Here are the predicable cat calls from the peanut gallery:
And now some more serious folk, from Fairfax:
A one-time student of Yanis Varoufakis has challenged the former Greek finance minister’s assertion that Australia is headed towards recession. And his message is: “You’re wrong, prof.”
Perpetual Investments’ head of investment research Matt Sherwood says the “one-dimensional view” of his former Sydney University economics professor conveniently ignores the economy’s resilience and diversity against the odds.“This is the amazing thing, and this is why I think Yanis is completely wrong,” Mr Sherwood said.
“We’re having a decline in mining investment, which is the largest in a century and a half.
“We have had governments detract from growth in the last five years, which is something you haven’t seen in the national accounts for the best part of five decades.
“And despite those two one-off hits, the economy is still growing at 2 per cent.”
…”The big thing with Dr Varoufakis’s view is that if you have that one-dimensional view of the economy based on the relationship between China and investment, you could come to a conclusion about an economic contraction,” he said.
“But there are many other parts of the economy which are offsetting that impact.”
“We are getting solid growth in consumer spending; we’re getting good growth in trade.
“There’s still a very solid contribution from housing.”
He conceded that while the Australian economy would avert technical recession, there was a so-called “income recession” because of the country’s declining terms of trade, which is the relative price of exports to imports.
…”However, given those two big contractions in public spending and mining, I tend to think if we can still grow at 2 per cent, then the Australian economy doesn’t have too many risks to it, other than some cataclysm in China,” he said.
That’s right, more or less, so long as you ignore the housing bubble supporting the services economy, which you could probably afford to do if there wasn’t a cataclysm underway in China. But there is. It’s not a China hard landing, it’s a China transformation, one that is a cataclysm for Australian exports and is in the process of sinking the world’s emerging markets into outright crisis.
A recession is here already for domestic conditions and one to silence even the dumb bubblers is coming, I fear.
