Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Rising unemployment endangers the recovery

By Henry Thornton - posted Tuesday, 4 August 2009

Interest rates are unlikely to change today following the Reserve Bank's board meeting.

The board and the staff need to ponder the current state of the major economies and that of Australia's, and also forecasts and risks.

As well as global risks discussed below, there is the risk posed by Australia's labour market, where unemployed and underemployed resources are far larger than official statistics suggest.


Rate hikes anytime soon would exacerbate this issue.

A key question about the international economy is: could the current global economy, or important parts of it, be unstable?

In economics, it is usual to discuss one's expectation or "best guess" about future development and also to articulate potential risks.

For the past 18 months or so, the "best guess" was first of a nasty slowdown, morphing into a "Great Recession" as the International Monetary Fund called it in early March of this year.

The IMF warned on Tuesday that the world was gripped by a "Great Recession" that could throw millions back into poverty and spark civil unrest, as the US appealed for joint action by nations to tackle the crisis.

There has been "joint action" aplenty. Substantial monetary and fiscal expansion has been the rule everywhere, including in Australia.


For the past year, the most discussed risk has been that of the world's financial system tumbling down. This risk was underlined in September last year, when the US declined to save Lehman Brothers. Global credit markets were gripped by fear and bankers lost the trust in other bankers. For a substantial period, the world economy wobbled on its axis.

Other US (and British) banks were bailed out and gradually a measure of trust has been rebuilt among financiers.

Yet nagging concerns remain. European banks own a lot of the debt of bankrupt or severely stretched Eastern European nations, and there is no united European government to lead the bailouts should this become necessary.

  1. Pages:
  2. Page 1
  3. 2
  4. 3
  5. All

First published in The Australian on August 4, 2009.

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Henry Thornton (1760-1815) was a banker, M.P., Philanthropist, and a leading figure in the influential group of Evangelicals that was known as the Clapham set. His column is provided by the writers at

Other articles by this Author

All articles by Henry Thornton

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Henry Thornton
Article Tools
Comment Comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy