Playing the Beatles backwards

Here it is. A new, sometimes cruel, always fair, reassessment of the music that made us when we still could be made. Click on each one. Wallow.

HT: Marginal Revolution

185. “Revolution 9”
184. “Honey Pie”
183. “I Want You (She’s So Heavy)”
182. “Yer Blues”
181. “Good Day Sunshine”
180. “Ask Me Why”
179. “Long, Long, Long”
178. “Little Child”
177. “Old Brown Shoe”
176. “You Know My Name (Look Up My Number)”
175. “I Wanna Be Your Man”
174. “Love You To”
173. “Why Don’t We Do It In The Road?”
172. “Magical Mystery Tour”
171. “Wild Honey Pie”
170. “For You Blue”
169. “Don’t Pass Me By”
168. “Doctor Robert”
167. “And I Love Her”
166. “The Word”
165. “You Like Me Too Much”
164. “Maggie Mae”
163. “Tell Me What You See”
162. “Thank You Girl”
161. “I’ll Cry Instead”
160. “Everybody’s Got Something To Hide Except Me And My Monkey”
159. “One After 909”
158. “I Want To Tell You”
157. “Don’t Bother Me”
156. “Sun King”
155. “What Goes On”
154. “Flying”
153. “There’s A Place”
152. “Her Majesty”
151. “Do You Want To Know A Secret”
150. “Dig It”
149. “Maxwell’s Silver Hammer”
148. “Julia”
147. “Day Tripper”
146. “Blue Jay Way”
145. “Birthday”
144. “Baby You’re A Rich Man”
143. “Cry Baby Cry”
142. “Only A Northern Song”
141. “Penny Lane”
140. “Every Little Thing”
139. “When I Get Home”
138. “Run For Your Life”
137. “I’m Happy Just To Dance With You”
136. “Misery”
135. “I Call Your Name”
134. “It’s Only Love”
133. “If I Needed Someone”
132. “Another Girl”
131. “Dig A Pony”
130. “Love Me Do”
129. “The Night Before”
128. “Mean Mr. Mustard”
127. “Get Back”
126. “Michelle”
125. “The Inner Light”
124. “Baby’s In Black”
123. “Think For Yourself”
122. “I’ll Be Back”
121. “I Me Mine”
120. “All I’ve Got To Do”
119. “Polythene Pam”
118. “Hold Me Tight”
117. “Got To Get You Into My Life”
116. “Lucy In The Sky With Diamonds”
115. “Can’t Buy Me Love”
114. “I Want To Hold Your Hand”
113. “Savoy Truffle”
112. “The Continuing Story Of Bungalow Bill”
111. “With A Little Help From My Friends”
110. “Good Night”
109. “All Together Now”
108. “Paperback Writer”
107. “I’ll Get You”
106. “I’ll Follow The Sun”
105. “From Me To You”
104. “Martha My Dear”
103. “Being For The Benefit Of Mr. Kite”
102. “Revolution 1”
101. “Ballad Of John And Yoko”
100. “Girl”
99. “Sgt. Pepper’s Lonely Hearts Club Band”
98. “She Said She Said”
97. “Tell Me Why”
96. “Because”
95. “Yellow Submarine”
94. “I Should Have Known Better”
93. “I’m A Loser”
92. “All My Loving”
91. “Any Time At All”
90. “Ob-La-Di, Ob-La-Da”
89. “What You’re Doing”
88. “I Need You”
87. “You Can’t Do That”
86. “I Will”
85. “Eight Days A Week”
84. “Drive My Car”
83. “Sgt. Pepper’s Lonely Hearts Club Band (Reprise)”
82. “Wait”
81. “She’s A Woman”
80. “I’m Only Sleeping”
79. “You’re Going To Lose That Girl”
78. “Oh! Darling”
77. “She Came In Through The Bathroom Window”
76. “It’s All Too Much”
75. “P.S. I Love You”
74. “Don’t Let Me Down”
73. “Rocky Raccoon”
72. “Your Mother Should Know”
71. “Piggies”
70. “I’ve Just Seen A Face”
69. “It Won’t Be Long”
68. “I’ve Got A Feeling”
67. “When I’m Sixty-Four”
66. “The Long And Winding Road”
65. “Fixing A Hole”
64. “I’m So Tired”
63. “Let It Be”
62. “Happiness Is A Warm Gun”
61. “Lovely Rita”
60. “I’m Down”
59. “Glass Onion”
58. “Hello Goodbye”
57. “While My Guitar Gently Weeps”
56. “Norwegian Wood (This Bird Has Flown)”
55. “Come Together”
54. “Help!”
53. “Helter Skelter”
52. “I Feel Fine”
51. “Yesterday”
50. “A Hard Day’s Night”
49. “Blackbird”
48. “Revolution”
47. “Getting Better”
46. “Hey Bulldog”
45. “Good Morning Good Morning”
44. “Back In The U.S.S.R.”
43. “Mother Nature’s Son”
42. “You Never Give Me Your Money”
41. “Sexy Sadie”
40. “I’m Looking Through You”
39. “Things We Said Today”
38. “This Boy”
37. “Across The Universe”
36. “Octopus’s Garden”
35. “Not A Second Time”
34. “And Your Bird Can Sing”
33. “I Saw Her Standing There”
32. “Taxman”
31. “The Fool On The Hill”
30. “Two Of Us”
29. “Here Comes The Sun”
28. “You Won’t See Me”
27. “Within You Without You”
26. “No Reply”
25. “Ticket To Ride”
24. “She Loves You”
23. “Rain”
22. “I Don’t Want To Spoil The Party”
21. “Yes It Is”
20. “Here, There, And Everywhere”
19. “You’ve Got To Hide Your Love Away”
18. “Tomorrow Never Knows”
17. “Lady Madonna”
16. “Please Please Me”
15. “Nowhere Man”
14. “If I Fell”
13. “For No One”
12. “We Can Work It Out”
11. “Dear Prudence”
10. “Eleanor Rigby”
9. “Something”
8. “Strawberry Fields Forever”
7. “In My Life”
6. “All You Need Is Love”
5. “Hey Jude”
4. “Golden Slumbers/Carry That Weight/The End”
3. “She’s Leaving Home”
2. “I Am The Walrus”
1. “A Day in the Life”

Comments at the bottom of this page, or on this one.

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Want the good news? (You won't like it)

Here's the good news.

Managing the Australian economy just became simpler.

Until this week it genuinely wasn't clear whether Australia was heading into a recession along with the rest of the developed world or whether the government's $8.7 billion of stimulus cheques and our special position as a supplier of raw materials and to both Japan and China would save us.

Wayne Swan, Kevin Rudd and the Reserve Bank could be forgiven for not knowing quite which way to turn. No longer.

Japan takes one in every four of the export shipments that leave Australia. China took the best part of another one and was catching up fast. Both are now shrinking their operations, if not their entire economies.

JP Morgan's calculations suggest that customers making up 48 per cent of Australia's exports are headed for recession. ABN AMRO last night amended its forecast for an Australian recession...

It deepened it.

There's now no doubt about the direction in which we are heading and no doubt about the directions in which the Reserve Bank and our leaders should move.

A cut in interest rates of another 1.00 percentage points next month is now entirely likely, as are tens of billions of dollars more government spending and tax cuts that will push the budget well into the red.

