Drum Piece on Surplus and Credit Ratings Agencies

My Drum piece this week has a look at the idiocy of chasing a good credit rating, even if it puts your economic growth at risk. We’re seeing Queensland right in the midst of such a play at the moment, when given the low bond yields (record lows) worrying about what a credit rating agency thinks at the moment is pretty low on the list of things governments should worry about.

That S&P is putting WA on a negative watch says all you need to know about their worth. To recap – here was the employment growth in WA over the past 12 months:

I also had a look at UK growth versus Australia’s growth this century, to show just how horrific things are over there – and why going for austerity might not be the most wise policy of David Campbell right now:

Here’s also a look at Australia versus European Union’s GDP growth:

And the USA:

Or to give it real context, let’s look at growth since the start of the GFC:

(The reason Australia's graph is shortest is because we entered the GFC later than both USA and UK).

Also interesting is that since reaching the bottom of the GFC, Australia and USA recovered at about the same pace – but the USA has been recently falling behind.

The UK on the other hand was only able to keep pace with the recovery for about a year and then flattened out. The UK has only grown 3.4% in the whole 13 quarters – over 4 years) since it began “recovering” from the GFC. To give that context, in the 4 quarters from June 2011 to July 2012 Australia grew by 3.7%