Costello’s tsunami is coming! I somehow think the dire predictions of doom so portentously articulated by the Subprime Minister haven’t had quite the effect that he might have liked. Virginia Trioli could hardly keep a straight face when talking about the “financial tsunami” on Lateline last night.
There’s one question that $weetie hasn’t been asked yet, as far as I can tell. If the tsunami did hit, what exactly would an “experienced economic manager” do? Cancel the tax cuts, perhaps? Maybe Swannie could put it to him on Tuesday.
Someone should email that question to either Wayne Swan or Paul Kelly.
Good idea, Sam. Just emailed the post to Swan.
Haha, Costello in that article talks about Keating “calling” a recession and how he believes we “shouldn’t have recessions”. In the world of economic booms and busts, short term winners and losers, etc, we can’t all be surging ahead with endless growth 100% of the time. The bubble will always burst and those smart enough to see it coming will manage to minimise the impact it has on their investments. After eleven years of strong economic growth with the squeeze on housing prices and the minerals boom in full swing, it’s only a matter of time before some key markets undergo “corrections”. You can’t keep inflating the bubble forever.
Could it be that scare campaigns like this don’t work anymore. After Tampa, Kids Overboard and rampaging iunterest rates might I suggest the electorate is a tiny bit cynical of Howard/Costello created bogeymen/women.
Like, I’m gonna be frightened by Julia Gillard.
Every time I’m reminded she was/is a Socialist, I’m tempted to vote Labor. Surely I can’t be alone. Now,a nuclear power plant in my backyard, that does froghten me. I can’t stop thinking of Cherrnobyl. And that one was all of Howard’s own making.
You can,by default, if you are the only ones by law able to blow bubbles,and your face is just too young to recognise Costello is talking recession for major corporations, which probably meant abandonment of certain sections of the community, and, for all intents and purposes is called depression.Australia has in many respects a two-tiered system of economic activity.
Costello must be quaking in his boots with an inquisition coming from the economic geniuses at LP. He’s best to file it with the viagra and russian bride emails.
Somehow I think this (& the next) government are more concerned with how to prevent a rampant mining sector from squeezing the life out of every other sector in the economy.
And a sneaking suspicion tells me that Kim thinks the tax cuts should instead be spent on government services. Am I wrong?
Oooh, I’m afraid – so very afraid.
Talk about the boy who cried, “Wolf!”
just how stupid is dollar sweetie?the so called tsunami was created by?yes you guessed it…. dollar sweetie,and the greed that exist with all the liberals so much for experienced people
Partly. I think there should be well targeted tax cuts for equity reasons, but I think we’d be much better off investing the sums squandered on regressive tax cuts for high income earners (see Andrew Leigh’s analysis of their distribution) on public services.
But none of that goes to how $weetie, with all his experience of “economic management”, would respond to a “financial tsunami”. What would he do? Concretely?
Buld levies around all our capital cities? Blame State Emergency Service Ministers? Ask GWB for aid?
Join the ALP so he can be our next PM after Rudd? Blowedif I know. I cheerfully admit to being an economic ignoramus about everything after 1972.
You pump out lots of credit and threaten the bank managers to hold the line, , tell everyone who will listen “Don’t panic ” , “these flucuations are all part of normal market activity” ,
have a quiet word to the trustee of the blind trust and retire to the sidelines.
The 1997 asian economic crisis was as big a crisis as you would ever want to have and Australia seemed to deal with that quite well.
People’s concern in this area is the unknown of how the imbalance between the US currency , the trillion dollars of reserves that China holds in the $US and the belief in the mainland that the chinese central governement won’t allow the Shanghai and Shenzen markets to crash before the Olympics.
The punters are throwing all their money into the markets – people are remortgaging their real estate and putting the LOT as MARGIN into the mainland market . Talk about risk .
These markets might correct or crash , the investors lose their real estate and the central authorities have massive civil disturbance to control.
