A little follow up on knob-twiddling on those
Treasurers machines. In countries where there are multiple levels of government, such as federal and state, we have the unfortunate scenario of too many Treasurers. Now those State Treasurers only have a TAX dial to turn. Seeing they've all spent up big
in the boom and now are all going broke, they are forced to twiddle the TAX dial as far to the right as the voters can bear.
That scenario is a little inconvenient for Federal Treasurers because it negates the effect of their twiddling the RATE dial to the left. If they muck around and only give it a girly twirl, the net effect is zero.
Such is the situation in Oz where the various State Treasurers are all giving their TAX knob a big boy's turn to the right.
Considering that, I think it'll take a lot more than the girly twirl we got on that RATE knob in OZ the other day to shift consumers.
I can't help but remember that if you don't have commerce, and income, then there is no chance of repaying your debts. Government spending on infrastructure and such can only go so far, like maybe back in 1960, now it doesn't even rate a Treasurers knob.
Another way to see this is to look back at how fast rates have been increased in the past when growth or inflation was an issue and compare the current economic collapse. Its easy to see that those dials should have moved further, faster and it would have
had more impact if it had been one big adjustment, rather than the 'girly twirls' which seem to be having insufficient effect.
For those of you who want a comparison Australia's Commonwealth Bank reduced it's standard variable home loan rate to 7.74% today. That is between .75 and 2.0% higher than in the US and much higher than Japan.
I note that after started writing this (I was distracted by history in the making) I heard the Australian Treasurer Wayne Swan announced that the multi-billion dollar Oz surplus had disappeared. Who knows where to, probably the same place our retirement
funds and TAX dollars have gone. Sounds like he's going to want twiddle that TAX knob to the right too.
Is all this knob twiddling the 'decisive' action we were promised? Hmm. Perhaps they're saving it for later.
This is only my personal opinion, as light-hearted as I can be considering the subject matter but I am a fully qualified non-economist if that counts.