It’s not yet the main topic of debate between Liberal and Labor, but some of the arguments in Debtwatch have at least made their way into Hansard courtesy of a speech by Laurie Ferguson. The full extract from the speech is shown below.
“This makes a mockery of the claim by the Prime Minister that we have never been better off. Whilst the Howard government crows about the success in the economy, which was largely inherited from Labor and fuelled by the raw materials demands of India and China, there is an alternative reality of an out-of-control personal debt spiral. Steve Keen from the University of Western Sydney writes:
Jessica Irvine from the SMH has written an excellent piece with this headline in today’s SMH. I’ve linked it on the blog roll, but it’s linked here too for quick reference.
Â My Debtwatch report will be very brief this coming month: I’m off to the USA tomorrow for some conferences, and I’m “under the gun” to produce papers and presentations to suit. I also won’t be available for comment at the time of the RBA’s next meeting–which is of course highly unlikely to move rates in either direction.
I regularly peruse, and enjoy, the “All Men Are Liars” blog at the SMH on-line. Today’s post there is on a topic dear (in every sense of the word…) to this blog. I recommend checking it out–and engaging in the debate, if you have time (I’ve just posted a quick comment):
Suckers: slave to your mortgage
Will Budget tax cuts fuel inflation?Â (click here for the MP3 file)
PM — Wednesday, 9 May , 2007Â 18:14:52
Reporter: Stephen Long
MARK COLVIN: Now, will the tax cuts in the Budget cause inflation?
Some leading economists argue that the Reserve Bank could be forced to lift interest rates down the track because Government spending and tax cuts will increase consumption and prices.
But others disagree. They argue that debt levels are so high that many people will be handing their tax cuts straight to the bank.
Stephen Long from ABC News brought to my attention the fact that the Reserve Bank of New Zealand appears to be contemplating a return to regulating lending.
This is only hinted at at present, but it represents a major shift in Central Bank thinking–and a welcome one, from a debt-deflationary point of view.
I’m interviewed about it on PM tonight; in the meantime, here are some relevant excerpts from the Reserve Bank of New Zealand: Financial Stability Report, May 2:
This is another non-debt post. I’ve just heard Costello describe tonight’s budget as an “Education Budget”. There was a welcome “equity” bequest to universities, to fund infrastructure and research: but there was also a shallow “shell and pea” trick in the allocation ofÂ funding for University places.
The complicated CGS banding system–which determines what theÂ GovernmentÂ provides per student, and varies depending on the discipline being studied–is being rationalised from 14 bands to 7. In 6 of those new bands, the amount being given in 2008 is slightly more than the highest amount given to the previous bands. For instance, the four bands of Maths, Behavioural Sciences, Education and Computing are being amalgamated into one band; the highest funding level per student in 2007 was $8,057 for Computing, and the lowest $5,381 for Maths; the new funding level is $8,217–a 2% rise for Computing, and a 52% increase for Maths.
It goes without saying that I’m a Cassandra amongst the Pollyannas crowing about Australia’s current economic performance data. Low inflation, low unemployment, and no sign of a wages breakout, are the usually-quoted sweet economic indicators (admittedly with some strange bedfellows, including a relatively slow rate of economic growth for these conditions, and a huge balance of trade deficit despite the best terms of trade in history).
So how do I justify the stance of a Cassandra? Because things can’t continue as normal, when normal involves an unsustainable trend in debt. At some point, there has to be a break–though timing when that break will occur is next to impossible, especially so when it depends in part on individual decisions to borrow.
I’m speaking at Reality Check,Â as part of the ALP Fringe Conference program, which runs parallel to the national conference and provides NGOs and other groups with an interest in influencing ALP policy with a platform to host discussions and seminars.
I’m one of three speakers and we have only one hour, so it will be rushed: if you want to participate, don’t be late:
Date: Friday April 27th; Time: 1-2pm; Venue: UTS Haymarket Campus, Building C, level 1, Room 31. Just up Darling Drive from the Convention Centre/down from UTS Library (view map) Enter via Block D next to the ‘Art of food’ cafe.
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This post has nothing–well, almost nothing–to do with debt. But this is a blog, right? So I can post whatever I want.
And what I want is for you to see a new play called Hell’s Belles–or at least spread the word about it.Â It’s a comedyÂ with the underlying theme of “Be carefulÂ what you wish for”: two divorcees fantasising about the ideal man accidentally conjure up a demon, who can only leave once he has someone’s signature on a contract that offers a wish in return for a soul.
I’ve slightly revised my analysis of shared equity loans. I am now awaiting feedback on this from the developers before I publish it here.
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