Australia's Recession 2020

[Balls In]

All the signs are pointing towards an inevitable Australian recession sometime this year as the Corona virus hits an already weak, Chinese dependent economy. So how does Australia deal with this one?

Labor avoided recession during the GFC off the back of an unprecedented stimulous package that is both applauded by some, or blamed by others for Australia's poor economic performance since.

Further stimulous may well keep us out of recession at cost of increasing our already historically high debt, or do we allow the recession to run its course 1990's style in which the underlying market forces (high interest rates) effectively corrected themselves (and which was immediately followed by the booming Howard era). Thoughts?

 

[Power Raid]

run its course please with a sprinkle of stimulus

we have a robust economy that will rebound. overstimulating the economy last time increased our interest rates higher than it should have been, increased our FX and killed our export industries like manufacturing.

sure only the weak industries die but it highlights a sprinkle of stimulus isn't bad but over stimulus results in decades of debt and results in structural changes cementing job losses

 

[kranky al]

run its course please with a sprinkle of stimulus

we have a robust economy that will rebound. overstimulating the economy last time increased our interest rates higher than it should have been, increased our FX and killed our export industries like manufacturing.

sure only the weak industries die but it highlights a sprinkle of stimulus isn't bad but over stimulus results in decades of debt and results in structural changes cementing job losses

A robust economy isnt one going into recession.

*shakes head

 

[Power Raid]

"We went into" a recession turned into "going into" pretty quickly

A robust economy isnt one going into recession.

*shakes head

Where do you get robust economy from?

the only thing propping us up is immigration. We went into a per capita recession ages ago.

sadly the facts don't back up your story. but hey, don't let the facts get in the way of a great story!

 

[Power Raid]

It's all about "you" turned into all about "me" pretty quickly!

I guess if you are sitting pretty then everyone is right?

im in a town thats lost 1/4 of its population in the last three years with compnies that have been around for 50-100 years going broke almost weekly.

even from your own links and despite everything from bush fires, corona virus and a weak global economy we have a robust economy that will grow 1.5% in 2020.

So we are on top of the world in terms of incomes and wealth, still growing and any recession we may or may not have will last 1-60 days from when a recession is called. How good is that!

Can you think of a better place in the world to be?

 

[Cookie]

It's all about "you" turned in itsall about "me" pretty quickly!







even from your own links and despite everything from bush fires, corona virus and a weak global economy we have a robust economy that will grow 1.5% in 2020.

So we are on top of the world in terms of incomes and wealth, still growing and any recession we may or may not have will last 1-60 days from when a recession is called. How good is that!

Can you think of a better place in the world to be?

LOL. 1.5% growth is far from a robust economy.

 

[Power Raid]

LOL. 1.5% growth is far from a robust economy.

If you exist in a vacuum and only look at growth, then you’re right. The growth band is 2-4%.

But we don’t live in a vacuum do we?

Please consider we are at the top of the list in wealth and incomes. That’s hard to achieve without a robust economy.

Recessions come and go with most not even feeling any change. 1-60 days is hardly an endurance

 

[E Shed]

The Elephant in the room is debt. Every time there is a recession the recovery has been fuelled by expanding debt and creating another credit fuelled asset boom. Australia's illusion of wealth is created partly from the absurd value of housing.
Fundamentals are broken, a prolonged recession is probably needed but the political and social cost is a price no one wants to pay. People are way too leveraged and the suffering will be very real.

 

[Gough]

Labor saves the country from recession and it's all ZOMG we're the next Greece. The Libs lead us into a recession and it's only 30/60 days, not a problem.

 

[QuietB]

All I know is we have the wrong people at the wheel.

Not a single thing they have done - which is really only tax cuts and a religious freedoms bill - has done a thing to the economy.

Everyone pocked the tax cash so all that did was move private debt to the public debt column. Good job Scotty.

Other than that all we get is someone else has to do it;

• Reserve needs to lower interest rates - well that is done and nothing has happened. Again everyone is pocketing the cash saving to pay down their own debt.
• And the latest is big companies need to be "patriotic". FFS. After 3-4 decades of rampant neo-conservatism and an attitude of everyone for themselves I am sure we are all of a sudden going to switch back to some sort of socialist patriotism

Scotty from marketing is a ******* idiot and we are doomed

 

[kranky al]

"We went into" a recession turned into "going into" pretty quickly





sadly the facts don't back up your story. but hey, don't let the facts get in the way of a great story!

View attachment 836624

Hands up everyone in the room who doesnt know the difference between a per capita recession and a recession

*everyone looks at the idiot in teal.

