Just watched this and regardless of your political leaning, IMO its worth the 13 minutes.
http://www.youtube.com/watch?v=WGHY8XpM6oI
http://www.youtube.com/watch?v=WGHY8XpM6oI
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IMPORTANT // Please look after your loved ones, yourself and be kind to others. If you are feeling that the world is too hard to handle there is always help - I implore you not to hesitate in contacting one of these wonderful organisations Lifeline and Beyond Blue ... and I'm sure reaching out to our PRE community we will find a way to help. T.
Economy gets big tick (TheAge)
- Thread starter Rosy
- Start date
Hey Willo, just noticed this thread.
I like your tea party chart.
Just two quick questions for you.
Does a deficit add to or detract from economic activity?
Does a surplus add to or detract from economic activity?
And for the interests of completeness here is budget paper no 10 from this years budget with historical data showing Gough ran surplusses and had no net public debt until Fraser and Howard started running deficits and incurring public debt and until Bob and Paul started running surpluses again.
Also you will notice froim the histotical charts that Howard taxed more than Rudd/Gillard.
Damn facts!!
http://www.budget.gov.au/2012-13/content/bp1/html/bp1_bst10-04.htm
I like your tea party chart.
Just two quick questions for you.
Does a deficit add to or detract from economic activity?
Does a surplus add to or detract from economic activity?
And for the interests of completeness here is budget paper no 10 from this years budget with historical data showing Gough ran surplusses and had no net public debt until Fraser and Howard started running deficits and incurring public debt and until Bob and Paul started running surpluses again.
Also you will notice froim the histotical charts that Howard taxed more than Rudd/Gillard.
Damn facts!!
http://www.budget.gov.au/2012-13/content/bp1/html/bp1_bst10-04.htm
lamb22 said:
Why bring Gough's record up? 40 years ago and he copped a record election defeat. It's not soley about deficits and surpluses, ist it?
Wasn't the Hawke/Keating government in from 1983 to 1996? Maybe you're looking at the wrong column there
A deficit or surplus detract from economic activity? A deficit..Depends how and where it's spent, A surplus can be good or not.. Fiscal responsibility or money with-held or money shaved from areas that may need financing. ie Swan trying to prove he's a good finance manager promising a surplus that wasn't in anyones benefit in achieving. Neither are the be all or end all. It depends what's achieved.
As for taxing at a higher rate, I take it you're referring to a % of GDP?
If that's the case didn't they promise tax cuts? Given that there was an increase of $80 billion in taxation receipts between 2007 and now it's the least they could do. So where has the rest gone seeing they started with a healthy balance and now owe $267 billion?
Damn facts, charts and history.
willo said:
My oh my, where do I start. I brought up the Whitlam and Fraser record (in fact complete record going back to 1970) to counteract the selective figures posted in the Tea Party charts which you were so proud of.
Second Fraser and Howard ran deficits in every year bar one and it took until a few years of Hawke/Keating to start running surpluses.
If you look at tax revenues in Table 10 posted previously you will see that in the early to mid 2000's tax revenue increases by about 15 - 20 billion a year. In 2008/9 it took a hit becaiuse of the GFC and even by 2010/11 it barely recovered to 2007/8 levels, so government revenues were hit by about $30 billion in 2008/9, another $30-40 billion in 2009/10 and $45-60 billion in 2010/11 over what would be expected without a GFC. I think treasury has the revenue shortfall at about $150 billion, The direct stimulus measures were about $52 billion. $10 billion in the initial $900 cheques, $16 billion in BER, $2.7 billion in HIP and the balance in later various infrastructure spends. So the stimulus spend and shortfall account for the vast majority, if not all of the debt.
Accounting for assets/monies held by the Commonwelath the net debt is around 140 billion.
The Commonwealth needs to keep a liquid supply of bonds which basically stabilise and underwrite the Australian credit market. An expert panel have assessed this at about 10-14 % of GDP which gets you to about $200 billion. In fact it is a great time for the government to borrow as yields on 10 year bonds are now about 2.86%, very cheap money. Under Howard 10 year bond yields were around 6%.
