Figures help us breathe easy - for now IAN VERRENDER September 3, 2009
Australians all let us rejoice, for
we have a bullish economy,
If only we could shut the doors
and just be girt by sea.
There's no denying the resilience of the Australian economy. It may not be powering ahead at full steam, but the numbers yesterday clearly indicated that while the rest of the world's economy nosedived, we side-stepped recession altogether.
It was also clear the economic stimulus packages here and overseas have done the trick. They spurred consumer demand while the enormous bail-outs of the US and European banking systems staved off a collapse in the global financial system.
The sense of relief that we were pulled back from the abyss has been at the heart of the surge on international sharemarkets since March. But what now?
Now comes the difficult bit, the part where the survivors are supposed to clean up the wreckage and rebuild the system. That takes time and there is still plenty of scope for problems.
As the Treasurer, Wayne Swan, reminded everyone this week, Australian interest rates have been at emergency settings, even if they have been substantially higher than any other developed nation.
Given we avoided recession, and that our vital signs - both official and anecdotal - are improving, Australia is likely to be the first developed nation to raise interest rates on the way up. That indicates just how strong a position we are in and that we are returning to normal settings quicker than anywhere else.
We entered the maelstrom in better shape than any other developed nation. Our banks were in rude financial health, had virtually no exposure to the toxic assets that came close to blowing up the system and, on a national level, we had no sovereign debt.
But that does not make us immune from the mammoth task confronting authorities in the US and Europe, even if our future is tied more to China.
The euphoria of avoiding catastrophe carried over into the recent corporate earnings season here and offshore. It was dominated not by massive losses but by unfettered optimism, talk of green shoots and the general sentiment that it 'wasn't as bad as expected'.
In the past few days, though, just as statistics emerged to support the argument that we have hit bottom and things may be looking up, markets have again caught a dose of the jitters.
Some large hedge funds have figured the bull run has been overdone and some analysts are calling the imminent arrival of a 'second wave'.
Robert Prechter, the US analyst who predicted the crash and then urged investors to buy into a recovery in February, now says sharemarkets are in 'extreme overbought condition', forecasting an even bigger slump than occurred last year.
Others completely disagree, arguing stock prices are not overly expensive relative to the earnings that underpin them.
But that's analysts for you. Sometimes they're right and sometimes they're wrong. And in any case, sharemarkets always overshoot. Fear takes hold in bad times, and when the inevitable bounce occurs, greed kicks back in until everyone needs to take a cold shower. That's probably where we are at right now.
Market sentiment can have an impact on the broader psyche. But ultimately, it is the economy that drives markets, not the other way round.
For mine, the biggest threat to a sustained recovery has been the very emergency provisions that prevented total meltdown.
As a triage procedure, the bail-out of General Motors and Chrysler and the massive handouts to the very Wall Street institutions that caused the financial chaos worked a treat.
But if all that effort has only served to transfer the pain - and the ongoing debt - from the private sector to the taxpayer, then there will be no quick or easy fix.
previous: Rudd does as Obama and nobody, but nobody would consider Rudd far left .. except the whacko far-rights, of course .. lol .. seriously. AND, the thunked up OH NO negative, conspiracy people who see one about every corner.
Darling said he hoped banks would now not be rewarded for reckless behaviour [AFP]
The Group of 20 finance ministers have pledged to maintain stimulus measures such as extra government spending and low interest rates to boost the global economy.
The ministers cautioned on Saturday that the fledgling recovery that provided the backdrop to their meeting in London is by no means assured.
They also agreed to take action over bonuses for banks, which would see them rewarded for long-term success and not short-term gains.
"The financial system is showing signs of repair,'Timothy Geithner, the US treasury secretary.
"Growth is now under way. However, we still face significant challenges ahead."
The joint statement issued at the end of the G20 finance ministers' meeting said that fiscal and monetary policy will stay "expansionary" for as long as needed to reduce the chances of a double-dip recession.
Action over bonuses
On the issue of bank remuneration, the communique called for "global standards on pay structure ... to ensure compensation practices are aligned with long-term value creation and financial stability".
The statement fell short of calling for caps on bonuses, saying: "We also ask the Financial Stability Board to explore possible approaches for limiting total variable remuneration in relation to risk and long-term performance."
The position was seemingly a compromise between countries including France and Germany that had pushed hard for pay limits and Britain, the US and Canada, which were opposed to caps.
G20 finance ministers met at the Queen Elizabeth II centre in London [AFP]
Tim Friend, Al Jazeera’s correspondent in London, said: "What G20 leaders are getting to is a situation where they would link bonuses to performances.
"Banks would have to show that the capital available to pay for those bonuses was proportionately in place."