 

[Power Raid]

Hands up everyone in the room who doesnt know the difference between a per capita recession and a recession

*everyone looks at the idiot in teal.

given I have posted links to per capita, you have to resort to reinventing history and false statements

further your claim we entered a recession per capita "ages ago" is also false. How many days ago do you feel is "ages"?


and even if we have or have not been in a recession per capita (yet to be confirmed), does that actually mean we don't have a robust economy?


clearly you aren't in a good head space when you have to resort to false statements and reinventing history. Hopefully things turn around in Geraldton sooner rather than later.

 

[kranky al]

given I have posted links to per capita, you have to resort to reinventing history

further your claim we entered a recession per capita "ages ago" is also false. How many days ago do you feel is "ages"?


clearly you aren't in a good head space.

End of 2018 - weve wobbled in and out since - but lets not be distracted from the fact that IN THE POST YOU QUOTED

you failed to distinguish between the two

 

[Power Raid]

Labor saves the country from recession and it's all ZOMG we're the next Greece. The Libs lead us into a recession and it's only 30/60 days, not a problem.

Gough get off the drugs. You are identifying the wrong issues in scenarios and thus concluding incorrectly.

The responsibility of government is not to avoid recessions. The responsibility is to manage the economy by adjusting fiscal and monetary policy.

Avoiding a recession, in the case of Rudd, was to save his job and to avoid the stigma that comes with Labor and poor economic management after the Keating/ Hawke recessions and the "recession we had to have". Taking a step back, despite the politics, Keating was right and it was the recession we had to have.

During the GFC, we may or may not have had a recession without stimulus, as the China pumped their economy and our mining industry powered through from that demand. Obviously every government around the world need to participate and stimulate the economy, as that is what a responsible global citizen would have done.

Where it all went wrong was the over stimulus, the waste and the purpose was Rudd's job rather than the economy. The result of over stimulus was the RBA had to counter Rudd's reckless behaviour and keep rates higher than they ought to have been, the FX went sky high as a result; reducing our mining export values, killed off our manufacturing, pushed refining off shore and left us with a generational debt which saw wealth transferred from the youth to the established and wealthy.

Then combined with the failed mining tax, investments were delayed and SA paid a massive price killing their golden goose. We now have a welfare state sucking on the governments teet for any hand out, subsidy or contract for its very survival.

 

[Balls In]

That's the bottom line isn't it. Australia avoided a recession during the GFC but what was the opportunity cost of that $140b spend and what did the avoidence of a couple of months of negative growth actually achieve? A natural market correction would arguably have led to a quicker economic bounce without the intergenerational debt legacy. It goes without saying that the apporach was a simple political thing for Rudd to stand up like father christmas handing out cheques, roof insulation and building new school halls.

 

[kranky al]

That's the bottom line isn't it. Australia avoided a recession during the GFC but what was the opportunity cost of that $140b spend and what did the avoidence of a couple of months of negative growth actually achieve? A natural market correction would arguably have led to a quicker economic bounce without the intergenerational debt legacy. It goes without saying that the apporach was a simple political thing for Rudd to stand up like father christmas handing out cheques, roof insulation and building new school halls.

Id suggest you pay a it more attention to what happened in countries that didnt stimulus spend.

they didnt have a “coupla months of negative growth”

Heres an article from the imf - ten years on from the gfc - ten years on and many countries still at 85% of pre gfc levels.....

Lasting Effects: The Global Economic Recovery 10 Years After the Crisis

blogs.imf.org

<<<
Our study looked at a sample of 180 countries—covering advanced, emerging market, and low income developing economies—to measure the decline in economic activity in the decade after Lehman Brothers collapse.

While many economies saw output losses relative to precrisis trends, the postcrisis experience varied across countries. Advanced economies and commodity-exporting low income developing countries were harder hit than others.

This variation partly reflected differences in the type of shock that hit individual countries. Some suffered severe banking crises as part of the global financial panic, while others saw weaker activity in advanced economies reverberated globally through trade and financial channels.

Among the economies that experienced a banking crisis in 2007–08, about 85 percent are still operating at output levels below precrisis trends. The number is smaller (around 60 percent) for the group that did not experience a banking crisis in 2007–08>>>

 

[Seeds]

run its course please with a sprinkle of stimulus

we have a robust economy that will rebound. overstimulating the economy last time increased our interest rates higher than it should have been, increased our FX and killed our export industries like manufacturing.

sure only the weak industries die but it highlights a sprinkle of stimulus isn't bad but over stimulus results in decades of debt and results in structural changes cementing job losses

How exactly do we have a robust economy? Our only talents are commodities and mining services.

