Keynes in 2011

[Jovial Monk]

Re our dollar, the quantities traded are insane, like 4 x the size of our total economy! Out of control of any govt!

[mellie]

Re- Rudd and Swan panicking....

Yep, 12 years out of the game ...was like handing over the keys to your Ferrari to your grandfather/or a teenager whos been coastering around in a shit-box for years.

Rudd had no idea, neither did the machine who operates them/ALP... we should have seen this coming.

Re-Howard.

Sometimes change isn't as good as a holiday, we would have done better to back this old favorite than place a 4 year old on a booster-seat at the wheel of our economy.

[Leftwinger]

Yes the stimulus did a lot to prevent the collapse of private demand and a nasty recession.

[Rainbow Moonlight]

Stimulus was effective, but now a lot of ordinary poor people are doing it very tough. IN the USA it was relatively less effective as the US economy is so big and has so much debt.

[Jovial Monk]

No other country stimulated their economy like Australia did. In America the stimulus was small and fragmented—ask Frogen.

We spent a lot of money here and would have recovered most of the actual stimulus money by now.

The threat now is a Long Depression like in the 1890s and 1930s due to all the austerity measures being put in place all over the world. On my board there is a very long thread about this very austerity, started by Lefty before most people realised what is happening.

The complicating factor this time is neocon fuckwittery that saw government deficits grow making stimulus measures harder to implement in places like the EU and US. In the UK the Tories, in the name of cutting the deficit are cutting all the services to the less wealthy—Cameron even tried to attack the NHS but got repulsed. The BBC is not so lucky and is being gutted to please Rupert Murdoch—guess Cameron has to give Rupe a reward for his support during the election. The LibDems in the meantime are tearing themselves apart.

In the US the Repugs made Obama keep Bush’s idiotic tax cuts, in the UK while services are being slashed taxes are not being put up (apart from the VAT.)

[Leftwinger]

The Australian stimulus was certainly standout in it's effectiveness. We need to differentiate between the Australian governments approach of pumping money into millions of ordinary people's accounts with the accompanying message "go forth and spend", and the approach of pumping up insolvent banks with excess reserves and then telling them "go forth and lend".

The major problem is that people in fear of their jobs and livelyhoods aren't all that keen to borrrow more money, squirrelling it away instead. This is a fairly wise approach for the individual to take but as is often the case, when very large numbers of individuals all try to do the same thing at the same time, the compounding effect can have unintended consequences. On the other side of the equation, when such an environment prevails the banks look out but do not see an army of credit worthy customers to lend to, the definition of credit worthy having become rather tighter than during the lax lending days as the top of the boom approached. What many other countries did was instead of spending to directly stimulate demand, they spent enormous sums of money trying to re-ignite the credit cycle. The results thus far have been rather wanting.

Stimulus was effective, but now a lot of ordinary poor people are doing it very tough. IN the USA it was relatively less effective as the US economy is so big and has so much debt.

The US government - like the Australian government - is fully sovereign in it's own non-convertable, floating fiat currency. This is a technical way of saying that the thing we call the US dollar is essentially an abstract concept, somewhat like points in a game of ten pin bowling. Such a currency exists only because the US government spends it first. This is not my opinion - it is a simple fact of modern monetary economies. As an operational fact, the US government could have spent whatever it needed to in order to get their economy back on it's feet. It's spending was constrained by politics and ideology, not by any actual lack of ability to spend what only exists because it creates it first.

Similarly, the Australian government has been feeling immense political pressure to get the budget back to surplus. I can understand the pressure they are under but I don't think this is a good idea. Our economy is in much better shape than that of many other countries - thanks in no small part to the timely stimulus - but I wouldn't say that trying to run a surplus to reduce demand is something we should be shooting for right now.

[harry climber]

What recovery? Australia was insulated from the crash so therefore needs no recovery. We didn't even go into recession and the economic maths shows that we wouldn't have gone into recession had their been no handouts.

Our biggest economic problem is the value of our dollar which is too high for a small economy. But that's not our fault... the USA is seeking to default of debt by devaluing their dollar.

This is true.
The greenback is still widely traded and much more than the AUD. The greenback's reputation has been tarnished slightly with other traders wanting another currency in preference to the greenback, but would expect that to be only for a short term.
Gold has in the past fluctuated so to is the greenback presently, and like gold would expect the greenback to return to its previous demand and reputation.

[Leftwinger]

What recovery? Australia was insulated from the crash so therefore needs no recovery. We didn't even go into recession and the economic maths shows that we wouldn't have gone into recession had their been no handouts.

Care to show me these maths?

[Jovial Monk]

Rightwing dickheads can’t believe the government action prevented recession here. Yet even so there were some anxious months until the Chinese govt instituted its gigantic stimulus.

Considering the amount of money pumped into the economy, directly as big handouts to those on lower incomes plus the successful HIP and BER schemes and later the heavy infrastructure program, if there was no recession narrowly avoided that money would have caused inflation to spike to 8-10%. No such thing happened. The govt stimulus merely took the place of deferred private sector investment and spending.

But to believe the GFC did not affect us in any way when our economy is so wide open to the world takes a huge amount of deliberate closing of eyes for ideological reasons. That or dumb fucks just believing the crap in the Murdoch press.

[harry climber]

Re- Rudd and Swan panicking....

Yep, 12 years out of the game ...was like handing over the keys to your Ferrari to your grandfather/or a teenager whos been coastering around in a shit-box for years.

Rudd had no idea, neither did the machine who operates them/ALP... we should have seen this coming.

Re-Howard.

Sometimes change isn't as good as a holiday, we would have done better to back this old favorite than place a 4 year old on a booster-seat at the wheel of our economy.

Very good analogy
The economy were in safe hands and entirely insulated due to having those who knew what they were doing in government.
Whereas Rudd had no idea of what was involved in economics or the economy, and hastily implemented a stimulus on the basis of "everyone else is doing it".
Rudd needed to understand what the issue and problem was first, but instead he wanted to be seen as doing something, anything to appease the voters.
Sometimes doing nothing is the best option.