<img src="http://larvatusprodeo.net/wp-content/uploads/2008/12/barbarella_green.gif" align=left … of course I am unstimulated, being neither a pensioner nor a family. But for what it’s worth, I bought Barbarella: Queen of the Galaxy and Urban Legend at Rocking Horse, contributing to alt.music store sales and the retail sector employment prospects of rockers in skinny leg jeans.
Bernard Keane has a very informative piece in Crikey today wrapping up all the hysterical coverage of Kevin Rudd’s Christmas fiscal stimulus spendathon. Random vox pops on tv news shows and a News Limited online survey, naturally, prove that the payments will be saved rather than spent, thus confirming Malcolm Turnbull’s talking points, of course. Forget Treasury estimates that 70% of the stimulus will be spent.
What’s going on here? I think partly we’re seeing the 24 hour news cycle at work – anything that happens has to be pronounced instantly a success (boring) or a failure (exciting!) on the basis of scant anecdotal evidence and off the top of the head commentary. God forfend that we could wait for the December retail sales figures. But the media/politics/commentariat bandwagon will have moved far on by then. An alternative hypothesis from Keane:
Much of this commentary seems to be a reflection of resentment toward the Government — a resentment made sullen and cranky not merely by Kevin Rudd’s persistent high polling figures but by the Government’s failure to provide any basis for criticism. In its bank guarantee and early stimulus, the Government has stuck close to not merely the advice of the Reserve Bank and Treasury but most economic commentators. Quite what the Government was supposed to have done to ensure the entire stimulus would be spent isn’t really clear — perhaps just dispatched a small brown envelope filled with unmarked $100 bills to every retailer in the country, although then they probably would have saved it rather than spent it.
Ah Barberella.
.
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She’s got no shame. She broke the orgasmatron. Hussy!
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I really think this spend-a-thon is irresponsible. We have a debt mountain threatening. From my perception of the Xmas feeding frenzy (
Good will to allget out of my fucking way) it really hasn’t dropped on people that they won;t be able to service their credit cards and mortgage next year when the wheels fall off. And if Kevvie’s already drained the coffers where’s the money for the dole gonna come from?.
I know. Let’s borrow it. Good idea. Where are all these countries borrowing their money from?
Regrettably I think to some degree Rudd has to do a bit of this “wasteful” stuff. Its all about keeping December Qtr retail figures up to break the negative newscycle. Something of a vicious circle at the moment.
There is much I disagree with at LP but Mark is 100% on the money with this
“anything that happens has to be pronounced instantly a success (boring) or a failure (exciting!) on the basis of scant anecdotal evidence and off the top of the head commentary. God forfend that we could wait for the December retail sales figures.”
If we can string together a few stats in a row that show its going to be alright it should go close to being self fulfilling. Once Joe Blow works out his job is probably safe the reductions in petrol and interest rates will see spending pick up again.
Rudd just has to nurse the economy through 2009 and he’ll be pronounced a hero. The funds to do it were generated by Howard and Costello but that won’t matter.
Slovenly journalists ignorantly or deliberately overlook the purpose of the stimulus spendathon package, why it was given to a particular section of society and, why it was timed to arrive in early December.
But now apparently the government should have known that Turnbull and Co along with the Murdoch media would be doing their best to undermine confidence in the governments actions and the economy and thus people might be too frightened to now spend it the bonus. One economist is saying that it should have been delivered in October for this very reason and that it would have been mostly spent then. Wonder what he would have said if asked at that time? December is not a good time to give people money as they are more likely to spend in October than Christmas time?
Other criticism from the media are too childish to repeat here except to note they all deliberately overlook what the purpose of this exercise is or that it is part of an over all strategy.
Murdoch’s political member, the Liberal Party, is still however impotent.
The underlying problem of Consumer Confidence will still remain during this pay-out. Sure, most people will spend some of the money on Christmas, but in all likelihood a lot of the money will be saved until safer economic times. This should have been put towards public infrastructure projects that will help to keep the economy afloat during the next couple of years, which will be quite rough.
