Critical Times

140,000 U.S. jobs lost so far this year, with more losses on the way. World’s largest contract semiconductor chip maker forecasts a 25% sales slump. In U.S., Motorola on verge of cutting 13,000 jobs. 44,000 full time jobs lost in Australia last month. Australian building approvals down 30% from last year. Bankruptcies near all-time high.

Yet for T-E-R-R-Y McCrann (Feb 11th, Sunday Mail Business Section, p37) the good times are rolling. “The first thing is that when you look out the window, the sun still seems to be shining brightly”. Terry dismisses concerns about such things as simply negativity, saying of US unemployment: “But hey, that’s the way America works”. When commenting on job losses in Australia, he simply suggests “True, unemployment has plateaued (his euphemism for continuing high unemployment rates), but after pretty spectacular growth”. Trouble is, many people who were unemployed in the 90’s are still under- or unemployed this century. Most jobs ‘created’ are casual and/or temporary and replace full-time jobs. Unemployment figures are notoriously unreliable – only two hours work per fortnight can get you off the unemployment figures.

As for another aspect of the economy, our low dollar and low interest rates are touted as good news. Countries around the globe are frantically cutting their interest rates to stimulate growth, therefore consumption, at all costs. However, Japan’s interest rates have been around 0% (currently 0.25%) for years, and it hasn’t helped their economy any. Neither does this augur well for Mitsubishi, irrespective of the State Government’s willingness to underwrite Mitsubishi’s South Australian vehicle plants.

“Stimulating the economy” with lower interest rates is also claimed to be good for those with mortgages; indeed, that may well offset a little, but what if you haven’t got a job? Many casual, part-time and contract workers can’t access loans for a mortgage anyway, due to the uncertain status of their employment.

Our low dollar is said to give us a huge advantage when trading overseas – “super-competitive” says Terry. Yet, if our export trading partners are broke, it doesn’t matter how low our dollar is! They won’t be able to afford our exports anyway, and shifting more volume at cheaper prices is a sure way to undersell our valuable and F-I-N-I-T-E natural resources.

Terry’s approach is simply another attempt (albeit a limp example) of ‘talking it up’. “Don’t worry, everything is fine”, “Crisis! What crisis?”, “Just get out there and spend!!” – these attitudes show Terry and others of his ilk having a perspective which coincides with that of big business interests, with little connection to reality. Telling it like it is doesn’t constitute negativity – if we don’t acknowledge the realities facing us, we will not be in a good position to deal with them. Terry can keep his shovel, we’re calling it a spade!

N.B. Next to Terry’s article in the Sunday Mail, the new circulation figures for Australian newspapers were highlighted , showing the Mail’s circulation at 342,376. That’s a lot of people reading Terry every week! If you can afford it, reading The Financial Review would be a better option.