They won't manage to stop a recession. But they might manage to make it shallow and to keep the jump in unemployment to just a few percentage points instead of the five or so per cent we got last time.

Read more >>

The government as banker? You bet.

"This is just the beginning" - Wayne Swan

In a dramatic intervention the Australian government and the big four banks are to set up a multi-billion investment fund able to use government-guaranteed borrowings to directly support property developers unable to roll over foreign loans.

The government will contribute $2 billion and the banks another $2 billion. The fund will be able to use government-guaranteed borrowings to create up $30 billion of loanable capital.

Although the shopping centre developer Centro recently succeeded in rolling over its loans after a foreign lender threatened to pull out, the Prime Minister and Treasurer fear that other developers will not be so fortunate.

"We will not idly by and watch jobs and small and medium size businesses be wiped out by fluctuations in global credit markets," said Mr Rudd and Mr Swan.

Commercial property development employs 150,000 Australians. The government feared that without action as many as 50,000 could lose their jobs.

To be called the Australian Business Investment Partnership, the fund will operate along similar lines to Special Purpose Vehicle for car dealer financiers announced in December. It will advance funds only to developers whose foreign finance has been withdrawn as a result of changes in the policies of overseas lenders...

"It will be structured to minimise the exposure risk to taxpayers. It will not allow the major banks to pass on any under performing assets to the government," said the Prime Minister.

The Property Council of Australia has backed the fund saying it will help ensure the survival of well-run companies that manage the savings of millions of mum and dad investors, superannuation policy holders and retirees.

The government will chair the partnership's 5-person board with Westpac, the Commonwealth Bank, the National Australia Bank and the ANZ Bank each nominating a director. All of the board's decisions about allocating finance will have to be unanimous.

The government will charge a fee for the use of its guarantee and wind up the fund after 2 years. It hopes to have it operating by March.

Overnight in New York Treasurer Wayne Swan told a business gathering that his government's actions to date were "just the beginning" of its response to the crisis.

In an earlier radio interview he said the slowing of Chinese economy alone could wipe out $5 billion off Australian revenue.

"What we are now seeing is the unwinding of the mining boom and all of the consequences that will have for our economy and, of course, for growth more broadly," he told Fairfax radio.

The collapse of growth in Japan and China - Australia's two biggest export destinations - saw economists yesterday further cut their forecasts of Australian growth and ramp up their forecasts of interest rate cuts.

Bothy Citibank and JP Morgan are now expecting the Reserve Bank to cut its cash rate by a further 1.00 percentage points when it next meets on February 3 - bringing the cash rate to all-time low of 3.75 per cent and the standard variable mortgage rate to a 40-year low of 5.75 per cent if fully passed on.

Former Reserve Bank Governor Bernie Fraser said he expected the Bank to eventually cut its cash rate to less than 2 per cent.

"This recession will be deeper and longer than the last recession in 1991," Mr Fraser told Bloomberg news. "People are not about to spend their stimulus, which exactly what needs to happen for confidence to improve."

Australian export prices soared a record 15.9 per cent in the December quarter, in what economists say was a last hurrah assisted by a dive in the Australian dollar.

Commonwealth Securities forecast an imminent 25 cut in the contract price of Australian iron ore.

UPDATE: Andrew Main as a typically wise piece on the RuddBank.

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China was going to save Australia. But now...

This morning:

John Garnaut

"CHINA may never again power the Australian economy like it has over the past five years, posing huge risks to the local economy, ripping billions from exports, and almost certainly driving the budget into deficit.

In figures significantly worse than the Rudd Government was anticipating, China's National Bureau of Statistics yesterday said annual growth almost halved from 13 per cent in 2007 to 6.8 per cent in the year to December - below the arbitrary 8 per cent threshold that Chinese leaders say creates risks of social instability.

Citigroup calculates the economy shrank 0.1 per cent in December from the September quarter - the first contraction in at least 16 years..."


Michael Stutchbury

"THE International Monetary Fund is poised to slash Australia's economic growth forecasts to not much above zero as the global financial crisis extends into the year ahead.

The IMF warning coincides with official confirmation that China's economic growth, the engine room of Australia's recent boom, slowed more sharply than forecast, to 6.8 per cent from 9 per cent in the final quarter of last year, as the global downturn hit.

The IMF's first deputy managing director, John Lipsky, told The Australian yesterday the global recession was deepening even as central banks repeatedly cut interest rates.

While backing the principle of using government budgets to support growth, he cast doubt on whether short-term fiscal expansion - such as the Rudd Government's one-off payments to households - would boost spending and stave off recession..."


Vanessa O'Shaughnessy

"AUSTRALIANS have suffered their worst losses on superannuation in living memory, with typical funds losing an average of almost 20 per cent in 2008, new figures reveal.

Research agency SuperRatings said the average balanced fund dived by 12.5 per cent in the second half of 2008, and by 19.7 per cent for the full calendar year.

It was the worst annual result since the start of compulsory superannuation in the early 1990s, wiping out any gains made over the past three years.

It also raises the spectre of an unprecedented two consecutive financial years of heavy losses on people's retirement savings if local and overseas shares — in which most funds are heavily invested — continue to flag..."

And no. I don't enjoy reporting this sort of news.

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What's next? Government guaranteed business loans

Declaring that “when markets fail, governments must act” the Prime Minister has raised the prospect of the government itself arranging finance for Australian businesses denied loans by international lenders.

Delivering the second of his Australia Day addresses in Adelaide Mr Rudd expressed alarm at what he said was a growing trend for cash-strapped foreign banks to scale back their lending to businesses in Australia, in some cases declining to roll over existing loans as they come up for renewal.

Some $75 billion in foreign loans are fall due in the next two years.

"If foreign banks do not roll over their share, it would be difficult for Australia’s four major banks to fill the gap on their own," the Prime Minister said. "Companies could be forced to sell assets, often at low value"...

"When businesses cannot get loans and are not confident about the future, they can’t or won’t invest, meaning they can’t create jobs and they can’t grow," he said.

"This affects real businesses and affects real jobs."

In December the government helped set up a $2 billion so-called Special Purpose Vehicle to channel funds to car dealer financiers whose foreign funders had withdrawn.

The government agreed to guarantee securities issued by the vehicle.

Mr Rudd said he was prepared to to the same sort of thing to ensure the supply of credit to the wider Australian business community could it become necessary.

“When markets fail, governments must act,” he said.

The arrangement would see the government effectively extending its guarantee of bank borrowing and car financier borrowing to all borrowing by Australian businesses unable to roll over loans, most probably in return for a fee.

"Australian credit markets are international – and Australia has gained much from the internationalisation of our banking system over the last 20 years," the Prime Minister said. "But internationalisation comes with risks that must be managed."

"The Government stands ready to take whatever further action is necessary to stabilize financial markets, and to help reopen the private lines of government to business, to get blood flowing through the arteries of the economy."

Many European and American banks, effectively nationalised, are under pressure to cut back on what they believe to be non-core operations including lending to far-flung destinations such as Australia.

The Prime Minister told his Adelaide audience that he believed some had already done so.

He met with the Treasurer Wayne Swan and Finance Minister Lindsay Tanner in Adelaide yesterday to continue talks begun in Sydney Monday about responses to the economic crisis.

The background from Andrew Main

Read more >>

COLUMN: Reporting reality

"Why are your reports so negative?" asked a voice on the other end of the phone. "A lot of us are sick of it".