Oh, shit! The bourgeois media and the Liberals just don’t like Rudd giving money to the poor instead of business. We might spend it on booze, sex and the pokiies!
That’s quite possibly right, I think, kingsley, or at least it’s what the government is putting their money on – see this earlier post:
http://larvatusprodeo.net/2008/12/03/economic-and-political-disconnects-and-the-sociology-of-knowledge/
Thomas Paine @3 – the irony with News Ltd is that Murdoch and his editors should know that their shaky print business is very far from being recession proof, and the worse the economy gets, the lower the advertising spend is. I have a feeling Murdoch’s empire is heading for a commercial reckoning sooner or later. The early 90s recession saw News Ltd in all manner of trouble, and the media biz is a lot riskier now as a general proposition.
Let’s face, every day is f*cking Xmas if you’re a 4WD-driving, privately insured Kenmoron with two rugrats up a private school’s spa complex. 30% handouts all year long! We’ve gone KRAZY etc.
You can thank the schmos you winged in your Prado as you reversed parked out of the trustfund meeting. No worries, its on us!
Pensioners and family tax A recipients? Hmmm, I think we can probably afford it, dont you?
G’nite Ostraya!
“forfend”? Nice.
“But the media/politics/commentariat bandwagon will have moved far on by then.”
True dat. Oh, I’m sure it will warrant a mention of two, especially by Albrechtsen or Bolt if it falls flat, but the rest will be too busy giving instantgratificationresponsesnownownow to whatever Rudd or Turnbull (or his successor!) is doing at that point.
OT – is it just me, or does JaneF have fugly knees? I know, I know, why am I looking at her knees.
Nah. This crisis is structural, not psychological.
I don’t pretend to be privy to Rudd’s private rationale for his give-aways. He may indeed firmly believe that his largesse will serve to end the financial and economic collapse. If he does, then he is mistaken.
In fact, largesse such as Rudd’s will have only the most marginal financial and economic effect. This largesse distributes a tiny amount of spending power away from groups with a propensity to save towards groups with a relative propensity to consume. Additionally, a small number of households may be able to fend off foreclosure on their houses.
Yet, it is precisely in encouraging the propensity to save that will bring about the end to the Australian manifestation of this crisis.
Evidence of Australians’ propensity to save will make foreign lenders more willing to lend to Australians on a more favourable basis. And maybe, just maybe, Australians will become lenders themselves. The last time this happened was in the recovery years of the Great Depression (after 1932) when Australians became huge savers relative to the size of the GDP, and huge exporters relative to the value of imports.
During these recovery years, Australians’ consumption patterns remained incredibly austere.
” We have a debt mountain threatening.”
Happily no!
Go to http://www.oecd.org/searchResult/0,3400,en_2649_201185_1_1_1_1_1,00.html and you will see that in 2006 net financial liabilities of general government in Australia were about -7% of GDP(i.e. we haf money in the Future Fund), compared to an OECD average of about 43% of GDP and 51% in the USA. There are rich countries in better fiscal shape, but not many.
Save??????
The message of a looming windfall hadn’t got through to my news depleted family. All girls (I dont’t count). Two dependent handouts and one carers allowance. There was a brief moment of missbelief as I explained while suggesting that the money should be spent on Australian content. I offered a printout from the days SMH about restaurants on the Hawkesbury, peaceful waterside delights that we would never get to normally. Well I was cast aside like christmas wrapping ribbon. Clothes, shoes, iPods, computers,,,,,,. When I last looked in they had overshot 100% and were pondering how to obtain more.
Save??????? Ha!
“Yet, it is precisely in encouraging the propensity to save that will bring about the end to the Australian manifestation of this crisis.”…..Katz@9
“Of course a great deal of this (bonus payment) may be saved, but even if it is, that presumably takes the place of private saving that would otherwise have done over a longer period”….. Glen Stevens@ the Australian Business Economists annual dinner.
http://www.abc.net.au/news/stories/2008/12/09/2442046.htm?section=business
So Katz, they are on to what you are saying.
