Recession - Where Is It?

[jerryc]

Waldo,

One of the problems of Economics is that it is not an exact science, however much Economist try to say it is. I couldn't raise Schiller's arguement and haven't heard it so cannot comment. However I wil quote Prof Boris Shedvin at his introductory lecture on Economic History at Melbourne.
In essence he said Economists think they are rational beings and their theories are rational. What they do no take into consideration is that people are not rational. A theory may work at one time and not at another, but if it doesn't work, Economists say it's the theory that hasn't worked so we must create a new one.

America decided to follow Milton Friedman the so called Reganomics (which I believe had to be explained to Ronnie with a comic strip) and discard completely government control which was part of Keynsian Economics.

Odd thing is now the "Free Market" has broken down, the American banks and car manufacturers want government assistance. Isn't that government intervention?

The first principal behind cash injections and the fact that they are aimed at the lower socio economic group is that such people have low discretionary spending control. You need new shoes because you only have one pair. A rich man has a wardrobe full. It's the same thinking in funding public works. Infrastructure eventually aids the economy in the short term by creating jobs and in the long term by having a useful assetthat can be used in the future.I would expect dissenters from the idea of "stimulation packages" it is the nature of Economics, , but one Economist does not a solution make. As with any sickness, a second opinion is a safe bet. It would be interesting to hear a discussion between Schiller and Ben Benanke. "Helicopter" Ben who is printing money like it's going out of style is an expert on the Great Depression. He might perhaps differ in his viewpoint from that of Schiller.

Jerry

[.RC.]

Deleted..Apologies to Lignin if I caused any offence, none was intended...
Sorry Lignin...

[.RC.]

What is relevant is the reality that we are in deep trouble, and if nothing is done to help and stimulate the economy then it will become worse.

Peter.

Yes I agree but how is stimulating retail going to create wealth....All it will do it send 50% of the money to China.. If you want to stimulate the economy be smart about it....This schools upgrade idea is stupid, every school getting the same amount....So a school with 10 kids gets the same as a school with 1000 kids...A school that has just had a $2 million upgrade gets the same as a school that has not seen a coat of paint in 30 years.It is just jobs for the boys so the construction industry can still charge their $120 an hour to install a power point...



A big splurge on new houses...Will these houses be built where there is enough water and infrastructure to sustain them, or are they going to be built in Sydney or Melbourne or Brisbane where there is no water to spare...

Will immigration be cut due to the lack of available jobs???

I bet 90% of families are better off right now due to lower interest rates and fuel then they were twelve months ago...They are simply not spending because the government says things are bad..

And I am sick of people parroting the IMF.. Yes of course the IMF are big on stimulation packages because the governments will borrow money from the IMF to fund them..Win win for the IMF who then makes billion's of dollars in interest payments.

And the poor miners with their flash expensive cars for sale.....If they had have saved a lot of that huge wage they had they would not be in the situation they are currently in...

The only way to create wealth is to invest in nation building projects, all we are seeing is a splurge in industries that create very little export earnings...

[Lignin]

RC,
There is supposed to be a rule about slagging each other off on this forum, but I'm about to break it!!

You have NO BLOODY IDEA what my investment portfolio is.
For your pea brained information, the majority of it is in the so called Blue Chip companies that provide employment for literally thousands of Australians, The fact that at least one company, BHP Billiton, has reduced its profit forecast by 50% is hardly the fault of we high risk taking investors.
I repeat, I have paid taxes ALL MY WORKING LIFE(40 YEARS) BUT, I'm getting bugger all out of this government or any other, simply BECAUSE I was a bit careful.
To have someone suggest that I'm a risk taker ,and therefore deserve what befalls me, makes me bloody irate.
You DO NOT HAVE ANY IDEA WHAT YOU"RE TALKING ABOUT!!!
Do you have the balls to apologise???

Note to : Please leave this up.I know it sails close to the wind, but I'm furious, and I'm prepared to bet quite a few others are too.

[q9]

You were the one who was greedy and put the money into high risk areas, so don't blame me for your loss...You could have put the investment money into a high interest bearing account and you would still have their full value today...

That's about the most ignorant thing I've read on these forums, and I've been around here for a while!

The astute investor know the rule about eggs and baskets...balanced portfolio's and all that. Greed need play no part.

[.RC.]

RC,

Do you have the balls to apologise???

I have edited my original post..But I still believe shares are a inherent higher risk for income then a plain jane term deposit...Just be proud of the fact you have never received any welfare from the government..

[jerryc]

RC,

It's difficult to answer some of your statements because they are just a little "eccentric" If you sole intent was to be provocative then I congrratulate you. If you intended to be taken seriously then I am more than surprised.
The stimulation package is not directed at retail sales alone. A point both Sturdee and I have highlighted is that infrastructure spending will have beneficial effects. Perhaps you missed that comment. Spending on education is not, as you seem to think jobs for the building boys. ANY investment on education or education infrastructure is an investment in this country's future.