I'd just reported that Victoria was losing full-time jobs at a rate approaching 150 per day.

"Things aren't as bad as you're saying," said the caller. "Your reports are making things worse."

The Bureau of Statistics employment survey is by far Australia's most comprehensive, apart from the census. Each month the Bureau's interviewers quiz the occupants of 22,800 houses and flats about their employment status (compared to just 1,200 in a typical opinion poll) and to make sure they are tracking real changes and not just changes in the sample of households, they keep quizzing each one for 8 consecutive months.

Their results have to indicate something real. Victoria's full-time employment trend has been shrinking since August.

I asked my caller to identify some positive developments he felt were missing from my reports. He said he couldn't think of any "at the moment".

On one hand he told me that I was writing bad news in order to sell newspapers. On the other he told me that people didn't want to read that sort of bad news.

Its the same sort of reaction I got in 1990 when I reported accurately that Australia was "on the edge of recession"...

A few months later the Treasurer who had complained confirmed the news, dubbing it "the recession we had to have". Or the reaction when I got when I reported from Japan that Mitsubishi was considering closing its Australian car plants. Those plants have since closed and the Australian Mitsubishi executives who complained have moved on.

In each case they weren't primarily complaining that the reports weren't accurate, but that even if they were accurate (which they were), the reports could create panic and make things worse.

It's a legitimate type of concern. There is clear evidence that reporting suicides encourages them. That's why newspapers are reluctant to mention suicides in all but the most important cases.

Access Economics director Chris Richardson acknowledged the concern - applied to economics - when he released his recession forecast on Monday. As he told his clients: "This is not just a recession. It will be the sharpest deceleration Australia's economy has ever seen. Apologies for the gloom - we do recognise that in forecasting mayhem we make it ever so slightly more likely to happen. Still, we wouldn't be doing our job if we didn't tell you what we think comes next."

The problem with withholding information - which reporters do do in limited cases such as suicides and where it could put lives at risk - is that it becomes hard to work out where to stop.

Why stop at protecting Mitsubishi Australia? Why stop at playing down the awfulness of economic data?

"Suppressing relevant available facts" is forbidden by my union's code of ethics. Its view is that reporters are employed to report, although there's a guidance clause that allows exceptions in cases including "risk of substantial harm to people".

As it happens, the Prime Minister and Treasurer transformed themselves towards the end of last year, changing from behaving like automatons who wouldn't even mention the words "deficit" or "recession," to open communicators prepared to acknowledge the pressures Australia faces.

Wayne Swan volunteered Monday that China might not grow by "anything like what was expected only a few months ago". That would put at risk "employment here and budget revenues".

It was, he had said earlier, "deeply, deeply concerning".

Wayne Swan and Kevin Rudd are being smart, as well as honest.

Dr Peter Sandman is perhaps the world's foremost expert on crisis communications. Among his clients have been Australia's AWB during the food-for-oil scandal (they failed to follow his advice) and the US government during the Three Mile Island nuclear accident and the 2001 anthrax attacks.

The advice is to share knowledge in order to build up the feeling that "we're in this together".

Among his commandments - "don’t over-reassure", "acknowledge uncertainty", "be willing to speculate", "err on the alarming side", "share dilemmas", "legitimise people’s fears", "ask more of people", "establish your own humanity" and acknowledge that no-one has all the answers.

Wayne Swan and Kevin Rudd are behaving as if they have read Sandman's books.

The former Prime Minister Bob Hawke behaved as if he had as the Australian dollar was buffetted throughout 1987, winning re-election on the slogan "lets stick together- let's see it through".

In 2005 Sandman singled out Australia's Tony Abbott as the world's best communicator about the risk of a bird flu pandemic. The Coalition Health Minister had acknowledged that a pandemic could be a “worldwide biological version of the Indian Ocean tsunami". He had said Australia was doing everything it reasonably could but acknowledged that "if we ever do believe a pandemic outbreak is imminent, no preparation will be sufficient."

He had taken people into his confidence. He had acknowledged the worst case. Sandman described his approach as "duly" alarming". He had asked us to "see it through".

Last night Rudd said "we're all in this together: business, unions, governments, the community sector — and every nation in the world." He's doing it too.


ABC is hurting us, says car chief

The Advertiser Wednesday 22nd of November 2000

By Motoring Editor MIKE DUFFY

MITSUBISHI Motors Australia head Tom Phillips yesterday attacked the ABC for what he described as "unjustified, biased and repeated reports" that the company's Adelaide plants were under the threat of closure.
Mr Phillips lodged a formal complaint with the ABC board, claiming the reports were seriously damaging the car maker's business and causing undue hardship to workers.
For the second time in five days, Mr Phillips was forced to write to Mitsubishi's 3150 workers calling for calm and assuring them their jobs were secure.

"I believe the ABC is guilty of unjustified and biased reporting which is doing great harm to our business as well as destroying the morale of our staff," he said.

Mr Phillips found an ally in Toyota Australia's chief, John Conomos, who strongly attacked the ABC.

Mr Phillips will meet shop stewards and section leaders at the Clovelly Park and Lonsdale factories this morning to again tell them workers' jobs were safe.

"It is very sad to see a fine company like Mitsubishi dragged into this level of media attention," Mr Conomos said. There were reports on the ABC last week claiming Mitsubishi's Japanese parents were considering closing its Australian plants.

Last night that same reporter had gone on ABC radio and repeated the claims. "This is having a debilitating effect on Mitsubishi.

"Why the ABC will not leave Mitsubishi alone defies logic."

Mr Conomos said if Mitsubishi were to close it would have "a very significant" impact on the remainder of the car industry. "We would lose expertise. We'd lose economies of scale from the supplier base and we'd lose job opportunities," he said.

"South Australia would suffer - it would be most profound."

Last night Mitsubishi Motors released the transcript of an interview Mitsubishi Motors Corporation president, Mr Sonobe, gave foreign journalists on Monday.

Mr Phillips said nothing Mr Sonobe had said warranted the ABC's Tokyo correspondent to go to air with reports MMC had issued another warning it was considering closing its Australian plants. "Just the opposite.

Mr Sonobe talked about assessing Mitsubishi Motors Australia on the basis of profitability and productivity and manufacturing quality," he said.

"Based on the criteria Mr Sonobe clearly indicated to foreign journalists, Mitsubishi Motors Australia is as safe as houses.

"But the ABC reporter chose to interpret this as a further warning of plant closures."

"This is biased reporting and I have lodged a complaint to the ABC board to that effect."

"We just want to be left alone to make a success of a very good business, and make and sell very good cars in Australia and overseas."

The transcript of the press conference, issued by Mitsubishi claims Mr Sonobe said, in response to a question by the ABC: "Unfortunately, all the focus of the media seems to be surrounded on whether or not we are going to close down this operation.

"And it is quite unfortunate that any quotes that have been made so fcar have been taken in this context.

"So let me clarity my position. We are studying all avenues . . . to enable the very survival of the Australian Mitsubishi activities."


Mitsubishi speculation `damaging'

The Advertiser Friday 24th of November 2000

By Political Reporter SAMANTHA MAIDEN in Canberra

FEDERAL Industry Minister Nick Minchin has criticised ongoing speculation about Mitsubishi's future in Adelaide, accusing the ABC and Labor of indulging in damaging speculation.

