S M J

Australia's Economy Sinks Further into Recession: Old Fallacies Abound

Beautifully written piece. I agree with your conclusion that economies are driven by businesses and production; not end-user sort of consumption. With the confidence of businesses and manufacturers drowning not only production will come to a halt but any consumption incentives such as Rudd's stimulus package, will only cause the money to be saved by the consumers because they would like to secure their future in case they are fired from work of which the possibility is increasingly high in these times. I tend to disagree with you that supply side economics hardly ever pulls an economy out of trouble because this is what Keynes made happen in 1930s. However, these are different times and I agree with you that little can be done about this recession where mood in both the manufacturing and working classes is at best pessimistic. If a higher minimum wage rate is fixed by the government as well as other conditions are put in place which will make hiring expensive and riskier for the manufacturers, then we have certainly had it. We are certainly talking about unemployment rate leaping at 12 percent or more within few months. Already the government's low unemployment figures are being disputed by various experts and institutions. Anyway, a very well written piece. Please keep it up. It will be good to know your thoughts as economic crisis deepens worldwide and affects Australia.