As the subprime crisis deepens in the US there is the additional risk that the chinese government will see it’s holdings in US treasuries losing value when the $US weakens. Note the 23 year record for the value against the $US for the $Aussie recently, similar for $Canadian over the last week.
The US treasury can let the dollar depreciate and the current account and trade imbalances shrink . Australian exports are hard hit but oil will be cheap.
The US consumer losses the ability to buy from around the world , the chinese consumer has lost money in the stock market and possibly their real estate and world consumption collapses.
Mining boom ceases and real estate in Australia – not NSW by the way, that has been correcting for a couple of years outside the inner city, starts to lose value.
I don’t think the Treasurer is responsible for the past good performance of the Australian economy but previous governments and this one have benefited from claiming the credit for the good economy as financial and labour market reforms have paid off.
The risks are primarily external and beyond the influence of tiny players like Australia.
Gold is currently at high prices for a reason.
costello only has himself to blame ,
we are now coming up to our 10th interest rate rise in a row ,
i see no plan by costello to make interset rates go down and he has had 5 years to put one in place
deserves to be voted out due to incompetency
Being Treasurer means never having to say you’re responsible (unless it’s good news).
What an incompetent twat. It says a lot for the electorate that the so-called government has got away with this level of incompetence for so long. The best thing that could happen would be that the myth of their supposedly superior economic credentials gets shown to be just that: a myth.
After all these years, if the ALP gets in and any forecast downturn occurs there’ll be a ready-made story about who caused it.
There is oh so much smugness around – from Michael Pascoe on Crikey to posters here – about Costello’s warnings that I suspect Labor will be blindsided if indeed the markets take a second hit from the credit crisis. Realistically it is about the only thing that could save Howard’s hide and yet it seems that this one escape hatch is not being taken seriously.
The Bank of England just put out a warning about the UK stock and real estate markets. Three weeks ago Merrill Lynch – the largest US retail stock broker with a market capitalisaton of US$55 billion – reported it had lost about US$5 billion in the latest 3 months from the credit crunch but then on Friday had to admit it had actually lost about US$9 billion in that period. There is genuine fear that the credit markets and the stock markets are about to fall off a cliff.
Now if the Australian stock market crashes by 20% before the election I can garantee that Ratty and Sub-prime will mount the mother of all campaigns for Australians to go for safety. Costello will be able to say only he was preparing for it and Labor had taken their eye off the ball. Didn’t something like this happen in 1963 (where Labor lost the unloseable election).
You lot can snigger all you like but hopefully Labor has Swan out there every day talking about the concerns of a credit crisis and the need for calm etc. Othewise if a crash happens then Costello will rip Labor apart and as the architect of such an unlikely electoral win will deserve to be the next Prime Minister (doesn’t that conjure up some images).
Phil, I would hope the ALP government counters with “Howard and Costello had 11 years of superb economic growth handed to them on a platter by Paul Keating, they squandered every opportunity to responsibly manage the economy and invest in the future in favour of electoral bribes and have now left us with a faltering economy”. Of course, the ALP will roll over, say they’re sorry about the economy being so bad and could they please return them for another term so they can fix it.
Historically, incumbents have copped the blame for any financial crisis that hurts Australian punters.
This isn’t always fair, but your marginal punter has little patience for a discussion of causation when s/he is scared and angry.
If the meltdown hits Australia before the election, then the punters will griil Ratty and $mirker over a slow flame.
Oyster, it is going to be difficult to get that incompetence one to fly, interest rates are still lower than when Costello took over as treasurer, and the “rises” under Costello are 1/4 the size of the blowout under the previous treasurer(s).
The correct answer would be to double the tax cuts.
To put it mildly.
Err, Howard, 22%.
I don’t get the logic at all. How exactly would $weetie act if the tsunami hits? Political blather?
The problem is, “investing” in public services is just spending. Tax cuts given to individuals may result in spending, but they may not (it may also result in faster retirement of debt – i.e. true “investing”).
