Seems like rates will stay at record low for longer than we predict

Discussion in 'Property Market Economics' started by sumterrence, 6th May, 2015.

  1. 2FAST4U

    2FAST4U Member

    Joined:
    8th Sep, 2014
    Messages:
    164
    Location:
    Adelaide
    Because cutting rates has worked soo well up to now:rolleyes:

    The only way Australia will avoid recession is if the Government fiscally stimulates the economy to a large extent. Already the deficit has blown out 50% since the Liberals took office. The deficit has gone from 12% of GDP up to 18% and that has only stemmed the bleeding with the economy still trajected to get worse. Since both sides of the political spectrum have a hatred towards deficits and have conned the public into thinking the budget is akin to a household budget I don't hold much hope for Australia at the moment.
     
  2. unloadmymind

    unloadmymind Member

    Joined:
    26th Oct, 2014
    Messages:
    268
    Location:
    Sydney
    good luck on that stimulus. not in this time of huge deficits. it blew up because the coalition cannot reverse labor's spending bills because of our senate.

    the RBA has no other tool than interest rates.
     
  3. lilman

    lilman Member

    Joined:
    11th Apr, 2015
    Messages:
    28
    Location:
    southpacific
    looks like someone gets turned on by all this negative news!
     
  4. 2FAST4U

    2FAST4U Member

    Joined:
    8th Sep, 2014
    Messages:
    164
    Location:
    Adelaide
    A fiscal stimulus is classic Keynesian economics. It basically means when the private sector is slack and not spending it's up to the public sector (Government) to pick up the slack and spend more money. The RBA has been doing their job by lowering interest rates but the Government has been spending more money, yet it hasn't been spending enough to generate jobs and growth.
    Once jobs and growth are generated and the private sector and business confidence is restored that's when the Government takes a step back and starts paying back the debt.

    The budget could get back into surplus tomorrow. The only problem would be the economy would crash and unemployment would skyrocket- nobody wants that.

    http://bilbo.economicoutlook.net/blog/?p=30223
     
  5. unloadmymind

    unloadmymind Member

    Joined:
    26th Oct, 2014
    Messages:
    268
    Location:
    Sydney
    I know Keynes and other basic stuff. No need to remind me.

    It's just that it's dreaming and unrealistic in the current situation. Not gonna happen anytime soon.

    The govt won't lift a finger.

    The RBA has no choice.

    We have squandered the spoils of the mining boom.

    Recession is a real possibility.
     
  6. BayView

    BayView Member

    Joined:
    2nd Feb, 2007
    Messages:
    12,129
    Media:
    9
    Location:
    Mornington Peninsula
    I agree.

    Actually though; the Libs are reducing the rate of deficit increase, so that in itself is a "backhand" improvement.

    But yeah; without the Mining, and no real improvement in manufacturing, little wage growth - on the foreseeable horizon...where is the revenue going to come from?

    The Senate has to wake up too; it's bloody hard for any GUbb to make a change and decrease any debt if you can't get anything actually in place which might facilitate that.
     
    Last edited: 29th May, 2015