary/force-daniel-andrews-to-bear-the-costs-of-the-damage-he-wreaks/news-story/b89f738403960baa2b742396f38b4036

    (Snip). The underlying problem of our fiscal architecture, which has bedevilled Australian politics for more than a century, certainly won’t be solved overnight. But if the federation is to be preserved, the Morrison government must replace the soft touch with some tough love.

    Making Victoria take out as a loan a much greater share of the transfers it is receiving would be a good start. So would be freezing the process of fiscal equalisation, whose methodology the crisis has left in tatters. Ultimately, Andrews won’t see reason until he is forced to fully bear the costs of the damage he wreaks. It’s bad enough that the state has lost its way; we shouldn’t fund it to lose its mind.

  11. Mater

    Making Victoria take out as a loan a much greater share of the transfers it is receiving would be a good start.

    Then he’ll pass it on to Victorians…
    Then they start leaving in their masses…
    Then he’ll have to stem the flow of human resource…
    Then he’ll build a wall…
    Then his plan will be complete.

  12. Can we dig up Keynes, hang him, chuck him on a funeral pyre, and then bury him again?
    The only reason his theories took hold was because they allowed governments to spend big to keep their snouts in the trough.
    So here we are – spending like drunken sailors to keep the ship afloat. Our problem is that the unproductive passengers are bailing in faster than we can bail out.

  13. Mark M

    It’s like watching a lopsided game of footy, where the result is academic.

  14. John Comnenus

    Ergas article is excellent. Victoria must be made to pay for the disaster that is Andrews. The federal government should stop taking money from my future earnings to pay for the utter incompetence of Daniel Andrews and the idiocy of the Victorian electorate in supporting this monumental idiot and his clown car kitchen cabinet of blame shifting morons.

    I live in the Uber Left ACT which is also burdened with an electorate almost as stupid as Victoria. But even our far left territory commissars would not have stuffed up as badly as Andrews, and such levels of incompetence would not be tolerated in Canberra.

    It is way past time that Morrison, our feckless and cowardly national leader, forced Victorians to face up to their own mistakes and stop stuffing the rest of the country.

    And don’t get me started on the callous cold hearted witch who runs Qld. SCOMO should make an example of her for the way she has treated the families of the sick and dying. What an evil bitch who then has the hide to claim she was bullied by SCOMO for begging her to show some compassion. She is the bully and SCOMO needs to threaten her properly and release the transcript of his telephone call with her. I doubt many Queenslanders would support this level of coldheartedness.

  15. flyingduk

    The titanic is holed, fatally, yet most of the passengers are unaware. The ship is still coasting, the lights are still on, and the drinks (jobkeeper etc) are still flowing. Deep down in the ship, however, the they have realised the truth, Andrews and the Captain have told Ismay ‘she shall surely sink’, yet none of it seems real yet. We cannot avoid this, save yourselves, guns gold and bitcoin are the only lifeboats.

  16. Anonandon

    we’re making 16 per cent more money in 2020 than last year.

    I’m making about 90% less so someone is making out like crazy.

  17. mundi

    What’s sad is that this graph basically proves a 4-5% pay cut accept public and private sector would have been all that is needed.

    Instead we’ve seen 100% increases in welfare and government subsiding labour by 70 to 100% in many firms.

  18. flyingduk

    The core concept of Jobkeeper was all right, to make sure no one was deprived of the ability to buy because they had lost their income

    Bollocks: we threw away a key ‘teachable moment’ wherein the citizens might realise that the world is a dangerous place, bad things can happen and that they, not government, are responsible for managing their own risks. I took the trouble, in the past, to squirrel away literally YEARS worth of resources lest bad times come. Now these will be inflated and taxed away* (but I repeat myself) to prop up other adults who didn’t.

    *Actually, they wont, the feds aint getting my bitcoin

  19. flyingduk

    we’re making 16 per cent more money in 2020 than last year.

    we are printing it, not making it….

  20. Nob

    Jeezus, that video in the Herald-Sun link!

    What a clueless clown show The Australia Institute is.

  21. Alex Davidson

    The core concept of Jobkeeper was all right, to make sure no one was deprived of the ability to buy because they had lost their income.

    Spoken like a true socialist. Government should never have the power to shut down the economy in the first place, and “making sure no one was deprived of the ability to buy” when they did, is simply compounding the insult upon the lifters.

  22. Fat Tony

    Alex Davidson
    #3580421, posted on September 11, 2020 at 8:47 am
    Government should never have the power to shut down the economy in the first place,

    Yep 100+%

  23. ExIronCurtain

    Re: the slide into Socialism via Keynes + Marx:

    Not that they will learn, but they will find out all the same

    So well said, so sad.

