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The Forum > Article Comments > Spend cure the wrong advice > Comments

Spend cure the wrong advice : Comments

By Alan Moran, published 19/12/2008

Treasury advisers are right to foresee the coming economic blitzkrieg. But their prescriptions for dealing with it are wrong.

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Keith, “picking winners” is always a bad policy. Commercial businesses and investors thrive or fail on their capacity to correctly identify and pursue profitable opportunities. The skills required for this are highly valued and are in great demand, particularly by firms and investors who operate globally. If there is a profitable opportunity available, it is unlikely to be overlooked.

Nevertheless, governments and public servants with little relevant expertise frequently think that their capacity to identify and pursue viable commercial opportunities exceeds that of the businessmen whose livelihood depends on that capacity. In practice this almost invariably leads to poor investment choices at great cost to the state concerned. More effective are market facilitation strategies which accept that the role of government in economic development is to provide an environment which enhances the opportunity of the private sector to identify and successfully pursue profitable opportunities.

Interventionist policies are based on the view that a government can obtain better economic results by direct intervention in the economy rather than by facilitating markets. There is little or no evidence to support such an approach. The Soviet bloc countries were strongly interventionist with extremely negative results. A recent World Bank report concluded that since the break up of the USSR, the economic well-being of the former Soviet bloc countries has been directly related to the extent to which they have opened up to trade and embraced pro-market capitalist policies). Within Australia, interventionist policies in Victoria, SA and WA around 10-25 years ago led to significant losses.

Queensland’s economic growth in the last decade has been in spite of, rather than because of, government intervention. A major factor has been booming world markets for minerals and metals, over which the Government has no control.

My advice to Ministers is: be sceptical of any public servant who brings to you a “wonderful” investment opportunity which has not been pursued by commercial investors. Your first question should be: “Have you mortgaged your house to invest in this wonderful opportunity?” Unless the answer is a resounding “Yes!”, go no further.
Posted by Faustino, Saturday, 20 December 2008 8:11:23 PM
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Mr Denmore “Sooner or later, you and the rest of your hairy-chested mates in the libertarian lobby are going to have to accept your time of manipulating the policy debate to your own ends is over.”

My chest may not be hairy but my politics are libertarian and I for one, disagree with your proclaimiation and lies to the reason for the current economic bust.

“This crisis was caused by an ABSENCE of proper regulation,”

No this crisis was caused by socialist minded politicians making credit easier for people who would not normally get money from bankers through using government funds to underwrite the borrowers debt.

No different to that nasty Victorian government (fat Joan Kirner) scheme to let people with insufficient income borrow against a government housing scheme which left them owing more than their houses were worth.

The “blame” was due the fraudulent and corrupt socialization of regulation to make a political whim and fact (nothing new in that, just a repeat of the litany of lies which under pin every socialist fantasy/nightmare.

The other problem with socialist policies is it is like building up the banks of a river instead of dredging away the silt, short term fix but when the flood (economic bust) comes the devastation is over a far wider area because the river has lifted over the level of the immediate hinterland.

Faustino “Nevertheless, governments and public servants with little relevant expertise frequently think that their capacity to identify and pursue viable commercial opportunities exceeds that of the businessmen whose livelihood depends on that capacity.”

Exactly.

Government playing lady bountiful with tax payers money.

Regarding the $10 billion vote buying exercise…. If the government had not taxed people to gain the surplus from which the corrupt , unearned vote bounty payments were paid, it would have still been in the community for people to spend as they wished.

If government left me to spend what they expropriate through taxes I would do a damn better job than all their wishy-washy re-engineering bunkum will ever produce.
Posted by Col Rouge, Sunday, 21 December 2008 10:46:08 AM
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Mr Denmore,

Wrong neither Fannie nor Freddie had lending policies ... ever. They had buying policies. They bought mortgages from the banks. Without understanding that your whole arument is flawed.

The lending standards were forced to be lowered by the enforcement of the penalty clauses in the Democrat 'owned and operated 'Community Reinvestment Act. That required lending to the poor and minorities even if they couldn't meat the Banks normal lending criteria.

