Tuesday, July 28, 2009

Why did the Government give Gerry my money?

“I’ve been in business since 1961 and I’ve never seen this sort of sales decline,” Harvey said. “I don’t know what we would do if we didn’t have Australia growing to make up for it.”
From Harvey Norman to ‘Persist’ in Ireland Amid Mounting Losses
"It is worth noting that the sector least affected (i.e. with little change in hours worked) is retail, no doubt buoyed by the Government cash packages," the report notes.
From 'Armageddon' averted but recession still likely: NAB

If I recall correctly, the first Government 'stimulus' payment was made just before Christmas, in time for the peak retail period and before the effects of the global financial situation were really being felt by the general population.


Steven Shaw said...

Didn't Rudd and Swan say that they were "going in early and hard" or something to that effect?

Rudd says in his latest essay that they went in early because they'd learned lessons from the 1930s.

Sounds like nonsense to me. However, it is difficult to know who's right on the economy since there's so much bias and prejudice out there. Maybe that's why they sometimes call it "political economy" :)

Brad Clow said...

The Christmas period has massive discretionary spending. So by timing the payment just prior, it is not as if people are going to save it for the hard times. They are going to hand it over to the retailers and consequently prop up some economic indicators.

Assuming the need for "economic stimulus", why didn't the government spend on health care, education or capital works? All of which they are behind in and would benefit a larger proportion of the community.

Steven Shaw said...

My best guess is that the government were trying to avoid a technical recession in Australia (i.e. they needed to get the money out there fast and so could not spend on health or education). The last quarter of 2008 was not shaping up too well. It would have been easy to get 2 negative quarters in the last quarter of 2008 and first of 2009. Government spending directly adds to the GDP and so bolsters the figures.