Willo, As a basic economic tenet government deficits add to economic activity and suprluses detract from economic activity. That's why they are necessary in times of downturn and not necessary in times of up turn. It is why labor have undertaken the greatest contraction of government spending since WW2 in this financial year.
Standard competent economic theory and management practised by Gillard and Swan.
lamb22 said:
Dear oh dear. Who said I was proud of any charts? You're taking liberties there mate. I merely posted the information chart that I found.
I don't know where you get your deficits and surplus figures from. Table 10 "Underlying cash balance (d)" paints quite the opposite.
So government debt isn't $260+billion but merely $140 billion. Has any other government racked up such debt?
I'm not doubting you on deficits and surpluses but for one basic practice. That is how and where the money is spent. Having a debt of $260 billion or even your figure of $140 billion and not having money to fund the NDIS, Education etc leaves questions to be answered, especially given a $80 billion increase in tax receipts over the last 5 years or so.
If your so enraptured with how Gillard and Swan are doing, good for you. It shouldn't be too hard for them to stand by their fiscal record and be able to sell it to the public, should it? Regardless of Murdoch, Fairfax and the Canberra Press gallery doing a number on them.
lamb22 said:
Really?
Some easy reading
http://lowpollutionfuture.treasury.gov.au/documents/1352/PDF/03_spending_growth.pdf
willo said:Really?
Some easy reading
http://lowpollutionfuture.treasury.gov.au/documents/1352/PDF/03_spending_growth.pdf
Facts, good to see. However the document you attached (although I have only skimmed ATM) seems to suggest spending needs to be high quality and as such corresponds with the UN report found that Howard spending in 2004 -2007 was wasteful but labor spending under Rudd/Gillard was not.
It also talks about spending trends since 2004.
My point that in this financial year we will see the biggest spending contraction since WW2 remains accurate and uncontradicted. In fact spending this year will not only go down in real terms but in nominal terms which is almost unheard of.
willo said:
Re the 140 billion net debt. That is in table 3 of the budget document I attached (actually about 143 billion i think) Gross debt is closer to 250 billion.
Re the second point you seem not to understand the document.
To help I will set out the revenue figures in the 4 years prior to the GFC and the 4 years after the GFC and explain the difference in tax take over the period.
If we use 2003/4 as the starting period, we see revenue (rounding off) of $217B,
In 2004/5 revenue goes uo to $235B which is $18b over and above 2003/4
In 2005/6 revenue goes up to $255B which is $38b over and above 2003/4
In 2006/7 revenue goes up to $272B which is $55b over and above 2003/4
In 2007/8 revenue goes up to $294B which is $77b over and above 2003/4
In total the government receives an extra $188b over and above the $217 billion it received in 2003/4 and each year since.
The GFC hits in late 2008. Demand evaporates. About $30 Trillion worth of assets written off worldwide. It should be noted that world wide GDP was about $60 trillion. Employment inches up, credit crunch, company sales down, GST revenue down, stock market down 30% , housing market down, people dont sell assets at under the price they bought them if they can help it so capital gains down too.
So we start with a 2007/2008 revenue figure of $294b
In 2008/9 revenue goes down to $292B which is $2b down on 2007/8
In 2009/10 revenue goes down to $284B which is $10b down on 2007/8
In 20010/11 revenue goes up to $302b which is $8b up on 2007/8
In 20011/12 revenue goes up to $329b which is $35b up on 2007/8
So over 4 years revenue in total goes up $31b over and above the $294B in 2007/8 (and each year since).
The revenue shortfall is obvious, the GFC link is obvious and this is the reason there is a fiscal shortfall, If labor had done nothing the $150B shortfall could not have been avoided and with unemployment going up to 9 or 10 % income tax revenue would drop and unemployment benefit payments would rise meaning the deficit figure would have been the same or worse except that we'd also have an economy on its knees and many hundreds of thousands more unemployed.
