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December 24, 2008
So we end the year on an upbeat economic note: big stimulus packages to kick start the economy with the rhetoric saying that things will get better soon. As Paul Krugman puts it in relation to the US: once a burst of deficit spending turns the economy around we can quickly go back to business as usual.
Steve Bell
However, Krugamn argues that things can’t just go back to the way they were before the current crisis.
The prosperity of a few years ago, such as it was — profits were terrific, wages not so much — depended on a huge bubble in housing, which replaced an earlier huge bubble in stocks. And since the housing bubble isn’t coming back, the spending that sustained the economy in the pre-crisis years isn’t coming back either.
Krugman asks: So what will support the economy if cautious consumers and humbled homebuilders aren’t up to the job? The answer in Australia is simple. The miners. Another resource boom for the Lucky Country. Boom boom, bust bust, that is the way capitalism goes.
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Maybe not the miners. Here in Qld demand has dropped, mines are closing and workers are being laid off.