AUSTRALIA, CHINA AND THE UNITED STATES OF AMERICA
A modern boxer rebellion
Below in this web site I refer to a modern
boxer rebellion anticipating an economic response from China for a range of perceived sleights, and
embarrassments, perpertraed upon it by eastern nations. Australalia ahs rejected Chinese investments in mierals because the site was considered too close to a military base. Similarly the United States
has rejected investent on the same grounds.
"The deeply humiliated Chinese burned with hatred of the “foreign devils” who, by the 1890s,
included the Japanese, Russians and Germans. Their resentment reached a peak of savagery and bloodshed with the Boxer Rebellion."
China Humbled by Foreigners: The Opium Wars and Boxer Rebellion http://modernchinesedynasties.suite101.com/article.cfm/china_humbled_by_foreigners#ixzz0iDBxcHN7
Would a western ally have been rejected for the investments? The referenced governments, Australia and the USA, would probably say yes.
China is not a military ally of either country. China rattles its displeasure over things like Taiwan and the Dali Lama (these are distractions), and supports North Korea, it probably trades arms and other materials with Iran, and
other not so "western friendly" nations. China keeps the best products for domeatis consumption and exports the lesser quality to the world. China has little, if any, quality standards regarding food. Do the masses of consumers in Australia know that. if that is the case whu do our supoermarkets stock the
items? Price, greed and poor ethical standards may perhaps, cause consumers, and corporations, to turn a blind eye to the risks.
I predict that Chinese investment in residential property in Australia, and Chinese students studying here, may both suffer a decline.
There is a growing tension between China and its international supplier companies over commodity prices and China has to deal with the
nation's that
have the commodities they want, for now. China is looking to South America and elsewhere including Africa.
The Australian government, and the experts here, see China as a fundamental plank in our economic future. They publish this widely and in doing that
they speak volumes to the Chinese. Yesterday, 15 March 2010, Chinese Premier Wen Jiabao, spoke about the very themes I have been publishing below in this site,
"From Times Online, March 14, 2010,
China Premier Wen Jiabao says world risks double dip recession
" Wen Jiabao, the Chinese Premier, closed the National People’s Congress session today with grim warnings that the global economy risked plunging into double-dip recession and that China itself faced a “complicated” year.
Mr Wen’s note of alarm for the global economy was based on the still high state of unemployment in many of the markets that buy Chinese exports. Sovereign debt problems and exchange rate instability, he said, created the risk that the world economy could tumble back into a second recessionary downturn.
His speech included an aggressive defence of Beijing’s currency policy – the emergency decision made at the height of the financial crisis to re-peg the yuan and stop the steady appreciation against the dollar which began in 2005.
That position has been heavily criticised in Washington and blamed by some for suppressing recovery in other major economies. In a blunt rebuttal of those charges, Mr Wen said that “finger-pointing” pressure from other nations was to be opposed, could equate to protectionism and that China was fundamentally a “supporter of free trade”."
(Source: http://business.timesonline.co.uk/tol/business/economics/article7061436.ece)
Is China's policy as to its foreign exchange and the Premier noting the difficult year ahead, plus more, a precursor to my theor of the modern boxer rebellion?
China's local government debt is spiralling and it has property bubbles and internal domestic issues that dwarf problems in other countries. In soe areas it is containing a local civil rebellion.
Yet over here in Australia the real estate agents and the miners, certain state governments, and analysts, see a golden era of resources, Australia the quarry for the world.
The Reserve Bank of Australia has muted such a proposition. The mineral boom has
a narrow impact on Australian society, and economy, as a whole. Certain states are winners. Uncritically we go forward and then ... a second receession? Or is it that a large chunk of Australia misses out and the have nots
grow in number and isolation? (Kevin R Beck, Melbourne Australia)
March 2010: NVESTING IN PROPERTY WHAT A GREAT IDEA .... EXCEPT...
Everybody is doing it. There is an aged theory that one never goes bad when they invest in property. Every body is doing it including those canny Chinese and Russians.
Yes, and everybody was putting their money in shares and loved playing the world's great casino. Yes they bought the story that Telstra's future was bright and that its conduits and copper cable were great assets.
Surely the government has to let Tesltra into the National Braodband Network project and swap shraes for shares? Why and what value will those assets be? Not what the T1, and T2, investors believed or still believe. The assets are depreciating in value dramatically. And they may be broken up.
Didn't read Beck's web sites last year or before, that was an oversight.
Then we had everyone who was anyone
investing in Pyramid building society way back in 1990. The tech boom and we bought Yahoo and the dream and then .....oops.
Back in 1990 I put my little client's small amount of money (a health facility) into Westpac bank deposits at probably 7%. The big hospital, at the back, put their money in Pyramid at 15% and told us we were negligent by not maximising opportunity.
They lost their money when Pyramid Building Society collapsed, my client still had their million dollars. Fast forward to 2008 in
Queensland hundreds of millions went into Storm, in Geelong again mor money lost on a good thing. People invested in toll roads and in tunnels. Well where re those investments? The herd mentality and the little glitches in human nature still persist, we follow hunches and trends.
We listen to the experts and there are lots of them. They are on radio too and on television, must be credible. They are in goverment and big companies. They run things and are talked about in the Financial Review in Australia, in BRW Magazines
and the myriad of investment and Fortune 500, magazines and on the web like me.
But proerty surely not, it is not tech? There is a surplus of people who want to rent, and to buy, over and above availability (market force theory) and so the market will always go up and up.
It ahs hasn't it? Why because Australians are prepared to borrow to the eye balls and international investors have no idea of value.
There is a shortage so all tings being equal the canny and the rich get richer.
Oh damn the Victorian government just announced (March 2010)
they will build 4,800 dwellings for rental. How rude is that!
Lucky its not in the metroplitan area where everyone wants to live. It is on the frines and in regions. I wonder how many other states will do the same as the pressure and debate on their failures loos high as a political threat? They will cut their mates in property loose as the risk grows.
have a look at the Minister for Planning's plight in Victoria. The corrupt processes are on show.
Damn the resources of the cities in Australia are over stretched, we now all have to live in apartments, the environematlists want us to live in caves, without electricity, so we investors will get in and
buy them off the plan. We will buy anything and renovate. Good idea. What the plan was a little more gloss than reality? Surprised are we? The uniots intrinsic value is not quite what was touted.
No worries wwe still et good rents. They can be bid for, we can hold an auction and sucker in the poor renters. Let them eat cake and fight it out.
Whoops governments are going to make bidding for rent ilegal? And out of the closet pops interest rates, they are going up and wages,
and salaries, have to be contained to stop inflation. What if someone in politics decided to do what they do in Europe and the USa and cap rents? hat a nightmare.
people cannot afford to pay 40% plus of their income on rent or buying. Oh a home aon now is not over twnety yaers it is over the life of the buyer cause the prices are so high. Thus we buy things we will never own unless we win Tatts Lotto.
Risk analysis, what's that you ask? Are there rules and other theories and beliefs for
investment?
back in 2005 I pout my assets into cash. That waas it turned out very good, I have had the cash since and now the returns are not that good and the cash has diminished so what is the strategy now?
The banks are calling for deposits because the cost of funds overseas is still so high and traditional sources seem to be having problems. What is happening domestically in China?
Why are the Chinese and others buying our property? Well maybe they are sending their kids here to study, among other reasons. They also have a different mind set about family than we do. They buy and put the family member in because that is secure and probably cheaper and when finished they can sell the asset.
When will they discern that the asset is actually too dear? Probably they are already thinking that.
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As for the future in 2010 - 2011, what will Kevin Rudd do when the nasty balance sheet entries, pasted onto the puboic sector last year have to be taken back into the private sector?
Pee in his pants and take the blame,for that new fiasco too? 9Kevin R Beck, February 2010)
- "The private sector builds up massive debt levels to buy property and speculative assets. This has occurred and may still be occurring.
- The asset prices rise as demand rises but then eventually the bubble bursts and the private sector is left with declining wealth but huge debt.
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The private sector then start restructuring their balance sheets – and stop borrowing – no matter how low interest rates go.
- All effort is devoted to paying back debt (de-leveraging) and households increase their saving and reduced spending because they become pessimistic about the future.
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A credit crunch emerges – not because there is enough funds but because banks cannot find credit-worthy borrowers to lend to.
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Attempts at pumping liquidity into the banks will fail because they are not reserve-constrained. They are not lending because no-one worthy wants to borrow.
- The faltering spending causes the macroeconomy to melt.
- With this private contraction (reducing debt, saving) the only way out of the “balance sheet recession” is via public sector deficit spending.
Koo says that during this process of balance sheet restructuring the priority is to pay off debt rather than pursue profit. In turn, this suppresses aggregate demand as investment plunges. The downturn reinforces the pessimism and credit-worthy borrowers dry up and bankruptcies rise.
The circuit breaker has to be fiscal policy because the economy gets caught in a liquidity trap."
(Source: Balance sheet recessions and democracy, Richard Koo, Richard Koo
Chief Economist, Nomura Research Institute, in "Billy Blog, Alternative Economic Tinking", http://bilbo.economicoutlook.net/blog/?p=3225)
So all the above has come to pass. So now everyone has to pay donw the debt. How doesthat work? We still have an asset bubble inflationioanry aspect in which property and resources are pivotal.
cash splash by Russians and Asians in the Australian market. Where is that cash coming from? Local investment in property, and resources, from within Australia
is by comparison, very low. Savings, and discretionary spending/disposable income, are being chewede up by rising prices and inflation. But you woulod not kknow this from
the optimism and feeling of euphoria to have missed the global financial crisis. Governments, all over Australia, are wasting billions, as if they have and endless
money tree.
NSW squanders $A250,000,000 on an unfinished metro project. Victoria flushes a billion and a half of a ticekting system? How bright is that as an investment?
The federal government funds crooks, and charlatans, for hundreds of millions of dollar,
whilst past, ongoing and future, failed tenders are well over a $A100,000,000 for no result. The Defence Department continues to make excellent choces in acquisitions that cost the tax payer more billions.
Did the Rudd government over react, and push too much public money, unnecessarily, into the Australian economy? Probably it did, prolonging the day of reckoning into the future.
So what happens? According to the experts Australia will be saved (some of us that is) by a boom in resources and the galloping hordes of demand out of China and India.
We will eat, wear and be all things Chinese. Yet is this enough?
The Reserve Bank of Australia thinks that the cash rate is too low. Interest rates must rise by 2% to come back to the point
where the conservative economists think is appropriate to dampen expansionary forces and the inflation beast that so frigthtened Wayne Swan.
The Australoian housing prices are false, only believable to a gullible and greedy, real estate industry, and they are way, way above
realistic values, so they must give eventually. To waht extent? If the government releases more land this will precipitate a decline in values on the fringe suburbs of cities.
The wealth of many Australians is in fixed assets like houses and not in cash. Others have portfolios and superannuation that rides the casino of the stock market.
At the same time that the "come back transfer from public to private balance sheets" bites, taxes, and charges (public and private), increase and certain demographics across Australia
suffer unemployment. Why is the government working to alter the bankruptcy laws base threshhold from $A2,000 to $A10,000 and tbeing opposd by business?
Do they have the same opinion as I do? That many more people will find they are going, or are already for all intents and purposes, broke? (Kevin R Beck)
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VICTORIA DEMONSTRATES WHY HOUSING MARKET IS CONTRIVED
The Victorian state government has had its legislation to create an impost of $A95,000 per hectare of sale land rejected in the upper hous of the state
parliament. Ostensibly the government wants this tax to fund infrstructure development needs in the outlying areas of Melbourne. As a response to rejection the Premier wants to review the
land boundaries and the green zone. The Victorian, state and territory governments could release large tracts of land tommorrow or the day after and take other measures to reduce the crushing price ioncreases and alleviate supply and demand distortions but for political, revnue and
other self interest reasons they will not. Thus we operate in a contrived and distorted market.
WHOOPY DO! OUR FUTURE RESTS ON CHINA AND INDIA
February 2010: I am so rapped at all things Chinese including the button mushrooms and easily impressed by the late night callform the Indian call centre, representing
Australia's top notch banks and companies.
I like meeting a predominance of computer programmers who barely understand English. We are in a global age according to our mentors. Then why is it that Australia is not affected by the GFC? have te goovernments and businesses been lying to us about our place in the word and need
to tolerate loss of jobs and industries beacuse of globalism?
The spin doctors may have been caught out here by inconsistency. Apparently we are unqiue and therefore not fully globalised.
Listening to the Deputy Governor of the Reserve Bank of Australia (February 2010) we are partly globalised, only to India and China's antics.
We are immune from the USA and Europe abut intrinsically bound to only two countries for our future economic well being. It is very comforting to know that the resources boom is entering a nother golden age. That it could lst, according to historic analysis, for fifteen years.
It is fuelled by the growth of India and China. All things being equal, we are on the road to long term prosperity. I wonder what particular, defined and refined, demographics benefiot from a resources boom? Those who uproot to live in the nether regions of the nation?
Those beavering away in associated resource companies and sectors? The local communities that rely on resources? Or is it also
the pensioner, and the unemployed/under employed, the hidden people of the cities who get trickle down crumbs?
Does the money flowing into government coffers find its way to
the far flung populations regardless?
Of course India may have a war with Pakistan to stuff it all up, or suffer some internal conflict that sends it all to hell in a basket.
Iran may pop off a bomb or two, and the Middle East might go puff and bang. In China the marginals may riot, and the chest beating with Taiwan
may turn incenduous. North Korea might pop off and go bang.
But what is the likelihood of unexpected surprises and events?
Then again Australia itself could go broke
by the hand of our own governments as they
waste the odd hundred million
or two (NSW drops a casual $A270,000,000 on the metro link), even a billion or three, here and there and everywhere.
It is all so rosy in the tower of power where fantasy shimmers and reality is not present. Nothing like theory and speculation, by the pundits and experts to get us all warm and comfortable.
