The Australian and US economies may be facing problems of a very different sort – too much growth here, not enough there – but in both places a similar response is emerging; blame the other guy.
In a speech to the Business Council of Australia last night, Federal Treasurer Wayne Swan spent a good chunk of his time explaining why the inflationary pressures that now beset the economy are the fault of the previous government.
“It’s clear Australia has been facing a slow-burning emergency for several years as the capacity constraints in our economy have been laid bare by this ongoing terms of trade boom,” Swan said. “It is vital we learn the lesson the previous government failed to.”
And in the US, Nobel prize winning economist Joseph Stiglitz got stuck into the once untouchable Alan Greenspan, the former long time chairman of the US Federal Reserve, for describing the housing bubble that led to the country’s sub-prime meltdown as “froth.”
“It’s not just that he was asleep at the wheel, he actively looked the other way,” Stiglitz says.
In each case, there is probably a pretty big dollop of justification for sheeting home blame to previous economic managers. Whether it is helpful in getting the respective economies into a healthier state is another issue.
The global credit squeeze was just setting in during December last year, and it now appears construction activity slipped back unexpectedly during that time also.
Construction activity fell 1% in the December 2007 quarter after being up 2.2% in the preceding quarter. Westpac economics is now predicting that construction activity is likely to see a more mixed performance in 2008, with residential building activity likely to face a more difficult year as interest rates move upwards.
On the markets, at 12.30pm the S&P/ASX200 is up 1% on yesterday’s close to 5724.8, and the Australian dollar is trading at US93.27c after closing at US92.69c yesterday.