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The Recession we are going to have!

Now we will see them in full bloom. No, not my iceberg roses, although they look spectacular at the moment. No, now we are seeing our brilliant, supposedly better economic managers in action, the ones a majority of the country think are superior to Labor.

Here we are, facing an unexpected hit to the budget bottom line, an economic disaster, never mind that peoples’ health is threatened, a time of unprecedented calamity, a true test of our leaders’ economic credentials and who is in charge?

Imagine briefly, if you will, that Labor won the election last May and were facing the same circumstances today. The economy was already in a slump, however, an increase to Newstart would probably have been introduced. Thus, all else being equal, the December GDP quarterly increase of 0.5% would likely have been marginally higher.

The bushfire crisis, however, would have prompted a Labor government to commit funds to generate economic activity, probably in the tens of billions, money actually spent, smashing the budget bottom line, committing the nation to more borrowing (quelle horreur) and most importantly, saving jobs.

Already, we would have heard the cries of reckless spending and higher debt burdens to come, from the feckless opposition. God save our poor grandchildren from their diminished lifestyle. Deja vu, I hear you cry.

But no, this time we have the rare opportunity to see the oh, so highly regarded, superior economic credentials of the conservative side of politics in action. And what have we seen thus far? Nothing! Zip! Rien!

But this week, an economic package will be unveiled, estimated to be in the order of $10 billion. Wow! How generous is that? This will be the conservatives’ response to a crisis. And who will be the main recipients of this spending?

Pensioners possibly, in the form of a lower deeming rate, likely to put one or two more dollars into their fortnightly pension. Perhaps even an advertising campaign targeting the tourism industry. Small business will get something, likely to be in the form of wage subsidies to encourage them to retain staff.

The problem with that though, is that if there is no work for them to do, a wage subsidy won’t be much of an incentive for a builder, a plumber or an electrical firm to hang on to staff. They would want to see activity, the kind that creates work.

The issue we are facing today is a double whammy. We are facing both a demand and supply shock to our economy. The demand shock is reflected in peoples’ unwillingness to spend. That’s been the case now for nearly a year.

A supply shock is reflected in the unavailability of goods, even if people did want to spend. The coronavirus has restricted the movement of said goods worldwide. That means hundreds of thousands of workers losing their jobs.

But we must remember that our present leaders are the superior economic managers. They will manage this emergency. I mean, how good is Josh Frydenberg? His latest comment, “The Australian economy is very resilient,” should reassure us all.

All of which means, a recession looms large and with it, a serious test of the economic credentials of the conservative side of politics. That’s something we haven’t seen since Malcolm Fraser was Prime Minister and John Howard was treasurer, in the early 1980s.

And I can still remember how well that turned out.

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38 comments

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  1. Harry Lime

    We are only the next lie away from Peak Stupid and the form sheet of these morons will not leave us disappointed.

  2. Ken

    Not to worry ScottyTheSalesman has got this covered ! How good is he.

  3. Alan Austin

    Nice work, John.
    You are correct to observe that budget surpluses should be abandoned as the situation demands.
    It is not inevitable, however, that Labor would have needed to go into deficit this year, had they stayed in office since 2013.
    According to the heads of Treasury and the Finance Department in their 2013 PEFO, Labor would have had the budget in a small surplus by 2016-17, and in a strong surplus today.
    The key to this is taxation policy, specifically with regard to the foreign exporters and developers who pay little or none of the corporate tax they really should.

  4. whatever

    An “Economic Stimulus” package will be presented, but don’t expect any rational decisions like raising Newstarve or family/pensioner bonus payments.

    It will consist of further deregulation in the labour market (more attacks on Award conditions), abolishing environmental conditions that Mining companies are supposed to observe, and more tax cuts for Big Business.

  5. Vikingduk

    Many times have I thought, are we there yet, Peak Stupid, that is, and many times no, still a ways to go yet. Hopefully, you are right, Harry Lime,Though hearing of a jerk being tasered after assaulting an employee and a customer in the great toilet paper wars, I think we are bound to sink below the waterline. What is certain is that this cabal of incompetence so superbly engineered by the smirking jerk will soldier on, delving to new depths of shitfluckery, lies and fear mongering.

  6. Arnd

    @ Harry Lime: Peak Stupid is some way off yet. More than just one lie!

    But fear not, we will ascend that summit, and our illustrious politicians won’t tarry or delay, nor permit anyone else to linger.

