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The Forum > Article Comments > The power of the Murdoch media to manipulate > Comments

The power of the Murdoch media to manipulate : Comments

By Alan Austin, published 30/8/2013

Murdoch's economists are more numerous, better writers and by virtue of their broader reach have greater influence.

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Greetings again,

@Yabby, re: “Alan, when it comes to globally competitive economies, countries like Switzerland and Singapore run rings around us.”

Your original assertion, Yabby, was “Your next mistake is to claim that the Australian economy is so healthy. It is in fact quite unbalanced, with continuing current account deficit, meaning we borrow more and more each month, unlike healthy economies.”

Borrow more?

The IMF shows gross debt to GDP for Australia, Switzerland and Singapore are 27.56%, 48.33% and 108.16% respectively.

Net debt percentages are 12.66%, 22.82% and undisclosed.

Australia borrows far less. No?

On some variables Singapore and Switzerland lead Australia, as do Norway and China.

But on all outcomes considered together, Australia is not only the best-managed economy now but the best-managed the world has ever seen.

@Rhian, re: “China, commodities, lack of exposure to the toxic derivatives, a relatively well-regulated financial system, a strong starting fiscal position and, yes, economic stimulus, all contributed.”

No, the evidence against is compelling.

Lack of exposure to toxic derivatives: no evidence either way.

Sound financial system: made no difference whatsoever.

Strong fiscal position: evidence suggests the better the fiscal position, the worse the outcome. With one exception.

Trade with China: didn’t hurt, but didn’t help anyone else.

Economic stimulus: overwhelming evidence from country experience, plus sound theory.

Re: “Australia did not do well throughout the past 5 years. Its per capita GDP contracted in 2009 ...”

Correct. No developed country did well. Hence terms like “healthy” or “robust” are avoided in favour of “well-managed.”

Every developed economy went backwards, Rhian. But Australia least of all.

Re: “EQ’s data are not meaningless – they show time series growth in a consistent metric that allows comparisons over time.”

But they don’t show growth in net debt, or net assets, or overall economic progress, do they? Pretty useless without these.

Re: “do you actually understand that the structural deficits he [Henry Ergas] referred to are not the budget data you linked to?”

Yes. We have corresponded for more than a year. Henry has agreed to send SBD spreadsheets. No appearance, your worship.

Cheers,

Alan
Posted by Alan Austin, Wednesday, 4 September 2013 9:02:07 PM
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Oh nonsense. The big picture is quite straight forward. Australia rode on the sheep's back until the sheep collapsed from all the weight. Keating could see it, pointing out that we were about to become a banana republic, so started deregulating our economy, in order to force us to join the real world. Next came Costello, who continued deregulation, paid off our Federal Govt debts and made sure that we lived within our means. Along came China, which meant that our coal and iron ore mountains were suddenly worth something, so mining investment, along with prudent bank regulation by Costello, got us through the GFC, unlike the US and Europe, who were in the middle of it, as their banks were part of it, not ours. Now we are back to a Govt who wants to go back to unions 60s style, which is why we were uncompetitive in the first place. No wonder that business has lost confidence. So building houses for migrants is what our economy in the cities is based on, apart from income generated by farming and mining, which remains the backbone of our economy. Singapore and Switzerland run current account surpluses and have done so for years.
Posted by Yabby, Wednesday, 4 September 2013 9:34:00 PM
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Alan

Re the importance of the banking system and lack of exposure to toxic debt, try:
http://epress.anu.edu.au/agenda/016/03/mobile_devices/ch09.html

or this:
“while the exposure to toxic investments of US and European financial services companies at the beginning of the financial crisis was up to 15%, the exposure of Australian banks was less than 1%. That was due to good regulation and structural differences”
http://knowledge.asb.unsw.edu.au/article.cfm?articleid=1105

For the importance of China, check out the latest budget papers, the RBA website, the Australian parliamentary library, or just about any credible commentator on Australia’s economy.

If you had asked Ergas for his data, and he has refused to provide it, why did you not mention this in your article, instead referring to a different data set that failed to illustrate your point? Or, refer to published structural balance estimates. We have discussed these previously.
Posted by Rhian, Wednesday, 4 September 2013 9:41:03 PM
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Hello again.

@Yabby,

No, not nonsense at all.

Re: “Along came China, which meant that our coal and iron ore mountains were suddenly worth something, so mining investment … got us through the GFC”

Your problem here is Australia is not alone in selling to China.

If this was significant, Yabby, then surely at least one of the other big exporters to China or big exporters of iron ore might have found some protection during the GFC.

They just didn’t. Simple as that.

Re: “Singapore and Switzerland run current account surpluses and have done so for years.”

Correct. But that didn’t save them from the GFC. Switzerland copped three quarters of negative or zero GDP growth in 2008-09. Singapore copped four negative quarters then and another four since.

Please read the article, Yabby.

@Rhian, re the banks:

Agree strong banks are a good thing. But other nations with equally secure banks suffered severe recession — Canada, Japan, Luxembourg, New Zealand and Norway. All experienced four, five or six quarters of negative GDP growth.

So that’s not the explanation.

Rhian, in your second link, who’s advancing the argument? A banker?

Re: “For the importance of China, check out the latest budget papers, the RBA website, the Australian parliamentary library, or just about any credible commentator on Australia’s economy.”

Yes. Have access to these. Everyone agrees trade with China was a positive. But pretty sure none advances this with evidence as the reason Australia alone in the developed world [with Poland] averted recession.

Re: “If you had asked Ergas for his data, and he has refused to provide it, why did you not mention this in your article, instead referring to a different data set that failed to illustrate your point?”

He hasn’t refused. Says he doesn’t have it yet.

Henry and I don’t disagree about surplus/deficits, structural or nominal. Only about what to say publicly about when structural problems arose. We both know problems arose during the Howard years, as confirmed by the May Treasury paper.

Henry only reports this as a problem caused by Labor. Just plain false.

Cheers,

Alan
Posted by Alan Austin, Thursday, 5 September 2013 3:52:57 AM
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http://www.rba.gov.au/speeches/2013/sp-ag-100413.html

The graphs in that speech explain it for you, Alan. Brazil came nowhere near that investment by mining, in terms of GDP.
Posted by Yabby, Thursday, 5 September 2013 6:06:49 AM
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How much is Labor paying you to be their apologist and PR man, Alan?
Posted by LEGO, Thursday, 5 September 2013 6:44:45 AM
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