The Diet Chocolate Recession.

The Diet Chocolate Recession.

I feel it is an important subject..Our finances..The Recession etc.
Remember how we were supposed to boost the economy with all these pre-Christmas bonuses??? Spend, spend, and spend some more... Did we all really think the money was staying within Australia...No, it was going to overseas companies and their shelf companies that sometimes wear the Aussie logo, thus sucking us into believing that the product is Aussie made therefore the money stays here to boost our treasury dept.'s growth...WRONG!! Many products might be assembled here, or one or two of the parts might be made here, but it is still an overseas company that gets the profits... So have a read of this article from the DAILY RECKONING...and see if you still think we are not in a RECESSION or Mr Rudd is doing the right thing by us...as I don't. His true colours are surely showing through...Just like the obamessiah's is showing up all the colours on the colour charts...He is one that stands out, for all the wrong reasons...
I actually sent an email to D.R saying I enjoyed this article...

The Diet Chocolate Recession‏

The Daily Reckoning Australia (dr@dailyreckoning.com.au)

Thursday, 4 June 2009

Melbourne, Australia

Two Time-tested Economic Errors
From Dan Denning at the Old Hat Factory:

--Today's Daily Reckoning is brought to you by the stupidity and buffoonery of Australia's politicians and mainstream economists. We thank them for today's bounty. Seldom in our four years since moving to the Lucky Country have we had such a target rich environment. Today's papers are filled with flim-flam, idiocy, and good old fashioned economic illiteracy.

--But wait! Before you write in accusing us of being perma-bears and running down Australia's economic good news, just remember this: the economy is not a footy team. It's not something you cheerlead or barrack for. Of course you want things to be good. But whether they actually are or not is a matter of fact, not national pride.

--And the facts? Here they are, in brief, for the March quarter: imports fell 1.6%, exports rose 0.6%, consumer spending rose 0.3%, and "consumption expenditure" fell 1.1%.

--"Consumption expenditure," by the way, is government, household, and business spending. And business spending, as you know, is investment (it creates jobs and incomes). Business investment actually fell 6.1% in the March quarter. That's an ominous sign for future employment.

--All of that added up to 0.4% GDP growth. That means that technically, Australia hasn't had two consecutive quarters of "negative growth" and isn't in a recession. That's if you accept the technical definition of recessions, or if you're a moron.

-- The numbers show reduced imports because consumers are scared. They show statistically goosed exports which predict lower commodity prices and therefore higher export volumes. And they show the biggest contraction in business capital and machinery outlays since 1991.

-- In summary: to celebrate the GDP figure as a triumph of government policy is to shout your economic ignorance from the rooftops of the world. Sure, there are items to be positive about, especially exports. But the idea that government spending has somehow spared Australia from the long-term consequences of debt and leverage is beyond absurd. If this isn't an old fashion recession, it's a Diet Chocolate recession, in which the short-term benefits of consumption belie the long-term consequences of debt.

--Specifically, there are two errors we'd like to expose, and ridicule if possible. The first is that increased consumption implies healthy growth. For starters, the government's December cash splash may have boosted consumer spending by 0.2% during the quarter. But the bigger contributions to the GDP figure were the surge in exports and big decline in imports.

--Why should that matter? Basic economics. Exports generate income and add to GDP while imports cost money and subtract from GDP (in general terms). Or if you were a business, when you sell more and spend less you generate greater income and profits. That's positive for growth, obviously. And that's what led to the positive quarterly figure.

--But by boosting consumer spending with borrowed money, the government detracts from Australia's long-term health for a short-term political benefit. Healthy consumption is financed from production. You make something. You sell it. The income you generate pays for the things you buy.

--But in the interests of generating the appearance of activity, the government borrowed money so people would spend it (or spent the surplus accumulated in the boom years). That's debt-financed consumption, an economic stupidity that has led America into a national nightmare. That is what the Aussie government seems to be encouraging and crowing about today.

--Of course it's said that deficit spending is "temporary and targeted." But no one has really explained yet how long it's going to take to pay off a $300 billion deficit. It will take years. And it will mean higher taxes or lower spending on other things.

