Comments on: Spending Our Way to a Depression

By: Biker Pete

Biker Pete — Tue, 30 Jun 2009 05:16:43 +0000

Yer a persuasive fella, Justin. I'll bury a couple of blocks in the backyard... .

By: Justin

Justin — Tue, 30 Jun 2009 03:01:24 +0000

And there are not warehouses full of gold and silver?

By: Biker Pete

Biker Pete — Mon, 29 Jun 2009 11:09:49 +0000

Hoardable? Moi? I eat the stuff, religiously. Haven't you seen all the health warnings about aspartame since '74?! (Seriously, you have warehouses full of the stuff, right? I'm into tangibles... and sugar is as tangible a substance as anyone can touch, but until now, it wasn't up there with gold, platinum and silver... .)

By: Justin

Justin — Mon, 29 Jun 2009 10:54:19 +0000

Since I can't hear the tone of your voice, I have to assume you are being sarcastic and say;

If you knew anything, you'd know sugar is one of the most hoardable commodities.

By: Biker Pete

Biker Pete — Mon, 29 Jun 2009 10:41:14 +0000

Sugar? Sweet! Melts quicker than gold and silver, but it's sticky stuff... . You're a dentist in QLD, right, Justin?

By: Justin

Justin — Mon, 29 Jun 2009 09:00:08 +0000

The IMF applauds the depreciation of the AUD?, says the RBA should not raise interest rates? Sell AUD, buy gold. The sooner everyone sells paper and holds gold, silver (and sugar) the sooner the government and the bankers will be unable to destroy the country by slowly sucking the life from it.

A story I heard the other day, North Coast NSW so many new apartments have been built in the last number years that buyers will not even look at apartments that are not brand new. Also, my cousin is assistant manager at a hardware store servicing mainly building contractors. More people have been laid off recently than at any time since he's been working there, about 20 years.

I think the bubble has burst. Expect the government to (attempt to) lower interest rates, further trashing the AUD, that same bill of credit you and I must accept in payment of debt.

By: Greg Atkinson

Greg Atkinson — Wed, 24 Jun 2009 05:49:33 +0000

Pete...you were not suggesting a company would take on debt I agree...the author of the article did this when he stated "The real danger now is that money is being borrowed and profits spent in the hope that the increased capital expenditure will pay off next year as demand rises from business and consumer customers."

Everything you say makes sense, my issue is with the author Kris Sayce. I wonder if he has ever actually run a business or CAPEX budget or is he just sniping comments from the peanut gallery

Some companies will make bad decisions that is for sure...happens all the time. But I do not think there will be a flood of bad decisions as even the most foolhardy company knows by now that times are tough.

By: Pete

Pete — Wed, 24 Jun 2009 03:19:01 +0000

Greg: I wasn't suggesting that companies would go into debt in order to take advantage of the tax break. I am sure some will, but when I was talking of a shortage of capital I actually meant available 'cash'.

I don't think we should go on underestimating the stupidity of some companies though. Most did not foresee or allow for a crisis such as the GFC, even though there were plenty of warning signs. The banks have been playing the fool all this time, although perhaps I am not the only one to notice all the little advertisements and incentives they are pushing to get savers deposits onto their balance sheets.

Good point about the imports...very good point in fact. Although, with our semi-decent exchange rate at the moment it may work out better than if we had to source the same items later on (assuming a worse exchange rate).

By: Greg Atkinson

Greg Atkinson — Tue, 23 Jun 2009 22:59:29 +0000

Pete there are incentives around for business and companies to invest in a wide range of areas all the time so I think it is going too far to suddenly think there is going to be a huge amount of over investment just because of a new temporary government incentive. In addition I doubt many companies or business owners will be keen to take on debt at the moment just to take advantage of a tax break. We all know that a tax break is not the same as revenue and that it does not really help cash flow. (best not to spend at all if you want to retain earnings)

I do wonder however if this incentive is the best way to help businesses though, personally I would prefer to see a reduction in payroll tax, a cut in the corporate tax rate or some other measure that helps cash flow rather than enticing spending. I would suggest that a lot of CAPEX spending will go towards imported products so I wonder how much of a boost the Australian economy will get anyway?

By: Biker Pete

Biker Pete — Tue, 23 Jun 2009 21:11:36 +0000

What America needs is a superhero: http://sendables.jibjab.com/originals/hes_barack_obama