Comments on: Shoppers’ self-esteem edges lower http://www.crikey.com.au/2009/03/11/shoppers-self-esteem-edges-lower/ now with extra source Sat, 11 Feb 2012 22:03:37 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: bohemian http://www.crikey.com.au/2009/03/11/shoppers-self-esteem-edges-lower/#comment-24475 bohemian Thu, 01 Jan 1970 10:00:00 +0000 #comment-24475 My own figures bear this out Greg. Around 50% of people I surveyed this week saw Australia’s situation as little more than a minor recession then back to normal. Just 27% believed we were in for a major recession and only 2% a1930's style depression. So, despite the Govt and the Media's best efforts, there appears to be some work left to do in dampening the spirits of the Australian consumer. No doubt the latest short term fiscal stimulus should ensure they eventually get their way. Even the apparently sanguine public are unconvinced about the value of the stimulus packages according to my numbers, although I am sure they won't say no to the cash. <br /><br />In my view, increasing government spending simply transfers wealth from savers to spenders, substituting a short-run stimulus for long-run financial deterioration. Japan has used this approach for twelve years, and it hasn’t worked. The US has been using it for six months and it hasn't worked there either. Brown in the UK has achieved even worse results. Slashing taxes absent government spending cuts is useless because the government has had to borrow the difference. Cutting government spending is a good thing, but politics will prevent its happening prior to a crisis. ... Prior excesses have resulted in a lack of solutions to the deflation problem. Like the pain of withdrawal for a drug addict, the discomfort of credit addiction withdrawal cannot be avoided. Forcing a consumer to spend more is like giving a drug addict free drugs. You will eventually kill the patient. The time to have thought about avoiding system-wide deflation was years ago. Now it’s too late.<br /> My own figures bear this out Greg. Around 50% of people I surveyed this week saw Australia’s situation as little more than a minor recession then back to normal. Just 27% believed we were in for a major recession and only 2% a1930’s style depression. So, despite the Govt and the Media’s best efforts, there appears to be some work left to do in dampening the spirits of the Australian consumer. No doubt the latest short term fiscal stimulus should ensure they eventually get their way. Even the apparently sanguine public are unconvinced about the value of the stimulus packages according to my numbers, although I am sure they won’t say no to the cash.

In my view, increasing government spending simply transfers wealth from savers to spenders, substituting a short-run stimulus for long-run financial deterioration. Japan has used this approach for twelve years, and it hasn’t worked. The US has been using it for six months and it hasn’t worked there either. Brown in the UK has achieved even worse results. Slashing taxes absent government spending cuts is useless because the government has had to borrow the difference. Cutting government spending is a good thing, but politics will prevent its happening prior to a crisis. … Prior excesses have resulted in a lack of solutions to the deflation problem. Like the pain of withdrawal for a drug addict, the discomfort of credit addiction withdrawal cannot be avoided. Forcing a consumer to spend more is like giving a drug addict free drugs. You will eventually kill the patient. The time to have thought about avoiding system-wide deflation was years ago. Now it’s too late.

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