What we're talking about

Phil of Springwood on "He's a dog..." @Bigfellah, with your permission, I would like to add that I thank you sincerely for acknowledging my success at being a ... more
Bella on Preferential voting FIRST PAST THE POST ~ is not as democratic as you may like to think.In a preferential system every registered voters final ... more
steve on A few facts on illegal boat people Hey Wendy - I'm an immigrant - I've lived here for 40 years and have learned to ignore people with attitudes like yours but ... more
James Weir on A few facts on illegal boat people Wendy, I'm surprised anyone lives in Adelaide. Even the Welsh born redheads are getting out of the place. more
Phil of Springwood on "He's a dog..." @Bigfellah. Again in typical Socialist Fashion, you are denying me my right to form an opinion. Mr. and Mrs. Newton ... more
Meg on "He's a dog..." I believe that any ordinary person who assaults women would have been charged and jailed not sent to rehab. Has Matthew ... more
Wendy on A few facts on illegal boat people Look around..In Adelaide now, you cannot spot an Aussie. Everywhere you look its Chinese/Asians, Indians and Pakistani's. ... more
bigfella on "He's a dog..." Hi z,The point is: How the heck would Phil of Springwood know what sort of parents Bert and Patti were to their son? For all ... more
z on Bob Brown Lazarus Where is the costings that they demand of everyone else, thier 5 minutes of fame will be up shortley more
Shanelle on System failure The whole system is stuffed. I have been apart of it for 10years now and still im confused. Im in a bad place at the moment ... more
James Weir on Barnaby Joyce How many Clem 7's would you like in your Super Fund, Barnaby? It lost $1.5B in it's current reporting period. Only Govts can ... more
Steve Martin on "He's a dog..." Rebecca Wilson as per normal is just plain out of touch.The hitting of women is wrong but personalising this with "he's a ... more
Ronny Of Brighton QLD on Preferential voting MichaelIve just come back from a holiday.That bloke Dean Jaensch Siad that if someone(call Him RONNY) had 40% he said 60% of ... more
z on Preferential voting the way it is working at the moment is the first loser joins with 2nd loser and so on untill they beat the winner, so a ... more
brisman on Bob Brown The guy is not green he absolutley red through to the core. His environmental visions are shallow and don't serve ... more
z on "He's a dog..." bigfella, Phil of Springwood is not talking from so called flippantly expertise, Ivory tower stuff but more from commonsense ... more
robert goodchild on Support our Diggers the sticker Idea is great.I would happily part with $20 for one and would like to see the profit go to families who have ... more
Phil of Springwood on "He's a dog..." Hey Bigfella, back again so soon after your mobs magnificent defeat by the Tories, I thought you and the rest of your Left ... more
z on "He's a dog..." Hey Phil, why don't you say what you really mean more
bigfella on "He's a dog..." Congratulations to Phil of Springwood,We've become accustomed to his astute political and social commentaries based on ... more

Bail-out?

Posted by: Michael Smith | 21 October, 2008 - 12:53 PM

Nobody should think that the Federal Government's $10.4 billion redistribution of money from some taxpayers to others is going to fix the problem that got us into this economic crisis.

It simply won't.

At the best, it's a short-term response and then only to a symptom of the illness - we are living on too much borrowed money and we don't create enough stuff of value to pay for it.

The economic growth that this government and the previous Liberal government crow about is built largely on a mirage. Our domestic consumption is funded by debt - which means it's funded by money we expect to earn tomorrow and not money we have earned today. Debt is OK if it goes towards assets that will make tomorrow better or more productive - a hospital, a new road, or a port. Or towards a major asset that you believe will grow in value beyond the cost of the money - such as a house at the right price.

But when the debt goes to pay for rubbish - plasmas, holidays, credit card purchases - the economy can end up in real trouble.

Our capacity to borrow is finite and it's clear our whole country gets the wobbles when the credit starts to dry up.

Rather than talk about addressing this very difficult problem, the Federal Government's response is to tip more money into consumption so that we'll buy more stuff in the lead-up to Christmas. Economists call it stimulating the demand-side. That should have the very short-term effect of keeping us out of a technical recession for another quarter. But it doesn't address our underlying problem at all.

We need to be more productive and to match our growth in consumption with our ability to pay for it. It's a hard thing to say to people - it will sound harsh - and our political leaders on both sides are avoiding it.

If Kevin Rudd was fair dinkum about the well-being of families, he would be saying two things. The first is to pay down debt. Ultimately that's the painful reality - in the short term we have to reduce our reliance on tomorrow's money.

Secondly if you want to spend more money - either as a country or as individuals or families - find a way to produce more stuff of value. Earn more money. Be more productive. Sell more stuff.

But he doesn't say that.

Consume, consume, consume. That's the mantra coming from the Federal Government. And it's a mantra that will lead us into trouble.

Blog comments

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david Monday 8 December, 2008 - 8:36 AM
If it's OK for teachers to stike, maybe we can have a tax payers strike when not happy with government behaviour. They would get the message pretty quickly!

Dave Muller Monday 27 October, 2008 - 12:59 PM