Tuesday, 4 June 2013

Another reason why the ALP will lose the next election

It is clear by now the ALP cannot win the next  election.

Three reasons stand out:
1) the key players who prosecute the economic case are hopeless at selling their (mostly only mostly)good policies, namely Julia Gillard and Wayne Swan
2) The ALP caucus and its key advisors particularly from the NSW right have absolutely no political smarts at all. Who in their right mind would remove a PM when you will have a comfortable election win?
3) the electorate is overwhelmed by false perceptions. Only 1/3 actually understand interest rates are lower now then when the ALP won office!

However I want to nominate an issue that is well under the radar that no-one has picked up but in the end cost Keating the 1996 election.

We are in unusual times. We have had above trend REAL GDP growth but below trend NOMINALGDP growth. This has occurred because of disinflation and in the last quarter's accounts deflation.

When people still possess inflation illusion and react to below trend nominal GDP growth they believe ,wrongly, the economy is going backwards. In other words we are in recession.

A group of us in the market looked at such information back in 1996 and realised the electoral implications. A big win for Howard. It is the same thing this time round.

Nominal GDP growth will not recover in time to assist the ALP even if they realised the extent of their problems.

Just remember you heard it here first. When focus groups are telling both parties the cost of living is too high and times are tough this is what it means!!

This ( by Ricardian Ambivalence) is somewhat related. There is a domestic recession!