mr rba's spot on
I will now be listening to RBA Governor Glenn Stevens and stop preaching how bad the economy is and how disgraceful our dollar is performing.
At a speech to Melbourne business leaders yesterday, he blamed the media for sensationalising the economic situation and capitulating any residual market confidence in the process. He said that the Australian economy is not in a recession yet, but the sheer talk about it teetering on the edge of the recession abyss is more than sufficient to push us in. He advised us to stop the negative press.The market is a funny thing. It works primarily on consumer and business confidence. If people feel good, then they are more willing to spend. So if the government gives people money, the Reserve Bank cuts rates and the media talks up our economy (hard, but still possible), people will naturally start spending.
Looking at the reverse situation. If I get all this extra money and the media says we're about to descend further with the share market blues, I might lose my job, the kids won't have free travel to school, I will have to pay more for tolls and fares and the state government will charge more for everything; then I would be inclined to keep the money aside for a rainy day and ride it out. Having 6 million NSW residents sit on their money defeats the purpose of giving money in the first place. If the money does not make it back out into the marketplace, then the point is lost.
With Christmas only 1 month away, it is imperative for the economy to kick start again with festive shoppers. I have taken a very insular approach in this post and have not taken into consideration the globalisation aspects. However, if Australia as a country can produce sufficient internal momentum, then it might just be enough for us to pull off this economic miracle.
benny | Thursday, November 20, 2008 
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