Saturday 23rd of November 2024
Home » Blogs » John Richardson's blog

beneath the budgie snugglers .....

behind the budgie snugglers .....

If I have to listen to another month of the Coalition banging on about Labor's debt pushing up interest rates, I think I'll scream.

But with the Reserve Bank waiting to scrutinise inflation data due out next Wednesday to decide whether a rate rise in the middle of the election campaign is necessary, we'll hear plenty more of the debt scare campaign in the coming weeks. It's worth taking some time to pick apart the argument that higher government debt means higher interest rates.

In economic theory, there are only two possible mechanisms through which this could occur. One is so silly to argue it is disingenuous, the other so marginal as to be negligible.

Not that Tony Abbott and Joe Hockey ever take much time to explain their assertion - the debt bogeyman is just too good a soundbite to spoil the illusion with detailed explanations.

Here's what they're not telling you.

The first way in which government spending - financed by debt - could influence interest rates is through the impact on economic activity.

The argument is put something like this: the government is spending sooo much money it is overstimulating the economy, forcing the Reserve Bank to retaliate by lifting interest rates to cool the economy. The government has its foot on the accelerator, so the Reserve Bank is slamming its foot on the brake.

First of all, it is important to remember that not all government debt is the result of stimulus spending. Even if the government had not spent a single cent, its budget would still have gone into deficit due to what economists call the budget's ''automatic stabilisers''. That is, when economic growth slows and unemployment rises, money coming into government coffers from taxes on wages, profits and consumption falls. At the same time, as people lose their jobs, outlays on welfare benefits such as the dole rise.

Eventually, when the level of revenue falls below that of expenses in any given financial year the result is a budget deficit. We're on course to be $40 billion short this year.

To make up the difference the government must sell financial assets called ''bonds'' to investors. The government gets the investor's money up front so it can keep paying its expenses. The investor gets a promise that the government will pay back the money at some point in the future with interest. The government is in debt to the investor.

In late 2008, Australia was faced with the real prospect of a domestic recession caused by the sudden collapse in world trade and confidence sparked by the global financial crisis. The Rudd government decided to intervene and try to stop a vicious downward cycle in confidence and income forming.

It spent nearly $100 billion stimulating the economy with cash handouts, home insulation, school halls, concessions for first home owners and large infrastructure projects.

The result is that we avoided recession and growth is back on track. As a result, the Reserve Bank has returned interest rates to their historical average and is poised to lift them further if it thinks inflation pressures are emerging.

So yes, in that sense, government spending means interest rates are higher now than would otherwise be the case.

But is that such a bad thing? The only way to ensure that we have low interest rates all the time is to have a recession, with lots of people out of work and no growth in the economy.

The next time someone complains about high interest rates ask them this: would you rather not have a job? Or, if you kept your job, would you rather no pay rise this year? The only way to blame the government for higher interest rates is to also maintain that it should have let the economy collapse to ensure the Reserve kept interest rates low.

Silly.

The second economic argument as to why government debt might push up interest rates is through the ''crowding out'' effect - that is, the government, by becoming a competitor with the private sector for funds, reduces the overall availability of funds for business or pushes up the price.

The theory goes that money invested in government bonds is money no longer available to be invested in companies or simply parked on deposit with banks.

This might be true if the economy was a closed system with a limited pool of capital, but it's not. The global capital market is large and mostly liquid. Moreover, there has been strong demand for Australian government bonds - more than could possibly be met - not just from banks, but foreign pension funds and central banks too.

But perhaps, if less money is put on deposit with Australian banks because it is going into government bonds, the banks will be forced to borrow more of their money from offshore. Since the global financial crisis, this has become much more expensive, raising the banks' costs of funding, which could in turn be passed on to borrowers with out-of-cycle increases.

But Australia's net government debt is so small, expected to peak at just 6 per cent of gross domestic product, any impact would be marginal.

Let's be clear: if interest rates rise during the campaign, there is no sensible way in which to sheet blame home to either the government's stimulus packages or its level of debt.

If Abbott and Hockey really want low interest rates, perhaps they should move to somewhere like the US, where interest rates are practically zero - and the jobless rate is 10 per cent, double Australia's.

Still, given the economic qualifications they've displayed to date, their prospects for landing the jobs they want here might be pretty slim, too.

Abbott Goes Scare Tactic on Debt

 

That Map is so good, the Abbott scare crazies may even use it?

Truth overboard?

Compiled by Ben Haywood  (The Age – my emphasis EWG)
August 30, 2004

The arrival of a boatload of asylum seekers in 2001 whipped up a political storm that refuses to subside.

What is the children overboard affair?

