UPDATE: The stimulus passed, bugger! Commentary to come tomorrow.

Senator Xenophon joined forces with Coalition senators to defeat the $42b 'stimulus' package, proving once again that politics can save us from...politics! Nick Xenophon's desire to benefit his own interest groups at the expense of the economy has, for now, saved the economy from this horrible 'stimulus' package.

"What happened in the Senate this afternoon was that the Government voted for jobs and the Liberal and National parties voted against jobs," Mr Swan said.

"The actions of the Liberal and National parties in the Senate and their actions in the House over the past week have effectively sabotaged the Australian economy." -- Source

Mr. Swan clearly has no idea how economics actually works; instead he, along with fellow economic illiterates Rudd and Gillard, continue to attack opposition to their 'stimulus' on the grounds of emotion rather than economics. They are joined by the Business Council of Australia, one of the many interest groups they cater to,

The chief executive of the Business Council of Australia, Katie Lahey, said: "The critical thing right now is to maintain and underpin confidence in the Australian economy, and we think the package the Government has put forward will be important in doing that." -- ibid

If this stimulus passes, it may give the impression that jobs are being saved -- but as Bastiat said, it's about looking beyond the immediate effects to see the damage this thing will cause elsewhere. Lets say it saves 500,000 construction jobs. Great, right? What you don't see are the 1,000,000 jobs that were never created thanks to this package distorting the nature of the economy. It will prop up areas of the economy that are full of, you guessed it, malinvestment -- all of which was caused by the same people who claim to have the solution! It will drive wealth from productive areas of the economy and subsidise people who shouldn't have been in their respective industry in the first place. The result of this wealth destruction is that as a nation we're all poorer.

My message to Australian politicians is this: Liberals and Independents, if you really care about jobs and the welfare of the economy, block this 'stimulus' package with everything you've got. I don't care how you do it or what your motives are (personal interest groups). Likewise, to the Labor party, don't back down and give these Independents or Liberals what they want (money for their interest groups)! We need politics to fight the politicians so that hopefully nothing gets done (i.e. they can't cause more damage) and then maybe, somehow, we can luck our way out of this mess.