GFC

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Why did our banks survive the GFC?

The 2008 global financial crisis (GFC) developed over a long period of time. It included a housing bubble in the United States and then a slow squeeze in liquidity that brought down banks around the world. Europe and the USA, in particular, are still suffering from the crisis.

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Gold Class Animal Spirits

In his 1936 book ‘The General Theory of Employment Interest and Money’ John Maynard Keynes outlined how rather than being independently rational, investors were often prone to erratic herd-like behaviour. He argued that macroeconomic stability is inherently vulnerable to the ‘animal spirits’ of speculators. The recent deflation of the post Global Financial Crisis (GFC) gold price bubble is a prime example of this phenomenon.

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Chinese GDP and growth: What’s in a number?

Recently China’s president Xi Jinping was quoted in saying that China’s GDP growth will be subdued in the foreseeable future, relative to the rapid growth in the past decade. China’s official newspaper Xinhua has put the internal target at 7.5% p.a. for 2013 from a 7.8% p.a. actual figure achieved in 2012, and many are undoubtedly aware that this is a 13-year record low. Exactly how much has the world’s second largest economy grown by and how has China done it?

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The Virtues of Contrariness in Economic Forecasting

Economists as a whole are notorious for their poor forecasting predictions, which is why the saying “economists predicted nine out of the last five recessions,” is so well known. Economic forecasting is no doubt a difficult task. There are those few economists who are known for ‘getting it right’ or perhaps are just plain lucky. Neither obtaining an economics degree nor working as a professional economist can guarantee success. Of course, no forecasts are 100% correct and we can expect small errors in the numbers. However at times these forecasts are the opposite of actual outcomes and we experience unexpected economic meltdowns like the Global Financial Crisis and the Euro Crisis, during times when economists had predicted strong robust growth. So it isn’t a surprise that the credibility of economists as a whole has come under fire these past few years, and that economic forecasts are taken less seriously than before.

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Why we aren’t feeling the mining boom?

We are all aware about the mining boom going on in WA and QLD, and the other states trapped in the slow lane of the 2 speed economy, patiently waiting for the supposed income flows from the mining boom to come. The RBA seems to always be optimistic that the boom will stay strong and the income and prosperity will spread to the other states eventually. The government has attempted to help out with the Minerals Resources Rent Tax.  Theoretically economic flows can be felt widespread under normal circumstances however the effect of the Global Financial Crisis plays a major role in why we have a 2 speed economy and how it is constraining the flows from the mining boom to the rest of the economy.

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My Perspective: Day 1 – Australian Conference of Economists 2012

 

This is the first of four blog posts I will be writing for ESSA from the 41st Australian Conference of Economists, co-hosted by Economics Society of Australia and Victoria University. This blog aims to give its readers an insight into the key discussion topics at the ACE conference which created hearty debate amongst some of Australia’s pre-eminent economists.

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Putting the Australian Budget in a Global Context

There will be a lot of people tuning into Wayne Swan’s budget speech on Tuesday night, and not just from within Australia. Provided that the Treasurer delivers a much-hyped budget surplus (despite a softening in tax revenues due to the global slowdown), he will be able to claim that Australia is one of the first developed economies around the world to emerge from the threat of the Global Financial Crisis.

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Australia’s Household Saving Ratio – Is the cautious consumer still at large?

In recent years, Australian households have been saving a significantly larger proportion of their disposable income than in the previous two decades. Although the December quarter’s National Accounts data revealed a slight easing in the household saving ratio, the overall picture remains the same. Following a significant spike in December 2008, Australia’s household saving ratio has remained elevated at levels not seen in over two decades. Is this the corollary of the ‘cautious consumer’? Or does it merely reflect a return to more normal patterns of behaviour?

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Downing Lecture 2012 – GFC and Household Incomes

I attended my first Downing Lecture on Thursday night, and heard a fascinating speech by Professor John Micklewright, a research fellow from the Melbourne Institute. It was an interesting account on how the GFC had affected household incomes and income distribution across OECD countries. This blogpost will focus only on Professor Micklewright’s research on household incomes, starting with his findings and then giving you my response and reaction to his research.

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