Rudd's $42 billion 'nation building' plan (5 Viewers)

[Gerald10]

I thought you must have missed it.

 

[zstar]

Wow, i clearly looked away for too long!



Ok, have any of you ever head of "market failures"? These occur because MARKETS FAIL! i think it's a good example of what's happening right now. Poorly regulated markets created this mess (Sub-prime mortgage market in the US, or at least partly)



Govt's HAVE to step in. I'm not saying any one govt is better than another. Rudd is doing exactly what Howard would ahev done and throw money into the market to 'stimulate' it. Otherwise known as expansionary fiscal policy. The market is contracting, mainly through lack of consumer confidence. People are scared about the future, so instead of SPENDING they're SAVING and no money is going into the economy, so businesses are laying off people to keep their stock holders happy. Meanwhile stocks are going down due to businesses doing poorly and generally everyone's loosing money (even poor I have lost a few grand thanks to this *sigh* ).



Oh, my bad Gerald10, i missed the "arn't", thought you were saying it was all bad, the stimulas. Appologies.



Otheriwse, Yep, agree with you there Gerald10, let the market (peoples) decide which industry is efficent and which isn't.



Just make them spend it!

Ah yes but look at who created these bubbles.

Fannie and Freddie was the result of government who created the moral hazard, It was the Federal Reserve that lowered Interest rates giving people easy access to money, It was the Federal Reserve that used delaying tactics to keep the recession of 2001 from happening thus insuring that a recession would turn into depression.

So a recession is not "failure" rather it's a correction to get rid of wealth that never existed due to these bubbles created by government.

If people were spending things they didn't need with money they didn't have the market has to punish us from all this easy money.

BTW regulation does not work. They could not stop Bernie Madoff from running his ponzi scheme and the regulators did not prevent this crisis from happening so regulation is not the problem.

 

[Gerald10]

Hawkeye I dont believe stagflation is a problem in the Australian economy. I think that since the 80's our markets generally have become sufficiently competitive to mean that cost push inflation (inflation caused by rising input costs) has largely been minimal. That means our only inflation problem is demand pull which obviously cannot occur when demand is low so hence stagflation isn't really possible. Though it may appear to exist with time lags etc

Of course it could happen hypothetically if our exchange rate collapsed ala Zimbabwe.

 

[Rafy]

Re: If this thread gets to 300,000 posts I will bake BOS a nice cake.

http://www.news.com.au/story/0,27574,25009452-5007146,00.html

 

[Gerald10]

Ah yes but look at who created these bubbles.

Fannie and Freddie was the result of government who created the moral hazard, It was the Federal Reserve that lowered Interest rates giving people easy access to money, It was the Federal Reserve that used delaying tactics to keep the recession of 2001 from happening thus insuring that a recession would turn into depression.

So a recession is not "failure" rather it's a correction to get rid of wealth that never existed due to these bubbles created by government.

If people were spending things they didn't need with money they didn't have the market has to punish us from all this easy money.

BTW regulation does not work. They could not stop Bernie Madoff from running his ponzi scheme and the regulators did not prevent this crisis from happening so regulation is not the problem.

We are talking about Australia whose only real economic problem is our exports diminishing as a result of lower global demand - that lack of demand is being suplemented by government which is preventing mass human misery.

If we were to talk about America... Regulation is the solution to the problem - in Australia for example if one takes out a mortgage and the house price falls and the are forced to sell then that person still owes the bank money - in America they could walk away from the house with nothing more than a bad credit rating meaning the losses were all the banks - a possible solution is for government to buy up these debts that are bad and to renegotiate with the homeowners at a lower interest rate but stipulate that (like in Australia) that the debt must be repaid.

Your argument that regulators failed to stop this happening ergo regulation doesnt work is fallacious and frankly idiotic - if regulation existed to a) not allow people to get loans the cant afford and b) not brand those loans as AAA and sell off to other institutions then the problem wouldn't have occurred. Though you are correct to an extent in saying that the government was at fault for allowing the mortgage giants to act the way they did and the federal reserve in creating a an artificial housing bubble.

But just because government makes a mistake its ridiculous not to try and rectify it as best possible.

Yes it is better to encourage sustainable growth rather than booms which lead to inevitable bust - thats exactly what Keynes argued - but to stand back and watch the world burn just to teach the markets a lesson is something completely unjustifiable.

 

[H@wkeye!]

True, wasn't trying to say it would happen, just a scary thought.

