W-shaped recession on the way says PEC
W-shaped recession on the way says Productive Economy Council
So the recession is over. At least Bill English is happy to say so and will spend the next month telling us we are out of recession and it's business as usual. That's fantastic news, or at least it would be if he was right.
But, says Selwyn Pellett of the Productive Economy Council, unfortunately he's wrong.
"Prior to the recession 30 percent of our GDP was from the export sector and that 30 percent is still very much in recession," says Pellett.
"How can we borrow $250 million a week to stimulate consumer and housing spending, thereby lifting the exchange rates and putting further pressure on the remaining exporters and then turn around and claim we have a sustainable recovery? The government can pump as much money as they like into the internal economy but it won't earn a cent towards paying it back," says Pellett.
"This bizarre idea that we can make exporters the whipping boys for the excesses of the internal economy has to stop. What is this government is doing for the Farmers and other exporters who are collectively having the hardest time in recent history?"
Federated Farmers have already come out and warned the government that the choice is either a short dose of reality now or the abyss when the economy inevitably crashes into a 'W' shaped recession, with spokesman Philip York saying :"If the Government believes its own rhetoric of an export led recovery then some hard decisions are needed immediately."
The export sector, says Pellett, don't want hand outs and don't want the internal economy getting them either.
"What we desperately want is for the hand outs to stop so the exchange rate can drop back where it belongs and that's less than 65 cents to the USD. The current rate is insanity relative to the state of the economy. "
"Bill English can talk up the economy all he likes but the reality is our real income as a country is export earnings and that income is plummeting. Even worse, the means of production and income generation are no longer being invested in due to the uncertainty of the returns."
"We have watched $7 billion in new loans go into new property lending while witnessing a reduction of $3 billion in business lending under this government's alleged focus on productivity," says Pellett.
"That's a recipe for disaster, and Bill English should understand that."
Bill English may talk about the government's "vision" to re-balance the economy but while those at the coal face of the economy continue to be hammered by policies aimed at pleasing the voting public rather than doing what is right for the country, that vision is merely a mirage, says Pellett.
"The exchange rate is killing sustainable jobs in our economy in the thousands. But as other countries have proven, you don't have to be a victim to the exchange rate. It is controllable if you implement the right policies. Those policies are well known, they are proven and they are within the Government's power to enact if it could muster the clarity of vision and fortitude to do so," says Pellett.
"When the export economy collapses Bill English won't be able to say it wasn't foreseeable, he won't be able to say he wasn't warned and he won't be able to blame it on the other guy. What will he say? Sorry?"