Australia is now solidly joining the bailout games, with direct bailing out of commercial real estate and plans for a solid "consumer bailout". The problem is that all these bailouts are taking water from the cabin and dumping it into the engine room. Sure, your pants are going to stay dry, but the ship is still sinking and eventually the engine will fail on account of being drowned. Those who aren't watching may think that everything is better because they're no longer being flooded, but the water always comes back!
The announcement of Australia's strong balance sheet is especially troubling, given that similar statements have been made by Bear Stearns, Lehman Brothers, the USA and the UK about their financial systems. In every case it was completely misleading and the statement was only made because they were in a compromising position.
I'm now finishing selling my specuvestment unit from the times before I knew economics. Most people who weren't sufficiently wise to avoid specuvestment seem keen to hang on to their properties still - but they are probably not aware of just how much property prices are falling.
The official tally of government expenses so far is A$45 billon, or about A$2,000 per person, including children. How do you feel about your contribution to our economic planning, where Stevens (RBA governor) thought a recession was unlikely as of April 2008 and Rudd chirped about the IMF's forecast of avoiding a recession and seeing 2%+ growth for '09 as recently October.
Who actually still thinks these people have any credibility whatsoever?
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Quote: "The problem is that all these bailouts are taking water from the cabin and dumping it into the engine room. Sure, your pants are going to stay dry, but the ship is still sinking "
ReplyDeleteGreat Analogy.