Category: Economics

How hard is it? Just Say No

Posted by Chief Blogger – 16 December, 2011

The French head of the IMF Christine Lagarde wants the rest of the world to bail out the Euro zone political project:

“It is not a crisis that will be resolved by one group of countries taking action.

“It is going to be hopefully resolved by all countries, all regions, all categories of countries actually taking action.”

Ah um, no. It will only be resolved by European nations leaving the Euro and learning to live within their means. Furthermore, why should Joe Public in Australia be on the line for a political institution like the EU when none of our banks are heavily exposed and when the EU is not exactly a friendly and open market for Australian exports? Wayne Swan of course is a gullible fool, completely out of his depth and so will probably go along with it.

The IMF has pledged to agree extra funding by next Monday and Mrs Lagarde’s comments indicate that non-European countries will also be asked for additional money – a move likely to prove controversial with America and China.

It also raises the prospect that funds from some of the world’s poorer nations, such as Brazil and India, will be used to prop up some of the wealthiest European countries which have failed to control their public spending.

Given that the IMF is being used so overtly to save the EU political project, a case for selling our shares in the IMF is not far off. The alternative of the Euro breaking up is not being considered by the EU and therefore by extension the IMF. This means Lagarde’s objectives are political not financial and therefore has nothing to do with Australia.

That took a bit of courage

Posted by Chief Blogger – 10 December, 2011

I’m not a David Cameron fan, but to stand against every EU leader and the BBC et al by vetoing a new EU treaty that would have undermined the City of London’s wealth took some guts:

Mr Cameron provoked widespread anger among European leaders by refusing to back a deal to rescue the eurozone, delighting Tories and raising questions about Britain’s future in the EU.

After Nicolas Sarkozy, the French president, led objections to his “unacceptable” demands for legal protections for the City of London, the Prime Minister refused to give Britain’s backing for a new treaty to create a “fiscal union” among eurozone members.

At the end of an acrimonious summit in Brussels, all 26 other EU members signalled they could now support the new treaty, leaving Britain in a minority of one.

Conservative MPs welcomed Britain’s move back towards the traditional Tory stance of “splendid isolation” in Europe — a term for the foreign policy of the late 19th century.

Given Cameron’s compromise was rejected out of hand by the EU, it shows that the UK has virtually no influence while France and Germany are running the show. Isolating your country from the failure of the Eurozone isn’t such a bad thing.

If the momentum in the UK develops to leave the EU, it may present Australia with an opporunity to seal a deal with the UK on trade, investment and immigration. Any such deal would be very popular in both countries.

NEWSFLASH: Swan’s budget surplus in 2012/13 not happening

Posted by Chief Blogger – 29 November, 2011

The Federal Budget for this FY has blown out past $30 billion when it was meant to come in just over $20 billion. Terms of trade are at a 140 year high, so it must take some feat of incompetence to mess the budget up as bad as Swan has. How has it gone so bad so quickly?

It’s called taxing ourselves into poverty

Posted by Chief Blogger – 23 November, 2011

The mining tax is as abhorrent as the carbon tax. Does anyone believe that levying our most successful and biggest employers with some of the highest corporate taxes in the world will be good for the economy – that it will foster innovation and investment? Does anyone believe that this ALP government knows how to spend money better than those charged with making it for their investors and employees and have a proven track record of doing so? Does anyone believe that the way to help the manufacturing industry is by punishing the mining industry, instead of just lowering taxes for manufacturing? Does anyone believe that taking money from an efficient and competitive industry and giving it to an inefficient, uncompetitive industry protected by government fiat and special deals such as ‘renewable energy’, will have no negative impact on productivity, employment and wages? Does anyone believe that someone who earns just above the government’s bond yield of 5 per cent is earning a ‘super-profit’ on their assets and that they need to be targeted and punished with higher taxes?

The Federal government needs to do all it can to foster incentives for innovation, wealth creation and competitiveness. On all three fronts the mining tax fails badly.

From the AEI:

….a unit standard deviation tax rate difference of 12.8 percentage points leads to 122 fewer market work hours per adult per year, a drop of 4.9 percentage points in the employment-population ratio, and a rise in the shadow economy equal to 3.8 percent of GDP. It also leads to 10 to 30 percent lower employment and value added shares in (a) retail trade and repairs, (b) eating, drinking and lodging, and (c) a broader industry group that includes wholesale and motor trade.