In a Senate committee hearing yesterday, he reacted angrily when NSW Labor Senator George Campbell repeatedly asked whether the Howard Government had a strategy to deal with the impact of a closure.

"What ifs, what ifs, what ifs - that is utterly futile, damaging and dangerous and I would respectfully ask you to not to persist in this line of questioning," Senator Minchin said to Senator Campbell.

"I think it's extremely dangerous and ill-advised to be publicly speculating about the closure of that company. If anything, it's likely to be self-fulfilling, that sort of wild, indulgent speculation based on reckless reports from the ABC."

Earlier this week, Mitsubishi Motors Australia chief executive officer Tom Phillips lodged a formal complaint over the ABC's reporting of a press conference by Takashi Sonobe, president of the parent company in Japan, Mitsubishi Motors Corporation.

The national broadcaster has rejected the criticism, defending the reporter involved, Adelaide-born Tokyo correspondent Peter Martin.

"It seems Senator Minchin, like Mitsubishi, wants to shoot the messenger," ABC's head of international operations John Tulloh said.

"ABC's reporting is based on facts, not emotion."

Premier John Olsen echoed Senator Minchin's concerns, labelling the Senate inquiry's line of questioning "outrageous and damaging". "If Opposition Leader Mike Rann is genuinely serious about the long-term future of the company he will call on Kim Beazley to pull federal Labor MPs into line," he said.

A spokesman for Mr Rann said his offer of participating in a bi-partisan mission to Tokyo still stood. "I will not be drawn into any political spat over Mitsubishi," Mr Rann said.

The row follows Mitsubishi's Tokyo executives blaming the diving Australian dollar for a drop in profitability.

Following talks on Wednesday night between trade representatives and the company, Senator Minchin said Mitsubishi had acknowledged a significant turnaround in profitability over the course of the year.

"However, exchange rates had had a significant negative impact on that profitability," he said.

"Mitsubishi indicated it wished to explore assistance to help offset this exchange rate impact."

The Federal Government has agreed to consider the company's concerns but stressed the generosity of existing industry assistance.

"Our job is to ensure this business remains in Australia and that's what we're doing," he said.

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Labor's 'new' mantra - Let's stick together

Rudd's entire speech below

EMERGENCY tax cuts could be introduced in a fresh bid to prop up the economy as the Federal Government reels from the latest warning signs that Australia is heading into recession.

Prime Minister Kevin Rudd, on his first day back from a three-week summer holiday, warned yesterday that the global economic crisis would get worse before it got better.

In a speech in Sydney, he called on bosses to do everything possible to protect their workers from dismissal and for workers to restrain any wage claims.

He also signalled that the Government was preparing to announce initiatives to add to the $36 billion of measures it had already undertaken to reinforce the economy.

Mr Rudd said the impact of the crisis would be big "but so will be our response.

"We are determined to chart a course that will see Australia through this crisis. We will do so with a combination of steely economic management and compassion for those who need support"...

But it was Treasurer Wayne Swan who fuelled tax cut speculation, saying Australia was in a strong position "to respond with further packages, whether it would be packages which would stimulate consumption through changes in tax, for example, or whether it was via a combination of investment in infrastructure and other measures".

He did not indicate, however, whether he was talking about cuts to personal or business taxes, or bringing forward personal income tax cuts already legislated for July this year.

Mr Rudd, at the first of a series of Australia Day events he will address over the next week, said all Australians had to "look out for each other" in the worst economic convulsion since the Great Depression.

"We are all in this together: business, unions, governments, the community sector — and every nation in the world," he said. "The current economic turmoil is unlike any we have seen in our lifetime — and unlike any since the Great Depression of 1931."

Mr Rudd said the protection of jobs had to be a top priority, and both employers and workers had a responsibility towards each other.

"Employers must do their utmost to protect their workers from dismissal, knowing that these workers will serve them well when times turn good again," he said. "Workers, too, must restrain any wage claims.

"I know there are employers who have asked their workers to accept shorter working hours rather than lose their jobs.

"That encourages me, because at this time Australians need to look out for each other — as we have done so many times in the past when the going has got tough.

"As I travel around the country, I sense a steadiness among our people — an awareness that times are hard, but also a willingness to help each other, to stick together. I have not the slightest doubt that we as a people will rise to the challenge that lies ahead of us."

The speech came a day after Access Economics became the first mainstream forecaster to state that Australia was heading into recession.

Despite Access' claim that Victoria was "on the brink of recession", state Treasurer John Lenders yesterday was standing by his forecast of 1.5 per cent economic growth this year.

A spokesman for Mr Lenders, Matt Nurse, said the global crisis had affected the Australian and state economies "as predicted", but Victoria was as well placed as anywhere to deal with it.

"Victoria has strong population growth, record levels of government investment in infrastructure, the highest level of building approvals in the country and our retail trade sector continues to grow," he said.

ANZ chief economist Saul Eslake yesterday downgraded his assessment of the international outlook, saying it would be reasonable to speak about the US and the UK entering "depressions" rather than recessions. He expected Australia's Reserve Bank to cut its cash rate to an all-time low of 3 per cent in a bid to avoid an Australian recession.

The Melbourne Institute's updated inflation gauge, released yesterday, suggests that the Reserve will find few impediments to further cutting interest rates next month.

It found that prices fell in each of the last three months of last year, producing a negative quarterly inflation rate.

"These are unusual times," said the institute's Professor Don Harding. "Based on the inflation gauge, we forecast that the December quarter consumer price index will fall 0.45 per cent. Lower petrol and fruit and vegetable prices are bringing the index down," he said.

The Bureau of Statistics reported that new borrowing slid a further 6 per cent in November, to take it down 30 per cent on a year ago.

Commercial borrowing fell 10 per cent, lease finance 3 per cent and personal borrowing 2 per cent. Lending for housing climbed 1.4 per cent.


RUDD'S NSW AUSTRALIA DAY ADDRESS

Premier Rees and distinguished guests.

The meaning of Australia Day

I acknowledge the First Australians on whose lands we meet, and whose cultures we celebrate as the oldest continuing cultures in human history.

It is always good to speak at Australia Day events, because it gives me a chance to talk about our country.

Where we are heading.

What challenges are before us.

And what steps we are taking, as a nation, to meet them.

It is particularly good because Australia Day comes at such a great time of the year.

Over the summer, most of us have had a chance to rest, to spend time with family and friends, to enjoy the bush, the beach or the backyard, and to recharge our batteries ahead of the New Year.

Australia Day is a day in which – through our honours system and the Australian of the Year Awards – we recognise and thank Australians who inspire us – in the local community, in education, health, business, sport, the arts, and in so many fields.

Through their example, we see the best of what we can be as a nation and as a people.

But this year the nation is overshadowed by uncertainty and anxiety over the global financial crisis at our door.

I understand that worry, and I can tell you that 2009 is going to be a tough year.

The current economic turmoil is unlike any we have seen in our lifetime – and unlike any since the Great Depression of 1931.

It is not a crisis of Australia’s making, but it will hurt Australia, as it is hurting every other country.

Over the next week, starting today, I plan to deliver a series of addresses on the global economic situation, how it will affect Australia and our framework for responding.

I am doing this because I intend to be absolutely straight with Australians about the impact of the crisis, and what we intend to do about it.

