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Capablanca-Fan
13-05-2009, 10:51 AM
See this analysis: The Real Rudd Budget (http://www.therealruddbudget.com/)


$124 billion new spending (can't blame the recession for these unforced errors)
$188 billion deficit by 2012, even larger than Whitlam's; this year $32 billion — $50 billion turnaround. Once again, it will be left to the next Coalition governemnt to pay off this debt.
$8 billion in interest payments alone
Spending is 29% of GDP
$9000 debt per person, $500 pa on interest alone
Unemployment will double from 4% under Howard in 2007 to >8%, despite Rudd's promises that this gigaspending will create new jobs


The Rudd Government is instead punishing the responsible and careful. And even rewarding those who weren’t (http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/column_from_those_that_do_to_those_that_didnt/):

This budget punishes thrift and foresight, e.g. paying for one's own health insurance and retirement. It rewards dependency, increasing pension and encouraging more use of the already overburdened public health system. It practises social engineering, punishing single-income two-parent families, forcing them to subsidise parental leave for double-income families. Cheques were sent to many who didn't earn them, in many cases to gamble or drink away, and taken ultimately from many who did.

Desmond
13-05-2009, 12:26 PM
The euphamisms continue. Laurie Oakes commented that he had been covering budget speeches for 40 years and this was the first one that didn't contain the bottom line.

Ian Murray
13-05-2009, 01:09 PM
Those who understand the economy are more sanguine, e.g.

...Far too much has been made of the idea that we are running up massive debt and somehow putting the welfare of our grandchildren at risk. It is true that CGS [Commonwealth Government Securities] on issue are expected to expand from $112 billion currently to $301 billion in four years time, but Federal debt as a share of GDP is expected to peak at just 13.8%, a figure that is laughably low by international standards (eg Japan and Italy are heading for debt/GDP ratios of close to 125%, and the average for the G7 will get close to 90%). The biggest determinant of the movement in the long bond rate in the next few days will be whatever happens in the US!

Chris Caton
Chief Economist
BT Financial Group
http://btfingroup.com.au/rp//91/process.clsp?t=2E62043B473F76131B1131BE22820E367

Capablanca-Fan
13-05-2009, 04:13 PM
Others who understand the economy are concerned about the debt. Not being high by world standards is not saying much these days, and we started with a surplus.

Terry McCrann (http://www.news.com.au/heraldsun/story/0,21985,25471604-5000117,00.html):


Treasury and its official sibling, the Reserve Bank, have fallen out big-time over their forecasts for the economy. The Treasury ones in the Budget are far more optimistic than those from the RBA in its Monetary Policy Statement just last week…

Simply, if the RBA is right or ‘righter’, the Budget will slide deeper into the red. And the RBA could be lifting interest rates into a relatively sluggish economy. Instead of exiting deficits in 2015-16 - and so entering the first possible year for a tax cut - we would still be in deficit. And in deficit despite a carbon tax which could be raising $20 billion a year or more by then.

There are three critical differences in the forecasts. The strength of recovery, the timing of recovery, and the risk and indeed likelihood of threatening inflation…

Treasury projects the economy to really roar in those ‘out years’. With GDP accelerating by 4.5 per cent in both 2011-12 and 2012-13. After picking up pace, to 2.25 per cent in 2010-11. This will - would - feed into inflation pressures.

The RBA is much more sombre over the next year or so. It appears to see a bigger negative - a slightly deeper recession. And not quite the subsequent Treasury surge. Is it because it sees itself forced to earlier action - to hike - interest rates?

Peter Hartcher (http://business.smh.com.au/business/federal-budget/rudd-has-lost-his-boldness-and-roar-20090512-b1zs.html):


The Rudd Government has responded to the recession like a lion, but the budget reveals that it is retreating from it like a lamb. The Government loves to tell us that it was “early and decisive” in splurging taxpayers’ money to ward off recession. True. And now we see that it plans to be slow and timid in bringing the budget back under control again…

Last night’s budget projects that in a decade from now, the Federal Government will still have net debt of 3.7 per cent of gross domestic product as a result of the money it is spending today. In today’s terms, that is about $40 billion, the size of the entire economy of Lebanon. This is extraordinary. It marks this as a frightened government.

Moody’s (http://www.bloomberg.com/apps/news?pid=20601081&sid=aM2USM5MKNGE&refer=australia):

The Australian government’s flexibility in trying to return to a surplus will be constrained by higher interest costs.

