Insiders host Barrie Cassidy complained on ABC Victoria this morning with Jon Faine that despite all the media coverage of interest rates and growth figures he couldn’t work out what it all meant. Crikey is also bewildered and would love someone to actually crunch the numbers on what was happening in May 1986, the last time we had banana republic debates. For instance, the economy has tripled in size to more than $800 billion since then, but how do we compare in absolute terms?
No one can make any sense of “growth only 0.1 per cent”, “current account deficit of $15.2 billion”, “record household debt”, “$30 billion in credit card balances” unless it is placed in its proper context. Costello was keen to compare 1986 inflation and mortgage interest rates with the current figures, but what about all the other economic indicators? How can we be so stuffed when we’ve got the best terms of trade in 30 years?
And if we really operating at full capacity, let’s talk about the industries that are running flat out. Is there a waiting list for new Falcons? How fast are the Bass Strait oil fields depleting. What are the projects that comprise Peter Costello’s claimed $24 billion mining industry investment program over the next three years? How many digital cameras and plasma screen TVs are we importing a year?
It is time to put some flesh and bones on all these meaningless figures, but not in a superficial way such as The Australian illustrating the interest rate rise this morning with a front page picture of a glamorous family in Sydney’s expensive Rose Bay. Sweeping harbour views is not exactly mortgageville!
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Henry Thornton on the double whammy
Henry Thornton notes that the press is all over the shop this morning. It will be important as the future unravels to seperate the disinterested contributions from those provided by those with an interest in rising inflation – eg retailers, owners of shopping centres, property developers, and their mates in the mainstream press.
So far, however, most of the arguments in the press are puerile. Some say the RBA is right to have raised interest rates now and others say it is wrong. The better argument would have been whether it would have been more right to have raised them last year or the year before. Raising them now seems an act of desperation before inflation took off and foreign investors stood back from financing a crazy-brave current account deficit. “Too little, too late” rings round the rafters – so there will be more to come as the RBA is well behind the curve.
Read more here: http://www.henrythornton.com/article.asp?article_id=2989