Wednesday, 29 June 2016

A good election result

I think the Government being returned with a small majority in the House of Representatives would be a good result for the country.

The Government's performance has been poor however the Opposition has not shown they are ready for Government.

(It is striking that there has been NO budget repair at all but more importantly no plan at all in future years.
Budget repair being a reduction in the structural deficit It being now all on the revenue side as both Treasury and the PBO has shown.
You could reduce the structural deficit over time. A gradual reduction could be done without causing the economy to slow as it did when Wayne Swan went overboard in the last budget he had responsibility for, Thus we should expect the structural deficit now to be say !.5% of GDP not still 2%)

I suspect such a result for be bad for Malcolm Turnbull as leader of the Liberal party.

Given the Upper House will be dominated by Non-government parties and the Government has shown they simply cannot negotiate it could well be not a lot gets done.

This would mean an early election if the polls favour the government or a poll in three years time if they do not.

Negotiation is part of the political process now. If you cannot negotiate you cannot govern. NO major party has woken up to this yet.

It is highly ironic that Julia Gillard who was a poor politician was a master negotiator. She had neither a majority in the lower or upper house. She was able to get policy through nevertheless.

Julia Gillard as a template for Prime Minister. Who would have thunked it!!

Tuesday, 28 June 2016

Government costings and Obeid

The Government claimed to have found some significant savings yesterday.
I am very cynical. The government claims finance signed off ion this.
Really. Why wasn't it in the budget then ? The government didn't just discover this could be done AFTER the budget was delivered.
Two reasons. too many hard questions to answer on how it works. Much easier if you release such rubbish a few days before an election.
See also Lenore Taylor and Saul Eslake's doubts. Peter Martin as well

If it was in the budget then it would have had to be signed off in PEFO.
Doing it this way completely avoids PEFO.

Most journalists will have forgot these policies by the time of  MYEFO. If you are lucky an improving economy will overshadow these policies as the cyclical deficit reduces.

Eddie Obeid was found guilty yesterday in a real win for ICAC. As I said previously it was ONLY ICAC which showed the public how corrupt he was. That is why it is so vitally needed in NSW. It is why we need one in Canberra

Monday, 27 June 2016

What if Brexit bites?

Only on the internet. Here I was about to argue about what Australia must do if Brexit bites internationally ( see David Beckworth for example) and thus affects us when I find the Kouk has beaten me to it.

I agree with most of what he has said however I do think I doubt we will face a GFC lite more like an Asian crisis situation where the currency would take the brunt of policy action.
Monetary policy can do little now given cash rates are at 1.75% and have a minimal impact.

Let us assume the present government are elected then if they have to use some fiscal stimulus could they politically?

Sunday, 26 June 2016

Brexit, Mediscare, costings etc

We go into the last week of the election campaign and little has changed.

Brexit has occurred but no economic catastrophe.( NO markets or polls picked this the betting markets in particular.) At this stage it appears to be a one day wonder.
Normally the incumbent Government would gain except when you have changed Leaders nine months ago you can hardly say you are a stable government.
A bit surprising to hear if problems did occur Scott Morrison would reduce the deficit faster not slower. Does he really think contractionary policies would fix things. Obviously hasn't examined Europe at all.

I heard the ALP costings meant the deficit had ballooned out. They would run a deficit of 2.3% rather than 2.2% of GDP the Government prefers. In all reality there is no difference between the parties at all. Why are journalists  so gullible on this subject?

Mediscare was al about getting the voters to focus on Medicare and realise the Present government would destroy it. Well destroy is not privatise and the polls show it has not made any difference at all. Dennis Shanahan right again I see. Mind you neither has 'protecting our borders'. Andrew Elder right about out Journos again.

I unfortunately saw some political ads It seems to me the ALP's is more hard hitting  but hardly vote changing.

Bring on Sunday please

Saturday, 25 June 2016

Fatboy Slim

I know nothing about this bloke but I love this song



Thursday, 23 June 2016

Around the Traps 24/6/16 Brexit Edition

it is time for Around the Traps again.

Aussie,Aussie,Aussie,Oy,Oy,Oy,
Northern America
Europe
Asia
Wonk
General
Climate
Andrew Gelman (mainly stats)
Genial Dave Giles (econometrics)
Dianne Coyle (quirky + book reviews)
Vox Wonk

Wednesday, 22 June 2016

The Myth of Austerity and Growth

Noah Smith has a great new article on the above title.

A few comments :

  • Why would Mankiw cite a 2002 paper and ignore all papers since then.
  • The paper he cites was co-written by Blanchard and Perotti. Both have now publicly recanted  their positions on this subject. No mention from Greg?
  • Blanchard and Leigh found fiscal multipliers much higher than previously thought.  Surely if expansionary austerity worked Europe would be in the midst of a boom!
  • THIS paper from long ago completely demolished Austerity. Ireland for example tried it THREE times yet it only worked once. It worked mainly because its main  export market the UK was in a boom, Their currency fell considerably and interest rates were cut a lot
  • Why is this witch doctoring still peddled?