Professor Sinclair Davidson (http://www.catallaxyfiles.com/blog/?p=4899):

Swan keeps going on about ... the collapse in revenue and the greatest recession since the Great Depression. That is just bullshit! Australia is not experiencing the greatest recession since the Great Depression, nor does Treasury forecast such a thing. Unemployment is now 5.4 percent - the same level as in September/October 2004 and only slightly higher than at the 2004 election. There was a budget surplus then. The government is forecasting a decline in revenue, yet at the same time is forecasting a return to above trend economic growth. So how does that work?

Alan Moran (http://www.abc.net.au/unleashed/stories/s2568872.htm):

When Wayne Swan says it will be seven years before the budget is back into balance you know he means he can never achieve this. Still less can he build the surpluses to pay back the hundreds of billions of dollars of debt budget deficits will accumulate in the interim… The problem is that the demand injection comes either from creating money or from borrowing. In the first case it will end up with inflation, perhaps galloping inflation. In the second case it will siphon off savings that would otherwise be used for investment… Hence fiscal deficits will undermine a recovery (and) perhaps, as was seen in Japan in the 1990s and US in the 1930s, totally prevent it occurring.

David Penberthy (http://blogs.news.com.au/dailytelegraph/yoursay/index.php/dailytelegraph/comments/the_ugly_side_of_the_budget/):

And despite all Mr Rudds claims of inclusiveness ahead of his victory, he showed yesterday that self-starters who work that little bit harder to get ahead will ultimately be punished.

Ian Murray
13-05-2009, 06:37 PM
Others who understand the economy are concerned about the debt.
I'm inclined to give more weight to professional economists' opinions than those of your list of journalists and an academic


Citi senior economist Joshua Williamson described the budget as a “relatively prudent approach to the long-run management of the government accounts".

"There’s been competing pressures there, with expenditure requirements because of the nature of the recession but also there is a requirement to actually bring the budget back into surplus,” Mr Williamson said.

"I think the Government has walked the tightrope between those two opposing drivers relatively well."

But Mr Williamson said the outlook for a return to surplus was "very optimistic” when compared internationally.

"Compared to many other OECD nations the deficit is scheduled to be would back relatively quickly,” Mr Williamson said.

"Having said that though, the longer you go out and forecast, the more variance there is in your forecast and there’s more than the usual amount of uncertainty there.

"So they needed to be taken with a grain of salt, but based on what’s been published and compared to our international peers the budget position is relatively more healthy in Australia."

RBC Capital Markets senior economist Su-Lin Ong said Budget contained no “huge surprises".

"The deficit numbers are broadly in line with expectations,” Ms Ong said.

She said the size of the forecasted Budget deficits were very comparable to other nations.

"If anything, the net debt to GDP projections are probably a bit better than we thought in hitting just under 14 per cent by 2013/2014,” she said.

"It confirms Australian (Budget) deficits and levels of debt are pretty modest by international standards.

"That should appease the ratings agencies and see Australia retain its triple-A status, which is quite important."

The increase in the issuance of Government bonds to fund the deficits was sizeable, and it was a clear breach of the $200 billion cap already legislated, Ms Ong said.

"It is something the market has to get its head around,” she said.

"There is a lot of supply, and ultimately markets are going to have make some room for that."
www.thewest.com.au/default.aspx?MenuID=28&ContentID=141249

Capablanca-Fan
14-05-2009, 12:15 AM
I'm inclined to give more weight to professional economists' opinions than those of your list of journalists and an academic
Oh really? Then how about the 200+ economics professors, including 3 Nobel laureates, who denounced Obamov's similar "stimulus" spending (http://www.cato.org/special/stimulus09/alternate_version.html)?

And if you think that this huge deficit won't hurt us badly down the track, then your optimism approaches fairytale level.

Desmond
14-05-2009, 10:25 AM
Apparently Rudd is threatening to throw his toys and call an early election if the budget does not go smoothly through the senate.
link (http://www.news.com.au/story/0,27574,25475608-5012587,00.html)

Capablanca-Fan
14-05-2009, 10:57 AM
Apparently Rudd is threatening to throw his toys and call an early election if the budget does not go smoothly through the senate.
link (http://www.news.com.au/story/0,27574,25475608-5012587,00.html)
Just the same sort of bullying that Obamov practised, and the same old logical fallacy of Politician's Logic:

vidzkYnaf6Y

Davidflude
14-05-2009, 11:08 AM
One of the reasons that Australia is not as deep in the poo as other countries is that lots of debt was paid off in the good times. Unfortunately the Howard/Costello government frittered away much of the gains on tax bribes instead of building the infrastructure needed in Australia.