Drat those doomsday prophets to predict gloom.
Well the GFC is gone is it not? Dream on. (Kevin R Beck, Melbourne Australia)
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RANTS, RAVES AND PREDICTIONS
ILLUSION, SPIN, DELUSION AND COMPLEXITY
CONSUMPTION IS AN ADDICTIVE DISEASE, THAT IS OUT OF CONTROL, NOT A SOLUTION TO ECONOMIC AND SOCIAL WOES
The Australian media are obsessed by immature games played by politicians. The theatre of Australia's parliaments is precisely that - threatre.
barnaby Joyce incites a blathering lot of shallow commentator writers whose ability to distill complex issues is probably limited to watching their tea bag turn water brown.
So he fumbles about, at least he sees something that they are not, a danger so damaging to our economy and society as to shred the paper wealth of millions of Australians.
Barnaby's sin is to question the government's fiscal credentials through the prism of big, bad debilitating debt. So it is okay to look at Iceland, Italy and Greece and suck our teeth as they go broke in a major way but of course we
are smarter here because we have the power collective looking after things.
The majority of today's pundist, and soothwayers, completely missed the global financial crisis but hey we are the lucky country and apparently there was no greate effect on us. We just gambled a few hundred billion.
Off we went shopping. Meanwhile the resources boom was all a simple glitch in time and then we were off agin with China creating our future and India prmising us a golden era too. never mind that we have little manufacturing industry and
what we do have we have to prop up with millions of taxpayers dollars.
We get a lot of that back in tax so it is just churn isn't it? We were not even miffed at the great
Climate Change con until we started to think that since the national electricity market that governments dreamed up back in the early nineties did nothing more than create another
casino for the big corporates, who catully do not build or generate electricity at all
but pbet on the price. Our electricity prices in the home has risen by well over 100%.
Now the Emmissions Trading Scheme, is set to be another casino
for the rich, as waiting players, in the professional services sector and in finance, as well as the fly by nighters salivate over gaming the price of carbon and a whole global industry of navel gazers and
examiners see if the claims are true so that the dollars can be paid.
Excellent, more pie in the sky. You think the housing insulation exercise was a disaater and cost blow out killing people as an indirect outcome? wait for the impact of
kev and Penny's ETS. So why believe this story over an other we have been told? We are not even slighlty bemused by a bunch of school children making a dill of the Prime Minister on ABC telecvions (Q&A) so much so that he makes shit
up in his answers and tells porkies. School kids ask questions he cannot answer and he gets tetchy at a sixteen year old.
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Kevin Rudd, as an evidenced based parctitioner of
detailed policies and ideas,
is an illusion and much of his theories, and spruiking, are delusions. he has alongside him a group of Minister whose management of portfolios is aweful and much of their activity is mired in spin and obsfucation and dangerous ideas.
Senator Penny Wong has a neew department with almost two hundred personnel sitting waiting for the Senate to approve her rubbish legislation and thought patterns, whilst planning the structure of the new gaming casino known as the ETS.
Deputy Prime Minister Julia Gillard's industrial relations reforms take jobs away from high school kids, add add enourmous amounts to powerful union memebers' pay packets, and great
costs to business. There are parasites who prey on other's endeavours in the guise of skilled workers, union officials and politicians. Julia wearing her other hat,
spins the drivel that painting a schoool, building a dunny and a gym, a hall, putting a few desktop computers in,
whilst creating a web site to compare the smart and the dull, who do well or not at tests twice a year, is an
education revolution
Yet the media obsesses on good natured Barnaby Joyce. Who do you trust of all the politicians? No one, well just go ahead basking in the sun of this impressive fiscal turnaround, because the solarium that we call the Australian economy is
going to go crunch and along with it your paper wealth.
Throughout my financial, and political, web sites I have suggested that Telstra shares was not a good investment. But according to the pundits Telstra was going to reap the wurl wind of the National Broadband Project because their copper network went everywhere and it was oh so valuable. Well now you know that
the copper is probaly only really valuable as metal scrap and Telstra shares are taking a beating as the management issues downgrades and negaitive commentary about their future working lives.
Then we have housing, and the proposition that the grandiose opulence of building a $A45,000,000 mansion in Perth, or elsewhere, is oh so interesting. Indian and Chinese zillionaires snapping up real estate with their mind boggling wealth.
So how long do you think that will go on? India's population consists of an enormous number of dirt porr, scrabbling to live daily and relying on hand outs from international agencies and countries, whilst a middle class (limited in number by comparison) stands idly by picking their teeth and pondering their good fortune.
Rushing all over the world engaging in dubious technology ventures and selling us skills, which though cheap compared to others, turn out to be
extraordinarly mediocre in their delivery. How many Indian and Chinese, superior skilled (in their own minds) technology types can an economy bear? Then there are the small number of mega rich. Similarly in China the ratio of have to have nots is a frighhtening number. Will these people not riot eventually and demand something more of their
government's and greedy, seedy politicians?
When will the vast majority of poor people in the United States get really tired of being economically enslaved?
Meanwhile back here in Australia if you earn $A120,000, a year either singularly, or collectively ,with a partner,
and have a $A400,000 mortgage you may make it through but bruised financially. If you actually have a debt say over $A600,000, or even higher,
then you are looking at a very nasty situation, as the ability to service the debt becomes more problematic, sometime in the next two to three years.
Perhaps housing defaults are being hidden and debt rearranged. Whether we look at trends or affordability, median costs, or tea leaves,
the current situation tells us that there is no rational relatinship between price and income or between rents and income.
There is one reality though. The majority, who bought property in from 2007 onwards, and who will buy in 2010, are paying top dollar, and many
will never own their own home in their lifetime.
For the heavily indebted, by mortgage and personal loans and credit cards, by hire purchase and the never pay enticements of the retailers,
you are at the mercy of interest rates, globalism, job employment and the mass release of land to supply an ever
increasing population and a group of disenfranchised who slide deeper into poverty every day. And we are told we
are doing well when compared to the rest of the world.
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THE STATE OF GLOBAL FINANCES, ECONOMIES AND THE IMPACT ON AUSTRALIA
In Australia there is a surreal quality to the aftermath of the global financial crisis.
It feels as if the hurricane came and blew the trees and we all girded ourselves for the impact but according to the
power collective it miracuously passed us by. Australia, according to Prime Minister Rudd, is the envy of the world. This is an extraordinary feat, is it not? Apparently
we are the only country (ignoring China) that was not seriously affected.
The whole financial system can collapse and yet we here are relatively unscathed?
"The extent of the problems has been so severe that some of the world’s
largest financial institutions have collapsed. Others have been bought out by their
competition at low prices and in other cases, the governments of the wealthiest nations in the
world have resorted to extensive bail-out and rescue packages for the remaining large banks and financial institutions.