The impact will be big.

But so will our response.

In fact, it’s been substantial so far, including $36 billion of new measures.

We are determined to chart a course that will see Australia through this crisis.

We are determined to navigate that course and to craft a more resilient Australia as a result.

We will do so with a combination of steely economic management and compassion for those who need support.

And we intend to prevail through the energy, innate optimism and decency of the Australian people.

The unprecedented impact of the GFC

The magnitude of the global financial crisis almost beggars belief.

By next year, up to 25 million people around the world may have lost their jobs, according to the OECD.

In the United States, the origin and epicentre of the earthquake, nearly three million jobs were lost last year – the largest decline since World War Two.

In December alone more than half a million people lost their jobs.

Global share markets have lost half their value since they peaked in October 2007 – the greatest fall since the Great Depression.

That is $32 trillion – the equivalent of the total annual GDP of the G7, the group of seven of the world’s wealthiest nations.

The Australian share market has been hit as well: it fell by 43 per cent last year, the largest annual fall since records began in 1982 – and twice the previous largest calendar year fall.

It is now clear that even though global capital markets helped drive the strongest period of economic growth in three decades, they had become structurally unsound and unsustainable.

A culture of excessive risk taking - a culture of greed - a culture of excess has brought massive economic disruption to global financial markets and the global economy.

These markets were inadequately supervised and, in the period ahead, one of the tasks of the global community will be to devise warning systems to ensure such a disaster never happens again.

The good news is that Australia has weathered the turbulence far better than many similar countries.

Our banks had a very low level of exposure to bad debt generated in the US.

Of the more than 40 major global financial institutions that have gone bankrupt or been bailed out since the crisis began, none are Australian.

However, Australia is not immune from these events, and difficult days lie ahead.

The US, Japan, Germany and the rest of the euro zone - plus, in our region, New Zealand, Singapore and Hong Kong - have all slipped into recession.

Critically, China has been hit much harder than forecasters had predicted.

Its growth has slowed sharply – from 12 per cent in 2007 to 8.5 per cent last year.

Its manufacturing sector – which is 40 per cent of its GDP – has been contracting for five months.

Because China takes 15 per cent of our exports, its slowdown will affect Australia.

Taking unprecedented steps to respond

This is an unprecedented crisis that demands an unprecedented response.

In October, for the first time in our history, the Government guaranteed deposits of up to $1 million in all banks, building societies and credit unions.

Our Economic Security Strategy injected $10.4 billion into the economy via payments to pensioners, low and middle income families and first home buyers.

We made a $6.2 billion commitment to strengthen Australia’s automotive industry, which directly and indirectly supports 200,000 jobs.

And last month we announced a $4.7 billion nation-building plan to invest in ready-to-go infrastructure projects in road, rail, ports and education.

These are investments that will not simply stimulate the economy now – they will build Australia for the long term.

The industries we are investing in – including education, information technology and renewable energy – are industries of the future that will ensure Australia emerges from this downturn with a stronger, more diverse economy.

We are all in this together

This is a difficult time, and in the short term there is no quick fix.

Things will get worse before they get better.

That is where all of us – not just government – have a role in lessening the effects of the crisis.

We are all in this together: business, unions, governments, the community sector – and every nation in the world.

In these times, employers must do their utmost to protect their workers from dismissal, knowing that these workers will serve them well when times turn good again.

Workers, too, must restrain any wage claims.

I know there are employers who have asked their workers to accept shorter working hours rather than lose their jobs.

That encourages me, because at this time Australians need to look out for each other -- as we have done so many times in the past when the going has got tough.

I repeat – we are all in this together.

Right now it’s jobs that matter most – because the global financial crisis has been the destroyer of jobs.

As I travel around the country, I sense a steadiness among our people – an awareness that times are hard, but also a willingness to help each other, to stick together.

I have not the slightest doubt that we as a people will rise to the challenge that lies ahead of us.

And we will emerge from this a stronger, more resilient nation than before – and a nation which never loses its heart

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Recession: Access Economics breaks the dam

The Treasurer Wayne Swan has promised "further action" in the wake of a damning assessment of Australia's outlook by Access Economics which is now predicting recession.

Previously optimistic, and known as Australia's "Treasury in exile" for the large number of ex-Treasury officers it employs, Access has sent its new assessment to high-profile subscribers including most of Australia's top 1,000 companies.

Access says Australia's economy shrank in December quarter despite the government's $10.4 economic stimulus package and will shrink again in this one.

"Conditions are worsening very rapidly," says the report. "This is not just a recession - it will be the sharpest deceleration Australia's economy has ever seen."

Anticipating criticism for breaking ranks with forecasters at the banks who are reluctant to countenance a recession, Access says it recognises that in publicising its forecasts it will make them "ever so slightly more likely to happen"...

...but it says it "wouldn't be doing its job" if it didn't outline what it believes is happening.

Access says corporate profits outside the banking sector will halve over the next two years, pushing some firms to the wall. "It is not just that funding from internal cash flows is about to become harder, it is also that many corporates are already finding it very hard to borrow from banks or even by issuing corporate bonds, Access director Chris Richardson said.

"Foreign-owned firms can no longer rely on the generosity of headquarters to tide them over."

Access expects Australia's unemployment rate to hit 7.5 per cent early next year - less than in previous recessions - with the unemployment queue swelling from its present 500,000 to 850,000."This is the most likely outcome, but much will depend on our new industrial relations system," Mr Richardson said. "Let's hope that it works better than the old one did during the previous recession."

The report points to "a clear risk" that its forecasts "are not dire enough."

"Our boom of the last four years has been all but undone in the last four months. That may mean not merely the recession we forecast, but something bigger and badder," it says.

"Unemployment could go higher than the 7.5 per cent we forecast. And although we already project a halving of corporate profits, it could get even uglier."

While making no comment about the specific forecast of a recession Mr Swan said he agreed with the report that the year ahead would be tough and there would be no quick fix.

"There's no point guiding the lily in any way," he said.

"China and other emerging economies now caught up in this crisis are expected to slow much more sharply than previously anticipated."

"We will not hesitate to take further action if necessary to support growth and limit the impact on Australian jobs."

Access says it had thought that China's relative strength would buy Australia "12 months of immunity from worldwide troubles", but China's boom was now collapsing quickly. Its economy should now grow by only 6.2 per cent this year -down from the 9.75 per cent predicted by the Australian Treasury in November.

Spot steel prices, once $1,200 a tonne, have collapsed to us $325, "posing significant risks to Australian producers as contract prices are renegotiated in the lead up April."

The Access report describes the the Federal budget as "buggered," noting that the latest revenue forecasts were made before the latest collapse in commodity prices.

"As Access stressed during the good years, the big personal income tax cuts and family benefit increases of recent times were spending a temporary surge in revenues. With that money now disappearing, Canberra faces ugly policy choices."

"The glory days of big budget surpluses are over and the Treasury is now staring down the barrel of deficits as far as the eye can see."

"This nation has legitimate policy goals in education, infrastructure, Federal/State relations, climate change and water management. What it doesn’t have any more is the money to help achieve reforms in those areas," the report says.

Access believes that Australian share prices have probably stabilised, after halving in order to reflect the prospective halving in company profits. It says the next risk to household wealth will be a slide in house prices this year of 5 to 8 per cent.

