Earth to Recessionberg. Your economy is falling apart

Earth to Recessionberg. Earth to Recessionberg. Earth to Recessionberg. Your economy is falling apart. Come in Recessionberg!

Nobody is listening. Perhaps nobody is home. Recessionberg is too busy today reassuring “quiet Australians”:

Josh Frydenberg has urged Australians not to overreact to the turmoil on world markets as he moved to smooth concerns the US-China trade war could hurt Australian retirees and the government’s budget surplus.

The Treasurer said this morning the government was concerned about the US-China trade war but noted that Australia’s superannuation funds were still performing well and the nation was still on track to achieve a surplus.

“We shouldn’t overreact,” the Treasurer told ABC radio.

Perhaps not. But we should react to what is already underway. The economy under Recessionberg’s stewardship is tanking before our very eyes.

As we know, the Recessionberg Plan is to reboot the housing bubble for growth, an echo of the Costello Plan many years earlier. To do that he is:

  • corrupting the Hayne Royal Commission as fast as he can;
  • preparing new, fulsome FHB incentives;
  • delivering structural tax cuts with cyclical revenue to leverage into fatter mortgages, and
  • driving for surplus over stimulus by saving his commodity boom windfall, ensuring that the RBA has to cut, cut, cut!

The problem is that life is what happens between the plans you make. The Recessionberg Plan will take time to gain traction given the slippery slope it finds itself upon. Time he does not have.

The various elements of the Recessionberg Plan are not only struggling for traction but are now sliding backwards down the hill:

  • he can’t corrupt Hayne fast enough as HEM tightening is structural and inhibiting credit;
  • his FHB deposit guarantees are still six months away, a lifetime right now;
  • his tax cuts have run smack into global volatility and a cautious if not to say bunkering consumer, and
  • his drive for surplus has added a public infrastructure bust via declining NBN spending to a dwelling construction bust that is showing all the signs of turning nuclear.

Add to that:

  • his economy is currently operating at stall speed just above 1% growth;
  • unemployment is rising and will keep doing so for the remainder of the year at least, if not next year as well, as construction comes apart and mass immigration pours in unemployed warm bodies;
  • wages growth is stalling and about to roll over;
  • his commodity boom is going comprehensively bust across all bulk commodities, delivering a massive national income shock;
  • threatening to turn the plan for a new property bubble into a double dip price fall.

Josh Recessionberg is going to get the recession he had to have if he does not wake up.

David Llewellyn-Smith
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