Now in response to zstar

Markets fluctuate, boom and bust cycle. I'm not trying to defend the govt, i didn't vote for this bastard, and he's made a bit of a mess of it, (unlimited guarantee of banks, destroyed NBFI - non-bank financial institutions), but it wasn't our govt that created this whole mess, that we can definitely blame the global economy. The recession of 2001, that never happened, was due to changing markets, and our ability to shirt our exports to other countries thus avoiding the Asian crash.

And, as i've said before, WE ARE NOT (yet) in a recession. Yes, though, if people spend money they don't have on things that do not create weath - then they will get punished, eventially. Equally i'm not saying all regulations work, clearly this crisis is an example of failed regulations, as well as over heated investment in now unviable industries.

Bernie Madoff was part of the cause, and yes, regs stopped picking him up, and so failed. These regulations failed, better regulations, more flexiable, adaptave ones could have. But that's speculations...

 

[H@wkeye!]

We are talking about Australia whose only real economic problem is our exports diminishing as a result of lower global demand - that lack of demand is being suplemented by government which is preventing mass human misery.

If we were to talk about America... Regulation is the solution to the problem - in Australia for example if one takes out a mortgage and the house price falls and the are forced to sell then that person still owes the bank money - in America they could walk away from the house with nothing more than a bad credit rating meaning the losses were all the banks - a possible solution is for government to buy up these debts that are bad and to renegotiate with the homeowners at a lower interest rate but stipulate that (like in Australia) that the debt must be repaid.

Your argument that regulators failed to stop this happening ergo regulation doesnt work is fallacious and frankly idiotic - if regulation existed to a) not allow people to get loans the cant afford and b) not brand those loans as AAA and sell off to other institutions then the problem wouldn't have occurred. Though you are correct to an extent in saying that the government was at fault for allowing the mortgage giants to act the way they did and the federal reserve in creating a an artificial housing bubble.

But just because government makes a mistake its ridiculous not to try and rectify it as best possible.

Yes it is better to encourage sustainable growth rather than booms which lead to inevitable bust - thats exactly what Keynes argued - but to stand back and watch the world burn just to teach the markets a lesson is something completely unjustifiable.

Good 'old Neo-classical economics, maybe now they'll stop praising it!

Keynes argued that we should do exactly that, and that's what the RBA and govt are suspossed to keep to. Not easy considering that any change you make now, takes 6-12 months to have any effect

You doing econs at uni? you seem to know a bit about it...

 

[sdent40]

Btw Sdent the only part of what you said that is remotely correct is that some industries are inefficient and shouldn't be subsidised. Other than that its a collection of very bizarre comments.

No it's not bizarre, it's just a different branch of economics than what you're used to, it is Austrian economics. Forget what they teach you in high school + most uni economics and give it a try sometime, check out Ludwig von Mises Institute - Homepage resources like daily articles or the free PDF books about the great depression, currency and so on.

 

[H@wkeye!]

No it's not bizarre, it's just a different branch of economics than what you're used to, it is Austrian economics. Forget what they teach you in high school economics and give it a try sometime, check out Ludwig von Mises Institute - Homepage resources like daily articles or the free PDF books about the great depression, currency and so on.

Yer, not sure where they my econs teachings from my, University!

OMG they're nutty at the von Misses "To make sure that individuals and corporations realize you are serious, blow up the IRS building." wtf?

"If an allergic man has been stung by a bee, I don't know what to do except rush him to the hospital and maybe scour the cupboards looking for Benadryl. But I'm pretty sure drawing blood from his leg, in order to inject it into his arm and thus "stimulate his immune system," is a bad idea on numerous accounts — not least of which, is that I'm pretty sure an allergic reaction means your immune system needs to calm down." THIS IS WHAT THEY'RE NOT DOING!

The money is coming from a place where it's not currently being used, or that is exactly what they would be doing. They expand the economy, not move a little money around. Geeze these Austrians need to learn basic econs!

 

[Gerald10]

No im just a high school economics kid - will be doing a B Arts next year minoring in economics as well as B laws eventually at UNSW.

 

[Gerald10]

No it's not bizarre, it's just a different branch of economics than what you're used to, it is Austrian economics. Forget what they teach you in high school + most uni economics and give it a try sometime, check out Ludwig von Mises Institute - Homepage resources like daily articles or the free PDF books about the great depression, currency and so on.