  24. Rafiki

    Will Andrews eventually say to the Victorian electorate “The way ahead for us is to put the Belt and Roads policy into effect. The Chinese will bring in the money we need to create jobs building infrastructure, kick-starting manufacture and building up agriculture. Or you can choose poverty. What’s it to be? ‘

  25. flyingduk

    What’s it to be?

    I would go for a dash across some border backroad at 4am.

  26. Pyrmonter

    The core concept of Jobkeeper was all right, to make sure no one was deprived of the ability to buy because they had lost their income.

    Tell me again about Say’s Law and how production drives consumption?

    The point of JobKeeper was, surely, to avoid what might have been high unemployment resulting from the costs of re-employing people if the disruption to production had been shorter-lived.

    While I thought they were lefty-grievance mongering at the time, the late 80s/early 90s made a convincing case for the idea that, at least with the sorts of labour market institutions commonly found in the English speaking countries, workers once displaced take a long time to re-hire and in some cases aren’t: the accounts of Brexit-voting parts of northern England are essentially an account of displacement of large parts of the workforce, permanently moving out of the labour market.

  27. H B Bear

    Jobkeeper has just put the pain on HP. Now everybody has to pay for this massive Big Government over-reaction.

  28. flyingduk

    Tell me again about Say’s Law and how production drives consumption?

    100% correct, wealth is ‘stuff’ not ‘money’ (at least since we stopped using gold as money). Printing money to pay people not to produce stuff does not create wealth, does not ‘save’ jobs and does not pay bills. Doing so has, however, given us the illusion that the things we are doing to the economy have not damaged it (or even, as some claim, have actually ‘saved’ it). We are literally burning the economic furniture at the moment for some illusory warmth. Winter is coming…

  29. thefrollickingmole

    In the Carboniferous Epoch we were promised abundance for all,
    By robbing selected Peter to pay for collective Paul;
    But, though we had plenty of money, there was nothing our money could buy,
    And the Gods of the Copybook Headings said: “If you don’t work you die.”

  30. What Rafiki said.

    I reckon the harsh lockdown is deliberate, the Viceroy will get a huge CCP loan and win the 2022 election again with all the largess.

    State Government run coffee shops everywhere.

  31. Terry

    ‘State Government run coffee shops everywhere’

    Soviet Soup Kitchens for the 2020s – brilliant.

  32. Catcalling Inebriate

    Kates has chutzpah! Cracks panic over Australia’s fiscal situation and yet is a huge fan of Trump’s hugely worse antics in the US. Is he blind in one eye? Deaf in one ear? How is this possible????

  33. H B Bear

    State Government run coffee shops everywhere.

    Even Victoriastanis may baulk at this. Starbucks was bad enough.

    My version of Marx class struggle has only two classes – baristas and coffee drinkers.

  34. HGS

    “The point of JobKeeper was, surely, to avoid what might have been high unemployment resulting from the costs of re-employing people if the disruption to production had been shorter-lived.”

    Don’t we have the dole for that?

  35. Simple Simon

    thefrollickingmole
    #3580580, posted on September 11, 2020 at 11:15 am

    He goes on:

    Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
    And the hearts of the meanest were humbled and began to believe it was true
    That All is not Gold that Glitters, and Two and Two make Four
    And the Gods of the Copybook Headings limped up to explain it once more.

    As it will be in the future, it was at the birth of Man
    There are only four things certain since Social Progress began.
    That the Dog returns to his Vomit and the Sow returns to her Mire,
    And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

    And that after this is accomplished, and the brave new world begins
    When all men are paid for existing and no man must pay for his sins,
    As surely as Water will wet us, as surely as Fire will burn,
    The Gods of the Copybook Headings with terror and slaughter return!

  36. Squirrel

    “How do we come out of this alive?”

    Indeed – I reflected on that today when I heard that we are providing a “loan” of US100m. to PNG to help them out of a serious fix – if only our problems could be solved so cheaply.

    In a perverse way, the catastrophe south of the Murray is a blessing of sorts for the federal government, because it provides an excuse for persisting with the pretend and extend arrangements – but the day of reckoning is coming.

  37. H B Bear

    The Commonwealth government and its hundreds of thousands of dependents is like a problem gambler hoping a trifecta on the 8th will get then back the black.

  38. Catcalling Inebriate

    Footnote: in further contrast, I should have noted that deaths of US citizens due to pandemic will soon reach a total greater than lives lost in both world wars, Vietnam and Korea.
    Dan is certainly heading a persistently failed administration, but Trump presides over the greatest loss of American lives in its history. Kates, no doubt, will overlook this. As he no doubt will overlook the recorded remarks of his President=love attesting to his lies over the virus and its consequences. It is most sad but plain that the US would be better off with Andrews than Trump.

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