Friday, December 19, 2008

Merry Christmas

I can’t believe it’s the end of the year already. It sounds clichéd, but it’s true. At this time of year it’s fairly normal to both look back and to look ahead. 2008 will go down in history as the year of the Global Financial Crisis, and it’s fair to assume that the fallout from that will continue to have a significant impact on the year to come.

Despite the brave optimism of the Federal Government, nobody seriously believes that it will be possible for Australia to stave off a recession while at the same time avoiding a budget deficit. It might just be possible to do one or the other, but almost certainly not both. In fact, after the recent spate of Federal spending there really isn’t a great deal of surplus left. It won’t take much more to tip the balance.

The important thing is to realize is that deficit is not the dirty word that Peter Costello made it out to be. It certainly would have been if we had been running a deficit during the boom times, but that was not the case. However, times have changed, and like a tropical storm the economic downturn has arrived suddenly and dramatically. It is the right and appropriate thing for the government to do to use a budget deficit to stimulate the economy, and most importantly protect jobs.

Employment is the key. As much as we might be told to go out and spend to keep the economy going, nobody is going to do that if they are worried about their jobs. The lack of spending reduces company revenue, leading to job cuts, leading to further reductions in consumer spending, and the whole thing becomes a vicious circle. Anything the government can do to create employment is not only desirable, it is essential.

So how bad will it get? That’s hard to say, but as long as the government is in a position to continue spending money, Australians will be sheltered from the worst of it. In the meantime, we’ve all earned a break from the doom and gloom, so regardless of the economy it is time to appreciate the good things in our lives and to remember that even if we can’t afford to spend very much, at least we can spend some time with our families and friends, in the best part of the world.

Until next year, Merry Christmas, and look after yourself, but more importantly, let’s remember to look after each other… after all, each other is all we ever really have.

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