Well another year has begun and I am starting to wish it was 2008 again. If 2008 was the year in which stock market investors were humbled, then 2009 is starting to look like the year in which we will be humiliated. We are now half way through January and many people will tell you that if the market ends down in January it will also be down at the end of the year. So far things are not looking good.
My expectations for this year are low…so low in fact that I probably should not call them expectations. All I want if for the government to stop making things worse, the Reserve Bank to stop waiting for China to save us and for the stock market to show some signs of life.
But the news so far this year has no been good. The U.S economy is in a worse state than expected, Japan is suffering from a strong Yen and a collapse in exports, the Chinese economy is slowing due to a dramatic drop in demand for it’s exports and the Eurozone is suffering it’s worst economic downturn for decades.
Never fear though, while all these events unfold our trusty Reserve Bank Board are having a break and will not meet in January. Perhaps they thought back in December 2008 that they had done enough? They had after all been busy raising and lowering rates and the poor fellows were probably exhausted and needed a rest……if we are lucky they won’t come back.
Maybe the Reserve Bank Board thought the money dished out by Santa Rudd just before Christmas would keep the Australian economy ticking along until their next meeting in February? Certainly the government handouts helped Harvey Norman and other retailers but ask yourself this question; do you really think this money will do anything to help companies get through 2009?
Also bear in mind that much of the money that was spent over Christmas would have been used to buy imported products. Computers,mobile phones,DVD players,children’s toys and cookware etc. are mostly imported so much of the Christmas handout money will eventually head overseas anyway. (I hope the Treasury boffins took that into account when using their “alcopops” forecasting machine)
Basically the government handouts were a bit like throwing pebbles at a rampaging elephant, at best it might distract the elephant but the fact is you are still likely to get squashed. At some point I hope the government just admits that the economic situation is largely out of their control and that global events will essentially dictate how the Australian economy will fare in 2009.
The time to act decisively was last year and both the government and the RBA were not up to the task. Both should be held to account by the public and I just hope they do not make things worse by trying to cover their tracks.
I am also not a fan of the increases to the first home buyers’ grant because I do not think encouraging people to buy a home in the current economic climate is a wise move or a good use of taxpayers money. What is going to happen to these new home owners if they lose their jobs, and isn’t there a danger we are just setting people up for a fall?
Also how can the car industry and first home buyers manage to get handouts but not the tourism industry? I might have to add the increases in the first home buyers’ grant to my list of Government economic blunders of 2008. As I have written before, I believe we should be focusing on helping businesses, not just throwing money at people and hoping we can spend ourselves out of this mess.
Finally I was amused to read how Wayne Swan was trying to explain how the government on one hand is supporting the car industry with tax payers money while at the same time imposing an extra tax burden on the industry via the luxury car tax. I said this was a stupid tax back in May 2008 when I wrote The Fluffy Duck and Teflon Man Budget and it still is a stupid tax.
If the government had any backbone at all, they would just admit it was mistake and scrap the tax. Heck it isn’t brining in the money they expected since the demand for these vehicles has collapsed, so I am not sure why they bother keeping such “socialist” tax in place anyway.
Or maybe they have a Baldrick like “cunning plan”?……