A bit over twelve months ago, on 19 January to be precise 2009, I was fulminating over Access Economics dire predictions on the Australian economy. On 5 February I wrote Are all the Australian economic forecasts wrong? I followed this on 23 February with A very odd recession.
My problem at the time lay in the fact that I was struggling to match the economic data with the dire predictions, something that had been worrying me for a little while. I was right, of course.
As the economy turned, Australia was one of the first if not the first major economy to start raising interest rates, full-stopping a sharp shift in economic perceptions. Now the Government has announced the withdrawal of its Guarantee Scheme for Large Deposits and Wholesale Funding to come into effect on 31 March 2010.
Simply put, the Government feels that Australia's banks can now borrow internationally without that support. This would have been inconceivable last February.
The guarantee has been a sweet little income earner. The Government was not required to make any payments, so the $A1.1 million collected from the banks to this point for the guarantee is straight profit. This is expected to rise to $A5.5 million over the life of existing guarantees. This represents a small but useful offset against the total cost of the various stimulus packages.
When I wrote A very odd recession last February I had no idea just how odd a downturn this was going to be. At this point, it is as though the Global Financial Crisis did not exist so far as Australia is concerned.
It would pay Australia not to forget, of course. But for the moment, everybody is enjoying business as usual.