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'Safe as Milk': Really? « Previous | |Next »
May 18, 2013

The media commentary around Abbott's Budget reply has by and large been positive. The Canberra Press/Media Gallery is happy to remain at the level of political appearances---"Abbott cleverly sidestepped Labor's booby traps" etc--- and to take Abbott at his word about budget emergencies and the austerity medicine restoring Australia to health after the virus that is Gillard Government has been destroyed.

budgetreply.jpg David Pope

John Wanna, in his positive review, does put his finger on the key economic point:

Much of Abbott’s economic strategy rests on a spike in consumer and business confidence upon the return of a conservative government. As economic activity picks up, revenues will improve further and restore the budget to balance. This may well eventuate, but it is an assumption — not yet fact. If any government squeezes the economy too hard through spending cuts or tax increases, it risks tipping the economy into recession –

Is this a realistic assumption? Is it a plausible one? How will economic activity pick up with austerity economics?

Wanna doesn't say--other than to remind us that John Howard nearly tipped the economy into recession when he made substantial cuts in 1996-97. The tone of the article suggests that Abbott will not be so silly as to tip the Australian economy into recession.

That's misleading as the Coalition's central claim is that austerity will lead to economic growth. Underpinning this is the hypothesis of expansionary fiscal contraction. According to this hypothesis austerity might have expansionary effects in cases where households trust government efforts and think that today’s sacrifices will translate into tax reductions in the future. These expectations on their future disposable income might induce them to increase consumption and investment in the short-term, leading therefore to expansionary effects.

Yet the UK experience of so-called expansionary austerity has been one of stagnation — similar to (but less severe than) the European experience, where limited monetary activism by the ECB has not even come close to offsetting massive unemployment and contraction in the periphery . It is a stagnation that America seems to be beginning to experience in the context of its embrace of expansionary austerity.

| Posted by Gary Sauer-Thompson at 4:45 PM | | Comments (4)
Comments

Comments

"Much of Abbott’s economic strategy rests on a spike in consumer and business confidence upon the return of a conservative government..."

Oh good luck with that!

When are the precious voters going to (as the rugged, pea-brain, knuckle-dragging manly-men in these-here parts a fond of saying...) SUCK IT UP PRINCESS!!

It's very unlikely we will return to the halcyon, comfortable, glorious gilded Howard era any time soon.

Why??? Because FFS... they never really existed!!! it was an unsustainable, manic fantasy maintained by governments, the media and business leaders world-wide! A time "when irrational exuberance has unduly escalated asset values". And we are paying for it now.

It there any chance at all that the electorate will perhaps wake up and realise they were conned (and are still being conned) by the tiny fraction of people who have amassed the REAL wealth in the last few decades?

Sadly, there is very little chance of such an awakening. But that's MY little fantasy!

Well the Coalition isn't not about to start raising revenue through taxes. They are talking about tax cuts. So the cuts are coming.

Listening to the Coalition you wouldn't realise that financial markets remain volatile and crises too common; inequality is raging and increasing around the globe; environmental damage continues unabated, whilst rising climate volatility belying claims that we can experience sustained and broad based prosperity without major changes in the global economy.

Ah the joys of Sunday arvo walking through the TV room and pausing.

I just watched PM Gillard deliver a damning indictment of Sloppy Joe Hockey ... and the media. Very tactfully but pointedly done.
Some journo asked her about Hockey saying spending on education has been cut.
Instantly, like within a second or 2, PM Gillard produced the Budget Paper, opened to page whatever [and told the journo what page it was whilst turning to it], referred to graph no. whatever [whilst telling the journo what graph it was] which showed, as she illustrated with her hands, education spending going Up and UP and UP in the current and future years.
All done with a smile.

Obviously Joe didn't read the budget paper - nor for that matter did the journo because the question was not framed in terms of Joe's cupidity but presumed he had credibility.

A couple of minutes later the bright eyed ABC 24 talking head gave his [superficial] analysis of the PM's press conference.
He missed the damning rebuttal of Joe.
I wonder how?

And that's the problem with our democracy [well one of the problems].
Between the reality and the public the message is ignored or distorted by the media messenger.

Incidentally did you know Clark's Nutcrackers can count up to 10? Apparently precisely so.