Tag Archives: John Quiggin

Leading Social Democrat Answers Rudd’s Question On AAA Rating

5 Aug


Kevin Rudd has made much of his being — according to him — a Social Democrat.

He has also made much of Australia’s AAA credit rating.

Interestingly, another leading light of the so-called “Left”, who also sees himself as a Social Democrat, has a rather different view about Australia’s AAA rating.

Indeed, Professor John Quiggin — someone with whom I agree on many topics — says that he agrees with Shadow Finance minister Andrew Robb’s recent observation; one that was much ridiculed by Labor, and its many Cyclopsian supporters:

Which politician, holding a senior frontbench economic position, made the following sensible observation

“I remind you that Lehman Brothers, the collapse of Lehman Brothers, which started this global financial crisis, on that very day, they still had a AAA credit rating. What does a AAA credit rating really amount to? What I’m saying is you can’t place enormous store in the rating agencies. They do get things very badly wrong, and they totally missed those major firms and economies that were driving and the reason for the GFC.”

The answer to Kevin Rudd’s arrogant challenge on why Australia still has a AAA credit rating “from all 3 ratings agencies” is, ironically, the very same argument that Labor has been using to proclaim how great a job they’ve done managing the economy.


Relative to the other basket-case economies in the Western world, Australia’s ability to service the $16 billion a year interest payments on its public debt, is still considered “AAA”.

For now.

As always, the truly important point is what the politician does not tell you.

That the ratings agencies have issued several stark warnings about our AAA rating.

If the Federal government cannot demonstrate a credible “path to surplus”, then our AAA rating is in jeopardy.

One look at Labor’s revised Economic Statement released on Friday, is sufficient to tell anyone with half a clue that Labor does not have a credible path to surplus.

Far from it, in fact.

The “major economic parameters” for the newly revised “projections” in that $33 billion black hole Economic Statement, have holes you could drive a truck through.

That is, if you could afford the fuel, after Rudd includes transport fuels for heavy on road vehicles in his CO2 trading scheme from 1 July next year.

And Labor’s sole idea for how to “manage the economic transition” from a collapsing mining boom — one they predicted would give us a period of “unprecedented prosperity” “stretching to 2050” — is to copy Cyprus and Iceland.

By turning Australia into a “financial services centre to the region”.

Brilliant. We know how well that grand plan panned out for the Icelanders and the Cypriots.

As your humble blogger observed on Twitter last evening:

Australia’s AAA rating simply means this:

We are 1st class passengers on the Titanic.

#gfc #lasttodrown

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