"Housing prices reached peaks relative to income only seen in the likes of Ireland and New Zealand," the report says. "From here on, top-end prices will be pressured by the collapse in share market wealth; bottom-end prices will he be hammered by a sharply rising risk of unemployment; and prices in general will be hurt by the higher returns relative to price now available on the share market."

Access expects the Reserve Bank to cut its cash rate to an all-time low of 2.5 per cent this year "in order to take out insurance," allowing the standard variable mortgage rate to fall to an all-time low of 5.25 per cent.

It says fragile commodity prices and a ballooning current account deficit should push the Australian dollar to a long-term low of US 56 cents.

NSW will be the worst-affected state by the recession and is was "already drowning with its economy contracting at US-style rates".

Victoria is on the brink of recession but is "taking the pain early with manufacturing and financial services the centre of its slowdown". It should do relatively better than the resource-rich states of Western Australia and Queensland during 2010-11 as they continue to suffer from low commodity prices.


COMMENT:

Don't mention the 'R' word? Until now, Australia's best-known forecasters haven't. That could be because they work for banks, or it could be because they're natural optimists.

But they have forecast Australia edging suspiciously close to recession. Some have even forecast zero economic growth. Not negative, but as close to negative as possible.

It's been left to the Australian arms of foreign financial institutions to describe the Emperor's state of undress as they see it.

Until Access. Previously as optimistic as the Treasury about Australia's prospects, they've switched to pessimism as rapidly as things have deteriorated in the last few weeks. There's every reason to believe that the Treasury has as well.

Both Access and Treasury believed that China would continue to boom regardless of what happened in the nations it sold to, buying Australian resources irrespective.

It is now clear that isn't happening. Access notes that 10,000 Chinese factories have closed in recent weeks and untold numbers of Chinese employees have been asked not to come into work.

Neither China's rising middle class nor its fading ability to deliver central government edicts will insulate it from what's happening to its customers.

It's the same with us. It isn't this government's fault, and it is not the fault of the last one. But that government could have better prepared us for what we are now facing by at least talking as if it would one day happen. It didn't.

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Stimulate, stimulate. That's what I've been saying, but then...

...I was trained by Keynesians.

The LSE's Willem Buiter disagrees.

An extract from his thought-provoking argument:

"Too often for comfort I hear variations on the following statements: “The long run is just a sequence of short runs, so if we make sure things always make sense in the short run, the long run will take care of itself.” This fallacy, which I shall, unfairly, label the Keynesian fallacy, compounds three errors.

The first error is the leap from the correct assertion that a long interval of time is the sum of successive short intervals of time to the incorrect impact that the long-run impact of a policy or event is in any sense the sum of its short-run impacts. The second error is the failure to recognise that our models (formal or implicit) of how the economy works are inevitably incomplete. The third error is that, when economic agents, households, firms, portfolio managers and asset market prices are even in part forward-looking, the long run is now.

HT: Anonymous commenter

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Unemployment climbs, and then climbs again.

And for full-time workers it's much worse

Victorian workers are losing full-time jobs at a rate approaching 150 per day as employers slash costs and switch to cheaper part-time workers in a move set to deepen Australia's economic downturn.

Victoria's unemployment rate surged from 4.4 per cent to 4.6 per cent in December and the national rate from 4.4 to 4.5 as employers parted with 43,900 full-time staff - more than at any time since March 2003, and before that the 1991 recession.

The news came as the Australian share market suffered its biggest one-day fall this year, wiping 4.27 per cent off the ASX 200 and $38 billion from the value of Australian shares. United States retail figures released earlier showed spending sliding 2.7 percent in December, normally the time of strong holiday sales.

"Until now Australia has benefited from Chinese factories making too much and American consumers buying too much. The retail numbers tell us that half that equation has broken down, and the anecdotes out of China suggest the other half is breaking down," said Access Economics director Chris Richardson.

"Both of the props that supported Australia are being broken"...

Acting Prime Minister Julia Gillard told a Melbourne press conference that she felt for Australians who were losing their jobs at what was a distressing and difficult time.

"We always said that Australia could not be immune from he global financial crisis and we are going to feel a further impact in the year ahead."

"We have boosted the economy by $36 billion to date and we stand ready to act further," she said.

Victoria has lost 13,100 full-time jobs since September, around 145 per day.

Ms Gillard said that manufacturing states such as Victoria could expect to be hit by longterm decline of manufacturing as well as the worldwide economic downturn.

"We have acted to protect jobs by measures such as our $6 billion car industry plan and there have been heartening announcements including in Geelong as a result," she said.

Opposition Finance Spokesman Joe Hockey said the government had little to show for its $10.4 billion economic stimuls package.

"It is clear that Kevin Rudd's pre-Christmas tax-funded binge has not delivered the full-time jobs or the full-time job security that he promised," he said.

"It is no good encouraging people to go and spend money at the shops if at the end of the day they don't have a job to pay their credit card bill."

Reserve Bank figures show credit card use slumped 9 per cent in November. Cash advances slipped 8 per cent to their lowest level since 1999.

"Our problem used to be that we spent too much," said Access director Mr Richardson. "But things get even worse if we all stop spending at the same time. Ultimately we all need to spend less. But if we all do it on the same day, we are comprehensively buggered."

"That's why the credit card news is so worrying - shoppers are on strike. The Reserve Bank and the government between them have just granted shoppers more spending power than they have ever had before, but by and large they are not choosing to fully use it."

The number of Australians unemployed climbed above half a million in December for the first time since 2006. Economists taking part in this month Age half-yearly survey predicted an unemployment queue of 750,000 by the end of the year.

The Australian Council of Social Service called on the government to introduce a paid work experience scheme for the long term unemployed and to boost the unemployment benefit by $30 a week to move it closer to the age pension.

JP Morgan economist Stephen Walters said he expected Australia's unemployment rate to double to 9 per cent by the end of 2010.

"This would actually be a more more benign outcome that during our last two recessions when the rate moved into double digits," he said.

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Do we need to do much more than stimulate?

Adam Carr of IPAC Securities:

"Fed Chair Bernanke gave a speech Tuesday suggesting that fiscal measures may not be sufficient in creating a lasting recovery. He suggested public funds should instead be used to strengthen the financial system by either buying distressed assets, guaranteeing those assets or creating another entity to take those assets off balance sheet. He also suggested that continued credit losses, asset write-downs and a weak economy would pressure balance sheets for some time. Worrying stuff.

Yet that being the case I’m not sure these institutions will be in a position to do their job of providing credit to the economy in a cost efficient way. Particularly higher risk business lending. I’ve been hearing a lot of talk about public institutions being set up temporarily to provide such credit. To be honest and as much as I loathe the idea of such a hands on approach – it beats the alternative of a prolonged recession. Why should a nation endure a recession because of one faulty cog? Cut the apron strings – thank you and good bye, you have failed the nation."

The text of Bernanke's talk to the London School of Economics is here.

The audio is available as well, on my new podcast site - the economics talks I listen to while cycling to work!

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COLUMN: We've only just begun to try to stimulate the economy

Lyrics here

Don't believe for one second that we spent up big in the lead-up to Christmas. That is, big enough to avoid a recession.

The retailers are telling us we were "healthier, guilt-free" over Christmas, spending a record $37 billion on the back of billions of dollars in government stimulus payments.

