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I personally feel we will hit a recession, but will recover slowly. I think, and have done for some time, that in Australia even though we are in a “Boom” time, it is only the mining area that is booming and keeping the economy as a whole out of recession anyway. For those of us not in a boom industry we are probably already in a recession, and have been for some time. It just isn’t politically responsible to say so.
I would like to hope that the issues affecting the US/Europe will be slowed sufficiently by the actions currently being taken by the world banks that it won’t affect us too greatly. Our recession (or non-recession) might go on a little longer than otherwise expected, and maybe be a little more obvious in the media/financial reporting, but that is about all we will see. Naturally if their actions don’t work, we are all toast, and out of jobs...
I think some of this is also media beat-up. The US for example has isolated their defence spending from budget cuts. Clearly to avoid depression they can cut this to save themselves if need be. And I am sure that isn’t the only action they have open to them. While it sounds funny there is no reason why 0% is as low as interest rates can go (and we are well off that anyway). I remember back in about 98 working for a major bank, Japan regularly had their rates below 0% to avoid recession and stimulate the economy. Think of that, you are getting paid to take out a loan.... can you see it “here have $100, and for every year you keep that $100 you will get an extra $1”...
And finally if we are all out of jobs, at least we can still look up, and with some luck there will be less cars, less lights, less air travel and so far less pollution...
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