“Prime Minister Kevin Rudd and Treasurer Wayne Swan have been happily espousing the need to forget the doom and gloom mongers and go out and spend, spend, spend.”

Yes, because they don’t know what to do, being the economic illiterates they are. They use the old mumbo-jumbo of ‘thinking positively’ in the vain hope that, magically, something will turn up that they can take the credit for.

There are many, many people out there who saved and saved so that they could retire in some comfort who would be only too glad to tell the Government where to stick its positive thinking. These people, incidentally, are not the ones sharing in the $10 billion hand out which has apparently added to Rudd’s popularity among people who haven’t saved a cracker, or done much else to help themselves.

People who should be saving are being told to spend, spend, spend. As the author points out, all of this spending is likely to be on imported goods, our industries having been “decimated” by successive governments.

This article is the most sensible on its subject to appear on OLO. The author doesn’t claim to be an economist, and the usual carping idiots will have to work very hard to find something to criticise in this excellent presentation of cold, hard facts.

Well said Arthur, I absolutely agree with all you have said. The Dud should cancel the school computer program as most of that money will go offshore. What are the chances for import replacement?
Bruce Haigh

A fine demolition job on the Rudd government's response to the global credit crisis.

Now how about outlining a more appropriate response?

I would be very interested to read it.

The Rudd governments attempts to "fix" the Australian economy has resulted in another government inspired recession we "had to have".
The complete lack of industry consulting (with the possibly exception of the major Australian owned banks) for the testosterone loaded grand gesture to guarantee all bank deposits and borrowings has all but killed off major sources of competitive mortgage originators funds and all sources of borrowings for the states since the banks now have a higher credit rating while the states have no repayment guarantees. This has led to the torrents of investment funds being extracted from the various investment firms that buy mortgages and flowing into bank deposits for only Australian banks as non-Australian banks do not get the benefits of the governments bank deposit largess.

A solution adapted long ago by some other countries was to put a much more modest cap on the level of deposits guaranteed. A cap of $100,000 to $250,000 seems to be common and it has not lead to the near demise of the lower cost mortgage origination market. This was the proposal of Malcolm Turnbull a few weeks before the Rudd announcement.

The most recent grand gesture (timed for just before the latest poll) was nothing more than another testosterone laden give away program that again did not suffer from any significant planning or historical data comparisons. The US has had 2 similar taxpayer giveaway programs, the most recent earlier this year. Neither has had anywhere near the desired effect. The money was saved or bills were paid. What did Rudd think was so different about his pay out?

Our government leaders are in way over their heads in this economic breakdown. Rudd is jetting around the globe (leaving behind great plums of green house gas and huge piles of Australian dollars) telling all the political leaders (while having his picture taken with them) how they should manage their store while his is heading for a shambles even though we started out as one of the least likely countries to be affected.

The biggest pitfall in a depression is protectionism. One must not diminish trade and one must not protect weak corporates. The complement is thou shall not borrow, Governments included. Else put, don't allow the size of potential markets to lessen: Dont't fund poor performers, as they will be returning cap-in-hand very soon. Shoulder some bad news/events and let market demand pull correct the situation.

Don't talk up the economy. Don't talk down the economy. Spend your cash. Save your cash. Increase super. Decrease super. Remvoe tarrifs. Impose tarrifs. Work towards a better credit rating. Ignore your credit rating.

DON'T YOU LOT EVER AGREE??

In a previous post I suggested economic commentators seem to be paid by the word. Now I'm sure of it. The article states the bleeding obvious for the nth time, then makes unique predictions based on the bias of the author. A lot like bible study classes, really.