From the mercurial Alan Kohler this morning comes some plain talking:
Yesterday Michael Chaney expressed what most people in business are feeling right now.
The chairman of National Australia Bank and Woodside Petroleum called the coincidence of a decline in the terms of trade and a long election campaign a “perfect storm” and added: “I would hope that after September, whatever the result is, people are a bit more confident and start spending again.”
Yes, well, good luck with that. The fact that there will be an election later this year was hardly a surprise and the result is already clear: no need to wait to start spending.
…In last week’s national accounts, GNE or gross national expenditure (which is GDP minus external trade, so a proxy for the domestic economy) declined for the second consecutive quarter – that is, we’re in a “domestic recession”.
…I suspect the main reason domestic demand is declining is the high level of household debt, which is producing a return to higher savings to repair personal balance sheets.
Kohler goes on to argue that it won’t change after the election and that any recession may be a boon for Tony Abbott because he’ll be able to push through unpopular but necessary reforms.
That’s not a bad thought. I’ve long been of the view that bad economic times favour incumbents as much as good ones. But it will very much be depend upon whether Tony Abbott is the man for the job should times get tough. Does he:
- have the values of shared sacrifice and a vision for the times?
- is he a great communicator and capable of winning people to a difficult task?
- does he have deep economic understanding and roots to facilitate both of the former?
My answer is no on the first. Half on the second. And no on the third. If he can’t measure up, tough times will not be a boon.
Anyway, welcome to the “at risk” school, Mr Kohler. It’s good to see you missed the Kouk’s “all good” memo.