The total amounts that governments have spent on bailouts have skyrocketed. From a world credit loss of $2.8 trillion in
October 2009, US taxpayers alone will spend some $9.7 trillion in bailout packages and plans, according to Bloomberg. $14.5 trillion, or 33%,
of the value of the world’s companies has been wiped out by this crisis. The UK and other European countries have also spent some $2 trillion
on rescues and bailout packages. More is expected." (Source: Global Financial Crisis, Global Issues, http://www.globalissues.org/article/768/global-financial-crisis)
".... sovereign debt is the new subprime. The immediate concern centers on Greece but the fear is
this is just the tip of the iceberg. De-leveraging that started after Lehman collapsed continues with painful consequences.
.....the global economy is realizing you can't borrow your way out of a debt crisis. Investors are responding by once again
selling equities and fleeing to the safety of the U.S. dollar and Treasuries, which is ironic since the U.S.
deficit as percentage of GDP is similar to that of Greece.." (Source: Stocks Struggling Again, Market Still Waiting for V-Shaped Recovery, Posted Feb 05,
2010 11:00am EST by Peter Gorenstein at Yahoo Finance, http://finance.yahoo.com/tech-ticker/stocks-struggling-again,-market-still-waiting-for-v-shaped-recovery-419642.html"
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" Rising mortgage defaults and credit card delinquencies put many banks on the
brink of bankruptcy in 2008, sending the global economy
into a tailspin. But sovereign
debt defaults are potentially even more catastrophic as they can lead to geopolitical instability, societal unrest and even war.
And there will also be economic ramifications for investors worldwide, putting America’s (and the globe’s) fragile recovery at great risk.
To varying degrees, Greece, Spain, Ukraine, Austria, Latvia, Mexico are just a handful of the
nations viewed at risk of defaulting. Meanwhile, Dubai only just avoided a similar fate thanks to a $10 billion bailout from their oil-rich
neighbor Abu Dhabi. ... where might the touble spots be? .....
Greece
Ecuador
Argentina, Grenada, Lebanon, Pakistan and Bolivia
Mexico and Spain
“Sovereign debt” refers to the debt of nations. Just as the U.S.
issues Treasuries backed by the “full faith and credit” of the government, other nations sell bonds in
order to raise money to pay for programs ranging from armies to public healthcare.
A “default” refers to a nation’s inability (or refusal) to repay its debt. Whether a homeowner sends “jingle mail”
(home keys via post) because a lost job makes mortgage payments impossible or because a drop in home values
makes paying the mortgage uneconomical, the effect on the bank is the same: they lent money and now they’re not getting it back.
The same goes for investors who’ve purchased sovereign debts. This is critical because nations’ debt is often viewed as safer than
corporate debt since countries have the ability to raise taxes and increase tariffs in order to raise money to pay their debts.
But “safer” is not the same as “safe” and certainly not guaranteed. There are risks in owning nations’ or sovereign debt, as with any stock."
(Source: Is Sovereign Debt the New Subprime?
Posted Dec 16, 2009 08:30am EST by Aaron Task in Investing, Recession, Banking -
Yahoo Finance,
http://finance.yahoo.com/tech-ticker/is-sovereign-debt-the-new-subprime-391552.html)
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So are we unscathed, in Australia, really or are we allowing ourselves to be deluded as we sit, smug, in the eye of the tornado?
We know there are pockets of significant loss and disadvantage in Australia.
Thousands of people in Australia have lost part, or all, of their superannuation but they are not apparent in our midst,
and seem not to be of concern to the government, the banks, the financial system or any of the miracle workers who laud our nimble footed ballet and sheer luck. Yet we know that charities are struggling to meet new demands and that our social services agency - Centrelink - is paying out more and more.
Violence and social unrest is on the rise.
Could it be that the governments of Australia are so addicted to spin that they have maintain a facade of well being least we panic?
In this modern age it is quite common that our government, and business, leaders imply that they have never made a mistake. They have the answers. The Prime Minister gets tetchy if questioned too closely. We are to accept his glib pontificating answers to our questions whihc he turns into his own questions, within a question,
and answers them instead. The global financial crisis has the propensity to intefere in his climate and greening agenda, thus its impact past and future must be minimised. Prime Minister Rudd's
ETS and CPRS
are far more important.
In looking at the attitudes of Australians, in February 2010, there seems to be little decline in expectations.
The federal government has borrowed extensively to fund the surplus. This appears to be of no consequence to many.
It is as if the Australian government is claiming that we are somehow immune.
Immune to what?
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"In 2008, the world entered into a period of slow economic growth, triggered by food, fuel
and financial crises. Countries across the world suffered from increased international
food and fuel prices and high inflation during the first half of 2008, while in the second
half of 2008, they were hit by an economic meltdown triggered by a global financial
crisis. It is expected that the world will enter an era of slower expansion; world economic
growth is expected to fall from 3.2% in 2008 to -1.3% in 2009, while growth in developing
countries is expected to slow down from 6.1% in 2008 to 1.6% in 2009 (IMF, 2009).
As a consequence, governments are facing severe fiscal constraints due to declining
revenue. This, in turn, affects the progress of educational development. The unexpected
collapse of the macroeconomic environment has placed national plans for achieving the
Millennium Development Goals (MDGs) at risk, especially in many developing countries.
The prospect of external aid is also likely to be affected given that the slowdown has
impacted many developed countries as well.
The global financial crisis slowed national economic activities, which in turn affect public
revenue.
Overall, countries have been forced to lower their expectations on revenue collection,
which is determined by transmission channels of the impact within national economic
structures. While not all countries face decreased revenues, the government ordinary
(tax) revenues in general are reduced as a result of slowed economies and decreased
household incomes. A widely observed cause of declining public revenue is a sharp drop in the volume of
international trade and commodity prices. Between September 2008 and March 2009,
the world dollar value of trade goods declined by about 30%. Much of the decline
reflected weaker trade in manufactured goods, the dollar value of which dropped 33%
over the same period (World Bank, 2009a)." (Source: EARLY IMPACT ASSESSMENT OF THE GLOBAL
FINANCIAL CRISIS - UNESCO, http://www.uis.unesco.org/template/pdf/EducGeneral/Financial_Crisis.pdf) |
So are the texation revenues down overall in Australia? Since we are a commodity based nation are we exposed? Can we believe the claim that China's growth will sustain us? It appears to me that there is some blind assumption that all we do in Australia is expert coal and gas.
The mining industry apparently is going to carry the Australian nation. In return we will live in cheap Chinese produced food and goods. Across Europe countries are reigning in their spending with draconian cuts to reduce their deficits. In the USA the money is being printed.
Unemployment in the EU countries such as Greece, and in the USA, is circa 10% or more. According to the statistics here in Australia, we are a little over 5%. That is fairly close to full employment.
So if we are at fulllemployment then we must be near full revenue raising capacity. Is that the case? It is quite marvelous how the books, whether they be government or business, can be billions in the red and with the wtinmkle of an eye they are in surplus.
It is quite marvellous how one minute there is no profit and then suddenly there are megamillions. It is also interesting why the media, the pundits and the commercial types, think that a particular stock price index, or activity,
is the sign of a very healthy recovery and robust economy. Given that it has been demonstrated, by the global financial crisis,
that the market actually has no idea and is not a good determinant of anything real, why is the stock market stil being paraded every night on the news as "good news"? The interests of the commercial sector and the traders, and the interests of growing the market are held up to us as pancea for our well being.
