Australia to miss recession

[Jovial Monk]

And the debt would be there, part of the automatic effect on the budget, regardless of any stimulus packages or not. Regardless of any stimulus package or not!

More people unemployed, less personal & corporate tax coming in, hence increasing budget deficit. Without the stimulus packages (of which the govt gets back by tax about 25%) tax receipts would be lower and unemployment payments higher! Plus schools are getting long-overdue upgrades and other infrastructure will be built/upgraded.

When the economy recovers, and it will, the debt will be paid off pretty damn quick!

Again, what if we had a decent govt 2001-7, we would have a huge sovereign fund of well over $300Bn to finance all this.

but the govt is following the best advice of Treasury/RBA etc. Unlike the previous mob.

[Leftofcentresalterego]

JM is actually correct Mantra. Budget deficits are necessary at this time and there is little to fear from them. The opposition is hoping to lift it's rather pathetic political standing by playing on people's fears and grossly exaggerating the possibility of negative effects.

Actually, a federal budget does not function anything like we imagine it to. The fed are not borrowing anything and it is impossible for future generations to be saddled with federal debt, no matter what Allbull is bleating about. The truth about how the economy actually functions is quite remarkable.

But that aside, if we did not stimulate as demand slumps, the outcome would be rather a lot worse. And as JM has said, the "borrowings" will be "paid back" as the economy recovers. If we try and run a balanced budget during a serious downturn, we will only fall further and take longer to claw our way back up.

The government's spending will certainly do more good than harm!

[Jovial Monk]

Interesting post at Larvatus Prodeo:

http://larvatusprodeo.net/2009/04/05/fi ... s-economy/

[Jovial Monk]

Hmmm the Westpac consumer confidence index has risen by a whopping 8.3%!

Just possibly the recession is giving way to recovery. . .if it is people's support for Rudd & the ALP will stay very very solid or even rise more!

All we need now is for the US to deal with the toxic debt and a recovery will accelerate!

[Jovial Monk]

Unemployment up to 5.7%, not good.

Japan to spend $US154Bn to stimulate economy. . .should help some of our miners, some in the services economy.

http://news.smh.com.au/breaking-news-wo ... -a1hs.html

[Jovial Monk]

A new and more dangerous phase of GFC has started in UK - deflation:

Inflation measure turns negative - UK annual inflation measured by the Retail Prices Index (RPI) went negative in March for the first time since 1960, to -0.4%, down from zero in February. RPI includes mortgage costs, which have fallen following the Bank of England's reductions in interest rates.

http://news.bbc.co.uk/2/hi/business/8009718.stm

Glad I am that our successful stimulus packages will keep the dreaded bogey of deflation away from our shores!

Go Rudd, Swan, Tanner, Bowen!

[mantra.]

Actually, a federal budget does not function anything like we imagine it to. The fed are not borrowing anything and it is impossible for future generations to be saddled with federal debt, no matter what Allbull is bleating about. The truth about how the economy actually functions is quite remarkable.

But that aside, if we did not stimulate as demand slumps, the outcome would be rather a lot worse. And as JM has said, the "borrowings" will be "paid back" as the economy recovers. If we try and run a balanced budget during a serious downturn, we will only fall further and take longer to claw our way back up.

The government's spending will certainly do more good than harm!

Lefty - if the govt isn't borrowing anything and our revenue for the next year is going to be down something like $115 billion - can you please tell me where they're getting all this "cash" from? Answer - it's because they are mortgaging us heavily which will leave a huge future debt for the younger generation. It was forecast that there was going to be a budget deficit of $57 billion for the next financial year and now these figures have to be revised drastically.

We already know the sacrifices we had to make to pay back the piddling debt of $96 billion Keating left, but within a couple of years - this figure will have doubled, maybe trebled. You must have seen the news this morning spruiked by the IMF - who are behind this bloody recession.

With the IMF set to issue today a formal forecast that Australia faces recession this year, Kevin Rudd confirmed yesterday that next month's budget would contain a third stimulus package to cushion the worst impact of the downturn.

And Reserve Bank governor Glenn Stevens yesterday echoed the Prime Minister's admission the nation was already in recession. However, he said there were "accumulating signs" that China, along with several other economies, was at a turning point that would support Australian commodity markets

The IMF believes the financial crisis is entering a dangerous new phase, with massive government budget deficits making it impossible for banks and companies to raise money.

http://www.theaustralian.news.com.au/st ... 01,00.html

Is mortgaging Australia's resources to the Chinese for the next 50 years really the answer? We will be a devastated and ravaged country in 50 years and it won't bring employment to our own - the Chinese will bring their own labour with them. They can't afford ours.

[Jovial Monk]

We are not mortgaging anything for 50 years. The bonds being sold go 80% to canny investors loving their return and securities with only 20% or so being taken up by the Chinese.

Once the economy recovers the debt will be paid off in a few years save perhaps some long term, low interest bonds may remain on issue and the money be spent on infrastructure, education, hospitals etc. Tip never spent anything on infrastructure--the waste of time Alice Springs-Darwin railway excepted--and it is crumbling.

To speed the repayments the middle class welfare of Howard will be progressively reduced.

[Jovial Monk]

Here is one such example:

Kevin Rudd to close tax loopholes in 2009 federal Budget

http://www.news.com.au/business/story/0 ... 62,00.html

WEALTHY Australians exploiting tax loopholes will be targeted by the Federal Government as it spends up big to create jobs and boost the ailing economy.

It is understood the Government will target tax breaks used by the wealthy, including high-salaried workers.

One tax measure being considered by the Rudd Government for abolition is a loophole which allows hobby farms and other lifestyle assets to be claimed as tax deductions. This could save $700 million over four years and stop big deductions by about 11,000 high-income earners.

Under this provision, a salaried employee can claim expenses incurred from other businesses they own which make a loss.

It is understood the closure of the loophole would not affect negative gearing of rental properties.

The Government will also target some holiday homes, including farms listed as businesses for tax purposes.

Losses from minimal agriculture are being used to lower tax obligations. Hobby farm deductions can be as much as $50,000 a year.

[Ethnic]

Glad I am that our successful stimulus packages will keep the dreaded bogey of deflation away from our shores!

Go Rudd, Swan, Tanner, Bowen!

Are you sure? Surely if deflation is on its way then there would be no stopping it unless consumers and banks feel that there is social optimism in the air and start to spend, borrow and lend again? I don't see how a one-off $900 handout would create that optimism? My cousin went for a home loan inquiry the other day and was given a list of demands needed to meet the citeria - much more tougher than a few years ago.

Don't have a go at me. I'm no expert on this. Just wondering how it would work.