Igor_Goldenberg
14-05-2009, 11:26 AM
I knew Rudd and Co are idiots. Unfortunately, I did not expect them to be active idiots.

Igor_Goldenberg
14-05-2009, 11:28 AM
One of the reasons that Australia is not as deep in the poo as other countries is that lots of debt was paid off in the good times. Unfortunately the Howard/Costello government frittered away much of the gains on tax bribes instead of building the infrastructure needed in Australia.

Indeed, why did not they put aside few hundred billions for Rudd/Swan to spend?

Capablanca-Fan
14-05-2009, 11:31 AM
One of the reasons that Australia is not as deep in the poo as other countries is that lots of debt was paid off in the good times.
I.e. sound economic management instead of throwing money like confetti like KRudd and co.


Unfortunately the Howard/Costello government frittered away much of the gains on tax bribes instead of building the infrastructure needed in Australia.
What do you mean "tax bribes"? Allowing people to keep more of their own money? People are bound to be more efficient spending their own money than politicians and bureacrats spending other people's money. Infrastructure is largely a State thing anyway, and since the States are Labor, it's not surprising that water, power and housing are in such strife.


“I'm not even a Christian, but I find it bizarre that people who pooh-pooh the idea that Christ raised the dead or walked on water are totally convinced that a guy who's tossing trillions of dollars into the air is a financial miracle worker. Talk about blind faith! It makes me wonder if these same people, were they facing personal bankruptcy, would think that the answer to their own financial difficulties would be to give their wife an American Express card and drop her off at Tiffany's.” — columnist Burt Prelutsky (about the similar big-spending Obamov and the other Dems)

Capablanca-Fan
14-05-2009, 04:02 PM
South Australia MP Cory Bernardi rightly criticized the skyrocketing debt and the "wildly optimistic assumptions", but added:


However, there is one matter that I find simply astounding and it has to do with foreign aid.

The Rudd Government has committed to increasing Australia's foreign aid by around two billion dollars. Some will see this as a laudable aim, and indeed it might well be - when we actually have some spare money to give.

However, in a time when we are borrowing hundreds of billions from overseas nations and important domestic pressures are so great, why are we increasing the amount of money we are sending to other countries?

Why are we spending borrowed money to build infrastructure in communist countries?

When there is a crisis of confidence in Labors ability to manage our finances, why are we funding 'improving the effectiveness of government' programs in other nations?

These and many other programs may indeed be important and justifiable when we have budgets in surplus and strong growth prospects. However, to borrow money from overseas only to send it back to the lenders as an interest bearing gift should be very hard for this Government to justify to the Australian people.

Dr Thomas Sowell also pointed that "foreign aid" is often really foreign hindrance; here's another article Foreign Aid, Help or Hindrance? (http://www.fff.org/freedom/0298f.asp) by Doug Bandow, February 1998.

Desmond
14-05-2009, 04:44 PM
hmm so $2 billion / 20-odd million people is 100 bucks each. That was nice of us wasn't it.

Capablanca-Fan
14-05-2009, 05:06 PM
hmm so $2 billion / 20-odd million people is 100 bucks each. That was nice of us wasn't it.
Yeah, and foreign aid is usually poor people in rich countries giving to rich people in poor countries. After all, they need their palaces to live in, armaments to butcher their people, and Swiss bank accounts to guarantee a luxurious retirement.

In fact, even in the very rare instances where aid actually helps the poor people, it usually kills the local industries who can't possibly compete with the free goodies from overseas. See The Failures and Fallacies of Foreign Aid (http://www.thefreemanonline.org/columns/the-failures-and-fallacies-of-foreign-aid/) by David Osterfeld, February 1990.

Ian Murray
14-05-2009, 08:50 PM
I.e. sound economic management
Flogging Telstra for $45 billion helped things along a little

Capablanca-Fan
14-05-2009, 10:35 PM
Flogging Telstra for $45 billion helped things along a little
Like I said, sound economic management. KRudd is doing the opposite, spending $43 billion with its crass internet plan. All the problems with Telstra stem from its origins as a government monopoly, and KRudd wants another one!