But what of that as the foundation of modern economics?
"Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price,
and thereby lessening the sale of their good both at home and abroad. They say nothing concerning the bad effects of high profits.
They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.
…
Merchants and master manufacturers are … the two classes of people who commonly employ the largest capitals, and who by their wealth
draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects,
they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly
exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment,
even when given with the greatest candour (which it has not been upon every occasion) is much more to be depended upon with regard to
the former of those two objects than with regard to the latter.
Their superiority over the country gentleman is not so much in their knowledge of the public interest, as in
their having a better knowledge of their own interest than he has of his.
It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and
persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction that their interest,
and not his, was the interest of the public.
The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and
even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers.
To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be
against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their
own benefit, an absurd tax upon the rest of their fellow-citizens.
The proposal of any new law or regulation of commerce which comes from this order ought always
to be listened to with great precaution, and ought never to be adopted till after having been long
and carefully examined, not only with the most scrupulous, but with the most suspicious attention.
It comes from an order of men whose interest is never exactly the same with that of the public, who have
generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions,
both deceived and oppressed it." (Source: Adam Smith, in the Global Financial Crisis, July 2009, Global Issues
Social, Political, Economic and Environmental Issues That Affect Us All, http://www.globalissues.org/article/768/global-financial-crisis#Rethinkingeconomics)
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THERE IS SOMETHING SERIOUSLY AMISS HERE IN AUSTRALIA
The Rudd labor government has a number of ticking time bombs that will impact their electoral chances.
- Non existent education revolution and poor policies
- The fallacy of climate change and the dire need (claimed by the government) for an Emmission Trading Scheme
- The failure to implement a credible national health and hospital policy
- Tax reform, the lack of a credible reform agenda and plan, attack on superannuation and individual endeavour
- Extraordinarily biased industrial reforms and dysfunctional, clumsy workplace awards, resulting in severe disadvantage for certain workers
- The inability of a number of front bench Ministers including the Prime Minister to articulte coherent policy and action
- Corrupt labor party members, governments and party politics, volatile state government electorates impacting federal members
- Housing affordability balloons into debt failure, and major economic crisis, again as stimulus comes out of the
economy and interest rates rise.
- Europe and the United States of America stagger, debt defaults and Chinese implement their rebellion against western economies and ideologies
CLIMATE CHANGE BEGINS LABOR'S SLOW POLITICAL DEATH
January 2010
We are now observing the beginnings of major miscalculations by labor in Australia. The Prime Minister of Australia is continuing on with his
climate change
fantasy despite evidence that the data supporting the Australian government's arguments, is rigged, the eidence manipulated and the "science club" long working like moles in the dark places deliberatley put
bright light prominence ahead of traditional scepticism. There is little evidence of deep thinking and analysis within the Prime Minister's office, there is little evidence of deep research and a
preponderance of
information management and poor intelligence gathering. There is however evidence of "politicisation" in order to achieve a political agenda that may not be in the interests of Australia.
The Office of Prime Minister and Cabinet and the close political advisers to the Australian Prime Minister have no clue who drives what agendas or who are the behind the scenes manipulators in large or small part.
They are derelict in their duties. They supported the Copemhagen agenda and agreement. When it went to hell the Prime Minister and his senior strategists wete shocked. Why?
The Prime Minister, and senior Ministers of Australia's labor government, in 2010, are exposed and they are being targeted by hidden interests ad practitioners of the
game play.
They are taking the advice of people not qualified to give that advice. Why would the ETS be any different to the failed
Light Metals Agenda of the Coalition government, in 2000 - 2003? A political, agenda managed by Senator Nick Minchin, a Minister in the Howard government, and powerful
business interests brought down by hidden interests.
The global financial crisis has exposed the vagaries of human
behaviour and consumer stupidity. It has exposed the shallow greed, and ethics, that riddle the economies, business and political structures, of the world. Are the voters of Australia not the same people generally?
If Prime Minister Kevin Rudd, Minister Penny Wong and Minister Peter Garrett proceed with the Australian Emissions Trading Scheme (ETS,) and their
promotion of ego, and ideology, ahead of public interest, then they risk crossing the line of ethical behaviour. They are supposed to represent the people to the best of their abilit not their interests to the best of their ability.
What they are engaged in, along with others, in their continued argument about climate change, is bordering on criminality. By this I mean the putting of political, and personal party interests, before the nation's interest.
Are we to accept that all three are stupid and that their advisers and departments are incompetent? It is looking that way. The opposition in the feeral parliaament is having a bob each way.
They seem to be pandering to the sectionn of Australia's population who are not known for their deep thinking. This large group swallow whatever popular line comes out, whether it be from commercial media, political media, or corporate and other interests. They accept the common wisdom that carbon
is a great danger to the planet. Within the Australian political system reside parliamentarians and bureaucrats who are a danger to the well being of the nation.
The Grrens, and the sustainability agencies such as the Department of Sustainable Environment in Victoria manipulate truth, run ideological campiagns and policies whohc are not based on fact nor on reason.
Climate Change is one furphy high on government's agendas. The next significant danger to the Australian economy is the unsustainable price of housing and property.
Within this sector live the property developers and the people who invest in property to rent at exorbitant rates. They live a fantasy that it can all go on and on. There will be a massive correction in housing and property values in Australia
probably later in 2010 and defintely in 2011. State and local governments fuel this scenario and they cannot allow a slump in values because this would cause a massive loss of revenue tothem and also place state
government in perilious political positions. This is why all governments react when housing loan interest rate rises occur. A few points movement upwrads and people will not have the income to sustain their payments. They are already shifting their discretionary spending.
The interest groups relying upon high prices, and endless, growth are collectively pushing the argument that it is feasible that Australian housing can cost five, six, ten, twenty and a thousand times annual income. There are some who believe that the Chinese are their slvation and
will snap up property in Australia at ridiculous prices.
Apparently it is just supply and demand that is the cause and effect. That is simply rubbish.
What it is, is the incredible stupidity of the people who for some inexplicable reason are engaging in financial suicide. As they curb their discretionary spending this flies in the face of the rodiculous policy and proposition that consumption is the saviour of economies and the nurturer of endless growth.
The economists talk of growth based on consumption. Consumption is a problem not a solution. There is great expectation that the Reserve Bank
of Australia will raise interest rates in February 2010. The pundits are wrong again. There will be no rise, in the cash rate, because the Reserve Bank of Australia may know, as I do, that there is no real recovery yet.
The recession in Australia is hidden. It is being ignored buy fools who live in a world of their own making and delusion.
The pundits were wrong, wrong and wrong, they missed the financial crisis set out below in this set of web sites. Now they are basing their opinions, and actions, on more delusion and illusion.
The so called growth is a manipulated fantasy of politicians and bureaucrats and the sheep who tag along behind. In the US the connsumption is over. China is gpoing to cause a great problem.
yet here in Australia the greater number of people wander along through their daily lives oblivious, living a "she'll be right mate" lifestyle.