It doesn’t matter who does the spending, the inflationary pressures are the same. At least by returning taxes to the individuals who paid them, those individuals will have a choice in priortising their needs. Individuals are usually the best judge of how their money is spent. Government spending is like you buying a present for someone you’ve never met, and imagining that they’ll think it’s the perfect present.
BTW, I’m not against genuine investments by governments into infrastructure, it’s just that they’re all too rare amongst the ideological boondoggles. I’d like to see a dam on the Mitchell, and a solution for the Nunawading Knot. However, I know I’m more likely to get “investments” like Quixotic Turbines, Desalination plants, and Gigabit broadband for the homeless. That’s why in the absence of intelligent investment plans I’ll always favour tax cuts.
Like King Canute. Sitting out there to hold the tide back.
(Apologies to Canute, though. He went out there to demonstrate that he could not, just in case Katz wants to pick me up on this point.)
Heh, Craig Mc.
I’d like to see a dam on Sydney’s Middle Harbour, but as you say, tilting windmills are the order of the day. I’d be perfectly happy with an enormous Don Quijote turbine on every cliff-front property from La Perouse to Manly.
satp, keating is not the issue
costello and his lack of policy to tackle interest rises is the issue today
Howard and Costello need to get together and discuss these things. One day Howard can be heard saying that Labor are ‘afraid of economic growth and as far as Howard is concerned there is no reason why ‘growth’ shouldn’t just continue on and on ad infinitum and the next day Costello is talking about an ‘economic tsunami’ and giving us a patronising dissertation on boom and bust cycles. You’re right Kim, if he wasn’t such a selfish, peevish, little prick he certainly wouldn’t be holding his cards close to his chest, knowing what the answer was as to how to deal with his so-called economic tsunami. If the truth be told, I don’t think he’s got any better ideas than the Labor party and if he did have than he’s a treasonous, treacherous little prick for not outlining what they would be.
I don’t think the Labor party would be so naive as to not be considering the very real possibility that the proverbial will hit the fan ‘on their watch’ (I dislike that phrase, but there you go). Unfortunately should we find ourselves no longer booming but busting with Rudd 07 at the helm, no doubt they will be conveniently cast as the villains and probably chucked out of office in three years’ time.
I don’t think there’s much that any individual whether they be Treasurer Costello or Treasurer Swan can do in the face of a complete shakeout of global markets. I think the neo-cons have a lot to answer for, we’re in such a mess because of a lack of responsible, considered, leadership and the mindless encouragement from little men like Howard who believe that the wealthy can exponentially accrue ever more wealth, (with no one missing out) and the not so wealthy can attempt to emulate them by putting everything on credit and re-mortgaging. The poorest of poor are those likely to be least affected. They’ve got nothing now, when stocks begin to tumble their ‘wealth’ will remain unchanged.
So, Howard and Costello are not beholden to the same Treasury mandarins who have not delivered an accurate prediction of GDP in, oh, absolutely yonks, that Rudd and Swan will be?
Give me a break.
Labor is always on the backfoot regarding treasury information. There is no reason, on taking government, that they could not draw attention to the figures they have not been privy to. When you have the power you set the aggendas and come up with new versions of “non-core promises”. It is all about making it palatable and a new government gets a honeymoon.
All Labor can do is ‘match’ and go for the biggest possible majority.
Same template as when Hawke took power, j2: Howard as Treasurer has comprehensively rooted us.
Kim, my memory isn’t that bad, I have paid 22% interest, and in excess of that (on a loan taken out at 5%) but Howard was not the treasurer at the time.
Wanna hazard a guess under which treasurer this happened?
Good post Kim. I wonder if anyone really listens to Costello spouting his puerile economic scaremongering? They really must believe that a large percentage of the population are morons stupid enough to believe this drivel.