Fannie, bought these mortgages. Fannie was the first organisation to bundle and sell these on the derivatives market.

There would have been no collapse if these loans had not been made and and normal tried and tested lending standards these loans would never have been made.

I understand what happened next and accept all your explanations as relevant but you seem to have some idealogical mindset that prevents you accepting the real source of the problem.

You should ask yourself who is it so?

'The plain fact is that global liberal market capitalism, as we know it, is on the brink of self-destruction. The people who will save it will be those who are not the victims of any ideology, but who put people first in framing public policy responses.'

Like to back up that assertion with ...at least some reasoning. Like to explain why and how?
Posted by keith, Monday, 22 December 2008 5:19:08 PM
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Speaking of Doc Frankenstein, I just lerv that photo of Moran. It was taken in the IPA's dungeon. There must be some beakers with bubbling, smoking potions nearby and...MWU-HAH-HAH-HAH-HAH! Deez MAGNIFICENT creations, my free-range monetarist children, deez market forcez, are now set loose to do their work in this cruel, unjust world. Hah! They will never laugh at us again!

You're on the, er, "money" there Denmore, for want of a better term! One point though, on your comment: "Greenspan thought he was getting out of the way of the uber-capitalists". Greenspan is a liar, constantly muddying his comments with vagueness and ambiguity like any practised sophist does. Greenspan did not just think he was "getting out of the way" and being a good, butt-kissing cultist and groupie for Ayn Rand. No, Greenspan knew that he was getting a knighthood and lifetime pass into the globalization oligarchs' Hall of Fame. At the same time as Greenspan was devising his "magic", unrepentant Nazi collaborator Soros was writing his prescription for the current corporatist bailouts (in his book 'The Alchemy of Finance', as excerpted recently in AFR.

Also, Greenspan must be one of the most hideous-looking people alive, so I guess he was always one of the most eager volunteers for work in the dungeons of Ayn Rand, IPA, the Haileybury School, LSE, etc.

Funny how keith still defends that funny position about "it's all Bill Clinton's fault" and "the fault of the US Democratic Party's Politburo", poor people getting house loans, etc. As Denmore indicates, Greenspan's derivatives bubble was already in place well before the usurers' ecstatic achievement in forcing Clinton to repeal Glass-Steagall. You should check some time lines there keith.
Posted by mil-observer, Tuesday, 23 December 2008 7:39:06 AM
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hey Mil

Nice to know you are still hooked into that drip feed that's keeping you in idealogical denial.
Posted by keith, Tuesday, 23 December 2008 12:26:55 PM
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some interesting facts being revealed in first hour
using the mp3 links you can fast forward past the slower bits

http://www.republicbroadcasting.org/index.php?cmd=archives.month&ProgramID=1&year=8&month=12&backURL=index.php%253Fcmd%253Darchives.getyear%2526ProgramID%253D1%26year%3D8%26backURL%3Dindex.php%253Fcmd%253Darchives

there is a big collapse on its way[do we want to keep the fed in the hands of the bankers;for proffit for the bankers]letting them turn intrest bearing bonds into cash[they alone[the fed alone]can issue

banks arnt lending[meaning the real economy cant lend its wage moneys] meaning wage earners dont get paid[meaning they default, meaning no one can pay rent, or buy food[the farmers cant plant [capitalism has failed]
now what?

why not just keep the economy turning over by allowing the people to spend, then big buisness earns who gets our cash

when the commies collapsed the people got shares
well we got fiat currency[currency swaps can keep our exchange rates near where they are [or else we all enter hyperinflation while the factories slowly get shut down till there is only looted factories left rotting]

half of the worlds banks will be in serious trouble next year
govt needs to come up with something better than giving more cash to those who set this up by being too big to fail[if the big guy fails cut em down to size[as soon as possable [but keep em going[or ready to go]or let em go now

ongoing[responsable]spending is the only cure
to do this consumers need to have money to consume[cut personal tax on wages] only tax legal income[profit ,not wage]
Posted by one under god, Friday, 26 December 2008 10:16:39 PM
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