On October 7, 2001 immigration minister Phillip Ruddock announced that children had been thrown overboard from a boat carrying asylum seekers. The HMAS Adelaide had intercepted the boat as it approached Australia.
At the time of the Government's claims, the arrival of asylum seekers by boat was a hot political issue.
The Government wanted to stem the flow of "illegal boat people" or "queue-jumpers", as it described them. In the lead-up to a federal election, it needed public support for its border protection policy.
The claim that asylum seekers had thrown children overboard had the potential to strengthen this support by demonising asylum seekers. What sort of person would intentionally put a child in harm's way? Do we want people like that in this country?
On November 10, the Howard Government won the election. Many believe the "children overboard" claims contributed to the win.
However, it was later proved that no children had been thrown overboard. The Howard Government had misled the Australian people in the lead-up to a federal election, but had it done so intentionally?
In 2002, a Senate committee investigating the matter found that defence minister Peter Reith had deceived the Australian people in the children overboard affair. But what about the Prime Minister? The committee left unresolved the question of whether the Prime Minister also knew the children overboard claim was false. It noted that this was because of its inability to speak to Mike Scrafton, a key government adviser.

Who is Mike Scrafton?

Mike Scrafton was a senior adviser to Mr Reith in 2001. Today, he is at the centre of the latest development in the children overboard affair.
Two weeks ago, in an open letter printed in The Australian, Mr Scrafton claimed the Prime Minister knew before the election that the children overboard claims were probably untrue.
Mr Scrafton says he had three telephone conversations with Mr Howard days before the federal election. He told Mr Howard that the evidence being used to support the children overboard claim was inconclusive. He also told him no one he dealt with in the Defence Department still believed children had been thrown overboard.
But, in spite of this advice, the following day Mr Howard continued to assert children had been thrown overboard.
If Mr Scrafton's claims are true, it means the Mr Howard knew there was doubt about the children overboard claims but continued to present them as true.

Did John Howard lie?

Mr Howard admits to a series of telephone conversations with Mr Scrafton, but denies Mr Scrafton told him all of the evidence was faulty, and that no one in the Department of Defence believed the children overboard story.
Mr Howard says Mr Scrafton told him only that the video of the incident was inconclusive.
The following day, Mr Howard released the inconclusive video footage to the public.
The Government says it did not know the children overboard story was false. It says it was acting on advice from the Department of Defence that it had no reason to doubt.
Mr Scrafton's claims passed a lie detector test but the Prime Minister says his only lie detector will be the Australian people. He refuses to take a polygraph test, but says the Australian people will judge him at the federal election. (End of Quote)

 

COMMENT:  The Australian people are ostensibly facing the possibility of a majority of the complicit members of Howard’s “New Order”, who were the inhuman beneficiaries of those lies, being the next Federal Government of Australia.  And led by Tony Abbott, the worst of Howard’s brown noses.

 

God Bless Australia Howard – NOT your American world terrorists.  NE OUBLIE.

 

the art of dogwhistling .....

from Crikey .....

Now we're picking on New Zealanders

Canberra correspondent Bernard Keane writes:

BERNARD KEANE ON THE FEDERAL ELECTION 2010, FEDERAL ELECTION 2010

For the second time in the campaign, Tony Abbott has been dropped in it by a frontbencher. Scott Morrison plainly had failed to work through the implications of the Coalition's immigration policy, and the direct result was Abbott thrashing around yesterday and last night on The 7.30 Report attempting to free himself from it.

The essential problem is that the Liberals insist they'll cut immigration, but can't explain which categories they'll cut. It's a sort of demographic version of "Government waste" -- the inevitable claim that every Opposition makes at every election that many millions of dollars are available to fund programs by cutting back "Government waste", a convenient expenditure reduction that will offend no one.

Morrison himself struggled with it yesterday in an amusing interview with ABC Newsradio in which he couldn't bring himself to admit that yes, New Zealanders would be one of the possible targets for exclusion under the Coalition policy. Morrison twisted every which way to avoid referring to the Land of the Long White Cloud.

I know Australian election campaigns have stooped to some pretty low depths over the last decade, but now we're picking on New Zealanders?

The essential problem for Abbott was shown when Kerry O'Brien pressed him to explain where exactly cuts would be made. "Look," replied Abbott, "I just can't specify every last category at this point in time."

Labor are belated converts to the issue of sustainable population. So, judging by Abbott's enthusiasm for a big Australia until recently, are the Coalition. Clearly the Liberals, who had assumed they owned the issue and could use it at their leisure during the campaign, were surprised by Julia Gillard's emphasis on the issue last week and scrambled to react. In doing so, they've produced a half-arsed policy that doesn't withstand the slightest scrutiny.