Low cost public housing is in short supply and a need exists to shelter those who might otherwise be subject to artificially high rents in time of shortage.

Trade is not something that should be protected by barriers. Trade is an international flow.That thinking of isolationism exacerbated the Great Depression. We had a boom because we sold to China. China paid top dollar of resources because it in turn could sell to America. So we have a vested interest in exporting what other countries are willing to buy from us. This stupidity about the flood of cheap Chinese goods misses the point. We sell to China, China's standard of living hopefully rises and that creates a bigger market for what we may have to offer.

The concept that 90% of families are better off is pure cloud cuckoo land. there are many out there who have lost jobs and many on short hours. Those families with jobs have reined in spending because of the knowledge it could be them next. A reasonable fear I would suggest and nothing to do with the government.

And you are sick of people parrotting the IMF. I'm no fan of the IMF, but to bring them into this discussion leaves me baffled. Could you please explain, with relevance to the present crisis, your point?


Jerry

[.RC.]

RC,

It's difficult to answer some of your statements because they are just a little "eccentric" If you sole intent was to be provocative then I congrratulate you

It was not intended to be provactive, I have apologised for using the word greedy in my original post if it was found to be offensive, it was not intended to be as most of us, myself included are greedy for more money to get a greater standard of living for ourselves and our family...My industry is currently experiencing low prices for the goods I produce, I am not going to complain as it is part of being self employed and I accept that..

The stimulation package is not directed at retail sales alone.

No but the $12 billion in handouts are.

A point both Sturdee and I have highlighted is that infrastructure spending will have beneficial effects. Perhaps you missed that comment. Spending on education is not, as you seem to think jobs for the building boys. ANY investment on education or education infrastructure is an investment in this country's future.

I am not dismissing that but where is the money for more teachers then??? All this is is cash for buildings to keep the construction workers in jobs..

Low cost public housing is in short supply and a need exists to shelter those who might otherwise be subject to artificially high rents in time of shortage.

but why build these houses in areas where they are not sustainable...

Trade is not something that should be protected by barriers. Trade is an international flow.That thinking of isolationism exacerbated the Great Depression

I have not advocated tariffs as such however we must do something to make it fair trade not free trade....Industries in China and elsewhere can pollute as much as they like, workplace safety standards are non existant, wages are incredibly low and we are expected to compete with that. Our current high lifestyle is based upon the exploitation of overseas workers...And the amusing thing is a lot of Australians were outraged when the previous government bought in legislation (workchoices) that was thought to allow exploitation..

The concept that 90% of families are better off is pure cloud cuckoo land. there are many out there who have lost jobs and many on short hours. Those families with jobs have reined in spending because of the knowledge it could be them next. A reasonable fear I would suggest and nothing to do with the government.

And how will a $950 handout help when they are not spending now??? I still believe most families are better off now then they were twelve months ago...

And you are sick of people parrotting the IMF. I'm no fan of the IMF, but to bring them into this discussion leaves me baffled. Could you please explain, with relevance to the present crisis, your point?

Kevin Rudd constantly says how the IMF says huge spending is the way out of the crisis...The IMF has a vested interest in lending countries money, that is how they make their money through interest in these loans....It was debt that got us into this mess and the current government line of thinking is it is debt that is going to get us out of it...


Jerry[/quote]

[Lignin]

RC,
Apology accepted.Thank you.

[Eli]

I do not understand why or how this situation has developed, but it seems to me that the blame lies fairly and squarely at the feet of the Yanks.

Seems to me you should blame yourself a bit more. You wanted a fat bloody profit just like everyone else, and I mean everyone. If the Australian market was as large as the Dow the entire world would have invested in it instead. There's a major correction and depression in the market about every seventy years. Know why? Because everyone that can remember the last one and is cautious has died. The next generation doesn't want to think it could happen again and the stupid ignore the evidence.

Humans are to blame. Not exclusively American Humans or only greedy humans. I don't play pokeys unless I'm super drunk, and I don't ever invest in stocks. I'm more likely to buy a shovel than a share.

I also don't blame citizens of other countries because I got my ass caught in the wringer. As was said by another poster, if you weren't willing to accept the full risk of investment, you should have kept the money in savings. A steadily compounded 3% over the life of your savings would look a lot better than a 30% loss right now. I don't think anyone has come out on top.

Be mad at the market sure. Curse your own lack of foresight for not burying jars of gold coins in the backyard instead of investing. But don't all over another country. Especially when conditions created by your fantastic profits for the last five years contributed to it. Millions of 'Yanks' are out of jobs and homes. My parents have suffered the same losses as yours. My Dad's gone back to work, he was to have retired this year. He figures he'll never stop now. My Mom has Parkinson's, how much of that filthy yankee money you figure she'll need towards the end and not have now?

