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Politics

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Ash

Michael Lynagh (62)
rsea; no, you are completely wrong that sub prime was in total melt down by end of '07. Actually, at the end of '07, most economists were (very incorrectly) saying that the subprime problem was just a small blip.

The global effects of the GFC were most noticeably caused by credit markets stumbling, which were triggered (not caused, it was always coming after the deregulation and proliferation of easy credit) largely by two things:
1. Collapse of Bear Stearns, and ultimate bail out (to JP Morgan Chase in March 2008) - this temporarily solved the liquidity crisis, but only delayed the inevitible until the...
2. Bankruptcy of Lehman Brothers in Sept 2008, and resultant liquidity crisis that undid AIG and resulted in the bail out of AIG, and the federal take overs of Fannie Mae and Freddie Mac. It was not until now that the full force of the subprime meltdown was felt.

Rudd was still cutting billions in early '08 because most of the government economists around the world was still under the crazy illusion that debt based growth and consumerism can continue forever. If the Liberal government was still in power, don't expect that they would've done anything then, either.

Your statement that the liquidity crisis really kicked in prior to Sept 2008 is incorrect, and is maybe revisionism. I may not be a fan of Rudd, but I remember what happened and followed the GFC VERY closely.

Out of interest (no offence), are you a Liberal voter?

Scotty; I was pissed at the Ballymore grant being cut by Rudd, but didn't have much of an opinion on most of it. A lot of spending was obvious pork barrelling by Howard, and a lot more was not required. Admittedly the razor gang did skip some that ended up being pork barrelling for Labor, but overall wasn't too bad.

Agree on plenty of the stimulour measures, though. While effective, they could've been better. Would it have been better if they sat and waited and controlled it better? Who knows.

I know this sounds bad, but for me personally, I would've preferred practically no stimulus measures. Get the pain, and go through it. For my financial situation, it would've been better (like house prices at sane levels, for instance).
 

rsea

Darby Loudon (17)
Ash said:
rsea; no, you are completely wrong that sub prime was in total melt down by end of '07. Actually, at the end of '07, most economists were (very incorrectly) saying that the subprime problem was just a small blip.

It seems stupid to argue about it but December 07 subprime was far from a small blip

http://news.google.com.au/archivesearch?q=%22subprime+meltdown%22&scoring=a&hl=en&ned=au&um=1&sa=N&sugg=d&as_ldate=2007/12&as_hdate=2007/12&lnav=hist11

I agree it got far worse after this but the warning signs were clearly there in December 07. By May (as you pointed out) the situation had worsened and yet Rudd policy remained the same. By October 08 Rudd was addressing the nation on the Global Financial Crisis.

I don't like to argue on a Rugby forum about politics but I'm to proud to have you tell me I'm completely wrong when the information is there for all to see.
 

Ash

Michael Lynagh (62)
December '07 there were largely writedowns from the large firms, but the warning signs were still being ignored and there was still little recognition of the crash to come. This is highlighted by the fact that the RBA was still raising rates into March 2008, still fearing rising inflation - so I don't know why you expected Rudd to have stopped his razor gang in 2007, or indeed early 2008. Don't forget that the general public is naive with regards to how the OCR works, so lower rates are generally cheap political points. The google searches you linked to have some worrying articles, but still pale in significance to what happened to the market with the collapse of Bear Stearns, and as I said, economic forecasts were still point to rising inflation and thus the RBA was still raising rates.

Don't forget that Rudd was cutting based on inflation forecasts from Treasury, which would've been looking at the same data as the RBA. I really don't think that Howard or any Liberal government would've acted any differently prior to Sept 2008 in regards to avoiding the GFC - if anything, if we still had a Liberal government interest rates likely would've been higher due to larger inflation without the razor gang cutting spending.

The fact is, it is revisionism of the economic data supplied from Treasury to state that Rudd should've cut his razor gang in 2007. You are incorrect and merely sprout a practiced line the Liberal repliers spew onto SMH comment enabled articles (which seem to be taken over by rubbish from Young Liberal and Young Labor members by the way), hence why I asked if you were a Liberal voter. I also know an active Young Liberal member and got the same lines from him, although he also had a healthy denial that anything Howard did increased inflationary pressures.

Although, another thing Rudd got wrong is still cutting tax rates after the GFC, that was merely another populist measure showing he was too afraid to rescind his tax cut promises in the changed economical landscape. The fact is, Rudd has lacked balls to make the tough decisions, but that's been pretty obvious...
 

rsea

Darby Loudon (17)
I'm not going to argue the point further as I feel it's a difference in interpretation. I'm not sprouting practiced political lines, I'm not a young Liberal, old Liberal or anything else. I did vote Liberal in the last election and I don't like alot of what Rudds done but that's it for my political persuation. I tend to vote with whom I think is best for the country.

