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The Recession and Rudd’s Plan 9 from Outer Space.

March 4th, 2009 · Greg Atkinson · 9 Comments

Can the discussion surrounding the Australian economy get any more bizarre? Will economists continue to make vague observations? Will our politicians spend most of 2009 making nonsensical statements aimed to please the plebs? If you answered yes to all three questions then you are well prepared for the year ahead.

The whole debate about if Australia would enter a recession or not was over in December 2008 as I wrote in Be prepared for the recession we might have avoided and yet I wonder why it is still the topic of so much debate. Rudd, Swan and the Reserve Bank of Australia (RBA) blew any chance of Australia avoiding recession last year by focusing on the “War against inflation” for too long at a time when they should have been focused on supporting the economy.

Most economists quoted in the media seem to think the RBA and even the government have been ahead of the curve when it comes to dealing with the global economic crisis. Rubbish! If you are cutting interest rates and rushing through economic stimulus plans in response to a deterioration in the global economy then you are behind the curve.

Yes other countries have been caught out by global slowdown as well and are also rushing through stimulus plans, but that is no excuse for the RBA, the Treasury or the Rudd Government to be caught napping. Some pilots lose both engines and get their plane back on the ground safely whereas a less skilful pilot might crash. I fear our team in the cockpit are about to give the Australian economic airframe a crash test.

We depend as a nation to a large extent on commodities exports and the prices for these had rolled over by the third quarter last year, so we knew the storm was coming well before 2009. But what did our economic managers do last year? Not much. In fact the RBA did not even bother to meet in January 2009 so that shows you how well they were reading the economic tea leaves. And let’s not forget Rudd and Swan actually spent early 2008 talking our economy down…well down lads. (Remember that nasty inflation genie?)

Dealing with a recession in 2009 will be bad enough but we will also be subjected to a lot of useless debates about how bad it will be and how long it will last etc. Statistics will be massaged, executive salaries will be frowned upon, politicians will point fingers at each other in order to deflect blame and time will be wasted. Australia may have avoided a recession if blunders were not made last year, but that is all history now. None of that matters anymore; we will not get out of this mess now until things improve in the U.S, Japan and China…end of story.

But of course there is a plan to help Australia ride out the this global economic storm…Rudd’s $42 billion plan, or as it should probably be called Rudd’s “Plan 9 from Outer Space” since it makes as much sense as the movie. We could be getting ready to take on the world after this recession and be investing in high tech industries, rolling out a national broadband network and setting up centres of medical research excellence but no, we get home insulation, railway boom gates and freshly painted schools.

As for the infrastructure projects to be executed by the state governments, they are likely to be having an impact sometime in 2010 and beyond…just in time to fuel inflation. First we will get whacked by a recession and then we will be hit by high inflation just when we dare to dream things might be getting better. Won’t that be fun?

Anyway if, you are not following me regarding the Plan 9 from Outer Space analogy (or even if you are) then treat yourself to these highlights from the movie:

So prepare yourself for plenty of spin from both side of politics and many “Plan 9” moments this year. Sometimes you will wonder if what you hear or read makes any sense and the chances are often it will not. Let’s just hope we all emerge from this mess smiling in 2010 sometime.


9 responses so far ↓

  • 1 Vince L. // Mar 5, 2009 at 8:22 pm

    Is Rudd related to Criswell (the narrator)…mind you that alien chief speaks a lot like Rudd.

  • 2 pat // Mar 5, 2009 at 8:59 pm

    do you think the aust eco. will really hit the wall in the first half of the next financial year as the stimulas packages are saved or debt paid off ,and there is no rebound in markets across the world.This govt was worned in 2007 by abc four corners of the hugh problems in home finance in america and the problems that it would cause around the world.
    we are told that the banks in aust are the safest in the world i think they are only safe because unemployment has not got out of hand,at 8,9,10% plus lets see how safe the banks are then.banks have been keen to give big loans to anyone, my daughter and husband went for a loan her job paid 35k and his 34k the loan they could get was 350k with no deposit that was in nov 2006.i was shocked as i had worked in banks for 15 years and as a loans officer would not authorised the loan without a least 20% deposit.j
    just wait until all the noodle (no deposit loans)loans hit the wall the banks will have our own aust sub prime noodle problem hear.
    maybe we might be able to beam them up with scotty.