But it's an illusion. We spent only about 2 per cent more than we did the previous Christmas. Inflation ran at 5 per cent. In real terms - which is how recessions are calculated - our spending is going backwards. We are buying less than we used to. We are in a retail recession.

Would it have been worse without those millions of December bonus payment cheques, each worth $1,000 or more? Probably not much worse. In November before the cheques arrived retail spending was crawling along at 1.9 per cent per annum - about as fast as the retailers say it was afterwards...

The Treasury didn't expect much of an impact at Christmas. It's guesswork was that we would spend a mere 1 in 10 of the bonus dollars before the end of December, a further 3 this quarter and another 3 the next. Over time the economy would benefit more as some of the money was re-spent. But the net effect of pouring about $10 billion of government dollars into the economy would be about $10 billion. In economist-speak, there wouldn't be a multiplier.

The Treasury's in distinguished company. Professor John Taylor of Stanford University devised the so-called Taylor Rule used by central banks to set interest rates. He told the American Economic Association's annual meeting in San Francisco this month that neither of the Bush government's two emergency tax rebates in 2002 and 2008 had made any difference to consumer spending. The problem was that they were temporary. We adjust our spending based on what we think we are going to be earning, not on the dollars that happen to fall into our pocket on any given week.

Applied to Australia his thoughts would suggest that permanent increases in the pension are a good thing - as soon as possible, as would be the mooted permanent increase in the unemployment benefit, and perhaps, permanent tax cuts.

But the problem with permanent measures is that they are... permanent. They're a perpetual drain on government finances and they are hard to unwind when it's time to cool the economy down.

Even tax cuts appear to have less of an effect than they used to because punters have jigged to the reality that they are never permanent - they are always eaten away as inflation pushes the recipients into higher brackets.

Professor Christina Romer will be at the centre of decision making in the new Obama administration. She'll head his Council of Economic Advisors. After an exhaustive study of every major US tax change between 1947 and 2006 she concluded their effect had shrunk. But in certain circumstances they could could still pack a big punch.

Unfortunately those circumstances are different to the ones we are in today. She finds that in good times when there is no economic need for a tax cut, a uncalled for cut can boost economic activity by an extraordinary 3 times its cost. It would be as if our economy got a $30 billion kick along from the government's $10.4 billion stimulus package instead of the $10 billion the Treasury is expecting.

That's in good times. When the economy is actually tanking she finds that tax cuts don't do much - they boost the economy by less than their cost, although it's hard to be sure because it is impossible to know how far things would have tanked without the cuts. None of this is to say that tax cuts shouldn't be tried - the Obama administration is about to try them - just that the effects are uncertain and the cost is ongoing.

A more certain way to boost spending would be to promise to increase taxes. Princeton University's Alan Krueger has suggested that the US legislate for a extra consumption tax of 5 per cent to take effect in two year's time. As he says, it would encourage households "to spend money now, rather than after the tax is in place". That's what happened in Australia in the lead-up to the GST.

Infrastructure spending has a more certain effect on the economy. The best estimate suggests that each dollar spent boosts economic activity by around $1.40. But it's hard to get going quickly as the last Labor Prime Minister Keating and his Treasurer John Dawkins discovered during the early-1990's. By the time the money started flowing, the recession was ending all by itself.

And critics are worried about roads to nowhere - railways and freeways that are built merely to get money out the door rather than because they will benefit the nation. But it's a misplaced concern. There mere act of spending the money will benefit the nation. Unlike tax cuts or bonus payments infrastructure spending can't be saved and will help keep people in jobs.

Anyone who knows someone who was unfortunate enough to lose their job during the last recession will appreciate the benefits. And by allaying the fear of unemployment, all of us will feel more free to open our wallets.

The important thing is to do something quickly, probably a mix of things. So far our leaders have done nowhere near enough.

Expect announcements from next week.


Christina Romer and David Romer, The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks, November 2008

Gregory Mankiw, Is Government Spending Too Easy an Answer?, New York Times, January 10, 2009

Brad DeLong, The Romer View of Tax and Spending Multipliers Revisited, January 13, 2009

Greg Mankiw, The Importance of Being Exogenous, January 12, 2009

Gary Becker, On the Obama Stimulus Plan, January 12, 2009

Richard Posner, The Obama "Stimulus" (Deficit Spending) Plan, January 12, 2009

Read more >>

Home buyers return

Emergency moves to boost First Home Owners' grants have paid off with a surge in first home-buyer mortgage applications as professional investors desert the market.

Figures for November, the month in which the grants were doubled to $14,000 for buyers of existing houses and tripled to $21,000 for buyers of new houses, show that first home buyer applications surged almost 18 per cent, taking the first home-buyer share of total loans to its highest point in seven years. In addition the size of a typical first home loan jumped $4,700 to $269,200.

"This is an extremely positive first indication that the government’s moves are having an impact, said Commonwealth Bank economist James McIntyre...

"Coupled with lower interest rates and improved affordability, first home buyer activity is likely to continue to improve further."

Loans to buy newly-constructed houses jumped 9 per cent in November, far exceeding the jump of 1.1 per cent in the number of loans to buy existing houses.

Its the third month in a row in which the number of loans to buy houses climbed after 8 consecutive declines. It follows interest rate cuts in September, October and November totaling 2.00 percentage points, which were followed buy a further cut in December of 1.00 percentage point.

Westpac is forecasting further cuts that will take the Reserve Bank's cash rate to 2.75 per cent from its present 4.25 per cent, pushing standard variable mortgage rates down below 6 percent for the first time since 1970.

Dun and Bradstreet forecasts released Wednesday predict zero economic growth in Australia through 2009, an outcome that would pressure the Reserve Bank to push interest rates lower. The international survey describes Australia's economy as "stagnant" in the September quarter "even before confidence in the global economy floundered in October 2008".


Demand for fixed rate mortgages has all but dried up in anticipation of further interest rate cuts. Only 2.5 per cent of the mortgages issued in November were for fixed rates, down from 24 per cent in January.

Investment housing loans slumped a further 6 per cent in response to financial turmoil, sparking talk of a "rent squeeze" as landlords became more scarce.

"This is a real concern for the state of the private rental market," said Housing Industry Association chief executive Chris Lamont. "Without affordable rental housing the number of households in rent stress could climb by a further 80,000."

He called for incentives to boost investment in affordable housing and said that without them there would be an increase in the demand for public housing and potentially a further increase in homelessness.

Read more >>

Off a cliff: job advertisements vanish

Newspaper job advertisements have collapsed, promting renewed forecasts of recession this year and a jump in unemployment to an 11-year high.

The ANZ Bank says nationwide newspaper job advertisements slipped to just 5,780 per week in December - their lowest level on record and less than half the 12,000 jobs advertised a year before.

The number of jobs advertised in Victorian newspapers dived below 2,000 per week for the first time since the 1991 recession. At just 1,130 jobs per week, the December count was the lowest since the bank began counting Victorian job advertisements in the mid-1970s.

"It suggests that the jobs market could be in worse shape than economists expect," said TD Securities economist Joshua Williamson...

"Even accounting for some substitution towards internet ads over the past five years, the result is staggeringly low".

The news sent the Australian dollar into a spiral, pushing it below 70 US cents for the first time since the start of the year. The dollar hit 68.95 US cents before recovering to close at 69.40 US cents.