Spiny Norman
15-05-2009, 05:20 AM
I thought Malcolm Turnbull made a very good budget reply speech. However I don't understand why more has not been made of the fact that (apparently):
(1) Rudd Bank isn't factored into the budget ($22B?); and
(2) Krazy Kevin's Broadband ISP isn't factored into the budget ($43B?)

Is that correct? If it is, then the figures bandied about regarding debt are way, way, way too low. If this is true, Turnbull should have been much more angry and savage in his denouncing of the Labor debt addiction.

NOW ... having said that ... I'm of the view that some debt now is not a bad thing PROVIDED that it is for useful/productive public infrastructure.

More roads, trains, improved ports, dams, water recycling, bringing water from northern Australia to the south, stuff like that. But just borrowing money and giving it away is cheap populism.

Worse, taxing people, then giving it back, is inefficient.

On QANDA on ABC last night, Hockey (who is generally a good media performer), when asked about "How would YOU save money and get the budget back into the black faster" could have simply said:

"We'd reject Rudd's "table napkin" $43B broadband plan and return to a $4.7B broadband plan we took to the last election. That would save almost $40B for starters. And that $43B isn't even factored into the Budget papers, so Rudd's $180B total deficit over 5 years really should be $220B ... but they're not telling the Australian people that, so they are being absolutely dishonest by concealing it".

We're screwed. Lets face it. Totally screwed ... idiots are running the country.

Capablanca-Fan
15-05-2009, 09:33 AM
Former NSW Labor Treasurer Michael Costa argues that Rudd changes his position (http://www.theaustralian.news.com.au/story/0,25197,25482879-7583,00.html) more often than we change our socks (yet he holds each mutually incompatible position with such apparent conviction):


KEVIN Rudd was a fiscal conservative, then a neo-interventionist, now he’s an instrumental rationalist, but for how long? ... It would be easy to accuse the Prime Minister of falling victim to the dangerous strategy of trying to be too clever by half, attempting to cover every base and appease every potential critic… A simpler, and possibly more generous, explanation is that Rudd is incapable of fundamental logical consistency.

...


In his The Monthly essay, published a little more than three months ago, Rudd regales his readers with his distaste for free markets and the economic orthodoxy of neo-liberalism. Remember, Rudd claims all our economic problems are due to giving "individual self-interest free rein" which has "led to greed of epic proportions". Economic orthodoxy is not to be trusted and a new social democratic project will save the nation. The essay, Rudd claims, was written during the Christmas break. The timing is important because Rudd was writing just after the Government started its flawed fiscal stimulus cash handouts. Rudd obviously was caught up in the euphoria of what he saw as a bold initiative to save the economy from recession.

It has become clear that the fiscal stimulus has had less than the expected outcome. Rudd has had to change his narrative. No longer is it about preventing economic recession, now it's all about supporting jobs. Not all jobs, mind you, but 210,000 jobs that are likely to be lost if unemployment hits 10 per cent. Rudd has taken to pointing to Treasury forecasts as evidence that the stimulus has worked. One of his advisers should point out that the main model Treasury uses to develop its macro-economic forecasts, the TRYM model, is inconsistent with his philosophy as outlined in the essay. According to Treasury, the model is "broadly new Keynesian in its dynamic structure but with an equilibrating long run". The model is described as conforming "closely with contemporary exposition of economic theory" in practice, it claims to trace "the changes in economic variables as the economy moves to supply determined equilibrium growth path".
...

Ironically, Friedrich Hayek, who Rudd particularly singled out for attack in his essay, provided the most cogent critique of the type of narrow macro-economic modelling that Rudd is relying on. How the wheel turns.

Former Labor leader Mark Latham (http://www.theaustralian.news.com.au/story/0,25197,25483637-20261,00.html):


John Howard was no slouch when it came to buying votes with budget handouts, but the Rudd Government has taken this profligacy to a new level. The only justification for age-pension increases and further tax cuts is electoral, aimed at opinion-poll ratings ahead of prudent fiscal policy. Twelve months ago on budget night, the Government forecast combined surpluses of $79.2 billion in the four financial years to 2011-12. Since then, the net impact of its policy decisions has been to erode the commonwealth’s fiscal position by $97.2 billion over four years. We have not seen economic recklessness like this since Frank Crean’s budgets in 1973 and 1974.