Reality is yet to bite them. (Kevin R Beck, Melbourne, Australia
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Is it about climate change sceptics or ETS sceptics?
Creating the Australian economic crisis
November 2009: Why is there an assumption that if people oppose passage of the Rudd labor government's ETS legislation
that they are climate change sceptics?
These are totally unrelated spheres. Perhaps Prime Minister Kevin Rudd, and Minister Penny Wong, should look at their failure to
fully explain, and educate, the population on what precisely is intended by the ETS and how a contrived market
can lead to a direct impact on global warming? They might explain why they think that an ETS is the way to go? Because the rest of the world believes it to be so? The EU model is not all that flash and has not delivered.
Jyoto has not delivered.
The proposed Australian ETS model, and the assumptions of Treasury and the advisers, who have put the ETS market model together are open to challenge.
They are, in many respects, nothing more than theory, and guess, with big numbers attached. They guess the impact,
the outcomes and the costs. This is a dangerous way to determine,
frame and implement policy.
The Rudd labor government, and the Australian government Treasury, and public service agencies, collectively have no
strong record of assessment, with demonstrably accurate modelling. Yet we are to rely upon a crystal ball government modus oepnadi, and set of arguments, and the creation of a contrived market.
In the mid nineties the Australian electricity market model was created. It failed to reach any of the expectations of costs and revenues.
It was contrived just like the ETS. In today's modern governments the policy makers and the bureaucrats prefer
to focus on "nebullous future" predictions over current every day pressing matters.
It is far easier for people, who may be struggling, bereft of ideas, and plans, to address immediacy and today's problems to
instead to turn to things that cannot be measured and challenged accurately. To blow up the hysteria and the urgency to move attention away from general failure of government.
Billions are thrown around as if the billion is equivalent to a mere hundred in our minds. A billion today! That is nothing! Governments
can manufacture a surplus with the sleight of a pen.
They cannot deliver effective water, health, education and transport services so they turn to things that are nebulous.
Things based on theory and that will not make them immediately accountable. Tings that are impressive and to which can be attached evidence from people whohave been in the twilight rabbiting away. They come into the light and go crazy with teir warnings, predictions and theories.
One upmanship takes over the more mundane processes of a boring life.
Prime Minister Rudd, and colleagues, prefer to take a stab at guessing the future.
So we see extraordinary claims, and fear mongering, competing and nmore bizarre
theories and claims published on the government climate change
web site. If we do not do something now the cost in ten, or twenty years, will be x billions of dollars.
If we do not do something now all of Australia's sea coast will be inundated. We are seeing government bodies such as in Victoria (VCAT)
making decisions on planning applications using guess technique assessment methodology: what will happen on the Australian
coast some decades into the future based on inarguable propositions that the sea will rise 0.7 centimetres. These are quite stupid
deliberations and costly soothsaying.
The Australian ETS called the CPRS has put a cap on carbon price of $10 a ton till 2012. By doing this; the CPRS is not creating
a market at all, it is creating a centrally planned market economy for carbon. On top of this the government decides which industries are part of the CPRS and which are not; which industries get free carbon credits and how much.
In addition, it is allowing overseas carbon credits to be bought in Australia to the tune of 100%. What this means is that
carbon reduced in other countries as part of their ETS can be bought by Australian companies and they do not have to innovate to reduce their carbon output.
By putting a cap on the price, by providing free credits as it seems fit, by excluding some industries and providing
access to foreign carbon credits the government is acting as a central planner and distorting the idea of a carbon market. Centrally planned economies do not work. A distorted market will
not provide the benefits of a free market and in this case it will not lead to reduction in carbon emissions.
What else will happen is hard to fathom?" (Source: What will the Australian ETS achieve? or What can a centrally planned carbon economy achieve?
Posted by: Suhit Anantula on: November 17, 2009, World is Green, http://worldisgreen.com/2009/11/17/what-will-the-australian-ets-achieve-or-what-can-a-centrally-planned-carbon-economy-achieve/)
Malcolm Turnbull, leader of the opposition in Australia's federal parliament, has precipitated a crisis by forcing the convoluted mixing of climate change theory and ETS theory onto the liberal and national party
parliamentary members. The media is focused on the leadership issue since gladiatorial contests are far better entertainment tan dry analysis of the facts. In this regard Malcolm Turnbull joins the government in an inept
methodology of deciding policy based on evidence and fact. The government would claim that there is evidence. But of what? Climate change, not the prrformance of their ETS. World concensus is that an ETS is the ay to go.
World concensus was that we slice and dice debt until it disappeared. What did world concensus deliver? The global economic crisis.
Mr Rudd is likely to create, by accident or design, the Australian economic crisis. Mr Turmbull will create his own crisis whihc will see him dislodged from the leadership by Senator Nick Minchin and others.
The affable Joe Hockey is more suited as a possible Premier of New South wales than the leader of the federal opposition. So do not bet on him coming to replace Mr Turnbull.
Look more to some of the long term hard line members of the party who held Ministerial roels under John Howard.
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USA will default on its debt but what will be the nature of that default?
A dance of fiscal death with China.
In many respects the US generally has its head in the sand, unable to comprehend
how the capital engine of the world
came to this situation. The US debt is now almost level with its gross national product.
The USA is owned by China, South Korea and some other nations. It is
inextricably locked, with China, in a dance of fiscal death. China needs the US consumer to buy but the rapacious nature of US capitalism
delivers poverty to the greater number of people in the USA .
Once it was thought that the secret to success was a balance between farm and manufacturing. However stupid policies and greed,
and an addiction to froth, and bubble, moved the USA and other places like Ireland, to a technology dream. Boxes that offer a feckless, and
false, set of beliefs and escapism. Apple, and Microsoft, along with other questionable enterprises (what do they actually add to society?) have become the greatest companies in the world. This is a sure way to economic destruction and still the yanks do not get it.
Other nations have filled the US, Australian and western world, food bowls and supply the manufactured goods. They buy the quarried products of countries like Australia, Africa and South America, to fuel this replacement.
There is nowhere left to go for the USA, ICeland, Ireland and the United Kingdom among others.
Bloomberg Television interviews the stars of corporations, and economies, and most talk of returning to growth. The fallacy of endless growth. They pick small numbers such as 3% growth and inflate these as signs of wonder and success.
They throw around billions as if they are ten dollar bills. The populations of nations have become innured to big numbers except when those big numbers are their losses.
The western world's concept of growth relies upon poor people becoming richer and consuming more of their goods and supplying them with cheap shit.
It relies upon China, and India, and other developing nations, using the savings of the
greater number of their poor citizens to fund the western economies ad decisions of their governments. Thus Chinese labourers,
earning $US6.00 per week, save $US2.00, and there being many of them, the savings pile grows. The Japanese workers have saved large parts of their income and now their governments rely upon them.
The dictator states (such as China) use this money, held in its banks, to buy up things and to build.