--It reminds you a little of Scarlett O'Hara pinching her cheeks to make them rosy for Rhett Butler in Gone With the Wind. The colour rises, but it's all artificial. It's the same with Australia's GDP figures. The number expanded, but it was completely artificial. It didn't indicate a blush of health, but a kind of bureaucratic harlotry.

--So why go to all the trouble of making a sick economy look pretty? Well, if the first error is believing that you can borrow your way to prosperity without producing something of value and generating surplus income from it, the second error is one a four year old might make. You believe you can have something for nothing. And you want it now or you'll pitch a fit.

--The second error is confusing the temporary benefits of a policy for a small group with long-term benefits for an entire economy. It's like believing you can eat chocolate without getting fat, or get drunk without getting a hangover. Or, if you're doing it on purpose-knowing full well what you're up too-it's putting your short-term electoral prospects ahead of the national interest (something all politicians everywhere now do as a matter of course.)

--To be fair, the journo and politicians who think yesterday's GDP number is a victory for Keynesian policies are making perhaps the oldest mistake in economics. Bad economists and policy makers have always focused only on the immediate and obvious effects of their decisions. After all, it is easy to show who benefits in the short term.

--Pensioners get more money. Who'd argue with that? Who wants to see Nanna starve? Consumer spending rises? What retailer will complain? If you focus only on the short-term and obvious, you see that GDP grows and Australia manages to pull off what only two other industrial countries in the world have? Shouldn't we all be justly proud?

--All these obvious benefits have unseen costs that come later, and hardly anyone in Australia is talking about what those costs are and who doesn't benefit (the next generation). Chocolate makes you fat. Drinking to excess ruins your liver. And debt financed growth ruins a nation's economic health and steals a fair go from the future. Don't take our word for it, though. Just listen to Fed Chairman Ben Bernanke speaking to Congress yesterday in America.

--"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term," the Chairman said, "we will have neither financial stability nor healthy economic growth...Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance."

--Bernanke knows America has to get its fiscal house in order before investors lose complete confidence in the U.S. dollar and dollar-denominated assets. But judging by the reaction of markets, it might be too late already to restore confidence. America's debt and deficits are large and getting larger.

--Australia's, by contrast, are merely small and getting larger. But if people begin believing that more borrowing and government spending is good for the economy-based on this first quarter GDP number-then Australia will walk even further down the road that has taken America to a road of national servitude to foreign creditors.

--Any government that is proud of a policy with that result is either incompetent or economically illiterate. However, now that we write that, we realise that is what most governments are: incompetent and economically illiterate. So what should investors do now? More on that tomorrow...

If you are at all interested in tomorrow's follow up, just go to the website of Daily Reckoning..not hard to find.

Increases in demand for support services

Increases in demand for support services as financial crisis hits home
23 Oct 2008 - Source: Ramon A Williams

Australia’s worsening financial and housing crisis is impacting on Wesley Mission’s ability to meet the needs of a growing number of people left homeless, bankrupt and vulnerable according to Wesley Mission’s 2007-08 Annual Review which was released today.

As the crisis deepened during the past year, Wesley Creditline Financial Counselling Service provided counsel and support to 4826 people but turned away 2424. The number of women seeking crisis accommodation grew from 148 to 227 – a jump of 53 per cent on the previous year.
For the rest of this story go to: http://www.acctv.com.au/articledetail.asp?id=6330


As a long time volunteer in various orgs I can tell you there is desperation out there. Most of these people are in this trouble through no real fault of their own, on the other hand, there are many who have brought this on themselves. Through greed...you know the type...higher mortgage than they could really afford, having to have all brand new and expensive furniture, and the flashy car/s to go with it all. And how do we pay for this...by that little piece of plastic that the banks just love to hand out to people who they know very well will get in over their heads. The other people going to NCO's for a handout, well these are the gamblers, the alcoholics, the drug addicts, who spend their welfare payments on their vices, and not only welfare recipients but workers as well. The biggest losers are of course the children of all of the above. Then many of these people declare bankruptcy, and who pays for this in the long run?? I think we all do in one way or another. We also pay in the long run for all the thieves who just help themselves in supermarkets, other shops or to other peoples' property, thus insurance will be increased in high risk areas, and we all pay extra for our groceries etc because of the insurance hike to cover the cost of thefts.


