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goodday sunshine « Previous | |Next »
August 8, 2009

Big banks show big profits, the stock market is up, bonuses are back, even manufacturing output is rising … so the recession is over already.The inference is that markets work well, the business cycle is self-stabilising and it is business as usual. Though it looks to be a jobless recovery, central banks are talking about raising interest rates to prevent inflation.

economicrecovery.jpgMartin Rowson

However, a stock market rally is not enough to ensure that households and firms purchase the goods that will maintain employment. The employment figures do not account for the increasing numbers of people working part-time who'd rather have full-time job; nor a large number who have given up looking for work.or those who have found new jobs that pay less than the old ones they lost.

Nor do they indicate that most of the jobs that have been lost are never coming back.

Though new jobs will replace some of them, eventually, but --not all of them- we need to recognize that the structure of the Australian economy is changing.

What's pushing the stock market upward? Isn't it corporate profits? However, those profits aren't being powered by consumers who have suddenly found themselves with a lot more money in their pockets from increased work. The profits are coming from dramatic cost-cutting -- if a firm cuts its costs enough, it can show a profit even if its sales are still flatlined.

| Posted by Gary Sauer-Thompson at 10:34 AM | | Comments (1)


Collateral damage. The system works. Hurrah!

The ironic thing is that this fiasco has left us with a reduced number of taxpayers and reduced taxes from those who are only doing part-time work.

Make me wonder where the govt will get the bail-out funds the next time around.

It REALLY sickens me. I'm likely to slap the next person who whines about how "welfare cheats" are dragging us down.

The system cannot be sustained as it is. But, sadly, it's all we've got. Nobody dares step outside the box.