Many commentators regard the federal Opposition as leaderless and hopeless. The budget on Tuesday, however, marks a turning point in the political cycle. Wayne Swan has given the Liberals a sword to use against Labor for the next decade or more: the way in which overspending and public-sector debt place upward pressure on interest rates. In Peter Costello’s hands it would cut the Gordian knot of Australian politics and, over time, pare back the Prime Minister’s popularity.

Furthermore, The Wall Street Journal Asia (http://www.theaustralian.news.com.au/story/0,25197,25483637-20261,00.html) editorialises on Kevin Rudd's similarities with the last fiscally reckless Labor PM.


TREASURER Wayne Swan announced on Tuesday a fiscal deficit that would rise to $A57.6 billion in 2009-10, the largest in the country's history. This is an extraordinary fiscal turnaround. The country entered the global economic downturn with historically low unemployment, muted inflation and very little debt, thanks to prudent fiscal management by the former Liberal government and its treasurer, Peter Costello. Tuesday's sea of red comes largely courtesy of Labor's political agenda. Over the last fiscal year, the Rudd Government has announced a spree of cash handouts, infrastructure programs and pet projects, which Tuesday's budget funds. The only measure that would stimulate the economy - tax cuts - is tiny. Without all that spending, Canberra would have announced a small budget surplus on Tuesday. Swan argues that the global downturn hit Australia "with a brutal, uncompromising force". That logic is hard to square with reality. Australia isn't yet officially in recession. Unemployment is at 5.4 per cent. Canberra projects only a 0.5 percentage point contraction next year, with recovery the following year. And don't forget the massive monetary stimulus provided by the Reserve Bank of Australia, which has cut interest rates by 4.25 percentage points since September.

Swan has forgotten the last Labor prime minister to try the Keynesian formula, Gough Whitlam, sent the economy reeling in the 1970s and was eventually sacked. Subsequent Labor governments have supported prudent fiscal management. There is no such political pressure on Rudd and Swan to change course yet. The Opposition Liberal Party is a shambles.

Capablanca-Fan
15-05-2009, 11:27 AM
I'm of the view that some debt now is not a bad thing PROVIDED that it is for useful/productive public infrastructure.

More roads, trains, improved ports, dams, water recycling, bringing water from northern Australia to the south, stuff like that.
Sure, a case can be made for that sort of thing. But the argument could only be that Australia needs this infrastructure. Stimulus spending it is not, simply because it the money would trickle through the bureaucracy too slowly. In America, it is well known that much of the so-called stimulus would not be spent in the economy for several years, beyond the time when most recessions have ended.

But what we don't want is spending on useless jobs (http://townhall.com/columnists/BenShapiro/2009/02/18/obamas_stimulus_creates_useless_jobs?page=full&comments=true). Also, as Bastiat pointed out >150 years ago in What Is Seen and What Is Not Seen (http://www.econlib.org/library/Bastiat/basEss1.html), while the government spending may provide seen benefits, it does so by taking money out of the private sector, and the resulting lost jobs and products are not seen.

Tax cuts really would provide a stimulus because people would adjust their present behaviour immediately to account for their greater expected future lifetime income (Friedman's Permanent Income Hypothesis). A cut in payroll tax would probably be best of all since it would stop fining businesses for hiring people.


Worse, taxing people, then giving it back, is inefficient.
Moronic. This is what the LDP's tax plan would end, since no individual would simultaneously be a receiver of a government benefit and a taxpayer.


On QANDA on ABC last night, Hockey (who is generally a good media performer), when asked about "How would YOU save money and get the budget back into the black faster" could have simply said:


"We'd reject Rudd's "table napkin" $43B broadband plan and return to a $4.7B broadband plan we took to the last election. That would save almost $40B for starters. And that $43B isn't even factored into the Budget papers, so Rudd's $180B total deficit over 5 years really should be $220B ... but they're not telling the Australian people that, so they are being absolutely dishonest by concealing it".
Well put.


We're screwed. Lets face it. Totally screwed ... idiots are running the country.
Worse, we're still a nation of idiots who would still vote for these idiots. :wall: :wall: :wall:

Basil
15-05-2009, 11:38 AM
Worse, we're still a nation of idiots who would still vote for these idiots. :wall: :wall: :wall:
Sig time!!!


We're screwed. Lets face it. Totally screwed ... idiots are running the country.
Sig time!!!