For people who lose their houses due to defaulting on their mortgage payments, who is going to bail them out...our government? Creating another Fanny & Freddie situation? After all, didn't they encourage low income earners to go in for a mortgage by offering them the first home owners scheme of X amount of dollars.

"It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.
What is a risky loan? It’s a loan that the recipient is likely not to be able to repay." from WOJ 21-10-08 Fannie Rort and Freddy Scam.


Just like they had to start paying people to have babies. Hence another baby-boom. Only this time there are babies being born to people who just simply have NO rights to be parents, hence so many kids needing foster care and babies being born only to go straight into a detox/methadone programme. And all because of why????? Not enough "caucasian" babies were being born to keep our population going, and then immigrant intakes to boost the economy, and presumably because there would not be enough tax payers to support the original babyboomers and those who followed.

Everywhere I go I see women...and young.. pushing a stroller with a baby, while toddler is beside the pregnant mum. There are so many barely legally old enough mums to be and in some cases these young mums are expecting their 2nd, and they are not even 18 years old yet., and at times, girls not old enough to be having sex....pregnant. Now I am not advocating abortion, as I am against that idea, but that is another issue...but for all these women and young adults and teenagers to be having babies and collecting the 'Baby Bonus' well I just have to wonder, would they be so eager to be having all these babies if there were no baby bonus? Some will say yes and others will not agree. Some will say that females do not have babies for the money, well let me tell you some do. I personally know of people that as soon as the baby bonus has been put into the bank, the baby is then being raised by grandma or handed over to welfare and foster homes. Some of the very unlucky babies are forced to endure life with a totally strung out on....insert whatever drug....and are lucky to get fed once in a while. There are babies and toddlers of single parents that the welfare need to agree on which drug addict parent is better than the other one to leave the child with. Oh and if grandma is raising the child, there is not much help out there for her, not from welfare at least. Yet if more foster carers were available then they at least get re-imbursed for expenses or in some agencies, depending on the age and level of needs of the child, then there is a sliding scale of 'payment'. I understand why most agencies do not pay a lot for carers, as there is already some in the business who only take these poor little kids in because of the money...yes it happens...if the weekly amount were to be raised then that would leave the way open for even more unscrupulous people to get into the foster care game.

There are some horror stories out there that do not make for good reading, but there they certainly are! If I did not know about this from experience then I would have a hard time believing it, but alas no. I have seen kids after months of a "caring" foster carers doing all the hard work on these dysfunctioning little kids, be returned to the parent/s because of a court order stating that the drug addiction is under control...not gone mind you, but under control.... or the domestic violence has settled because the parent/s have been to court/rehab and promised they would be good little parents if only they can have their welfare payments....ooopppsss I mean their kids returned. Only for these kids to once again end up back in the system....or worse DEAD. Now this I have written proof of and have had for 13 odd years. I have a stack of court documents of child welfare cases where the child was returned to the parents only to be returned to the Childrens' Hospital time and time again, or sadly to the morgue. I obtained these case files when there was a State Inquiry into DHS, that was instigated by Jeff Kennet back in 1996. This was a result of then a young boy (barely 16 yo) died from heroin.... and this was not long after the first death of a young girl from ecstacy. Mind you the details of these stories are long and detailed, and I might just one day write about it, as I am personally involved in one of the cases. But not today...the wounds are still raw. Suffice to say that the young boy who died of heroin was not into drugs until he was put into the welfare system and short-term units, due to family problems. He never saw any heroin use from his parents or close family members, he learnt those tricks from being placed in with other teen drug users.

But the long and the short of all this is I am really getting tired of people who run up credit knowing full well they have no real means of ever getting out of debt, and so using up all welfare resources, leaving none for those truly deserving of other peoples generous donations. Call me hard, but yes I have had to harden up over the years. I believe that a bit of TOUGH LOVE can go a long way with so many people and especially with today's youth, and even some adults.