    pat

  • 3 Greg Atkinson // Mar 8, 2009 at 11:46 am

    Pat I think things are now pretty much out of Australia’s hands. If the global economy does not pick up then demand for our exports will stay weak and we may find ourselves back in the pre-commodities boom area. This would mean a lot of downward adjustment and plenty of pain for the Australian economy. I have no idea when things may improve and niether does anyone else, however some”experts” say we should see the global economy start to recover in the 2nd half of 2009 whereas others are now saying things will not get better until 2010. I agree with your comments about the relative ease of getting home loans these days but this problem is being fueled by both polictical parties via first home buyer grants etc. (and plenty of property developers, real estate industry groups etc. are always pushing for more handouts)

  • 4 8020 Financial // Mar 8, 2009 at 5:18 pm

    Oh come on Greg, I’m certain that home insulation will be solution to all our problems ;).
    Good article. I wish someone (anyone) in the mainstream media would say something along these lines.

  • 5 Senator13 // Mar 8, 2009 at 7:31 pm

    I second that!

  • 6 millie // Mar 15, 2009 at 3:38 pm

    I just stumbled across your website and it’s terrific to finally read some balanced commonsense comments on the economy, tax system and media.
    The clowns we have in politics, finance and power controlling our country is beyond a joke.
    What makes it even more frustrating is having our hard earned tax dollar massively wasted and the majority standing by and letting it happen.
    in fact it seems, the more wasteful and mediocre the current government the higher the popularity rating!
    My husband and I are in our early 50’s, both with small businesses.
    Our son at 20 has started his own small business.
    We are trying our best to achieve and maintain financial independence.
    the level of government interference for so called compliance (and taxation) doesn’t make it easy.
    It looks like we are well on the way to socialism and control under Kevin Rudd, I couldn’t think of a worse and more embarrassing leader in power.
    I believe completely in all your comments to date on the web site and suggestions to improve our country.
    We really need rationality and common sense in politics, not populism.
    the current government has totally lost the plot and much worse than I ever expected.
    We really need to be lobbying constantly against all the ridiculous, irrational media comments that the population is constantly being fed.
    Let’s hope that web sites such as this become widely used and read and maybe somewhere along the line will have some impact.

  • 7 Greg Atkinson // Mar 16, 2009 at 10:35 am

    Hi Millie, thanks for taking the time to leave a comment. I always appreciate feedback and invite you to leave comments, ask questions or make your views known. I agree with you views about how the economy is being managed by the clowns we have overseeing the whole circus. You just have to think back to that symbolic waste if time “Australian 2020 Summit” to see that Rudd and Co are all more focused on managing the media and public perception rather than managing the country. If they really had any idea of how to manage the economy they would have had an economic summit last year and not have been rubbing shoulders with Cate Blanchett. It is pretty clear what sort of game Rudd is playing…..he will take credit when things go well but be ready to point the finger when there are problems. For example he takes credit for a sound banking system (largely thanks to Costello) but at the same time rants on about the evils of neo-liberals even though his wife’s business thrived under the Howard years.

    Anyway I hope your business holds up well. Good luck to your son and his new venture…..please stop by again.

  • 8 Crazy Jim Smith // Mar 27, 2009 at 7:04 pm

    A very good article.

    The average voter still likes the Rudd government unfortunately.

    It will take time for them to realise that their policies will result in major damage………..probably after the damage has already been done!

    Right now everybody is happy about their one off $950 stimulus gift!

    When they start paying $3,500 in tax hikes, which will be every year, then they might start to think about how bad Kevin Rudd really is……..

  • 9 Greg Atkinson // Mar 28, 2009 at 8:28 am

    Crazy Jim, or do you prefer just Jim 🙂 Sadly I think you hit the nail right on the head as they say regarding people being happy about the cash handouts from the government. Personally I think this is a loophole that needs to be closed as these cashbacks are essentially much the same as the prime minister walking around giving out taxpayers money to lift a governments poll numbers. In any case, a lot of the money that is spent eventually heads overseas anyway so it is hardly a very efficient way to boost our economy.

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