Abbott also wandered into dangerous territory when he was asked to reconcile his sudden dislike of population pressure with his enthusiasm for higher fertility. He ended up taking a leaf from Julie Bishop's book and quoting Paul Keating from 1969 to the effect that Australian babies were the best immigrants (what does that even mean anyway?)

This lays bare the cynicism at the heart of both the Liberal and Labor pitches on immigration. Julia Gillard and Tony Abbott can't be for a sustainable population and for higher fertility at the same time. More people are more people, whether they're born here or they flew here. You don't cause less congestion or take up a smaller seat on the bus if you're Australian-born. And immigrants arrive here ready to go to work. Kids take two decades of rearing and educating before they're ready to start making an economic contribution.

So why are the Labor Party and the Liberal Party singling out immigrants?

You know why.

"Well might we Say...." Remember?

I may not agree with every point he makes but, I wish we had more Bernard Keanes to contribute to the Main Stream Media so that we could enjoy fair dinkum and reasoning OPINIONS - and so noted with the names responsible for those too often faceless authors of the Murdochracy.

Regarding my distrust of journalists goes well back to the days of the “TRUTH” newspaper which was hung by its own “Packer/Murdoch” style petard due to criminal abuse of their Charter.  With typical disregard for decency or duty of care, the Editors of that rag persecuted one Mrs. Monte to the point where she took her own life.  She was not even a government identity or a political public figure, but these mongrels made her life unbearable.

Even after he had resigned from the Labor Party and in fact the Parliament itself, Mark Latham and his personal life and children were consistently abused in the most unnecessary and vicious way – and when he rebelled against this Fascist method of punishment for not being a “media accepted individual” he was whiplashed by the Conservatives and taken to court.

During the horrific eleven years of the Howard “New Order” Rattus was responsible for many crimes against humanity and yet, while the Murdochracy has been able to “cause an Abbott leopard to appear to lose its spots” he is still the most dangerous “wild card” in this election.  The media conspiracy must be obvious – he now only makes “statements” and “is not allowed” to answer questions – all US supported negativity.

Julia Gillard is a trail blazer who, I believe, will carry on the major items that Kevin Rudd held close to his heart but, he was NOT crucified by Union Thugs nor the Factions (one day of the left next of the right – struth) but by the demonstration of a Caucus democracy where a new leader was unopposed. 

This in stark contrast to the Liberal/National parties’ very nasty and orchestrated assassination of Malcolm Turnbull by just one vote, and why?  Because MacFarlane had made a fair dinkum “meeting of minds and intentions” with Labor on the ETS and Turnbull accepted it.  The almost 50/50 split in the neo-cons was quickly band aided and the “one vote” leader of the Corporation’s Liberal Party became a “born again Christian”.  Fair dinkum.

Malcolm spat the dummy but, after overtures, possibly for another challenge for Prime Ministership, did a flip flop and changed back to his one party view. 

Meanwhile, that “made over person” Abbott is still protected by the media corporations for obvious reasons - he is under control?”

Now the “leaks”.  When two journalists from the Herald Sun used a leak from an unknown and un-identified source during the Howard years, infamous and incompetent Downer had them in court - and jailed - for NOT divulging the source of their leak!!! The media did not, to my knowledge, ever explain the outcome of that fascist drama.  So the precedent is set?

But let’s be fair?  Laurie Oaks made his “name” while being very much involved in the DISMISSAL of the Whitlam Government even though they were elected twice in three years.  Yes, Laurie was then unknown to me and I would still like to forget him and his journalistic abuse of a once dignified profession.

He helped enormously to bring down a government that had been elected twice in three years – 1972 and 1974.

Now he is trying to repeat that effort and in doing so, IMHO he is in breach of the Howard Sedition Laws and should be prosecuted – but by whom?

The Julia Gillard Labor government COULD use the Howard/Downer precedent to prosecute Laurie Oaks for NOT divulging his sources which have had a major and adverse effect on the elected government, and conveniently during a Federal election campaign.

IF it was reasonable for the Howard “New Order” then it is even more so for the Gillard government to demand that this Channel Nine “sensationalist” media politician reveals his “sources” to the general Australian public “In the National Interests” as identified by the “New Order”.

Whether the courageous journalists of the Herald Sun were right or not – the Howard mob had set a precedent for the normal function of a government in “the National Interests”.

What could be more in the National Interests than for our Security Services and AFP to insist on proof of the unverified word of an “opportunist ” journalist who is breaching the very basis of our security?

The history of Laurie Oaks is based on mind boggling stories which are usually without any owners - and whoever are his spies in the Labor party heirachy, the Government has the right "in the National Interests" to legally demand who they are.

God Bless Australians all – and may the negative policies of the Oaks/Abbott and Corporation’s media fail in the minds of the working families of Australia. NE OUBLIE.