“This should have been put towards public infrastructure projects that will help to keep the economy afloat during the next couple of years”
Infrastructure projects take years to start, by the time the environmental impact inquiries are done and the construction tenders are complete.
Think of an infrastructure project now and it should be good to go in about 5 years..
I have several choices tomorrow.
1.Spend $1300 on books on Amazon and blow $100 (on pokies, booze and sex, just to prove I belong to the working class.)
2. Spend $1400 on books on Amazon as I have enough in my normal pension payment to pay my current crop of bills, the rent and a fortnight’s food, usual new books + a movie. [Australia, if its still on, on Friday.]
3.Buy a reading lamp, a set-top box and spend the rest of the $1400 on books at Amazon.
Any suggestions? btw, I don’t believe its possible to spend $1400 on booze in one day, but I don’t have champagne tastes.
And another thing…why is Jane Fonda impersonating Kermit?
http://thegazz.com/gblogs/karinfuller/files/2008/07/kermit.jpg
Aside from skinny jean wearing indie shop assistants, my impression of where the economy was supposed to get hit the hardest was the hospitality/tourism industries. So, the money probably should be spent less on christmas presents and more on christmas parties. At least that way the waiters and kitchen staff will get to keep their jobs for another three months and the social interaction will do you all good.
Remember, you’ve got to fight for your right to party! And drink a big glass of water before you go to bed. And stay away from the pokies otherwise Tony Abbott and Barnaby Joyce will have a sargasm.
Actually, Kingsley, the funds to do this weren’t “created” by Howard and Costello. The funds fell into those two gentlemen’s laps courtesy of a once-in-a-lifetime externally generated commodities boom. It didn’t take any particular skill in economic management on their part. Quite the contrary. They just watched the money roll in.
Actually, we might not be in this position now (needing very short-term stimulus) had Howard and Costello actually done something productive with the surplus when they had the chance, like investing it in medium-term supply-boosting infrastructure.
Paul,
Spend no more than $99 on your set top box (i.e. Dick Smith has them). Buy one that is capable of receiving HD as some of the multi-channelling will be broadcast that way. It doesn’t matter if your TV isn’t High Definition, the box will down convert it and you aren’t missing much. The standard definiton boxes will not display some of the new free-to-air channels at all. You might need something like this video switch if your TV already has a DVD player plugged into it and has no more inputs, so budget for that.
Spend $700 on books from Amazon and spend some in town. Keep money as local as you can for as long as you can.
For those of you with a penchant for adventure might like to take your Govt Given Largess to the local spaceport, don’t tell me that you havn’t seen them popping up all over, and mutter to the concierge “The church of St. Mary in the hollow of white hazel trees near the rapid whirlpool by St. Tysilio’s of the red cave”. if you can get it out in the original there are extra points. Jane can help with pronounciation.
Katz @ 9 – “propensity to save” is subject to the “paradox of thrift” – if everyone decides to stop spending at the same time, well, you join the dots. In general it would be desirable if everyone saved more, but not immediately. And also, the consumer sector of the economy is far more significant in terms of employment effects than it was in the 1930s!
Paul – instead of Amazon, you could buy via Booktopia – an Australian online book retailer – service is excellent. More or less the same range.
http://www.booktopia.com.au/
Geez.. all that hate for Roger Vadim returns. The sleezy rodent [not Howard this time] got off with all of my fantasies.
If everyone stopped spending at the same time that would be more than paradoxical, it would be bizarre.
A propensity to save or to spend is nothing more than what the word suggests — a tendency in one direction or another.
The medium-term challenge facing actors in the Australian economy will be access to credit. The world is now in an era of severe rationing of credit. The specific challenge will be to convince creditors that it is good business to lend Australian economic actors money at an economic rate.
A slight propensity to consume, which will be stimulated by the Rudd give-away will not be critical to either the level of economic activity in Australia, or to Australian economic actors’ creditworthiness.
The Rudd give-away hands out a few choccy frogs and augments the feel-good factor. It is a political rather than an economic gesture.
