In a round about way I was trying to stress that I just don’t quite see how the numbers add up. Exports are falling and the stronger AUD is not going to help us ramp up export earnings next year. Perhaps demand will pick up, but lower contract prices are just coming through now so these are going to hurt earnings for coal and iron ore exports. So it seems Government spending is going to be the thing keeping the economy ticking along…but as you mention this is funded by debt so what are we actually achieving?

To make things worse we now have the RBA and Government viewing things differently. The RBA is clearly back into inflation fighting mode but as long as the Government keeps tossing money around then they are actually fuelling inflation. It is like being out of sync when you use oars, instead of moving forward you sort of spin around in circles and I sense that is what the Austrlaian economy is doing now.

Ah Swanny, he is probably not a bad chap and good to have a beer with, but he is just not very convincing as the Treasurer. I bet he has nightmares about Lindsay Tanner taking his job!

I can see why some people don’t think a rate rise was necessary, but I welcome it. I’m offended by the amount of cash that the government has tossed around over the past year. The economy has now got all sorts of mal-investments, to use Austrian terminology, that were products of boom times. Most of it built on loose credit. Now is the time to wind that in a bit so that our economy has some sound foundations going forward.

Yes, that’ll mean some pain for some sections of the economy. But that’s what recessions are for. We’ve got out of this one because of the government’s spending, but I reckon that has to simply mean that the day of reckoning has been postponed not avoided altogether. Surely the excesses have to be cut out at some point. If not, when will it happen? As far as I can recall, past governments didn’t try to shield the economy from a recession by gross spending – they stood back to a large extent and let the economy take its medicine.

So we’re in some sort of zombie economy where the government is doing all the spending while the rest of us take a breath. All the while, the so-called recovery is predicated on more cheap credit to keep the wheels turning. So I don’t see how we’re any better off – the cracks have just been papered over. We’ve seen no significant reform. Our major industries are still digging stuff out of the ground and selling houses. Great.

So to summarise the rant, I think it’ll be more of the same going forward. More borrowing, spending and spin from the government. More weak growth on the back of a stimulus-based economy. Pretty depressing, really.

I agree with pretty much everything you’ve written. Except for perhaps the ETS, where I’m wavering. I’ve said previously that I’m in favour of action on climate change, but I also recognise that we shouldn’t do anything prior to Copenhagen.

There’s no disputing your analysis of Kevvie and Swanny. Kev is certainly showing himself to be a very astute politician who will sway whichever way the wind blows him. Swan just makes me laugh (and cringe). I’m embarrassed that Australia is represented by that idiot. What a disgrace.

The behaviour of Stevens and the RBA is pretty erratic as well. I think he is trying to keep on Rudd’s good side (for reasons I can’t quite understand) but every now and again he wants to demonstrate his supposed independence so he’ll come out and cryptically criticise the government or raise interest rates. Weird.

Anon – you could be onto something about it being more symbolic then a necessity…

Still, I think everybody had priced in at least one 0.25% move upwards by the end of the year.

They must not wanted to wait to see if this was a false dawn…

I will continue to expect the unexpected in this economic climate ! If rates do continue to rise gradually (as the RBA indicated) then i’d expect they’d still need to move considerably to keel over the economy. However I am still weary in listening to the RBA as they made some huge forecasting errors at the top of the last interest rate cycle.

Hey just a side issue – not advice, only for debating – pls see a financial advisor for decision making.

Hey just a side issue – not advice, only for debating – pls see a financial advisor for decision making.

As a side note the BRIC nations and the Arabs have had a few secret meetings according to some:

http://www.abc.net.au/news/stories/2009/10/06/2706148.htm

I think there is more down side to raising them too early then raising them too late. At least for the rest of the year anyway… They do have them at a bit of a “sweet spot” at the moment. Or is a better term “hands tied”? Either way I don’t think they are going to drop them any further and raising them could hurt the little confidence we have at the moment. Current rates seem about as good a balance we are going to get at the moment.

They do seem to be laying the ground work for a rate rise however… If I was a betting man I would say one (0.25%) will come from the Melb Cup Day meeting…

Just my thoughts only… It will be interesting to see what they do… Soon find out tomorrow!

How long is a piece of string?
I’m not sure. Certainly the economy doesn’t look strong enough to warrant an interest rate rise. Reported Inflation figures arn’t high. Peering through my broken crystal ball i’d say they would be inclined to leave it on hold for an extended period – well this is how I’ve positioned my cash deposits.

Hey just a side issue – not advice, only for debating – pls see a financial advisor for decision making.