I know libs play politics with economics but it would be nice to see a simple acknowledgent of facts and a basic understanding of numbers.
lamb22 said:
Are you sure you're not Gillard & Swans PR manager?
So they are finally tightening the belt. Good to see they'll try to reign in the runaway debt. I hope you've factored in the NDIS, Gonski Reforms etc. So if they're going to reduce spending where are the cuts coming from?
lamb22 said:
And for this year (estimated) $369 billion, another $75 billion up on 2006/7
But I was referring to the table 10 you used about taxation levels. Not total revenue that you're now claiming. You're jumping from one to the other.
Tax receipts (Table 2) for 2006/7 were $257.3 billion up to $343 billion for 2012/13. Going up each year apart from 2009/10. Is that an increase or not.
"Net debt" (Table 3) has gone from a surplus of app $30 billion in 2006/7 to a deficit of $143.3 billion for this year.
I notice you didn't answer my question of whether any Australian government has been so deep in debt. It would be different if they'd actually funded all the Reforms they promised.
Nor how are they going to fund the NDIS, Gonski Reforms etc. Do you know where it may be coming from Lambsy?
No wonder they're finding life tough. Spent the bank, hocked the silver and still can't fund their big ticket items.
What you should be concerned with is wealth generation. Demand for commodities does not constitute demand for labour. Government spending increases the demand for consumer goods and hence less is spent by capitalists on capital goods. Ergo less wealth is generated in the economy.lamb22 said:
Giardiasis said:
Nice laugh. Corn flake Box Economics in action.
Does US Military spending stimulate capitalist spending on capital goods?
What about any government infrastructure spend.
And if governments stimulate the economy and aggregate demand increases wouldn't the capitalist class take advantage of that demand in the normal way that markets operate.
And your comments about demand, commodities and labour - drivel of the highest order!
Overstimulating demand when there are capacity constraints leads to increases in inflation and interest rates (to dampen demand). That's what happened under Costello and the 10 rate increases in a row.
Just one example to illustrate how stats lie.
Under the last few years of Fraser/Howard the country suffered a massive drought.
At that time we depended on agriculture exports to a much larger extent than we do now, and national exports were well down, with falls to GDP and debt etc.
No sooner had Hawke/Keating taken over than the drought broke and agricultural exports returned to "normal levels" with consequent increases to GDP and national wealth.
The GFC explains a lot of what is happening now, but you don't see it mentioned anywhere in the stats.
In generations to come, the GFC will be overlooked just as the drought is now overlooked in the Fraser/Howard era, and PRE will be discussing the incompetence of Gillard/Swan in 30 years time without reference to history.
Under the last few years of Fraser/Howard the country suffered a massive drought.
At that time we depended on agriculture exports to a much larger extent than we do now, and national exports were well down, with falls to GDP and debt etc.
No sooner had Hawke/Keating taken over than the drought broke and agricultural exports returned to "normal levels" with consequent increases to GDP and national wealth.
The GFC explains a lot of what is happening now, but you don't see it mentioned anywhere in the stats.
In generations to come, the GFC will be overlooked just as the drought is now overlooked in the Fraser/Howard era, and PRE will be discussing the incompetence of Gillard/Swan in 30 years time without reference to history.
Poppa
Our treasury is pretty competent and both parties have had the use of usuusally good advice (John Stone notwithstanding) over the years.
Accordingly general economic managemnt has been basically competent from both parties.
Its only in situations when there are crisis' either domestic or imported that the parties are tested. These are the oil shock in 74, downturn and drought that Fraser faced, the recession of 91 which was a somewhat ham fisted approach by Keating to actually dampen the demand which their deregulation and other econmic reforms (including floating dollar ) unleashed but which then became the engine for 21 years of consecutive growth and of course the daddy of them all the GFC in 2008.