You sound like a spoiled child that broke his toy. Blame yourself.

[ian]

Sorry Waldo

Mac had their dates organised from day 1 as dd/mm/yyyy or the Yankee mm/dd/yyyy.

I haven't as yet read Waldo's response to this, but from memory PCs (DOS and Windows) and Macs (UNIX based) use different "base" years

software based on DOS had a recognised potential problem in 2000 — an example quoted to me was that because of the way DOS recorded dates, the software used by the Blood Bank to track blood and blood product would interpret 1 Jan 2000 as being YEARS after 31 Dec 1999 and consequently suggest that all stored bllod be destroyed as too old


software based on UNIX (including Macs) also had a "Y2K limitation", the difference to DOS was that the Mac's Y2K "year" was 2042 or thereabouts



ian

[.RC.]

http://www.ipa.org.au/news/1789/the-bail-out-disease

It's actually a bit misleading to describe our economic woes as a crisis.
If anything deserves that title, it was the asset bubble that was burst in the crash last year.
All the downsizing and unemployment that we face over the next year is not the crisis, it is the correction.
So when the Government tries to stimulate the economy with big spending and tries to resuscitate dying companies, it isn't resisting the crisis, it's resisting the correction. And preventing the economy from healing itself isn't doing Australians any favours.
Things fail. Napoleon failed to conquer Russia. Baz Luhrmann's Australia failed to be the next Titanic. And companies fail. In fact, building a successful business is an extremely hard thing to do.
The sooner we get to the last stage of grief - acceptance - the quicker our economy is going to recover.

Food for thought

[Jeff@G]

There was an interesting chap on the 7:30 report tonight who made an interesting point about income.
He said that over 20% of all income in the US is now going to 1% of the total number of earners there. (In 1980 that was under 8%)
He followed that by saying that the last time that ratio occurred was 1928.

I was quite stunned by those numbers. Greed has truly ranged out of control in recent years. How could that possibly be a sustainable ratio in a free market?
Does anyone think that the contribution to society made by such a few individuals is worth sucking that much wealth out of an economy?
The reports in recent years in Australia of grossly overpaid executives & fat cats make me think that Aussie has sufferred from a similar problem as these US numbers...

& I still can't imagine what I would have to do for a living, in order to feel like I would be justified claiming even 1 million$

Funny how people, even on this forum, are sccreeching @ each other over this... Will that help

[Cruzi]

Sorry Eli, you may have taken it personally, but bad decisions by the succesive US Governments have lead the world to this position, it is their fault. Not just Yank bashing here, its a fact, remember though you are no more responsible for it than Australians are for Rudd and Lil' Johnny.

Seems to me you should blame yourself a bit more. You wanted a fat bloody profit just like everyone else,

Do you really know what a share is?

Seems a lot of people have the wrong end of the stick about stocks and stock markets, everyone knows "buy low , sell high", but in reality what people do is "buy high, panic sell at low", not the markets fault.

"Serves you right" and "you knew the risks" are no comfort for people when the fund or bank collapses, so why direct it at people who dare invest in the market?
Remember what a share actually is and differentiate it to speculating.

The saying " safe as houses" will be challenged soon, WA and Qld are already seeing falls as a overheated market slows, serves you right for buying your home?

How about the people who bought into the gold boom in the 80's, are people who buy gold now any smarter?

So, lets review, banks are beng bailed out to stop them collapsing, many cash and mortgage funds have collapsed, property prices are falling, gold is fully valued, inflation is reducing buying power, company profits are falling (lower share prices), serves us right for taking risks?

Sheesh.

[jerryc]

Eli,

I back up all that Cruzi has said but would just expand a point on shares. Emotive language, such as greed and fat profits are not really what is at the base of a share. When someone buys a share they are taking a stake in a company. Hopefully that company is honest enough in it's accounting and other info to enable the share buyer to make a reasoned decision regarding how much risk he or she is willing to bear. Properly balanced and controlled, the share market is not akin to pokies.
Without it no company could prosper because it could not raise capital to generate more business.
The current crisis is, in part, genrated by a total lack of control in certain countries and through that lack of control unscrupulous CEO's have scewed information to the point of dishonesty.
As everyone knows, the sub prime scam started in America. That vulnerable people were preyed upon is an example of the result of lack of control. That other countries have been drawn in is in part because some of those countries equally lacked proper control. However trade is an interdependant web and so innocent countries and innocent shareholders suffered. Many shareholders have lost money, not because they were seeking fat profits but because the information on which they based their decision has changed.

Jerry