We both agree Rudd is a popularist and makes poor decisions because of this. In my opinion these bad decisions extended to his Razor gang and then the stimulus packages. If you disagree, thats okay with me but I'll not be convinced he got it right.
 

Scotty

David Codey (61)
Agree on plenty of the stimulour measures, though. While effective, they could've been better. Would it have been better if they sat and waited and controlled it better? Who knows.

I know this sounds bad, but for me personally, I would've preferred practically no stimulus measures. Get the pain, and go through it. For my financial situation, it would've been better (like house prices at sane levels, for instance).

Yes, in hindsight if more thought was taken by the government it would have been better. At the time the opposition were calling for a more measured response, which would have led to a much more efficient use of money. It just seems to me that this government has, in one brush of a pen, pissed up against the wall all that money that was saved over the preceding 8 years, where economic conditions were good.

They had a once in a lifetime opportunity to spend some real money to make real long term differences which by and large was turned into a once in a lifetime wastage of funds.

I completely agree with you that a much smaller stimulus package would have been better. They can't have spent even half of it yet - why not scale it back now?
 

Scotty

David Codey (61)
Don't forget that Rudd was cutting based on inflation forecasts from Treasury, which would've been looking at the same data as the RBA. I really don't think that Howard or any Liberal government would've acted any differently prior to Sept 2008 in regards to avoiding the GFC - if anything, if we still had a Liberal government interest rates likely would've been higher due to larger inflation without the razor gang cutting spending.

I seem to recall that a lot of economists believed that it was an incorrect decision for the RBA to increase rates that last time. Turned out they were correct. If I recall correctly the opposition may have also stated the same thing, calling for the RBA to refrain from further hikes.

It would be interesting to see a comparison between the cutting in spending by the razor gang and the amount of the stimulus package. I suspect the spending cuts were less than 10% of the stimulus package, and therefore almost insignificant when it comes to inflationary pressures. Particularly when they were announcing increased spending in other areas at the same time.

My feel is that the Labor government were so desperate to establish economic credentials, they jumped the gun too early in both instances, with poorly thought out policies, which have ultimately harmed our future.
 

Ash

Michael Lynagh (62)
You can't compare the values the razor gang cut to the stimulus values in terms of inflationary pressures as the economic environments were different. There isn't a direct ratio from stimulus / government spending to inflation. For example, the stimulus packages were around a time with low consumer confidence and deflation threatening, so significantly more money might be needed to create some inflation in comparison to government spending during boom time. Just look at the Fed Reserve in the US printing money ("quantitive easing") in a large way coupled with huge government stimulus, and they have low inflation rates. Just wait until there's any recovery, though, and if they haven't backed off the inflation rate will go through the roof.

Hah, pollies being anti-rate hikes. What a shock. The voting public always blames them for high rates, whether it's their fault or not.

I don't think the razor gang harmed our future (oh come on, a lot of what they cut was rubbish Liberal pork barrelling anyway), and the stimulus didn't do much to our future either - it's not like Australia has a large public debt at all (now private debt...). What will harm our future is when the speculative asset bubbles in China created from free Chinese lending burst, or perhaps when the Option Arm and Alt-A loans start reset en-masse again in the US. Expect pain to come in a few years time when a real correction ends the rally, which is neither here nor there of the Rudd or Howard governments.

Oh, and I agree the economic credentials of the current Labor government are limited at best. And I also think that the economic credentials of Howard and Costello were very much overplayed, as they were fortunate to ride the resources boom most of the time in their office. The luck came from Australian economy becoming more reliant on resources and the Asian economies coming out of the Asian financial crisis in the 90s, thus allowing us to largely dodge the recession caused by tech stocks. We have a large crash coming at some stage.
 

Scotty

David Codey (61)
Agree that Howard got lucky with the resources boom.

I wasn't trying to compare stimulus to razor in terms of inflation. Just interested in the differential spending between the two, and implying that the razor stuff wasn't large enough to make any real difference to inflation. Particularly when Labor were announcing spending measures at the same time.

Basically I'm saying they were cutting spending in the guise of reducing inflation, where as realistically they just wanted to funnel the money away from the former governments policies into theirs.

The Ballymore thing is very frustrating, particularly in the light of the amount of money they are throwing at the soccer world cup bid. (I note that this bid seems to cost more than the total cost of the Ballymore redevelopment, and may end up coming to nothing.)
 

Scarfman

Knitter of the Scarf
You guys know I'm a card-carrying member of the left wing intelligentia that secretly runs the world. I just want to make one point about the Greens. When Bob Brown pulls a stunt like having a go at G.W.B., part of me thinks - that's a protest organiser not a professional parliamentarian. On the other hand, I was sickened by the Bush regime and was very glad that someone in authority expresed that.

