To boil it down, the reason Greece is in so much trouble is that every Greek wanted a government that did all the expensive things governments do, but none wanted to pay tax.
Greece's politicians did not have the courage to tell their people that, in the end, you cannot have one without the other.
The Greek government ran budget deficits for year after year, racking up more and more government debt, eventually doing dodgy deals...
Wednesday, June 29, 2011
Monday, June 27, 2011
How to blow the boom: cocoon manufacturers
The fusspots are right when they say we must make sure the nation gains lasting benefit from the resources boom. But doing so is as much about what we shouldn't do as what we should.
The first thing to note is that, even if the boom were to end a lot earlier than the policy-makers expect, the main thing we will be left with is a very much larger mining sector, producing and exporting a lot more minerals and natural gas than...
Pop bubbles before they can cause havoc
Don't drop your bundle yet. It would be a brave person - braver than me - who denied any possibility of another global financial crisis.
Sure it's possible, but it's far from certain. And another financial crisis might be like we eventually realised the last one was: more North Atlantic than global.
The Bank for International Settlements is the central bankers' club. And central bankers don't warn of catastrophe if they really...
Saturday, June 25, 2011
Raising the bar on the dollar's change in fortune
You may not have noticed, but the econocrats have raised the bar on the amount of economics you need to know to follow the debate about the economy - or, at least, to follow what they are saying about it. The jargon phrase of the year is the "real" exchange rate.
Until recently, heavies from Treasury and the Reserve Bank were content just to say the exchange rate - the overseas value of the Australian dollar - had depreciated...
Wednesday, June 22, 2011
Primary products are setting us up well
For many years - most of the second half of the 20th century - it looked like Australia was on the wrong tram. In a world of ever-more high-tech, sophisticated manufactured goods, we were hewers of wood and drawers of water. To put it less biblically, we paid for our imports mainly by growing things in the ground or digging stuff out of the ground.
We were stalled in primary industry while the rest of the developed world had...
Monday, June 20, 2011
Let punters beware of business carbon claims
Sometimes I suspect many business people regard it as quite ethical to lie and mislead the public, provided they're lying in the shareholders' interests. And when you're laying it on thick to pressure some government into giving you a special deal or an exemption from some measure, you're always doing it for the shareholders. What's in the nation's interests - and whether your special deal would damage the nation's interests...
Saturday, June 18, 2011
Resources boom has mined a rich seam for everyone
If you haven't said it yourself, I bet you've heard others saying it: ''Resources boom? What resources boom? Whoever's benefiting from it, I'm not. None of it's come my way.''
Is that what you think? Well, don't kid yourself. Whether or not you realise it, you almost certainly have benefited from the boom.
But how have people who don't work in or near the mining industry - and don't live in Western Australia or Queensland -...
Wednesday, June 15, 2011
Great cities inspire us to reach for the sky
As I'm sure you've heard, for the first time in human history more than half the world's population lives in cities. In the developing countries, particularly China, the urban population is growing by 5 million a month. In rich and poor countries alike, cities are a magnet. But why are people so keen to crowd into congested, expensive cities?
The explanation has to be primarily economic, but most economists studiously ignore...
Monday, June 13, 2011
Far too much economic news for our own good
Ian Macfarlane, the former governor of the Reserve Bank, thinks Australians get too much news about the economy, and this surfeit actually worsens the decisions we make about investments.
At the risk of being drummed out of the economic journalists' union, I suspect he's right. But I'll let him do the talking (he was delivering the Mosman Address at Mosman Art Gallery on Friday night).
Over the past couple of decades the public...
Saturday, June 11, 2011
Quest to make uni fees a heck of a lot fairer
One measure in the May budget's tightening up on ''middle-class welfare'' drew surprisingly little debate: the decision to cut the rate of discount offered to people who pay off their university HECS debt up front from 20 per cent to 10 per cent.
When the higher education contribution scheme was introduced in the late 1980s, the discount for paying up front was 25 per cent. Now it's falling to 10 per cent. And the discount for...
Wednesday, June 8, 2011
Sympathy for those on $150,000, but...
One thing I despise about public life in Australia today is the way power-chasing pollies and self-promoting media personalities seek to advance themselves by encouraging people living during the most prosperous period in our history to feel sorry for themselves. Apparently, the soaring cost of living is absolutely killing us.
So forgive me but, just this once, we're going to worry about other people's problems, not yours.
Years...
Monday, June 6, 2011
This time it's a recession we don't have to have
Though nothing is certain in the unpredictable world of the national accounts, it's highly unlikely we'll see a second, successive quarter of ''negative growth'' when the figures for this quarter are released in early September. Which, in a way, will be a pity.
Why? Because even if the hiccup caused by our natural disasters had spread itself over two quarters - after the 1.2 per cent contraction in the March quarter - not even...
Saturday, June 4, 2011
GDP hot air gives Hockey hiccups
See how long it takes you to figure this one out: if something falls by 50 per cent, then rises by 100 per cent, where is it? Answer: just back where it started.
If you had to think about it you need to be careful what conclusions you draw from this week's national accounts showing the economy - real gross domestic product - contracted by 1.2 per cent in the March quarter.
Thanks to economists' obsession with growth, we focus...
Wednesday, June 1, 2011
Mouse is mightier than the stores
Well-mannered newspapers don't spend a lot of time talking about themselves. Even so, you've no doubt heard that the future of newspapers - though not news or journalism - is under great challenge from the arrival of the internet.
Much classified advertising has moved to the net and now some display advertising is going.
Some readers are moving to the net, smartphones and tablets such as the iPad.
As you may imagine, these...
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