Flat White

The economy is stuffed full of stimulants – and so are too many business commentators

12 February 2021

4:00 AM

12 February 2021

4:00 AM

It is results season in Australian capital markets, This is the time of year listed companies delivery their half or full-year results (depending on their reporting timeframes).

The investment and media community look at company results to see how particular businesses have performed and what the company’s and perhaps its sector’s prospects are.

Some types, however, like to look at certain “bellwether” companies and make broad and sweeping macro-economic assessments and predictions. Sometimes these macro assessments/prediction have a basis. Others not.

On Wednesday, the CBA announced what appears better than expected results — and not just CBA, prompting one commentator to write:

CBA, IAG and Suncorp results to name a few show the economy has bounced back and the outlook is a mile stronger than was the consensus in the middle of last year.

The “economy has bounced back”.

The same piece also questions the perspective of the Clerical Clown of Martin Place:

Just what planet is RBA boss Philip Lowe on to deliver his cautionary policies last week?

If the economy has bounced back, to where has it bounced? Or is it just a dead cat bounce?

If you pump up a terminal patient with stimulants and pain killers, no doubt they will feel good or better. That does not mean that the patient is no longer terminal.

The Australian economy is leveraged to the eyeballs. The RBA is printing money left right and centre and keeping interest rates at effectively nil for the foreseeable future.

The Commonwealth and state governments are running fiscal deficits as far as the eye can see. The economy is in dire need of productivity-enhancing economic reform.

Our educational performance continues to decline notwithstanding more and more money being pumped in. Our cost of construction is 30-50% higher than the next highest country.

Our largest export market has given us the middle finger and is working diligently to decouple from us laughing at our attempts to decouple from it.

Yet the economy has bounced back.

If CBA’s results signal that the Australian economy has bounced back, I would like to know bounced back to what?

Perhaps these boosters would like to share with the rest of us which stimulants they are on, including for the unemployed and soon to be unemployed following the next state wave of border closures?

Bounced back. Right.

Stephen Spartacus blogs at Sparty’s Cast where a version of this piece also appears.

Got something to add? Join the discussion and comment below.

Show comments