This comment was made at Macrobusiness (link may be locked – but there is a free trial available)
Expect things to get very incoherent as a defunct economic model (neo-lib attitudes to trade and capital flows) crashes into the politics of recession (worried locals without enough income to pay their debts and buy the necessities).
- Mr Robb signing predatory capital inflow facilitation agreements (FTAs) to assist the FIRE industries that export – capital assets, industry, land and financial claims on public and private income AT THE SAME TIME as Abbott and Kelly try to hose down the issue in relation to residential real estate.
- Population ponzi growth rates and guest worker schemes (457 visa) and golden ticket migrant programs (SIV) AT THE SAME TIME as rising unemployment and underemployment.
- Residential Asset price pumping programs (ZIRP) AT THE SAME TIME as pumping supply to try to provide some employment options in residential construction.
The ability of the politicians to ‘hide’ the very real consequences of an economic model that involves supporting a standard of living with massive levels of off-shore debt (public and private), encouraged by “….interest rates will always be lower….” (i.e. Households living on rising levels of debt and leverage) – is starting to FAIL.
The day middle Australia finally gets to the “OMG” moment is getting closer. The day when the credit card bill arrives and you realise that your future income growth expectations were a bit rosy when you signed off on an over-priced residential asset.
Beads of sweat on the brows of Treasurers, finance ministers and RBA governors are the best index.
Joe Hockey is already sweating bullets and I reckon even Mr Morrison looked a bit twitchy on the 7.30 report last night
“…the party hacks don’t actually want to do this..”