  7. jake

    funny – they can throw millions (probably billions) into marginal or possible seats to keep themselves at the trough but it’s liking getting blood from a stone to put it into the failing, going down, down, down economy and when they do, where does it go – straight to businesses

    WHY CAN’T THEY GET IT THROUGH THEIR THICK HEADS THAT NO CUSTOMERS = NO BUSINESS

    and where’s this money coming from – well nobody wanted ndis so we took that for the bushfires and then we put all the bushfires out (how good are we) so they don’t need the money anymore so we’ll put that to the virus fund and only the peasants will get that so we’ll take that and give it to the top 1% because they’re the ones that matter

    unfortunately peak stupid is a long way off (though disgusting donald seems to be reaching for it – but just ask him – he has skills no-one knew he had)

  8. Kaye Lee

    I also heard talk of more instant asset write-offs for business. Why would they increase their capital investment when they don’t have customers (or supplies)?

    Re corporate tax evasion, the government is now in the comical position of evading their own legislation on evasion.

  9. Henry Rodrigues

    Now that the ASX has dropped by 5%, yes 5%, what will the smurking f-ckwit and his gap toothed side kick do. Blame it on Labor, blame it on the Chinese, blame it on the supernatural ????
    Not to fear, the crinkled scroat and his minions will dream up some elaborate rosy scenario and the headlines and front pages will be all about the start of the NRL and sport and how wonderful and fortunate we are that we have so much more interesting activities to think about other than the stock market and what that means for the economy.
    Scummo must be salivating at the challenge to prove just what a great brain he is. !!!!!!!

  10. Robin Alexander

    Josh saying help to Pensioners!what a joke! Tiny interest rate rise on deeming rate will benefit part pensioners only oy ones to have sufficient money in a bank account for rise be benefit? These people don’t spend saving to leave it to their well off children! Meanwhile thousand maybe few million other aged continue to live under the threat LNP SOON TRY TO IMPOSE INDUE CARD on 80/90yr olds who will never understand restrictive cruel card leading to stress Misery for all! Going to maybe rethink with Vires outbreak now causing much trouble big spending!Cost to Gov to inflict card now $12000 per card? Millions og Aged & Veteran pensioners plus all other Welfare recipients? That’s BIG BIG MONEY? Where is it all going to come from? STOCK MARKET fallen badly today!Us also & again tomorrow unemployment in US JUST STATED WORST IN 5 DECADES? So much for them booming under their Clown? Good pair PM & Trump???

  11. Carol Taylor

    Robin, IMO you are absolutely correct. From the snippets fed to the MSM it seems that any stimulus will go to deeming for wealthier pensioners – ‘wealthy’ because they have substantial savings and/or investments, and tax relief for employers – so they can retain employees. Firstly it seems to me highly unlikely that wealthier pensioners will spend anything other than they normally spend. Are they suddenly going to rush out and buy 6 slices of ham and a new pair of slippers or anything that they wouldn’t normally buy? However if you gave that same money to a pensioner (age & disabled) it would equal ADDITIONAL spending. And additional spending is what the government should be aiming for,

    As far as tax relief. Employers will still not keep on staff or provide additional hours when there are no customers.

    Liberal governments seem consistent with this, that as far as business goes, they see only one side of the equation – the bosses. Employers are supposed to somehow stimulate the economy minus customers.

  12. Doone Wborn

    “The bushfire crisis, however, would have prompted a Labor government to commit funds to generate economic activity, probably in the tens of billions, money actually spent, smashing the budget bottom line, committing the nation to more borrowing (quelle horreur) and most importantly, saving jobs”

    Why would committing tens of billions require borrowing? The money can just be brought into being by computer keystrokes. That’s how it’s done in a sovereign country. So long as inflation is kept in check it works.

  13. John Kelly

    Doone Wborn, you are right but both government and opposition would treat it as borrowing and issue bonds.

  14. Patagonian

    The $2.6 billion they wrenched out of the NDIS to produce their magic pudding ‘surplus’ will never be repaid now.

  15. Egalitarian

    Even a $20 rise a week for the unemployed would be a win win for the economy.

  16. Kaye Lee

    Along with increasing Newstart and pensions, if they increased the tax free threshold, instead of delivering tax cuts for the wealthy who already have many ways to minimise their tax, it would also help those who need it most and all get spent hence having a multiplier effect. It would cut administration costs as less people would have to fill in a tax return. They should also adopt the Labor plan of capping the amount you can claim for accounting advice. It is ludicrous that someone can claim millions for financial advice and not pay any tax.

    John, at least they are edging closer to allowing the RBA to buy the bonds direct though with interest rates as low as they are, it doesn’t really matter.

  17. Baby Jewels

    While they are determined not to help the people who could actually turn the economy around, they are cutting their noses off to spite their faces. It’d be funny if it wasn’t adversely affecting people’s lives.

  18. 3poodles

    Bring it on…too many folks live on the never never, debted up to their eyeballs, will make a real wake up call.

  19. DrakeN

    3poodles,

    That is also a common cause of businesses going into receivership.