The Howard and Costello legacies are being rewritten as we speak:
Howard – the wiley, clever politician who let Australia get blindsided by the economic and environmental effects of climate change and peak oil. And lied numerous times without repenting, and played the race card many times, and took us to an illegal and immoral war . . .
Costello – the twerpy treasurer who was so busy throwing around muck and pork barrells and protecting the dirty coal industry that Australia missed the 21st century opportunity to transition to a healthy clean and prosperous low carbon economy that exports its new clean energy products and expertise all around the world.
No Peterc, I think it’s mainly been the Political Genius who’s set the policy tone for this government. Costello, unlike Keating, has proven himself to have no ideas beyond the Treasury minders, no guts, and definitely no glory.
Gee, this criticism of Costello’s performance as economic manager is hilarious. The economy hasn’t been this well managed since before Whitlam. 3% inflation,
Steve at the pub wrote:
“Kim, my memory isn’t that bad, I have paid 22% interest, and in excess of that (on a loan taken out at 5%) but Howard was not the treasurer at the time.”
You could have found yourself in this situation under any of Whitlam/Cairns, Fraser/Howard or Hawke/Keating, Steve. The critical point, really, is that Keating was actually the guy who managed to put the processes in place to break the cycle. Since then things have gone up and down a bit (interest rates under Keating, after this, were sometimes a bit lower, and sometimes a bit higher than they are today), but the volatility of the 70’s and 80’s hasn’t returned. Costello has undoubtedly enjoyed the ride in that hammock so far! We haven’t seen “double digit” RBA rates since 1991 – roughly 5 years before Costello got his hands on the job.
It’s an interesting psycho-cultural point.
If Canute were attempting to demonstrate his inability to hold back the tide, why didn’t anyone suggest at the time that Canute was deliberately attempting to look impotent?
The answer is clear enough.
In those pre-Popperian times no-one was in a position to say, “Your Majesty, the evidence that you have adduced does in no way falsify the hypothesis that Your Majesty is capable of holding back the tide, if Your Majesty wants to.”
On the other hand, maybe no one wanted their head cut off over a somewhat abstruse point of scentific enquiry.
Hopelessly addicted to oil and coal, tax revenue squandered rather then invested in our future, the highest ever level of foreign debt, interest rates rising, home ownership now out of the reach of the average Ausralian, totally unprepared (still in denial actually) about climate change, electricity and food prices skyrocketing due to the shortage of water, pulic education and health systems underfunded, all surplus cash squandered in a futile attempt to get re-elected. Yes, an unenviable and hilarious record indeed.
Strange, isn’t it, that while politicians whip up the ’skills shortage’, at every chance, that a lawyer with no economic qualification, as far as I know, has been steering the ship towards a tsunami and is looking to get off the ship before the women and children.
All public servants funds have been organised , like his, while the rest of us will be looking for the life rafts.
Hmm. Something truncated my post. How peculiar.
Er, yeah – by crashing the economy into the recession we had to have.
Craig Mc , how boreing.
Ever thought about talking about what is happening now?
Costello and Howard are the blokes that are relevant.
They are the ones that have squandered a good chance for us all.
22% interest rates under JHO as Treasurer. Let us never speak of it again.
And, Craig Mc, your lot are comprehensively done. Get used to it. The next four weeks are going to be like an extended slow-mo train wreck.
CK: My earlier post was truncated, but in it I wrote that it certainly looks like enough people think like LP to sweep Rudd to power. I realise the Libs are done, that’s why I’m going to the bank to fix my interest rates for the term of the next government. BTW, I didn’t bring up Keating, Katz did.
My other point was that if you think 3% inflation,
Hmm. That’s twice my posts have been truncated at “3% inflation,”.
I blame George Bush.
I never mentioned Keating.
I mentioned Canute.
So you didn’t. It was Rod I was replying to. I’m a little frazzled after setting up a PS3 and installing Leopard everywhere. Apologies Katz.
