If it wasn’t serious it would be funny. The certainty with which economists and politicians here and elsewhere proclaim on the merits and demerits of plans to stimulate recessionary economies would be quite amusing if the subject was not so serious. A day does not pass without one expert saying a planned spending package is too large while another equally well credentialed denounces it as not being enough. And these are the very same people who, almost without exception, failed to see the world financial crisis coming.

I was particularly taken by the evidence yesterday of Reserve Bank board member Warwick McKibbin to the Australian Senate inquiry into Labor’s $42 billion of proposals. The good professor, speaking on his own behalf and not as a Reserve Bank Board member, thought the total amount was too large and that the $950 in handouts to individual taxpayers only had the potential to temporarily stimulate demand without any long-run benefits to the economy. Presumably he was a dissenting voice last year when the Bank totally misread what was happening to the world’s financial system and decided that higher interest rates were what was needed to rein in Australian inflationary pressures.

Viral hate spreading. The power of chain emails must have been hard at work yesterday to elevate the story “Islam group urges forest fire jihad” to the top of the Melbourne Age internet site’s most read list this morning. The story originally appeared back on 7 September last year. I would like to be able to give you some details of it but I did not copy it when I came across it sometime before 7am and the link at noon brought up one of those “Sorry your page was not found” messages. Presumably someone at The Age made the sensible decision that recycling the views of one extremist Muslim group about becoming arsonists was in the current Victorian environment was a bit like yelling fire in a crowded theatre.

Measuring the insurance losses. Some things with newspapers do not change. This morning it was a case of pay for your paper and take your choice about how much the Victorian fires would end up costing insurance companies. The newspapers guesstimates as to the damages bill have begun and they vary considerably. The Melbourne Herald Sun puts the bill at $1.5 billion, the Sydney Morning Herald at a much more modest $500 million.

The stories took me back to the Hobart bush fires of yesteryear when Sydney was still blessed with two afternoon tabloids both had their finance editors invest a damages figure to splash across page one. I cannot recall the exact figures but I will have the proportions right if I say the Mirror‘s Jules Zanett went for an impressive sounding $250 million while the Sun was more conservative at $150 million. When they saw each others first edition the Mirror team decided they had overdone it a bit and reduced their guesstimates for the second edition to $195 million while at the Sun they were determined not to be outdone by their rival and bumped their’s up to $300 million. Those were the days!

Peter Fray

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