 

[Noobz0r]

It is so difficult to get right, and even getting it right won't be enough (see: Rudd legacy) for everyone.

Time for this government to lead. Personally I don't have any faith in Morrisson and Frydenberg, but time will tell.

 

[Seeds]

It is so difficult to get right, and even getting it right won't be enough (see: Rudd legacy) for everyone.

Time for this government to lead. Personally I don't have any faith in Morrisson and Frydenberg, but time will tell.

Rudd didnt get it right. Whilst its speed of implementation was good its target was terrible. Schools and sports clubs around the country have been left with expensive infrastructure they have no viable use for and the tax payer often paid triple the price in some cases for that infrastructure they didnt need Because there was a lack of tradies to build it. a proper stimulus package would of been allocated to areas of weak demand and helped boost long term productivity. Rudds failed woefully at both.

australia was saved by china stimulus which drove commodity export prices through the roof

 

[kranky al]

Rudd didnt get it right. Whilst its speed of implementation was good its target was terrible. Schools and sports clubs around the country have been left with expensive infrastructure they have no viable use for and the tax payer often paid triple the price in some cases for that infrastructure they didnt need Because there was a lack of tradies to build it. a proper stimulus package would of been allocated to areas of weak demand and helped boost long term productivity. Rudds failed woefully at both.

australia was saved by china stimulus which drove commodity export prices through the roof

You keep bloviating this drivel

yet brazil that was in a better circumstance than us - with similar iron ore export levels crashed in the gfc.

They didnt do stimulus.

btw iron ore is about 3.5% of our gdp - - coal about the same 7% of our gdp didnt save us from the worst recession since the great depression.

 

[Balls In]

You keep bloviating this drivel

yet brazil that was in a better circumstance than us - with similar iron ore export levels crashed in the gfc.

They didnt do stimulus.

btw iron ore is about 3.5% of our gdp - - coal about the same 7% of our gdp didnt save us from the worst recession since the great depression.

Did Brazil have a large budget surplus and a once in a generation construction boom still in full swing? Even the Guardian (circa 2013) could acknowledge that;

https://www.theguardian.com/commentisfree/2013/aug/28/australia-global-economic-crisis

We enter this one in a vastly different circumstance and mainly due to our structural deficits that were only now starting to improve...

 

[Seeds]

You keep bloviating this drivel

yet brazil that was in a better circumstance than us - with similar iron ore export levels crashed in the gfc.

They didnt do stimulus.

btw iron ore is about 3.5% of our gdp - - coal about the same 7% of our gdp didnt save us from the worst recession since the great depression.

Um we need to do some maths here. australias gdp growth is usually around 3 percent. A recession is when it goes to 0 percent. I.e. a 3 percent fall. If key commodities make up 5 percent of gdp and their price doubles then thats a 5 percent increase in gdp. So if gdp was going to be in recession at 0 percent growth it suddenly turns into 5 percent due to the commodity price boom.

in any case when we say rudds stimulus was poorly done we are talking about inefficiently implemented with long term costs. any stimulus has short term positive impacts that can help prevent recession. Some stimulus is way better then others though. Preventing recession also isnt the only goal here. Its also the long term health of the economy. some recessions are in fact good long term. See keatings early 90s recession. rudds stimulus was poor bang for your buck and did nothing for productivity and made long term viability worse. he is partly responsible for australia having the biggest net externel debt in the developed world. Howards housing policies also being a big cause.

 

[Frank Bunn]

The only reason we have growth in growth domestic product (GDP) is because of our continued high immigration rate. It suits federal and state governments to be able to keep the immigration rate high and make claims as a result of it. However GDP per person, which is the indicator of whether we are better off financially, is pretty much static. At the same time we are having to suffer the impact of overpopulation on road congestion and public transport overcrowding.

 

[Power Raid]

How exactly do we have a robust economy? Our only talents are commodities and mining services.

And despite your observations we are at the top in terms of wealth, at the top in terms of income, have a fantastic social welfare system, have great distribution of wealth.

Sure we have challenges with our debt and Rudd robbed youth of wealth and gave it to the wealthy and established.

We also desperately need tax reform, the need to increase social welfare and many other challenges.


But logic says we can’t be at the top economically if we don’t have a robust economy

 

[kranky al]

Did Brazil have a large budget surplus and a once in a generation construction boom still in full swing? Even the Guardian (circa 2013) could acknowledge that;

https://www.theguardian.com/commentisfree/2013/aug/28/australia-global-economic-crisis

We enter this one in a vastly different circumstance and mainly due to our structural deficits that were only now starting to improve...

Brazil had a massive surplus and astronomical foreign currency reserves - over 230 billion at the time of the gfc