Peter Costello will soon be recognised as the most lucky Treasurer in Australian history. His time in office coincided with a persistant boom in China which brought about a minerals boom in Australia.
He has only succeeded in cultivating a third world economy in this country, based on digging minerals out of the ground and exporting these unprocessed, with little technology, skilled labour or Australian jobs applied in the operation. We have a shrinking industrial base, a shrinking skills base and a massively growing debt. The debt is due in large part to consumer debt.
Peter Costello’s economic management has mostly been done by permanent public servants. He doesn’t manage anything – certainly not interests. The GST was a regressive step for Australia which has only distorted the market in favour of unsustainable economic activity.
We can see what Peter Costello has achieved with his A$2.4 billion per annum to private medical insurance – a near collapse of the public hospital system.
Just think of the harm Peter Costello’s A$34 billion tax cuts will do when we have the costs of global warming and the urgent need for government investment in renewable energy. This still leaves the Great Barrier Reef in imminent danger of ecological collapse. Peter Costello prefers to stuff the letterboxes of the McMansions with cheques.
Who wants this smirking, bullying trickster as Prime Minister? Nobody! Not anyone in the Liberal Party either! Give me Petro Georgiou for PM if it has to be a Liberal.
Willy Bach
Greens candidate for Griffith
Thinking of doing the same. How’s it working for out for you?
Any election parties on the night in Sideny? Jill L., is it on again? Irina is holding one in Balmain I’m told. Might as well start planning.
Watch this space, Sir Henry. I’ll be down in Syddeney on election night and we’re thinking about having an LP party.
I’m dying to wear my Sue Nami outfit.
Craig Mc, Nabakov –
Installing leopards everywhere is rarely a good idea. I tried it once, for security purposes, and barely escaped alive. The damn things have no loyalty whatsoever. Apologies to those mauled, especially my private-army stalwarts. Good thing we were on a remote uncharted island, otherwise boats, extra ammunition and medical supplies would not have been placed by me in a hidden coastal cache quite so craftily.
On the whole, I’d say installing even one leopard should be mulled over very carefully indeed. Take a look at “The Killer Shrews,” “Fiends Without a Face” or “The Devil Is a Man” if you don’t believe me. In my experience, a few zombies on a good sturdy neck-chain are a much better bet, and they really frighten the shit out of Dr. Maestro’s super-dobermans, long before they reach your perimeter. It’s something to see.
JPZ, it’s worse than that – now I have a bunch of tigers I don’t know what to do with.
Fabulous. Now reality is mirroring my hyperbole.
My question to Mr Costello would be this:
Given that the polls indicate that many ministers in the current government, including even the Prime Minister, are in serious danger of losing their seats, in the unlikely event that the Coalition retains government after the election and Mr Costello becomes Prime Minister, whom would he choose as the ministers in his new government?
Watch out for Leopard, some upgraders are getting a blue screen of death [link]. Maybe wait until they get a fix for this out.
Katz
I believe Canute was attempting to show his inpotence: some things, a King can do; others, he can’t, Nothing to do with Popper. Something about the limits of governance. And prudence. And not-to-get-too-big-fer-yer-boots. Modesty. Temperance.
“My dear, impotence had nuthin’ to do with it!” – Mae West.
cheerio
Of course it had nothing to do with Popper!
Canute’s experimental design could never falsify the hypothesis: “King Canute can stem the tide if he wants to.”
Canute’s experimental design was pre-Popperian, unsurprising really, when you take into account the fact that Canute lived in the 11th century.
Indeed it would be difficult to construct an experiment to disprove that hypothesis, because Canute, being the pious fellow he was, never wanted to test whether he had god-like tide-stemming powers.
And that, of course, was the conceit that lay behing my little joke.
Here’s my take on the Treasurers’ debate:
http://www.newmatilda.com/election07/index.php/2007/10/30/the-ties-have-it-round-two/