Not Trampis

The National Accounts were released today and they were a shocker.

I both agree and disagree with the Kouk .
GDP growth would be weaker if the government 'savings' measures were passed by the senate.

Just think at a time of record low yields on bond yields both for Commonwealth and State in this quarter public investment detracted 0.5 percentage points from GDP!
This at a time when we need investment in infrastructure.Just ask either the IMF or the OECD.

I am not as worried about future quarters as commodity prices rising will boost national income.
I doubt whether a cut in interest rates will do anything but boost housing prices thus I do not expect the RBA to cut more. More so given the depreciation of the $A.

Greg Jericho has a good summary about the figures.
Mark the Graph is sensational

Global warming and El Nino

There is a debate about the extent El Nino affects global warming.

So it is fantastic one of the best in the business, Tamino, has written about this. not once but twice!
They are:

HERE and
HERE
This is a BONUS

Monday, 5 December 2016

Jean Bapiste Holland

Francois Hollande announced he would not be a candidate for President in the forthcoming French elections.
He has a very unhappy term as President. The main reason for this was his embrace of supply side economics.

Francesco Saraceno writes about this very well.

There is nothing wrong in boosting the supply side of the economy however it will not boost demand ( unless you are embarking on a significant infrastructure program)for goods and services but will boost efficiency when demand is increasing. Supply reacts to demand. Employers do not invest because you try to boost the supply side. ( Neither do they invest merely because taxes are cut )They invest when they are confident about demand over the medium term.

Hollande has now learned this the hard way. A program of austerity and supply side measures was always going to fail and fail it did badly.

Sunday, 4 December 2016

What ever happened to Scott Morrison?

When the Liberal ran into reality and realised Tony Abbott was leading them into political oblivion and they replaced him with Malcolm Turnbull Scott Morrison's profile rose accordingly as well.

He was seen as delivering a key number of votes and he became Treasurer and seen as the heir apparent indeed the only heir apparent.

These days it is completely different. Scott Morrison is not viewed as a competent treasurer. His predecessor Joe Hockey was seen as hapless and incompetent in this role. Morrison is seen in a similar light..

Morrison immediately blamed Hockey and Abbott for the situation he inherited although this was by implication. The Liberals got into this position because they simply did not understand the position they inherited from the previous government.Morrison follows in that tradition.

Moreover he has put himself under a lot of pressure by saying inaccurately the government has a spending problem. He cannot cut spending to the level needed to bring about a balanced budget because of the impact on the economy however he cannot say this or does not understand this. As Wayne Swan has shown cutting nominal; spending has an affect on the economy. If the economy is not growing substantially you simply cut the speed of the economy. Obama too has shown this!

When you are bombastic and over the top in parliament you look simply ridiculous. The ALP are able to make fun of him at will.

Morrison is a very good example of the Peter Principle in action. Yet no-one , including myself, thought this when he became treasurer.

It also means the Liberals have no-one to call on if they wish to depose Turnbull.