Australian Politics Forum - The government is lying to us about the economy

Raven

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The government is lying to us about the economy
Jun 23^rd, 2019 at 6:44pm

This week the head of the Reserve Bank practially yelled at the government to do something. The government instead spent time yelling at an ALP backbencher for daring to say the economy is struggling to stay out of a recession.

You would hope by now that the government is ready to face up to reality. Surely the treasurer and his predecessor and now prime minister, realise they have a problem with the economy?

One of the more amusing things this week was seeing the government and their conservative cheerleaders trying to suggest ALP backbencher Anne Aly had endangered the economy by asking “what about the fact that our economy is now in a recession, or it looks like it is going into a recession?” while discussing tax cuts on Sky News.

The Australian in its cute partisan manner described it as a “car crash” interview, and the finance minister Matthias Cormann suggested it was “recklessly irresponsible and wrong and they show that Labor has learned absolutely nothing from the recent election outcome”.

Actually they are neither of those things at all.

As Aly then continued to say in her interview, “it’s very obvious that the economy is not doing as well as the government would have believe. You have figures out of the RBA, you’ve got the interest rate coming down again.”

And it seems the only ones who do not find that obvious are the members of the government – mostly because they spent the entirety of the election campaign lying about the strength of the economy’s fundamentals.

This week the yield (or interest rate) for Australian government two-year and three-year bonds went below 1% for the first time in history. Seven months ago the rate the government was borrowing money for two years was 2%. It has taken less than seven months for that to halve.

The gap between the five years and the two-year bond yields is as small as it has been since the GFC. Essentially the market is seeing very little extra return from borrowing for five years as opposed to two years because they see very little chance that things are going to get better in that time.

That does not happen when things are strong. That doesn’t even happen when things are just OK. It happens when things are bad.

At the start of December last year the general expectation was that interest rates would stay flat for this year and then start going up next year. Now not only have rates been cut, it will be shocking if there is not another two cuts before the end of the year, and a 50/50 chance of a cut to 0.5% by this time next year.

A cash rate of half a per cent. That would translate to mortgage rates lower than any recorded since the second world war.

The Reserve Bank is not doing that because the economy is abounding in sunshine and rainbows.

The head of the Reserve Bank, Philip Lowe, gave a speech on Thursday in which he made it very clear how things were going.

He noted that the decision earlier this month to cut the cash rate to 1.25% “will support the economy through its effect on the exchange rate, lowering the cost of finance and boosting disposable incomes. In turn, this will support employment growth and inflation consistent with the target”.

“However,” he continued (and it really is as big a “however” as central bankers ever say), it would “be unrealistic to expect that lowering interest rates by a quarter of a percentage point will materially shift the path we look to be on”.

In other words, the rate cut will not do much; the Reserve Bank will need to cut rates even more.

His speech concluded in what might be a central banker’s version of a scream. And the scream was directed at the federal government.

He said: “It is important though to recognise that monetary policy is not the only option, and there are limitations to what can be achieved.”

This is him saying in big bold letters that the government should not just hope that even more cuts to interest rates will change things.

Just in case the treasurer was not paying attention the governor continued his scream at the government.

He finished by saying “as a country we should also be looking at other ways to get closer to full employment. One option is fiscal policy, including through spending on infrastructure. Another is structural policies that support firms expanding, investing, innovating and employing people”.

The governor of the Reserve Bank does not use a term like recession in his speech. His words (unlike those of a opposite backbencher on a barely watched pay TV station) can move markets.

The government needs to acknowledge our economy is not in a healthy shape and actually develop policies to fix it.

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Quoth the Raven "Nevermore"

Raven would rather ask questions that may never be answered, then accept answers which must never be questioned.

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Bam

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Re: The government is lying to us about the economy
Reply #1 - Jun 23^rd, 2019 at 10:21pm

Raven wrote on Jun 23^rd, 2019 at 6:44pm:

This week the yield (or interest rate) for Australian government two-year and three-year bonds went below 1% for the first time in history. Seven months ago the rate the government was borrowing money for two years was 2%. It has taken less than seven months for that to halve.

The gap between the five years and the two-year bond yields is as small as it has been since the GFC. Essentially the market is seeing very little extra return from borrowing for five years as opposed to two years because they see very little chance that things are going to get better in that time.

That does not happen when things are strong. That doesn’t even happen when things are just OK. It happens when things are bad.

It is normal for longer-term bonds to have a higher yield than short-term bonds. When it's the other way around, it is an inversion of the yield curve. This is a strong portent of recession.

What is an Inverted Yield Curve?
Quote:

An inverted yield curve is an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.

Inverted Yield Curve and Why It Predicts a Recession
Quote:

An inverted yield curve is when the yields on bonds with a shorter duration are higher than the yields on bonds that have a longer duration. It's an abnormal situation that often signals an impending recession.

Quote:

At the start of December last year the general expectation was that interest rates would stay flat for this year and then start going up next year. Now not only have rates been cut, it will be shocking if there is not another two cuts before the end of the year, and a 50/50 chance of a cut to 0.5% by this time next year.

