A few things about economics and the present difficulties in Australia

There's lots of pessimistic stuff around about the financial crisis.

And that pessimism has a detrimental effect.

A few weeks ago Australia's most senior practising economist, the Secretary to the Department of the Treasury, Dr. Ken Henry addressed the National Press Club.

Journalist Alan Ramsey wrote an interesting piece about it which included this exchange from the Q&A session:

Can Australia avoid a negative growth?

Henry: "Dramatic action has been taken and is likely to be taken globally. And when added to the actions taken domestically, and which could mean still further actions, [it] gives one reason to be confident Australia can indeed avoid a negative quarter of growth. We can talk ourselves into worse outcomes, of course we can. People do. It wouldn't be the first time. But we don't have to."

That was the best news about our present difficulties I had seen in a long time.  If Ken Henry thinks we can avoid recession, then we've got a pretty good chance.

But what can you do about turning around the pessimist spiral?

Well, in Latvia they've come up with a pretty good idea.  Round up pessimistic economists and hold them for a couple of days.  It's a good deterrence.