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In Sensible Grown-Ups We Trust


What does a country want in a crisis? Above all, it wants a grown-up in charge. Someone who can calmly deal with the problem and reassure the public on the way through.

Do we have grown-ups in charge? And can they deal with the problem?

Australia's current crisis, which started as a financial crisis, is now an economic one.

Our starting point is better than that of any developed country. Don't just take Wayne Swan's word for it.

The Economic Cycle Research Institute in New York has a first-rate record of foreseeing recessions and recoveries months before anyone else. In a technique pioneered by the late statistician Geoffrey Moore, the centre uses more than 100 indices of leading indicators of economic activity to monitor 20 of the world's major economies.

And?

"We are seeing clearly the worst reading in the six-decade history" of the indexes, the institute's Anirvan Banerji said. "Europe is the epicentre of this recession. In the US, we are already 10 months into this recession and we don't see any end in sight. It's not just going down, it's plunging. In the early 1970s and '80s we had 16-month recessions, long and deep. We are set up for that.

"Japan is in recession; China is going into its worst slowdown in a decade or so; a serious slowdown is under way in India. Since the early 1990s, every country has increased its dependence on exports, so international contagion is quite serious."

And Australia?

"I'm not sure about Australia yet," Banerji said. "Certainly it's going to be a major slowdown and it may still be possible to avoid a recession. It's the one significant economy where I wouldn't want to say it's a done deal."
VIEW THIS ARTICLE ON THE SYDNEY MORNING HERALD