My father says that he can't vote for a bloke "who lives up a tree with his boyfriend." I can laugh at that, but still, it's the only party in Australia that comes close to expressing the kind of social and environmental justice values that I believe in.
 

Cutter

Nicholas Shehadie (39)
Scotty said:
Cutter said:
Scotty - the discrepancies in the IPCC report are minor. They don't go to the conclusions. In any document that long and with that many contributors you are bound to have the odd error. That doesn't mean the whole thing is suddenly invalid. Similarly with the Climate Gate story - the results that institution have supposedly fudged are replicated elsewhere so it doesn't undermine the conclusion, just the veracity of their figures.

Most of the rest of the world has stopped debating whether to do anything about climate change. If we hadn't had the arch enemies of climate change in power for far too long I expect we probably would have too.

Minor discrepancies? Glaciers melting within 30 years? Large swathes of the Amazon turning into Savannah? These claims have been based on either little or no scientific fact or have been grossly exaggerated. These are not minor discrepancies.

As to the bolded bit. What rubbish. Anytime someone fudges results it most definitely undermines the conclusion, no matter if it is true or not. Both sides of this ongoing (yes it is still most definitely ongoing, and not just in Australia) debate are guilty.

Scotty it undermines the integrity of their data but not the results from the likes of NASA who have reached the same conclusions. We ignore the UEA results because of that and rely on the conclusions based on data which is not corrupted.

There is no debate that increasing CO2 is warming the atmosphere (not from credible sources anyway). The question is to what degree it is warming it and we can only rely on the modelling we have. As Sully says, far better to move and be wrong than not move and be wrong.

I also agree with Scarfy, and didn't articulate my position as clearly as I could have above, that on key social and environmental issues no one else is in the ball park.

In terms of the stimulus spending, for those of you wishing the money had been spent on infrastructure projects instead of cash handouts, there is a huge time lag before that spending starts to rinse through the economy. Cash handouts are faster.

My personal view is that we aren't out of the woods yet in terms of economic downturns. Things will get far worse before they get better. Markets will drop below their post Sept 08 lows before our recovery starts in earnest.

Scarfy are you a member of the left wing latte sipping intelligentsia? I love coffee so I think I'd like to join.
 

Scarfman

Knitter of the Scarf
Cutter said:
Scarfy are you a member of the left wing latte sipping intelligentsia? I love coffee so I think I'd like to join.

My regime is lattes until 5, then champagne therafter.
 

cyclopath

George Smith (75)
Staff member
I appreciate what you say about stimulus spending v infrastructure, Cutter, and you are quite right. But sooner or later there needs to be some vision. In terms of infrastructure, we are in a woeful state. Too much reliance on poor roads for heavy transport, rail systems out of the 19th century, a 20 year debate about where to put another airport in Sydney which has progressed, well, nowhere. Transport in general is rubbish.
Don't even get me started on our over-bureaucratised health system, where the only growth sector is medical administration (by several hundred %).
All these politicians look to is the next election, and that is that. They are mostly self-interested fools, or in NSW something else! The stimulus was blown by most in frivolous spending on items that most people didn't need, and to reduce some personal debt by some, and for Kevin07, Swannie, Jules and co to feel the love. There has been too much chest-beating about how strong our economy is, and how fore-sighted some people were, when in fact it was mostly dumb-luck and a shitload of minerals. And I mean not only the incumbents, but the mob that went before too.

Triple shot flat white to start each day, then a couple more after that. And I don't sip!! ;)
No champers though...off the grog. :'(
 

Lindommer

Steve Williams (59)
Staff member
Scarfman said:
Cutter said:
Scarfy are you a member of the left wing latte sipping intelligentsia? I love coffee so I think I'd like to join.
My regime is lattes until 5, then champagne thereafter.

But aren't you off the piss, Dear Leader?
 

Biffo

Ken Catchpole (46)
cyclopath said:
Rudd disappoints me hugely. He has acquired the Howard love for strutting the world stage at every envelope-opening he can, as you say talking a good fight and producing nothing. He will benefit from the ineptitude and rank ordinariness (probably not a word, I'm sure Biffo will correct me if so) of the opposition and get another term at least, much as the NSW Labor party has managed to hold power despite their being riddled with some of the most corrupt politicians in living memory. Abbott is a smart politician in the Howard mould, but not the sort of person I want in charge. Barnaby Joyce is ridiculous, Kevin "Grecian 2000" Andrews is scarcely better and it's hard to see any real brains amongst the lot.

??? WTF?
 
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