This idea may well be hopelessly too expensive but I wonder how making wages say 125% deductible for the 09FY would recession proof us? If there was a level of magnified tax deductiblity that made it difficult to justify laying-off workers, particularly those that you thought you are likely to re-hire in say 12 – 18 months time. I do believe that with the reductions in interest rates and fuel if Joe Average did feel his job was safe the threat of recession for Aust would be over. It won’t be boom times for awhile but the key is just to get through 2009.
This morning, on radio, a women who claimed to be a “seasonal employer” lamented the government largesse is already leading to unintended consequences.
It seems that over the last few weeks it has become very difficult to round up sufficient unskilled slaves for cotton pickin’ because the lazy sods have been given a full wallet by bad Kevin and are presumably out on the piss.
Let us just hope that Barnaby and Tony do not tune into morning radio. Prize anecdotal ammunition like that would be far too hard not to spray for the scrooge brigade.
Joe2,
Anecdotal indeed. because if they are on Newstart, they won’t get Kev’s largesse.
And if they have kids, they’ll probably spend it on kids instead of piss.(Maybe, just maybe, they’re spending some time with the kids for Xmas. Round my way half the kids seem to be out of school anyway) Not that RWDBs would think the prols could do anything so normal!}
And if they’re aged or disabled pensioners, they either too old or too fucked to work. Sounds like RWDB bullshit to me.
DR, thanks for that info. Sound a bit complicated to install and I might put the expenditure off and blow it on books. Only reason I wanted it anyway was to watch the old episodes of Brideshead Revisited, anyway. Besides, I’m determined to spend at least $1300 on books.
Mark,
Will check out Booktopia later this afternoon more thoroughly.
Thanks to you both.
Have just been given a bookcase from uni to help hold yet to be bought books.Friends coming round to re-arrange the bookshelves later today.
See how Red Kev changes lives with his Socialist generosity.
@ Paul B, you could get it on DVD for $50 from the ABC shop and spend the rest on books.
Sorry buggered up the link. Go to abc.net.au and search for Brideshead and the DVD and audio books come up.
Thanks, Mindy. I might just do that.
Katz – I think this is one of those rare situations where everybody gets to be at least a bit correct. I think you are right on the ease of business credit being very important but one of the reasons making banks reluctant to lend is businesses outlook and that gets ultmately back to consumption which I think is Mark’s point. If you make the decision avoiding a recession is a good thing and some sort of pump priming/stimulus is desirable then I think a multi pronged approach is required.
Unlike many of my fellow conservatives I’m willing to give Rudd a grudging pass on the grand giveaway as long as it doesn’t become a “habit”. Paradoxically I think the biggest drawback to it is the research that suggests unless people perceive it to be a permanent increase in income it won’t increase spending. It might be that if Rudd said there will be another grand in April that this one would have a better chance of doing its job. However a grand just before Chrissie to lower and middle income earners must stand as good a chance as any hand out of being spent. Pensioners however I think will save a disproportionate amount compared to other recipients.
PS – nice to kind of agree with you for a change, must be the Christmas spirit breaking out.
Jarrah wrote:
I didn’t even notice that. Her knee could use some help though (ew!). Perhaps if she slathered it in some of that hideously expensive face cream she spruiks on the TV. That way, when that Rudd Xmas Bonus rolls in, the plebs can choose between pokies, drugs, sex and “Jane Fonda Knee Lift” cream with some idea of which will be more satisfying. The conservatives told us in the 1960s that the miniskirt would be the end of society. Now we know why
Katz, we’ve had this argument about creditworthiness before, and you’d be aware I disagree with you. I’d also point out that Australian banks are now finding it easier to raise money, and that the credit crisis is the precipitating cause of a world recession (or, it could be argued, the proximate cause) and one of the continuing effects, but not the only one – it’s the fall in confidence that starts to collapse the whole house of cards, and a stimulus directed at spending is in large part directed at the psychological levers of both consumer and business confidence.