A cash rate of half a per cent. That would translate to mortgage rates lower than any recorded since the second world war.

The Reserve Bank is not doing that because the economy is abounding in sunshine and rainbows.

When the RBA cut interest rates to 2.5% on August 6, 2013, Joe Hockey was interviewed on 7.30 and had this to say:
Quote:

We should celebrate when interest rates are sustainably low. It was Kevin Rudd on four November 2009 that said three per cent cash rate was an emergency level. Today they've gone to 2.5 per cent ... They're not cutting interest rates because the economy is doing well. Interest rates are being cut to 50 year lows because the economy is struggling.

If a cut to 2.5% was because the "economy is struggling", a cut to 1.25% - with up to three more cuts foreshadowed - means the economy is worse than struggling. It's non-responsive and the RBA is getting out the defibrillator.

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Sir lastnail Gold Member Offline Australian Politics Posts: 29705 Gender:	Re: The government is lying to us about the economy Reply #2 - Jun 23^rd, 2019 at 11:28pm The libbos have well and truly f.cked the economy and have no idea how to fix it Selling bits of Australia to each other using more and more borrowed money was never going to be a sustainable proposition !
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SadKangaroo

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Re: The government is lying to us about the economy
Reply #3 - Jun 24^th, 2019 at 7:45am

At least in South East Queensland, it seems like the only thing keeping us afloat is the endless construction but at least south of Brisbane, once things are built they're just staying empty. Thankfully many of the tradies are spending money like it's always going to be there, but once things start to slow down and they tighten their belts, it's going to hurt.

It's a worry seeing so many commercial ghost towns. Then there are so many new housing developments and people moving from interstate, but unless everyone is retaining their jobs and able to work from home, where are the jobs?

The current Government don't seem interested in accepting what is happening under their watch but also expected to lose the last election and locked in spending to hurt the ALP in Government that they now have to deal with.

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

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macman

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Re: The government is lying to us about the economy
Reply #4 - Jun 24^th, 2019 at 7:57am

This was all part of the "trap" the coalition were setting for the new labor government when they thought they were going to lose. (The economy was fine until you got in! ). Every other time the country has gotten in financial trouble the people have voted in labor and they have sorted it out but this time they have voted in the clowns who caused us to be in trouble.
We deserve a recession. Grin

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SadKangaroo Gold Member Offline #FightStupid Posts: 14879 Mianjin (Brisbane)	Re: The government is lying to us about the economy Reply #5 - Jun 24^th, 2019 at 8:50am The myth that they're the better economic managers needs to be quashed once and for all.
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Grappler Truth Teller Feller Gold Member Offline Australian Politics Posts: 80203 Proud pre-1850's NO Voter Gender:	Re: The government is lying to us about the economy Reply #6 - Jun 24^th, 2019 at 10:23am When did this become news?
Back to top	“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.” ― John Adams IP Logged

Grappler Truth Teller Feller

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Re: The government is lying to us about the economy
Reply #7 - Jun 24^th, 2019 at 10:26am

SadKangaroo wrote on Jun 24^th, 2019 at 7:45am:

At least in South East Queensland, it seems like the only thing keeping us afloat is the endless construction but at least south of Brisbane, once things are built they're just staying empty. Thankfully many of the tradies are spending money like it's always going to be there, but once things start to slow down and they tighten their belts, it's going to hurt.

It's a worry seeing so many commercial ghost towns. Then there are so many new housing developments and people moving from interstate, but unless everyone is retaining their jobs and able to work from home, where are the jobs?

The current Government don't seem interested in accepting what is happening under their watch but also expected to lose the last election and locked in spending to hurt the ALP in Government that they now have to deal with.

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

My son is one such tradie and I keep encouraging him to save for the future... at least my daughter is burrowing deep into Hollywood ....

Every time I drive past one of those huge developments, here in NSW or elsewhere - I always ask:-

"But what to all these people do for a living and to pay the mortgage or rent? And where are they coming from?"

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« Last Edit: Jun 24^th, 2019 at 10:45am by Grappler Truth Teller Feller »

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
― John Adams

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Sir lastnail

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Re: The government is lying to us about the economy
Reply #8 - Jun 24^th, 2019 at 11:17am

Grappler Truth Teller Feller wrote on Jun 24^th, 2019 at 10:26am:

SadKangaroo wrote on Jun 24^th, 2019 at 7:45am:

At least in South East Queensland, it seems like the only thing keeping us afloat is the endless construction but at least south of Brisbane, once things are built they're just staying empty. Thankfully many of the tradies are spending money like it's always going to be there, but once things start to slow down and they tighten their belts, it's going to hurt.

It's a worry seeing so many commercial ghost towns. Then there are so many new housing developments and people moving from interstate, but unless everyone is retaining their jobs and able to work from home, where are the jobs?

