The pitfalls in talking up the economy

Australia is not a mushroom economy.

If we are to trust a new and novice government that appears to be floundering, then Australians need facts, realistic responses and strategies to face the challenge, not policy on the run, visionary rhetoric, and politically inspired expediency or panic spending splurges.

The Rudd Government is calling on Australians to give up saving and just spend. Just check our current levels of savings to find the margin for that. The overall effect is a demand and increasing reliance for "easy credit" and zero deposit for items ranging from electronic games, to cars and homes. We've just been there.

Rudd is relying on spending by pensioners, carers and families who receive the "windfall spending bonus".

What happens if that doesn't work? Will he blame the pensioners, carers and families for failing to do their duty in saving Australia's economic problems?

The real extent of this looming recession will become clear in the 2009 March quarter figures, an agonising wait of almost six months.

A healthy economy is one in which savings allow consumers to spend on items they can afford and is usually reflected as a percentage of savings and GDP.

Rudd is saying empty your pockets now and somehow you will make it up in the future. He knows what he is doing and the consumer's don't.

Who to trust?