In retrospect while both periods were difficult you'd have to say Rudd/Swan succeeded spectacularly while Fraser/Howard got most of the calls wrong. It is almost impossible in classical economic theory to have double digit employment which stifles demand and then also have a double digit inflation and interest rate. With Howard as treasurer interest rates hit their highest ever at 21.4% in 1982.
Economic Historians will view this labor government well although the great unwashed will probably still believe what Rupert will tell them
Our treasury is pretty competent and both parties have had the use of usuusally good advice (John Stone notwithstanding) over the years.
Accordingly general economic managemnt has been basically competent from both parties.
Its only in situations when there are crisis' either domestic or imported that the parties are tested. These are the oil shock in 74, downturn and drought that Fraser faced, the recession of 91 which was a somewhat ham fisted approach by Keating to actually dampen the demand which their deregulation and other econmic reforms (including floating dollar ) unleashed but which then became the engine for 21 years of consecutive growth and of course the daddy of them all the GFC in 2008.
In retrospect while both periods were difficult you'd have to say Rudd/Swan succeeded spectacularly while Fraser/Howard got most of the calls wrong. It is almost impossible in classical economic theory to have double digit employment which stifles demand and then also have a double digit inflation and interest rate. With Howard as treasurer interest rates hit their highest ever at 21.4% in 1982.
Economic Historians will view this labor government well although the great unwashed will probably still believe what Rupert will tell them
lamb22 said:
:cutelaugh I didn't see Rupert looking down at the camera denying the introduction of a carbon tax.....I didn't see Rupert ranting and raving in Parliament labelling Abbott a 'misogynist' as a melodramatic way to deflect away from the Slipper "mussel" shenanigans....was Rupert the one who was denying their role in the Fabian/communist societies?
Didn't know Rupert was behind the changing of visa criteria and the inaction over the rise in boat people since the ALP took over? Rupert again to blame for the money thrown away by getting someone on the UNSC for a 2 year temporary stint, by more or less bribing African nations with promises?
That bloke Rupert again who decided to stiff a long-serving Northern Territorian politician so a female Aboriginal could be rushed in in her place bypassing party protocols in the process.
And don't forget, it was Rupert who knifed Rudd to get the job in the first place!
There's half a dozen reasons off the top of my head why the 'great unwashed' (majority of Australians, mind you) not only want the ALP out, but see Gillard as one of the most hated PMs in Australian history....and thats without even touching on the economic outlook of the country.
You think economic historians will look at a rising debt as some sort of job well done...but there is nothing to say that Howard/Costello could have not only done the same job, but a better one without the future prospects looking so dire.
So go back to reading your Fairfax ALP-love fest newspaper while watching your ABC propaganda shows and let the rest of us unwashed vote in September
These things are financed by public debt, inflation, or taxes, not real savings. Government can not generate savings.lamb22 said:
lamb22 said:
By stimulating the economy as you call it, all the government is doing is creating a bubble in whatever part of the economy it directs the money. The government can try and put off the bust as long as if can, but it can’t stop it.
All demand does is tell capitalists where to direct their money, it doesn’t cause wealth generation. What causes wealth generation is the investment of savings into capital goods for the production of consumer goods. That way the true demand of market participants can be best catered to. If people wanted pink batts more than other things, they would have bought them in the first place.
If governments “stimulate” the economy, this will generate false price signals to capitalists which leads to the boom, and eventually the bust. Only a free market, that is not distorted by government interference can provide the price signals capitalist need to direct savings effectively. It will still be inefficient, but compared to the alternative it is like comparing a Lamborghini to a Lada (actually that’s a good analogy for capitalism vs socialism in general).
The only cause of inflation is an increase in the money supply and an associated credit expansion. That has happened under both parties, as both support the socialist banking system we currently have.lamb22 said:
Giardiasis said:
Seems you have swallowed a textbook on neo classical economics and then attached some random word generator.
I prefer 1000 monkeys on a 1000 keyboards though as it is likely to be more coherent.
You seem to be fighting some ideological culture war which of course means you require no link to reality or empirical evidence.