    Real calculated logic is not something common to homo sapiens sapiens, otherwise there would be no religions, unbridled consumerism, nor political chicanery of the kind prevalent in our societies.
    We might know a lot, but have limited intellectual capacity to use it wisely.
    Primitive, reflexive emotions remain the main driver of human behaviour.

  20. Pingback: The Recession we are going to have! #newsoz.org #auspol - News Oz

  21. New England Cocky

    Money injected into the bottom of the economy flows upwards to the top, creating job opportunities and wealth as it goes.

    I doubt that the Hungarian failed professional tennis player in the Smirkie Sacked from Marketing Liarbral Nazianal$ misgovernment has either the ability to understand this simple principle or the skills to create the necessary policies to bring about a soft landing.

    Oh, where is Kevin Rudd and Ken Henry when you need them to act for the benefit of Australian voters??

    Praying for miracles is not a strong strategy in the commercial world.

  22. harry

    Those who believe federal “debt’ is or will become a problem should consider Japan which has a debt to gdp ratio over 200%. According to most economists that should have led to both high inflation and high interest rates but both are low.

    And the “debt clock” in the US has been ticking for decades with no ill effect. National governments have no need to issue debt (bonds) to “fund” spending over and above taxation.
    The mainstream paradigm is flawed and hugely damaging!!

  23. Kronomex

    No doubt lots and lots of cash for big business with a bit thrown at small businesses as a sop. Tax cuts and other cuts for everyone else which can conveniently be shunted aside when the economy does it’s impression of the Titanic. And, as expected, (pardon the language) f*ck all for the unemployed and other recipients . Yay, for Scotty from Marketing and Criminal Crony Co. Inc. saving the day.

  24. Tom of Melbourne

    “Those who believe federal “debt’ is or will become a problem should consider Japan which has a debt to gdp ratio over 200%”

    Racking up public seems to be a particular baby boomer phenomenon, previous generations did not do it, and future generations won’t have the option of accumulating public debt at the same rate.

    The policy options of future generations will be limited by the public spending of baby boomers.

  25. whatever

    Kronomex, I read that article and I saw Scotty on TV this morning but I still haven’t seen an actual ‘Plan’ of initiatives or anything resembling any kind of action. Scotty has been practising saying “‘Straya” like Pauline Hanson, but that doesn’t add up to a Plan.
    Maybe thats what they mean by “Scalable”, you have to hold the Plan with one finger and drag/hold with another finger until the Plan resizes and becomes visible.

  26. Kaye Lee

    Scotty is announcing that they will have a plan soon. Perhaps it would be best to have something to announce first? Or, heaven forbid, actually announce something you HAVE done?

  27. Kronomex

    I thought the plan was to release the plan tomorrow? Scummo has well and truly been sniffing the Clayton’s Plan when you don’t have a plan. Plan stupidity with no plan sailing?

  28. John Kelly

    Perhaps the plan is not to have a plan.

  29. Harry Lime

    Claytons plan from a claytons government,they haven’t a clue what to do,so doing nothing is the default position,at least they have had plenty of practice.I don’t think the end of the world can come soon enough for the Liar King,who’s looking more ridiculous by the hour.

  30. Harry

    Tom, there is Not a debt problem for a national government that creates money, by keystrokes on a pc. It’s not constrained by funding as you and I are. It can buy any unused resources hat are for sale, but if it tries to buy what is in short supply it could cause undesirable inflation.

    And as remarked above,no debt should be issued.

  31. Michael Taylor

    Ah, ToM, good to see you.

    Agreeing with you goes against my better judgment, so I won’t. 😜

  32. paul walter

    The government only ever had one policy and that was the policy of polite looting with various stunts to divert when and where necessary.

    Now the public will experience the consequences of its folly over the last three elections when it line up to pay the price through unemployment, defaulted mortgages and other property forms and a recession as excuse for social infrastructure cuts.

  33. Brandane

    Scotty from Marketing will utter words but is unlikely to follow with the promised deeds. When to vast majority realise that Covid19 is no worse than a bad cold and does not result in diarrhea the panic will subside. The worst affected will be the much maligned selfish Boomers and other chronically sick or disabled and they will be regarded as dispensable. Why waste a surplus on keeping some old folk alive for a few extra months?
    So a slow feed of cash and he can clear out the bed blockers and petrie dish aged care homes resulting in a saving in Health Costs and Pension payments. A Win Win! How good is that.

  34. wam

    The way is prepared for smirko in that the recession will be worse than the GFC too bloody right because the economic morons are in charge.
    When the the rabbott ott was stirring the debt idiots like me was telling swan and Gillard tell the f*cking Pom that England and japan were 4 times worse so if the rabbott was calling labor disastrous what is he calling the poms, the yanks, the japs and just about every body else?

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