Goldwater Institute:

…..the 10 states with the lowest total state and local tax burdens saw an average poverty reduction of 13 percent – two times better than the national average. The 10 highest-tax states, meanwhile, suffered an average increase in poverty of 3 percent. Some high-tax states, such as California, Hawaii, and New York, suffered catastrophic increases in poverty. As California began to reject the low-tax legacy of the Reagan governorship, the state’s poverty rate jumped 13 percent in the 1990s.

Heritage Foundation:

Another EU success story

Posted by Chief Blogger – 30 September, 2011

Example 801 that the ALP is failing the economy

Posted by Chief Blogger – 8 September, 2011

The World Economy Forum has released their Global Competitiveness Report and it is not good reading for the greatest country on earth. In 2009-10 Australia ranked 15th (not good itself) now we are 20th in 2011-12 (even worse). The biggest problems are ‘restrictive labor regulations’, ‘inefficient government bureaucracy’ and ‘tax rates’. No surprises there – thinking of Fair Work, virtually every government programme the ALP have implemented and the carbon and mining tax.

So what is JGill going to do about it? Next week ram through her Co2 tax and damn the nation to EU-style mediocrity and poverty. Can’t wait.

Mark Steyn: After America

Posted by Chief Blogger – 15 August, 2011

I read American Alone, looking forward to After America.

America is no longer a AAA nation. It is a hard reality that many conservatives are struggling to come to terms with. Not necessarily permanent, but that is how America is right now. I’m afraid that under Gillard Australia is heading in the same direction.

We’ve won the battle of ideas, lost the implementation of them

Posted by Chief Blogger – 14 August, 2011


It is less than 5 per cent

Posted by Chief Blogger – 12 August, 2011

What is (70/1560)*100? 4.5 per cent. That is the decline in government expenditure over the forward estimates being proposed by the Coalition. Not much, but it would be enough to offer $8 billion in income tax cuts and would see the abolition of the mining and Co2 taxes. However, the government’s chief economist has a problem with it:

GREENS leader Bob Brown has warned a Coalition government could tip Australia into recession through massive spending cuts to fund its election commitments.

Lower taxes lead to stronger economic growth and tax revenue. A small example from the USA, via the WSJ:

In 1987 the capital gains tax rate was raised to 28% from 20%. Capital gains realizations as a percent of GDP fell to 3% in 1987 from about 8% of GDP in 1986 and continued to fall to below 2% over the next several years. Conversely, the capital gains tax rate was cut in 1997, to 20% from 28% and, at the time, the forecasts were for lower revenues over the ensuing two years.

In fact, tax revenues were about $84 billion above forecast and above the level collected at the higher and earlier rate. Similarly, the capital gains tax rate was cut in 2003 to 15% from 20%. The lower rate produced a higher level of revenue than in 2002 and twice the forecasted revenue in 2005.

BB wants higher taxes, so he needs to tell us what level taxes should be before they become too high. Just name a figure…… My answer: taxes are always too high.

There is only one word: ‘monstered’

Posted by Chief Blogger – 19 July, 2011

Monckton’s addresss to the National Press Club pretty much destroyed his opponent, former Greens advisor Richard Denniss.

Denniss clearly did not know or have any factual details or evidence at his disposal, beyond repeating ad nauseum that the CSIRO backed the climate ‘science’. Using the CSIRO as the yard stick for climate science would be like asking the Chinese Communist Party if their political ideas were working. It is not credible. The CSIRO has become a hot bed for left radicalism. How do you think Greenpeace was recently able to learn and gain access to destory the CSIRO’s genetically modified wheat crop? Inside job, that’s how.

Monckton threw fact, reference, details and evidence at Denniss and the Canberra press gallery and he only got snide remarks about the Coalition’s climate change policies in return – policies which Monckton does not support anyway. So what was Denniss hoping to achieve? His little strawman trick was pitifully weak.

Channel 7 were there of course and they launched a predictable ad hominem attack on Monckton, Mark Riley style. Along with the pro-Al Gore Sunrise morning programme it is pretty clear which bandwagon Channel 7 are on: big government and small freedom.