But the dream has faltered and the golden age has come to a grinding crunch. China must invest in its own
rural areas as discontent grows. 120,000 factorues have closed and 10% of the population is unemployed, though the Chinese government, known for its lies and distortions, says that unemployment is a little over 5%.
Disagree and they will lock you up. China is becoming aggressive wanting to own rather than purchase he outputs. It has executives from foriegn companies in gaol.
The government took over a
private steel mill because they did not like the way it was being run. So what can this tell us?
In the USA an octopussy crisis is rolling across the American dream crushing the breath, and life, out of it.
What is the real USA unemployment range? Is it 8% and up to 75% or more in some locations? In Las Vegas unemployment creeps
towards 20% as the casino economy, and the glamour of get rich quick, a valium induced fantasy, dies.
Avidly people watch the stock exhange for signs and meaning. The false God of wealth creation and voodoo economics. The global casino has risen
to a status that belies reality. Any movement up or down is read as gospel proof of something.
It is inevitable that the US will default on its debt. But what form will that take?
Continuing to print money pushing the Australian dollar above parity to something like a $US1.05 - $US1.10 destroying our exports along the upward path.
Will it be a restructuring of debt, an inflation correction or a mix of deliberate, and unfortunate, outcomes?
When that default occurs what effects will there be?
In Australia the dollar's value destroys the value of our quarries, the price of houses is unsustainable and yet Australian
state governments continue to rape in political self interest. Governments and local councils add $A100,000 to the price of a block of land.
The public services, of the states are callowed, and will not challenge the political fools and thieves. They will not decline to act immporally and unethically and serve without question. In Victoria the police deaprtment blows a casual $A40,000,000 on infornmation technology and gross mismanagement.
The Police Commissioner responds that he ahs a "new policy to go around the draft policy" but cannot implement it until the SSA has a look at the whole state system of ppolicies within policies.
It is also a nomenclature exercise, of the meaning of "command and control". These are his words, in response to many challenges faced in the past ear, not mine.
It is logical, and inevitable, that housing prices will collapse dramatically in Australia. Not by a few percent but by
ten, twenty and up to fifty percent in many places. No one believes this for reasons I have not yet worked out. Apparently
in our cultural belief of where Australia is and is going and the nature of ego, people can gamble with rates and the future sustaining
their lifestyle, and careers, whilst applying 40% of their income, and more,
to housing needs. This is quite simply a dangerous, and unrealistic, belief.
The social engineers are out in force. They are the
fairy dust, fringe dwellers, with minimal grasp of reality and a lack of any innovative thinking, who harp.
They continually propose that there should be more public housing and yet when built this is often too expensive and as demonstrated
by the corrupt NSW government can be a target for revenue grabbing. Federal Minister Tanya Pliebersek is working on these hackneyed concepts which have never delivered benefits. Everything is based on a government subsidy of some form.
because people are either too lazy, or incapable, of educating themselves they should be maintained by governments. Add in Rudd's cliamte change agenda driven also by the fairy dust merchants and watch our economy being ripped apart.
Soon China will cut itself lose from the fiscal dance of death with the USA and then the world will really
experience a global financial crisis. The paucity, and embedded fantasy, of the economic and financial model, with its
reliance on stock trades and smart manoeuveres (like buy outs and take overs in lieu of actually creating anything extra) along with
world trade - balancing system - is clearly shown when the rich
nations have to rely upon the poor people of India, China, and Indonesia, to save their hides. The US administration is
comforted by China's investment in domestic demand and its ambitious reform agenda. Asia is leading the
gobal economy and according to Tim Geitner this is going to be fabulous for the USA. How so and when has Tim Geitner ever been right?
Peraps we should read about Henry Ford's Brazilian utopian dream to gain an inkling of what occurs when such assumptions are made by the self annointed masters of the universe.
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Australia, Pollyanna
Off we rush for the crisis is over. Australia missed the recession. Is this true?
People are gearing up to spend at Christmas and give their credit cards a trashing. Credit cards that are already a burden on the natoon. They are buying over priced
houses, fulled by a silly government policy of giving handfuls of money. The federal government crowed that it would increase housing stock budgetting hundreds of millions. After a year it has built seventy five houses.
Minsiter Pliebersek says that 10,000 dilapidated accommodations have been returned to the hosuing stock. The governments are always quick to have a stretch of the imagination and abit of a tweek at the truth.
Nothing is ever as it seems with the modern (ethically challenged) politician. Though it is probably not Ms Pliebersek's fault that the states and territory governments and public services are inept and unable to
achieve a modicum of success and nation building. State and local governments are legalised theives. They are stifling housing development and keeping prices high through inadequate supply due to their greed and corruption.
Their charges can add tens of thousands of dolars if not hundeds of thousands to blocks of land in estates. They are hopeless at providing economic infrastructure and more attuned to self interest and
misleading conduct.
How high can house prices and rents go? When is it that the average person can no longer afford to be a part of this fiscal madness?
If the nation is solid why have four private educatioon facilities (2 in Melbourne and 2 in Sydney) gone belly up like a number of others? Why
is small business struggling with insolvency rising? Are bad debts going down or up? Are people paying their bills on time, in advance or later?
" Australian firms are hurting each other and setting themselves up to be locked out of the credit market or to face action from the tax office as a result of the way they are prioritising payments.
A new study released today by Dun & Bradstreet (D&B) reveals that 66 percent of firms are prepared to miss supplier payments if they are unable to pay all their accounts and a further 15 percent are prepared to a miss a tax payment.
Yet failing to pay these bills could leave Australian firms unable to access credit and facing penalties from the
tax department as financial institutions refuse loans to firms holding a tax debt and credit providers continue their stringent focus on trade reference checks as part of the credit assessment process.
The study also reveals that many firms are unaware of the implications of paying late on their ability to access credit,
with close to two thirds indicating that if they knew late payments would detrimentally impact their credit standing they
would be more likely to pay on time." (source: Dun and BRADSTREET, 28 October 2009: http://dnb.com.au/Header/News/Australian_businesses_to_face_further_difficulties_accessing_credit/indexdl_5592.aspx)
" Insolvency data shows small businesses are still hanging on, Friday, 05 June 2009 10:50
James Thomson
The number of companies falling into administration continues to rise sharply in 2009, but insolvency experts say struggling small businesses appear to be hanging on despite the downturn.
New figures from the Australian Securities and Investment Commission show 810 companies
entered external administration in April 2009, up sharply from the figure of 680 recorded in April 2008,
but down 25% from the 1,095 companies who fell into administration in March." (source: Smart Company: http://www.smartcompany.com.au/economy/20090605-insolvency-data-shows-small-businesses-are-still-hanging-on.html)
"Global debtor finance provider, Bibby Financial Services , believes the seeds are now being sown for a bitter harvest of small business insolvencies later this year.
“While the Reserve Bank held interest rates unchanged this month, other developments affecting small business lead us to believe Australia will see business insolvencies climb to a record later this year,” Bibby Financial Services’ Managing Director, Greg Charlwood, says.
“The average time business debts remain unpaid by large companies and government organisations is now over 60 days, more than twice the normal 30 days and according to Dunn & Bradstreet, the highest since 2001.
