Are we out of the recession?

Well for a political junkie like myself a week when the great smirker Peter Costello retires after all the time he has spent coveting the leadership of the Australian Liberal Party, is a week to comment upon.
Costello despite the efforts by Howard to downplay his efforts deserves credit for the position that the Australian economy now finds itself. As Peter Hartcher stated in his article this week,

"Keating imposed the structural reforms that woke Australia from its economic coma and created the beginnings of a modern, competitive economy. And Costello imposed the discipline to prevent the political system from bogging the country down in a mire of government debt"

There is no doubt that without Costello the Howard government would have blown a considerably higher proportion of the commodities boom. The result is that Australia has been able to cope with the recession better than any other developed country due to the subsequent budget surpluses and negative public debt. The following graphs from the Federal Treasury show Australia's Economic growth to be higher than all of the top 20 economies and to have lower net public debt than all of the top 5 economies.








However the question that needs to be answered is - Is Australia out of the recession?? (give the poll a go). After reading Gittins from the 13/06/09 a number of points are raised. Our recent trade performance has been exceptional- why? Well the Australian dollar feel sharply which meant that exports received an advantage and imports were higher. Combined with lower demand for imports by Australians in a downturn has meant that our trade performance has been very good. In addition during a recession manufactured good demand falls- now we our economies structure is weighted towards services and commodities. The demand for these has been steady.

However with the dollar heading back to 80c/US, business confidence picking up and thus higher imports combined with the prices gained for our exports sliding the future for Australia is not rosy yet.

New World Order!!!

There are a considerable amount of conspiracies floating around out there that perpetuate the idea that the USA has attempted to change the balance of power so that they are in total control.
The evolving nature of world order means that there has been constant change since the end of the Cold War and the demise of communism. If this peaks your interest then you could try a number of avenues for further research.

Here a number of links that will make you think. I am not trying to sway you either way, merely encouraging you to challenge the accepted beliefs and always question.

New World Order- details.
The basic idea of the concept is that very powerful forces would cause conflict and situations which require solutions (e.g East Timor independence) which will require outside forces i.e the UN to enter sovereign land and then retain control post the conflict. The end goal is a totalitarian world government.
If you are interested further try the videos on this google search.

If you want some relevant information to the World Order syllabus then start here.
For example you will find information about the UNMIT (United Nations Integrated Misson in Timor Leste) which maintains a policing and training role in East Timor to encourage democratic processess to be constructed in this new nation state. They have supervised volunteer collection of arms, swearing in of judges and administered a serious crimes unit which is investigating human rights breaches dating back to 1999.

Budget Leaks and Wrecking Balls

As May comes around the chatter amongst economists and interested people regarding the Budget begins to build steam and this year it appears to have started to have happened quite early. With the background being the global financial crisis (or GFC as some have named it- sounds better) this means that many items on the ALP wish list will be placed on the chopping block.
Here are some of the items that have been considered;

• paid maternity leave (min 6 weeks)
• upgrade to the aged pension and unemployment benefits
• increased funding for universities
• continuation of 'Education Revolution'
• whether the incentives for first home buyers should be continued
• environment incentives e.g insulation
• tax cuts (which were introduced as part of election campaign in 2007)
  

However with unemployment heading towards 7% (which obviously increases transfer payments), company and income tax revenues down it is obvious that a number of these items will be merely wishes. At the least Australia is heading for a Budget deficit of $30-50 billion.

Compare these issues to this article from the SMH (by Jonathon Pearlman) regarding defence spending. What are your thoughts on defence expenditure and where the funds could/should go???

Illustration by Rob Homer , SMH.

Is Rudd the Australian ambassador of China???

Good luck, sleep well and remember the basics. (fact, explanation, example) and make sure your answer is balanced without becoming an emotional diatribe.
Hope I have some interesting marking ahead.

Eco- Is Foreign Aid good for Africa?

On the 17th of March, Foreign Correspondent (yes on the ABC) had an interview with Dambisa Moyo a Zambian-born economist. This is some of the information from the ABC web site.

"In her new book, Dead Aid, she argues that official aid is easy money that fosters corruption and distorts economies, creating a culture of dependency and economic laziness.
Moyo is particularly dismissive of the ‘celebrity aid’ model popularised by international stars such as Bob Geldof and Bono and says many aid organisations and NGOs are more interested in perpetuating poverty in order to justify their own existence."

Interesting thoughts indeed. Moyo is a believer in trade and the power of the market as opposed to the aid model in which she claims the only growth occurring is in the Swiss banks accounts of the political elite.
Lastly she claims that 10 percent of Africans were living in poverty in the 1970s compared to 70 percent now.
What do you think? It would be good to hear some comments for a change.... (PS this is not a new concept it is new for an African economist to be suggesting it though)

Legal - Modern day slavery

The Wei Tang case is very important regarding human rights and the definition of modern slavery in Australia. It was eventually found that ownership is an old fashioned definition of slavery however that 'control over freedom and movement' and to be 'deprived of choice' did exist.

It is estimated that between 400-1000 women (Project respect) are brought to Australia every year for the purposes of sex work and the UN estimates that up to 4 million people are trafficked yearly.

Sex Slavery- the Wei Tang case involved the first person to be charged guilty for possessing of sex slaves. Five women were brought to Australia and told they had to work off debts of $45,000 before they could earn an income. Wei Tang received 10 yrs in June 2006 from the Victorian County Court.
On appeal "her convictions were quashed and a fresh trial was ordered after the Court of Appeal ruled directions given to the jury were inadequate." The prosecution then appealed to the High Court which upheld (agreed) with the original decision which means she is /was guilty. SMH Aug 08.
From an Australian legal point of view this is a landmark case as Weng argued that she was involved in debt bondage not slavery. The Criminal Code Act 1995 (Cwlth) is the issue and the actual defintion of slavery. After hearing the appeal the majority of High Court agreed that the defintion which comes from the 1926 International Convention to supress the Slave Trade was correctly applied.
For additional information see Madam or slave? (The Age) or for a comprehensive discussion see this ANU report which goes into the legal detail.

Yr 12 Eco; An interesting week (updated 11/3)

The past week has been an interesting week in the world of the Australian economy. Statistics seem to drive the political cycle and this makes for interesting viewing in the times we are currently living.
On Tuesday after the RBA decided to hold interest rates on hold for March (after 5 succesive cuts of the cash rate from 7.25% to 3.25%) in a 'vote of confidence'.
In his statement on 3/3/09 Glenn Stevens stated "In Australia, demand has not weakened as much as in other countries and, on the basis of currently available information, the Australian economy has not experienced the sort of large contraction seen elsewhere."

Then on Wednesday the figures the government has been dreading were released. The December quarter growth (GDP) figures showed the economy contracted by 0.5%. This is the first period of negative growth since Dec 2000. The ABS figures also showed that the end of year figures (0.3%) were the lowest since 1990.
Interesting the manufacturing sector contracted by 4.7% and the TCF by 8.5%. On the positive side the agricultural sector expanded production by 10%.


Finally today (Mon 9/3) the World Bank has released a report stating that the volume of world trade will decline for the first time since 1982. Secondly in a report the bank has prepared for next weeks G20 meeting the World Bank states that the world economy will shrink for the first time in 60 years. They have advised developing nations to monitor their banking sectors and to stay away from protectionsim which in their view will 'deepen the crisis'.
Interestingly they te World Bank also suggest that governments like Australia should "create a "vulnerability fund" and to set aside a fraction of what they spend on stimulating their own economies to help others.
After all that dastardly news the positive spin is whilst most of the major OECD nations are officially in recession Australia has the lowest negative growth.