Alastair Darling, the UK finance minister, said: "We are determined to take action to stop banks or other financial institutions getting themselves into a situation where their pay and reward practices actually encourage people to take risks.
"[This] brings their institutions into a situation where they could be brought down with catastrophic results.
"I hope we are going to enter an era where we do not have again a situation where people are being rewarded for reckless behaviour," he said.
Stimulus spending
The finance ministers agreed they would keep spending the $5 trillion already earmarked as economic stimulus and delay any unwinding of emergency fiscal and monetary measures until economies are sturdy enough to stand on their own.
"We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies, consistent with price stability and long-term fiscal sustainability until recovery is secured," the statement said.
"We agreed need for a transparent and credible process for withdrawing our extraordinary fiscal, monetary and financial sector support as recovery becomes firmly secured," it said.
"Working with the IMF [International Monetary Fund] and the FSB [Financial Stability Board] we will develop co-operative and coordinated exit strategies, recognising that the scale, timing and sequencing of actions will vary across countries and across the types of policy measures."
Bank pay packages
Some G20 sources expressed frustration that there was not more progress made in curbing excessive pay packages for bankers - particularly those employed by firms that have received billions of dollars in government support.
Dominique Strauss-Kahn, the IMF chief, said: "There is broad agreement on what to do. The problem is we need to go beyond agreement. We need to have concrete measures.
"I'm impressed by the level of consensus, but I'm still waiting for strong measures to be decided and also to be implemented at the national level."
Much of the public pressure before the meeting had centred on bank remuneration.
John Hilary, the executive director of the campaigning charity War on Want, told Al Jazeera: "The G20 have failed to recognise the serious impact of this economic meltdown around the world.
"Tens of millions of people are being pushed into extreme poverty in the poorest countries and yet, what are they talking about? How rich our bankers should be. It just doesn't square up."
Kevin Rudd, left, said it was time to apologise for the tragedy of thousands of lost childhoods [EPA]
Australia's prime minister, Kevin Rudd, has made an emotional apology for the abuse and neglect endured by hundreds of thousands of child migrants who were sent to Australia without their consent.
Many of the thousands of so-called "forgotten Australians" had been promised a better life in Australia, but instead suffered sexual abuse and violence in state and church care homes and other institutions.
Around half a million children, including thousands of British migrants, were sent to Australia between about 1930 and 1970.
Echoing an historic address a year earlier apologising to Australia's indigenous Aborigine community, Rudd said it was time to right the wrongs done to thousands of child migrants.
"We come together today to offer our nation's apology," Rudd said at a ceremony in Canberra on Monday, speaking before about 1,000 victims of abuse.
"To say to you, the 'forgotten Australians', and those who were sent to our shores as children without their consent, that we are sorry.
"Sorry that as children you were taken from your families and placed in institutions where so often you were abused. Sorry for the physical suffering, the emotional starvation and the cold absence of love, of tenderness, of care.
"Sorry for the tragedy, the absolute tragedy, of childhoods lost. Childhoods spent instead in austere and authoritarian places where names were replaced by numbers, spontaneous play by regimented routine, the joy of learning by the repetitive drudgery of menial work."
The apology follows a 2004 inquiry by the Australian senate which unearthed hundreds of stories of children placed in care due to family breakdown, because their mothers were unmarried or because they were considered uncontrollable. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ John's story
Among those in the audience for Rudd's speech was John Hennessey, 72, of Campbelltown near Sydney.
At the age of six he was shipped from a British orphanage to an institute for boys in the remote country town of Bindoon in Western Australia.
Six years later he was he was stripped naked and nearly beaten to death by the headmaster for eating grapes he had taken from a nearby farm because he was hungry.
"What terrified me most was that in my mind I thought: 'that's my father; what's he doing?'", Hennessey told the Associated Press.
"I had nobody else and he was the one I'd looked up to." ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The senate investigation found evidence of widespread assault and emotional, physical and sexual abuse, as well as neglect, humiliation and the deprivation of food, education and medical care.
Thousands of survivors continue to suffer mental and other health problems, including drug and alcohol abuse, while others are believed to have committed or attempted suicide.
Many of the children were told falsely that they were orphans, although most had either been abandoned or taken from their families by the state.
In many cases siblings were split up once they arrived in Australia.
"The truth is, this is an ugly story. The truth is, great evil has been done," Rudd said in his address on Monday to survivors.
Rudd's apology has already made waves in Britain where Gordon Brown, the UK prime minister, plans to issue a formal government apology to thousands of British child migrants forcibly sent overseas.
An estimated 130,000 poor British children were shipped to Australia, Canada and other former colonies over a time span of more than three and a half centuries.
Some of the children were as young as three years old.
News 
Market Data 
Discover 
AI