I will be sure to look at a great deal of different economic theories but as Hawkeye showed your argument is full of holes.

I am completely open to new economic ideas and to learning a lot more about the seemingly endless complexities of economics - i follow no theory dogmatically but I see no evidence that Keynes was wrong - when the facts change I will change my opinion.

 

[H@wkeye!]

I love Keynes's policies, however, the long run Philips curve kind of undid hims somewhat.

Stagflation + Inflation.

His response - "in the long run, we're all dead!"
hehe.

I'm into New Keynesian

Otherwise a little chaos theory.

*Edit* best bit about learning Economics at uni, is the lectures who know, tell you how the theories they teach, don't work! Kind of funny!

 

[hiphophooray123]

Me:

I am a uni student, i am not on youth allowance

I do not work, but my interest counts as income so it I have to pay PAYG tax and have to lodge tax returns every year etc.

am i eligible for this payout or not?

 

[H@wkeye!]

Hrm, if your interest counts as your income, you must ahve a lot of savings!

Otherwise, i donno. I'm not even sure if i get that payout.

 

[sdent40]

But just because government makes a mistake its ridiculous not to try and rectify it as best possible.

It's biggest mistake was to create malinvestment, which is the bubble that it created by having fractional reserve banking, and monopoly fiat currency.

The best way to rectify that problem is to allow free banking and private currency.

H@wkeye, I will respond to your post later tonight, don't have the time right now

 

[H@wkeye!]

It's biggest mistake was to create malinvestment, which is the bubble that it created by having fractional reserve banking, and monopoly fiat currency.

The best way to rectify that problem is to allow free banking and private currency.

H@wkeye, I will respond to your post later tonight, don't have the time right now

Ok, i'm going to come right out and say this. NO economic theory can truely explain why this crisis happened. This is because no economic theory can be proven in the real world. This theory is another attempt (not saying that it's a failed attemt) to explain economic happenings.

I've never heard of it, but from what i've read it seems to have some fundamental holes. Please do explain what you mean by 'free banking' and 'private currency', i really am confused. The banking (and finance industry) is regulated, things like reserve rate, and alike (and yes, they failed here - more thanks to the US though). Currency - if what you mean is exchange rates, are private. The RBA doesn't control it like in China, it floats depending on the market.

 

[Gerald10]

It's biggest mistake was to create malinvestment, which is the bubble that it created by having fractional reserve banking, and monopoly fiat currency.

The best way to rectify that problem is to allow free banking and private currency.

H@wkeye, I will respond to your post later tonight, don't have the time right now

??

 

[H@wkeye!]

Way ahead of ya!

 

[incentivation]

Ok, have any of you ever head of "market failures"? These occur because MARKETS FAIL! i think it's a good example of what's happening right now. Poorly regulated markets created this mess (Sub-prime mortgage market in the US, or at least partly)

I was under the impression that the existence of such sub-prime markets was a result of policy of the Clinton Administration. I can assure you that not many in the financial sector would provide such high risk loans without some form of state protection.

Intervention not market decisions resulted in the sub-prime issue.

If I'm wrong I'll gladly accept it, but that's what I thought the deal was.

 

[H@wkeye!]

I was under the impression that the existence of such sub-prime markets was a result of policy of the Clinton Administration. I can assure you that not many in the financial sector would provide such high risk loans without some form of state protection.

Intervention not market decisions resulted in the sub-prime issue.

If I'm wrong I'll gladly accept it, but that's what I thought the deal was.

I am, by no means, an expert on this issue, and am not crystal on the beginnings of it. What i thought happened, as a relaxing of the regulations regarding mortgage's (when, i'm not sure, as said, pre-bush - sadly we can't pin the initial blame on him...), which allowed people with super low, or even NO credit rating, to get a mortgage. As these were super high risk mortgages, banks had to get some reward for footing the risk, so they jumped from like 6% interest to something ridiculas, 20+% i imagion. That's what killed those with them.

The market - or greed, another cause of market's failing - did cause this, through sending the risks all over the place, both nationally and internationally. Then they all started crashing, and so the current crisis was born.

Personally i'd put the beginning of the crisis, the catylst, if you like, down to poor regulation of financial markets, and lack of intervention when the crisis was becomming apparant (here we can blame Bush! hurrah!)

For some reason, those who were setting up these mortgages, were making a killing from it. Scary to think that the banks, or even the actuwary's (that spelt right?) within the banks couldn't see this coming...