Is THIS The “Trend” Growth You Are Banking On, Wayne?

1 Dec

Isn’t it wonderful how inveterate liars and deceivers eventually get caught out?

From the Australian:

The Treasurer today declared the government was banking on growth remaining at trend to deliver its wafer-thin budget surplus in 2012-13, despite the threat posed by worsening economic circumstances in Europe and the United States.

Here is the newly-revised MYEFO budget “forecast” for GDP growth that Wayne is “banking on”:

MYEFO 2011-12, Part 1 Overview | Click to enlarge

Er … 3.25% annual GDP growth?

I have one chart for you Wayne.

From the RBA’s latest chart pack (trend line added):

Click to enlarge

So … Wayne.

“Trend growth” for Australia over at least the past 18 years (since 1993), has been slowly but steadily sinking towards 2%.

And yet, you really expect us to believe that we will witness way above-trend 3.25% growth both this financial year, and next? In spite of all the increasing turmoil and volatility in a debt-saturated world right now?

Mr Swan said revised budget forecasts outlined yesterday were based on the “best judgment” of Treasury.

Having confidence in Treasury’s “best judgment”, is akin to having confidence in the “best judgment” of the band playing “In the Shadows” as the Titanic slowly sank beneath the waves.

Rather like Australia’s GDP “trend growth” slowly but surely sinking beneath the waves of a debt-soaked world economy.

And to think this government is introducing a world’s-highest carbon dioxide derivatives trading scheme scam from July next year.

Based on more modelling tea-leaf reading by the same Treasury “bozos” who originally predicted 4% GDP growth back in May.

The same “bozos” who could not foresee an onrushing GFC that even Blind Freddy could see (“Why Would Any Sane Person Believe Treasury’s Carbon Tax Modelling When Its Budget Forecasting Record Is This Bad?”).

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11 Responses to “Is THIS The “Trend” Growth You Are Banking On, Wayne?”

  1. Tomorrows Serf December 1, 2011 at 7:27 am #

    NIcely exposed BI.

    Idea on budgetary savings… Get rid of Treasury.(and the Aust. Office of Financial mis-Management, and the RBA, and…..)

    But no, then Wayne would have no-one to blame for his incorrect assessments and projections.

  2. Jazza December 1, 2011 at 9:17 am #

    Can a Goose be out of his depth at all(I know a Swan can) ?

    Ours is!

    More’s the pity!

  3. JMD December 1, 2011 at 9:41 am #

    From Bloomberg – http://www.bloomberg.com/news/2011-11-30/fed-has-tools-beyond-swaps-for-countering-europe-s-sovereign-debt-crisis.html

    Some quotes –

    “Six central banks led by the Fed lowered the cost of emergency dollar funding for financial companies, reducing the premium banks pay to borrow dollars overnight from central banks by half a percentage point to 50 basis points.”

    “The new interest rate instituted by central banks is the dollar overnight index swap rate plus 50 basis points, and the program was extended by six months to Feb. 1, 2013.”

    Basically, this article states in obtuse fashion that central banks have bid up in price whatever junk financial companies have been caught holding & are promising to keep doing it for longer. Explains the big market moves overnight as speculators rolled into ‘securities’ other than government bonds to catch the rising prices. This is what most know as inflation, it is of course weakening the credit of the central bank, so the government, but so far this is of little immediate consequence.

    Hate to rain on your parade TBI but the effect of this is to reduce yield spreads across the financial ‘markets’, if continued it will give the impression of ‘economic growth’, the same credit bubble ‘economic growth’ that makes everyone think Howard & Costello were the biz.

    • The Blissful Ignoramus December 1, 2011 at 10:09 am #

      We’ll see JMD. It’s not an action addressing the underlying problems; no more than another attempt to send a “signal” that “Central Banks are ready to act”. I can’t see it having any more than a (very) temporary effect. Appears to me that every attempt to kick the can down the road has an increasingly shorter lifespan.

      None of these “signals” are doing anything at all on the foundational issues that directly impact the masses – (eg) improve availability of loans for SME’s, improve job opportunities, reduce sovereign debt burdens (thus, remove hardship of “austerity”). On the other hand, some of these “signals” are dramatically increasing the wealth of the uber-rich. And that reality is becoming increasingly apparent to all.

      Social chaos is here, and these “signals” near-certain to make that worse.

      • JMD December 1, 2011 at 10:37 am #

        Agreed it won’t address any underlying problems, it will only make them worse. Just saying that we are more likely to see more of the same rather than some change for the better.

        By the way, I see a failure of the governments credit as a change for the better, even if it does bring real social chaos, not the faux ‘occupy’ kind. Only the market stripping the government of its ability to ‘extinguish debt’ with more debt will change anything.

  4. Will Bort December 1, 2011 at 10:14 am #

    Isn’t it wonderful how inveterate liars and deceivers eventually get caught out?

    Yes, yes it is.

    Barnaby_JoyceBarnaby Joyce
    I just saw Tony Burke fly off in a private jet. 30,000 feet above the almond orchard I am at. Consider yourself consulted #basinplan
    7 hours ago FavoriteRetweetReply

    Tony_BurkeTony Burke
    @
    @Barnaby_Joyce That’s surprising. I’m in the main street of Griffith. You shouldn’t make things up.
    7 hours ago FavoriteRetweetReply

    • The Blissful Ignoramus December 1, 2011 at 10:32 am #

      Proving what, exactly?

      Two people appearing to make contradictory claims.

      Got any evidential proof that Burke was telling the truth? Or are you merely preferring one person’s word over another’s … without *any* evidential proof of either.

  5. Faye Busch December 1, 2011 at 12:52 pm #

    Any chance of identifying the main Treasury authors who put together the advice to the Treasurer. Are these mentioned above, the ones who wrote the Climate Change costings etc too?

    I keep hearing about Treasury as if it is devoid of humans – I want to see who actually writes this stuff.

    • The Blissful Ignoramus December 1, 2011 at 1:11 pm #

      And not only that Faye … I’d like to know exactly how much both the authors/modellers/tea-leaf readers, and especially their boss, the head of Treasury Martin ‘Mini-Me’ Parkinson, get paid for producing their drivel.

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