We don’t have a clue really. Proof again this morning that we really should not bother taking all these economic forecasts too seriously. They are no help at all to anyone trying to foresee the future. Last January Access Economics in its preview of Australia’s economic future had Australia insulated against the horrors of an emerging world financial crisis because of the strength of minerals exports to China. The big worry for the government was inflation.

Now this year Access Economics has our economy buggared with Australia not only in recession but undergoing “the sharpest deceleration Australia’s economy has ever seen.” The inflationary problem has disappeared along with the optimism. So what is likely to happen in the year ahead? Honest economists would answer that they don’t have a clue actually. For my part I can but repeat my observation in Crikey last Friday that there is a considerable difference between what ordinary Australians think will happen in the months ahead and what the dismal science is now almost unanimously predicting. The mob are tending to be optimists while the “experts” are gloomy.

Looking on the bright side. I suppose there is a bright side to the world flirting with a depression. Greenhouse gas emissions will surely be much lower than contained in all those forecasts by the panels of scientists. That should at least ease the damage caused when developed countries burdened with high levels of disgruntled unemployed show no enthusiasm whatsoever for committing to meaningful reductions in carbon use when the conference to decide on a successor to Kyoto is held next year.

Driving along the beach. The day the family car got stuck in the sand as the tide was coming in is one of my earliest childhood memories. It was back in those 1940’s days when cars had what I think were called running boards and the Farmer family were on a picnic day out on the outskirts of Adelaide. I was reminded of the excitement of watching a feverish father battling the sand by a story in this morning’s Adelaide Advertiser telling how this very South Australian tradition of driving on the beach has continued for 60 years but is now under threat. Apparently the Onkaparinga Council at its meeting tomorrow night will consider banning the practice at Aldinga, Moana and Sellicks beaches which are the last in the state and among only a handful in the nation to permit vehicle access. At the weekend 1500 defiant protesters turned out to demand that a proposal to ban cars from Adelaide’s southern beaches be scrapped.

The declines continue. The evidence of a declining economy continues to mount with figures for both personal and commercial lending finance out this morning from the Australian Bureau of Statistics trending downward. While the total value of owner occupied housing commitments excluding alterations and additions increased in trend terms (up 0.4%) and the seasonally adjusted series rose (up 1.4%) in November compared with October, the trend series for the value of total personal finance decreased 1.1%, due to falls in both fixed lending commitments (down 2.2%) and revolving credit commitments (down 0.2%).

The seasonally adjusted series for the value of total personal finance commitments decreased 1.8%, with a fall in fixed lending commitments (down 6.0%), while revolving credit commitments rose (up 1.5%).

The trend series for the value of total commercial finance commitments decreased 1.6%. Revolving credit commitments fell (down 5.7%), while fixed lending commitments rose (up 0.5%).

The seasonally adjusted series for the value of total commercial finance commitments decreased 10.4%. This was due mainly to a fall in revolving credit commitments (down 27.6%). Fixed lending commitments also fell (down 1.5%). Lease finance commitments (trend) decreased 0.9% and the seasonally adjusted series fell 3.0%.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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