I just wish some of it would come my way but I don’t qualify (too middle aged/well paid/adult family). Pity, it would be enough for a shiny new Australian Made (TM) Maton guitar. Oh well…
BTW, Brideshead Revisited has just started on ABC2 on Sunday nights. Bloody good too
It is true that Australian banks are now finding it easier to raise money now than earlier in the year, when credit market locked up completely. Nevertheless it is also true to say that credit is tighter now than it has been since at least the 1970s, and it likely to remain tight for some time.
Moreover, it is also true to say that there is a much higher demand for credit than banks are prepared to satisfy. If lack of consumer and business confidence were paramount in driving the recession, then banks would be complaining that they are offering finance at reasonable rates but that borrowers refuse make use of the opportunities provided by banks to turn a profit.
In fact, the opposite is the case. Borrowers are battering down bank managers’ doors in search of credit but bank managers are treating a large proportion of these folks as bad credit risks. Businesses that were once the bankers’ favourites are now being sent away empty-handed.
Sure, Katz, but that’s only one aspect of what’s going on.
An increased rate of saving may be desirable, but it would take a long time to substantially increase the amount of capital Australian financiers could access, and in the meantime, there are other good reasons for wanting to see consumers spend.
Katz – don’t know who you’ve been talking to but from what am hearing from a few different quarters is that there is only one of the major 4 who are hard to get a business loan off right now ( the bank our business uses!!!).
That said I’m sure it is harder generally speaking to get a business loan right now than 6 months ago but I’m not hearing anyone say its extremely hard. Probably its back to where it should have been 6 months ago. I think this issue is THE issue in the USA, whilst over here it is one of the major ones but not necessarily front and centre which is why we don’t see the Govt expending too much effort on it presumably.
Mark,
I’m not exactly sure where to put this but when I click on LP on Google now I’m told the domain name has expired and needs renewal. I got connected by clicking on Howard’s Back – a bit of an irony, eh?
Not to worry. Its working now. Must’ve been me doing something odd.
Well I was gonna spend $30 discretionary money this afternoon but then I got fined $30 for bloody jaywalking by the cops!
I wasn’t really gonna spend anything though.
David at 16, you’ve shown me how to help out with the economy! I haven’t had a handout from Kevin, but I have an extra few hundred a month compliments of Glen Stevens piling up in my bank account. Being retired I don’t have to worry about losing my job, so saving it for a rainy day does not make sense. I want to do my patriotic duty too. I hate shopping but I love doing lunch, preferably outdoors near trees and/or water. So I’ve rung a few friends and invited them out, one at a time. Of course we’ll stop off at the bottle shop on the way. And they’ll repay the compliment with another lunch date. We could keep a few locals in work for a while. We’ll be saving jobs, saving Australia, and it beats stretcher bearing or digging for victory!
There’s plenty of anecdotal evidence to the contrary.
Stories such as this one are too recent to be reflected in any authoritative statistical series.
Started spending the mooulah. Bought some grapes and some lemon butter, along with all my other groceries.
For thosre of you concerned I’ll be stimulating the American economy rather than the Australian economy I also bought the following books I would not otherwise have bought: John Keay’s India. A History and China. A History and Abraham Eraly’s The Mughal World. A Tainted Paradise.
DR, checked out the new A & R in the big concrete block. If its possible, its worse than the old A & R that got burnt down.
I dunno Paul, if you’re after incredibly cheap chinese reprints of Enid Blyton books, or “High School Musical 3: The Book!!!” then where else are you gonna go
The Dymocks isn’t really much better – although as a repository for books on failed internet technologies it’s hard to beat. Then again, I’m with Egon Spengler: Print is Dead! Now where’s my spores, molds and fungus collection…
DR,
Reader’s Companion and the two secondhand book shops are probably the best bet.
Got foiled somewhat in my attempts to boost overseas economies. Five of the books I ordered from Amazon can’t be sent to Australia. And one other site wouldn’t accept my debit card. In some places, credit rules. Haven’t gone completely mad though, still lots more to spend. Got bored with buying stuff. I’ll never make a good little capitalist.
Just love this ejaculation of cash from a blonde bombshell that is leading my and your country (if your Australian )into the future .