An end to the recession in sight?

[Jovial Monk]

Quite a few economists are now saying the economy will start returning to normal by the end of this year. That would be nice, would mean the govt won't go as far into deficit and won't need to borrow as much money as budgeted.

Would be nice, but I am not entirely convinced: political shenanigans in China (public unrest, the detention of Stern Hu and chinese iron & steel executives) and America not seeming to be coming out of recession. I mean, when the hopeful signs are "only" 400,000 people were laid off and a squalid finance company is making money again that does not augur all that well for a strong bounceback! If China jails Mr Hu for several years investment may not flow into China as rapidly as it has, and that would lead to even more unrest.

But let us say the economy here, China, US, Europe does bounce back and starts growing again, will it be just business as usual, neocon business?

One item of neocon belief is chief executives should be paid obscene amounts of money as do the other senior management team. No wonder forms can't afford proper levels of staff: say you have a 100 strong senior management team earning (salary, bonuses) 75 times the average wage for non-senior management then paying them is equivalent to paying 100 times 75 = 7,500 workers. We see Goldman Sachs wanting to return to these practices.

Another item is that tax rates on high incomes had to be reduced. The result of that here was that suddenly there was a $215Bn gap in forward estimates of tax revenue when the GFC hit.

So somehow governments, if they want secure revenue streams and enough money to do the things government does and want to reduce unemployment, is to wind back these neocon excesses. Can you hear the screaming starting already when a government starts to increase top tax rates and lower thresholds where rates cut in? Especially if it is Rudd/Swan/Tanner doing the tax increases/windback of middleclass welfare? But it has to be done.

For example, the MD is dying, victim of greed, states competing for more water and global warming. We could perform major works and reduce flooding in Queensland while sending that water down the MD. Cheaper than moving Pert/Adelaide/Hobart/Melbourne to the top end, but WTF will the money come from?