On “Black Monday” October 19, 1987, the US stock market crashed, losing over 500 points and 22% of its value in a single day. At around the same time, R.E.M. had just broken through as a major act, and their song “It’s the End of the World as We Know It (And I Feel Fine)“ was playing everywhere, getting an extra boost from the events of the day.
In the US, it seemed the ostensible “Reagan era” was coming to an end. The still-evolving neoliberal economic order – based on valuing financial returns over wage increases as a source of demand – had been shown up. Asset bubbles were not to be trusted as a stable basis for an economic policy order.
via It’s the end of the world as we know it…again.
Agriculture has always been and is likely to remain for some time, an important component of the Australian economy. While agriculture contributes just 2.3% of GDP, its diminishing importance is not the result of any reduction in output but rather to the growth in manufacturing and the service-based sectors of the economy.
Today, more than 307,000 people are employed in agriculture. Agriculture is the biggest employer in rural and regional communities, but if we consider all those employed in the input and output sectors, food manufacturing and processing, distribution and retail, agriculture provides employment for more than 1.6 million Australians.
via Australia’s ‘five strong pillar’ economy: agriculture.
Is the rise in inequality in Australia due to global changes in the distribution of marginal productivity or changes in the allocation of political favours? This article lays out the arguments for both views. Looking at the tax and subsidy changes that favour the rich, and considering that almost all the 200 richest Australians look like the beneficiaries of political favours rather than innovators or superstars, the article concludes that inequality is probably increasing due to changes in the political realm. The discussion outlines a research agenda and possible counter-moves, such as more direct democracy and having open markets for political favours.
via Rising Inequality: A Benign Outgrowth of Markets or a Symptom of Cancerous Political Favours? – Frijters – 2015 – Australian Economic Review – Wiley Online Library.
Prime Minister Julia Gillard woke up this morning with the knowledge that Australia’s annual GDP growth is 3.1 per cent, inflation is 2.2 per cent, the unemployment rate is 5.4 per cent, mortgage interest rates are at 6.4 per cent and over 190,000 jobs have been created over the past year.
Gillard can check with the three major credit rating agencies and see that they all have Australia triple-A based on some of the best fiscal settings in the world. Government debt remains at trivial levels and the recent cuts to government spending is seeing a sharp improvement in the budget balance, as it should when the economy is growing.
via Enough leadership clamour, back to budgeting | Business Spectator.
The Australian economy is changing, but consumers and businesses are changing their habits to suit. We have good reasons to be confident in our economy, writes Greg Jericho.
Last week the Monthly Westpac-Melbourne Institute Index of Consumer Sentiment found that Australians are now more confident about the economy than they have been for two years.
In a blow to the all the prognostications of doom and destruction regarding the carbon tax that flowed forth from both the Opposition and sections of the media favourable to that party, Australians have essentially kept calm and carried on.
The latest figures suggest that consumers are rather more in tune with how the economy is going than those who would seek to tell us life is gloomy and horrible. Not surprisingly, as employment has increased since July 1 last year, so too have consumers responded with increased confidence.
via Good reasons for a confident economy – The Drum Opinion (Australian Broadcasting Corporation).
Time Australians’ stopped the whining and fessed up that the Labor Party has been pretty good in government and to realise that the opposition are like those Europeans with all their talk belt tightening.
The Australian “grim reaper” economy, as Shadow Treasurer Joe Hockey called it today, currently has an unemployment rate of 5.2%. That is low by historical standards (average for last 30 years is 7.2%) and sits well against 7.7% in the US, 11.7% in the Eurozone and 7.3% in New Zealand, to name a few.
No one seriously expects the unemployment rate to go above 6% despite the current soft patch for growth, while the RBA and Treasury reckon it will stay near 5.5% over the next year or so.
This is a rolled gold performance in anyone’s language.
Contrast this with the US, where Chairman of the Federal Reserve, Ben Bernanke, said this morning that interest rates will be left at zero, yes zero, where they have already been for four years, and the Fed will keep printing money (US$85 billion a month in fact in quantitative easing) until the unemployment rate gets down to 6.5%. Not the “grim” 5.2% in Australia, but 6.5%.
via Blog | Market Economics.
Megan Clark, the chief executive of CSIRO, was talking to one of her Chinese research colleagues and she asked him why China was putting so much effort into partnering with Australia, given the opportunities they would have with much larger research nations like the US, Germany and Japan.
Clark says he looked at her with puzzlement, “we’ve done our numbers”, he said “and by 2050 you will be the richest nation per capita country in the world, you can feed yourself, you have abundant energy resources, and you have an educated population which means you will be able to innovate”. Then, Clark says, the Chinese scientist looked at her as if to say “have you not realised this about yourself already?”
It was an ‘aha’ moment for Clark and it should be for all Australians.
via Australian cure for a Dutch disease | Jackson Hewett | Commentary | Business Spectator.
d debt.What is it?The Budget Control Act of 2011, set into law in a grudging political compromise in August that year, forces the government to slash spending by $1.2 trillion over 10 years from January 1, 2013. Next year’s cuts, called “sequestration”, would be about $109 billion.Also on that date, a package of tax reductions set or extended in 2010 to spur economic growth, as well as an extension of unemployment benefits, will expire, meaning taxes will rise significantly for most Americans.Why will this happen?Democrats and Republicans have long been deadlocked over whether to address a $1 trillion-plus annual budget gap with higher taxes or lower spending.The BCA was a poison-pill deal designed to force them to find a less austere compromise, but neither side would budge before the November 6 election.Now that the vote has passed, they only have a few weeks to find a solution to beat the year-end deadline.
via Facts on the US fiscal cliff – ABC News Australian Broadcasting Corporation.
China’s export growth is slowing and Europe remains in trouble, but not everything is gloom and doom in the financial world, as Alan Kohler explains.
There’s an air of unreality about the share market at the moment. Yesterday, the Australian market hit a new 2012 high on the back of a sudden spurt in the iron ore price, as the IMF cut back its forecasts for global growth, Rio Tinto added to the gloom about China by cutting back its forecasts for that country, and the local polity managed to plumb new depths.
Investors have long since ceased to worry about politicians, but how to account for the disconnect between what might be called the real world and the financial one?
via The disconnect between the real and financial worlds – The Drum – ABC News (Australian Broadcasting Corporation).
Today, amid a regulatory clampdown and a turbulent global economy, the industry is contemplating a future that looks more like the lower-key profession Mr Forese remembers. Securities firms are cutting jobs. Bonuses are down sharply. The prestige of being a Wall Street banker has plummeted. And the profits that underpinned the heady years of the past are harder to come by. For Wall Street’s critics, these are not all bad developments.This week, the Financial Times looks at the industry’s attempts to adapt to a post-crisis world. We investigate whether the spread of electronic trading is a threat or salvation, examine the competitive challenge from non-bank firms and report on the struggle of troubled European institutions to stay in the top tier of financial players.
via Wall Street: Leaner and meaner – FT.com.