The current Government don't seem interested in accepting what is happening under their watch but also expected to lose the last election and locked in spending to hurt the ALP in Government that they now have to deal with.

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

My son is one such tradie and I keep encouraging him to save for the future... at least my daughter is burrowing deep into Hollywood ....

Every time I drive past one of those huge developments, here in NSW or elsewhere - I always ask:-

"But what to all these people do for a living and to pay the mortgage or rent? And where are they coming from?"

Build more apartments for the future unemployed and build more roads so the future unemployed can get to the interviews for the non existent jobs Cheesy

LOL

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minarchist

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Re: The government is lying to us about the economy
Reply #9 - Jun 24^th, 2019 at 11:35am

SadKangaroo wrote on Jun 24^th, 2019 at 7:45am:

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

What do you suggest should be done to turn the economy around?

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People accuse Capitalism of being a "dog eat dog" system, yet it was the Communists who ate each other when they were starving!

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SadKangaroo

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Re: The government is lying to us about the economy
Reply #10 - Jun 24^th, 2019 at 12:37pm

minarchist wrote on Jun 24^th, 2019 at 11:35am:

SadKangaroo wrote on Jun 24^th, 2019 at 7:45am:

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

What do you suggest should be done to turn the economy around?

Policy decisions grounded in reality, doing what is needed to help address the economic issues we face, not enrich their donors, you know, the opposite of what they usually do.

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Bam

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Re: The government is lying to us about the economy
Reply #11 - Jun 24^th, 2019 at 12:59pm

Grappler Truth Teller Feller wrote on Jun 24^th, 2019 at 10:23am:

When did this become news?

Depends on the media organisation. Left-leaning and centrist news outlets are discussing it now. The Murdoch press and other right-wing media won't be mentioning it for another year or so until the recession hits.

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You are not entitled to your opinion. You are only entitled to hold opinions that you can defend through sound, reasoned argument.

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Sir lastnail

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Re: The government is lying to us about the economy
Reply #12 - Jun 24^th, 2019 at 3:36pm

minarchist wrote on Jun 24^th, 2019 at 11:35am:

SadKangaroo wrote on Jun 24^th, 2019 at 7:45am:

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

What do you suggest should be done to turn the economy around?

For a start ban lawyers and career politicians from politics. They can have an advisory role only but cannot call the shots on policy. All polies must have run a business or worked in private enterprise for a while. The industry and science minister should have a degree in science, physics, engineering or some related degree etc. Same with the environment minister etc

Also limit access to outside consultants such as KPMG, Ernst and Young, Deloitte and the rest of the parasitic vermin etc and put a stop the gravy train that goes with it. Over 3.5 billion spent in the last 10 years on outside consultants to write up lame reports that favour the outcomes of the politicians. If polies or the public servants can't do the job then they should be sacked. Stop feeding these consultant parasites.

The job network should be disbanded and the money saved should be used to support local industry to create real jobs ! Secondly NO money should directly go to foreign corporations. They can have a slice of the action but shouldn't be the front runners in any government assistance.

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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

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Bobby.

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Re: The government is lying to us about the economy
Reply #13 - Jun 24^th, 2019 at 6:48pm

Sir lastnail wrote on Jun 24^th, 2019 at 3:36pm:

minarchist wrote on Jun 24^th, 2019 at 11:35am:

SadKangaroo wrote on Jun 24^th, 2019 at 7:45am:

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

What do you suggest should be done to turn the economy around?

For a start ban lawyers and career politicians from politics. They can have an advisory role only but cannot call the shots on policy. All polies must have run a business or worked in private enterprise for a while. The industry and science minister should have a degree in science, physics, engineering or some related degree etc. Same with the environment minister etc

Also limit access to outside consultants such as KPMG, Ernst and Young, Deloitte and the rest of the parasitic vermin etc and put a stop the gravy train that goes with it. Over 3.5 billion spent in the last 10 years on outside consultants to write up lame reports that favour the outcomes of the politicians. If polies or the public servants can't do the job then they should be sacked. Stop feeding these consultant parasites.

The job network should be disbanded and the money saved should be used to support local industry to create real jobs ! Secondly NO money should directly go to foreign corporations. They can have a slice of the action but shouldn't be the front runners in any government assistance.

Hi Nail,
That will never happen.
Wouldn't you like one of those cushy jobs?
You'd be on easy street.

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greggerypeccary

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Re: The government is lying to us about the economy
Reply #14 - Jun 24^th, 2019 at 7:53pm

minarchist wrote on Jun 24^th, 2019 at 11:35am:

SadKangaroo wrote on Jun 24^th, 2019 at 7:45am:

We need real leadership and they're asleep at the wheel, doing the same old same old and when things do get tough, rather than following Labor's example from the GFC, they'll try the normal trickle down nonsense that will just make things worse and then they'll try austerity measure which will only greatly compound the problem.

It's obvious, but there is too much politics, in politics.

What do you suggest should be done to turn the economy around?

Have the Governor General sack the Morrison (corrupt & inept) Government.

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