"Job advertisements don't normally move markets, but this count points to weaker national income than previously forecast and and even more aggressive interest rate cuts. It's bearish," said Mr Williamson.

Job advertisements collapsed the most in the previously booming states of Queensland and Western Australia, sliding 60 per cent and 57 per cent over the year. They slid a record 53 per cent in Victoria and 52 per cent in NSW.

Australia's total count of advertisements including those on the internet slid a record 30 per cent.

“Australia has no experience of recession since we started collecting internet job ads, so all our longer-term historical comparisons are based on the newspaper series," said the ANZ's head of economics Warren Hogan.

"A 50 per cent decline in newspaper job advertising in a year is historically consistent with economic recession within the next 9 months and a rise in the unemployment rate over the following years."

Economists taking part in this month's Age economic survey forecast a jump in the unemployment rate from 4.4 per cent to 6.4 per cent this year accompanied by barely positive economic growth.

Such an outcome would push an extra quarter of a million Australians into unemployment, lifting the unemployment total from around 500,000 to 750,000.

"The ANZ is expecting the unemployment rate to rise to 6 per cent throughout 2009," said Mr Hogan. "The risk remains skewed towards a worse outcome, particularly if labour shedding or corporate failures intensify."

"In any event the job advertisement numbers indicate that the government's unemployment forecast of 5 per cent by June 2009 is too optimistic. We expect to see an upward revision in the May Budget resulting in a further deterioration in the
Government’s financial position."

The ANZ expects the December figures due for release Thursday to show the loss of 21,000 jobs.

Foreign tourist numbers released Monday showed a sharp dip between October and November as the global economic crisis took hold, with international arrivals down 5 per cent over the year.

"Our tourist deficit is the biggest in two decades," said CommSec equities economist Savanth Sebastian. "In November 483,100 Australians travelled overseas while only 446,400 visitors came to our shores."


Victoria's vanishing job advertisements

December 2004: 3260 per week

December 2005: 2480 per week

December 2006: 2390 per week

December 2007: 2390 per week

December 2008: 1130 per week

Source: Raw ANZ data for the Melbourne Age and Herald-Sun

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Can economists be funny?

Well yes. I have a friend who these days can't stop laughing the moment any of them open their mouths.

But what I mean is: can they be intentionally funny?

The American Economic Association set out to examine this in its first-ever humour session this month.

Among the speakers was The Standup Economist, who (re)performed this piece. Enjoy it.



Also, Robert Oxoby of the University of Calgary (re)presented his seminal paper:
On the Efficiency of AC/DC: Bon Scott versus Brian Johnson Yes. ACDC.

Anyway, economists aren't that funny - although the UK's Tim Harford is getting there:



One of the funnier economists has just been awarded the Nobel Prize. Yes, Paul Krugman.

A trade specialist, in 1978 he investigated Interstellar Trade (enjoy).

As he put it:

"This paper extends interplanetary trade to an interstellar setting. It is concerned chiefly with the following question: How would interest charges on goods in transit be computed when the goods travel at close to the speed of light?"

As he says:

"While the subject-matter is silly, the analysis actually does make sense. This paper, then, is a serious analysis of a ridiculous subject, which is, of course, the opposite of what is usual in economics."

Oh yes. And there's former Fed Vice Chairman Alan Blinder's The Economics of Brushing Teeth.

Any more? I'll bet there are. Names please. And I am not talking about hoaxes. They're mean.

(Although I think Keith Windschuttle is wrong when he says about the latest hoax of Quadrant that "if it were any other editor who had fallen for such a hoax, it wouldn't be a story". Strewth! If it had been the been the editor of a more real publication it would have been a bigger story. Even if it had been the editor of Angry Penguins.)

UPDATE: There's actually been a book: On The Third Hand - Humor in the dismal Science, edited by Caroline Postelle. Some of it is here. It looks good.

UPDATE 2 (2011) The Standup Economist has a massive list, here.

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Summer viewing - Frost/Nixon

We saw it last night. To quote a reviewer, "If there's a single misstep in Ron Howard's expertly calibrated Frost/Nixon, it eluded me."

I remember the time well, as of course all Australians who were around then remember "Frost over Australia", which I swear was on the Seven network, not Nine as the movie suggests.

Interestingly the movie uses "Australia" as a synonym for failure. (The words do rhyme.) The idea was that Frost was only down under in the early 1970s because his career was washed up. It never occurred to us at the time. We felt graced by British brilliance, as if Australia was part of the jet-set. Frost interviewed Gough Whitlam and got an admission out of him that Whitlam wasn't a Christian, but was a "fellow traveller". More Parky than Parky, and with much more quick-wittedness than is suggested in the film.

My wife (a radio and television journalist) and I cringed at Frost's truly awful interviewing style as portrayed in the film. It must have been in fact been aweful because that part of the film came from transcripts.

Frost described the whole experience to Philip Adams here. (The audio will vanish from the site after a while), and to The Age here.

Five stars from me.

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Is it too late for seasons' greetings?

HT: Greg Mankiw

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Enjoying the ride?

Two years ago, the history of US housing prices looked like this:



As Joshua Gans noted back then, it was an inherently unsatisfying ride:

"A long climb at the end with no downward plunge. All anticipation, no relief."

We've got it now. The ride needs an update.

HT: Speculative Bubble

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There's another tax inquiry taking place...

Had a problem with the Tax Office? Ali Noroozi wants to hear from you. Australia's new Inspector-General of Taxation is conducting another (less well resourced) inquiry in parallel with the better-known Henry Review. And he couldn't be happier.

Until November a tax expert with a lobby group, he says at last feels free.

"In my previous role at the Institute of Chartered Accountants, while I always acted in the public interest, I was representing accountants. Now I can promote the interests of the entire tax paying community - representing no-one, or everyone," he says.

"For 5 years I'll answer only to the Governor General. Neither the Minister nor the Tax Commissioner will be able to censor what I write, although I will of course involve them both."...

Labor rode to office in 2007 promising to abolish the post of Inspector General of Taxation. It had been created by the Coalition mainly to investigate the grievances held by big businesses. But over time the view of the incoming Assistant Treasurer Chris Bowen softened. He extended the 5-year term of the first Inspector General David Voss while he sounding out candidates to succeed him for the next 5 years.

As a result the forward work program stalled. "That's completely understandable. My predecessor didn't want to tie me down". But it means the next few years are up for grabs.

"I have put advertisements in the papers asking for ideas, and I will read every one that comes in," he says.

It isn't his job to arbitrate individual tax disputes. "That's for the Tax Ombudsman. But where a individual dispute illustrates a broader systemic problem, that's my area."

Asked for examples, he is not keen to provide them.

"I want issues to come from the grassroots. I shouldn't pollute the process," he says.

Previous reviews have dealt with topics such as debt collection and the administration of audits.

"But the potential range of topics is broader - anything administered by the Tax Office. That covers superannuation and the concessions and grants the the Office administers. It needn't even involve the Office, it could be the tax law it is forced to administer."

Ali Noroozi studied engineering at first "because it was about problem solving", and then obtained a Masters degree in tax law "because it was the most complex legal there is".

He wants ideas by the end of January and wants to announce his work program in March.

He has only six staff and so will have to pick carefully the ideas he chooses to investigate. "But I want to know what can be made better," he says. "Now's the time."

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Here's to a better 2009

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