The longer that companies have to wait for payment, the higher the strain on their cash flow,” Greg Charlwood said, adding that the statistics indicate larger businesses are taking longer to pay their debts than small and mid-size companies, putting smaller business under greater pressure.
“It appears this situation is getting worse, rather than better, so we will see a greater rise in small business insolvencies later this year as a result.
“Companies are going into administration at the rate of around 700 a month at present – a near record level. We expect
this will climb above last year’s peak of 747 in coming months because of the increasing pressure on small companies,” Greg Charlwood said." (Source: Greg Charlwood, Bibby Financial Services, http://www.ferret.com.au/c/Bibby-Financial-Services-Flexible-Cash-Flow-Solutions/Bibby-Financial-Services-suggests-business-pressures-will-make-small-companies-insolvent-n777246)
The Rudd labor government bpought a respite at a cost of billions funnelling money into consumerr's pockets and into small construction and allied firms, and the Reserve Bank kept interest rates low.
The money for cionsumers is all gone, other funds such as insulation subsidies have been misused and a large segment of money has been stolen. Thus reducing its impact.
Intrest rates are rising and those who bought over priced houses will suffer in 2010. Unemployment appears to be static but there is a hidden under employment and many people have taken reduced hours and pay cuts to keep their jobs.
Despite all of this many average Australians live in a pollyanna world of make believe. Like sheep they bleat the common refrain and gullibly swallow the majority line.
Investment financial advisers are reccommending that I reduce my cash holdings and move that money into equities. Thye too are sheep following the trens and they totally failed to predict or comprehend the diaster that confonted them in 2008.
Now they would have me believe that they know what they are doing. I am told that they are relying upon Standard and Poors, which they describe as the world lading ratings agency. Is this the one that suggested we all but the sliced and diced mortgages?
The US government's debt appraches the value of their GDP. What if there was a default? Apparently we can rely on China and India to keep Australia afloat and we are again in a resources boom.
Never mind that we do not have the capacity to support the boom, another failure by state governments. They just want the royalties to squander on their personal exploits and ideas.
When the money runs out they will sell assets (NSW and Queensland) and the cycle of destruction will go on. labor tell us they know how to manage things, the liberals tell us the same stories. They are in their own world of pollyanna fantasy as to their capabilities.
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Whoops We Crowed Too Soon in Australia!
The fallacy of growth will hit us in 2010.
Sunday 6th September 2009 and Wayne Swan, Treasurer, talks of "when Australia returns to trend growth". What does that mean? 3%? How is growth measured, in Wayne's world, by Gross Domestic Product?
The modern day economic management practice is to assume that economies will grow endlessly but there will be "bumps along the way".
This growth will be fueled by (a) ever extended consumer demand arising from increases in wages and salaries, (b) the insatiable
demand from emerging economies (particularly India and China) as they move from disadvantage to some sort of wealth.
Mr Swan is euphoric, as the media runs headlines that we are the world leading economy.
This is rightly so under the current thinking of the fiscal kings. We are in the "medium and long term fiscal programme" delivered by
Mr Rudd and Mr Swan. Aks Mr Swan a difficult question, such as
how is giving cash away an investment in our future? What happnes when the cash runs out and he wants to take the money back in the form of taxes and charges?
He will not answer but will talk of the "mediun and long term fiscal measures" without ever going deeper.
The problem for Australia is that the presumptions under which he, Treasury and the government overall,
frames policy and action, are based, to my thinking, on a number of assumptions and a critical flaw. The fallacy of growth.
Extract: "Bitter climate truths are fundamentally bitter cultural truths.
Endless growth is an impossibility in the physical world, always—but always—ending in overshot and collapse.
Collapse: with a bang or a whimper, most likely both. We are already witnessing it, whether we choose to acknowledge it or not.
Because of this civilization’s obsession with growth, its demise is 100 percent predictable. We simply cannot go on living this way.
Our version of life on earth has come to an end.
Moreover, there are no “free market” or “economic” solutions.
And since corporations must have physically impossible endless growth in order to survive,
corporate social responsibility is a myth. The only socially responsible act that corporations can take is to dissolve....
(continuing extract:) And here, in a footnote, are his two fallacies very simply put.
Endless (exponential) growth is an impossibility in a finite physical system (planet earth)
To take the second error first. The claim that the earth is a finite physical system is as lunatic as the
creationists' argument that evolution cannot have happened because of the Second Law of Thermodynamics.
For the earth is, of course, not a closed or finite system. We have a huge influx of energy into the earth each and every moment of every day.
We also expect that influx to continue for the next 4 billion years or so.
If you (carefully now!) look up into the sky during the day you will see the
source of that energy: we generally call it "The Sun".
The first error is a tad more complex. The statement "endless physical growth
is impossible in a finite physical system" is of course true. The statement "endless economic growth is impossible in a finite physical system"
would only be true if economic growth were in fact physical growth. Which, sadly for the argument, it isn't.
We measure economic growth by some variant of Gross Domestic Product (there are others, GNP, NNP and others, but
the differences between them do not change this point), the GDP that gets splashed all over the newspapers every three months.
We often also refine it a little to refer to GDP per capita, as that gives us an idea of how much economic activity there is per person, not just in the country.
GDP however does not measure the amount of stuff we make. Nor does it measure the amount of resources we use to make our stuff.
It measures the the amount of value we add in the economy." (Source: The fallacy of Adam D Sachs
August 25, 6:36 AMPage One ExaminerTim Worstall, http://www.examiner.com/x-14795-Page-One-Examiner~y2009m8d25-The-fallacy-of-Adam-D-Sachs?cid=exrss-Page-One-Examiner)
(Extract: "Growth in GNP should cease when decreasing marginal benefits become equal
to increasing marginal costs. But there is no statistical series that attempts to measure the cost of GNP.
This is growth mania, literally not counting the costs of growth. But the situation is even worse. We take the real costs of increasing
GNP as measured by the defensive expenditures incurred to protect ourselves from the unwanted side effects of production and add these
expenditures to GNP rather than subtract them. We count real costs as benefits. This is hypergrowthmania. Obviously, we should keep separate
accounts of costs and benefits. But to do this would make it clear that beyond some point zero growth would be optimal, at least in the short run.
Such an admission is inconvenient to the ideology of growth, which quite transcends the ordinary logic of elementary economics. More precisely,
it is good growthmanship strategy to admit the theoretical existence of such a point way out in the future, but somehow it must always be thought
of as far away. The ideological reasons for this are clear and have to do with the problem of distribution of output in an economy in which ownership
of land and capital is highly concentrated and embodies laborsaving technology. Full employment at a living wage requires high aggregate demand,
which requires high net investment to offset the large savings made possible by concentrated income. High net investment signifies rapid growth." (Source:
STEADY-STATE ECONOMICS, By Herman Daly, Chapter 5: A Catechism of Growth Fallacies,
The part played by orthodox economists, whose common sense has been insufficient to check their faulty logic, has been disastrous to the latest act. J. M. Keynes (1936),
http://dieoff.org/page88.htm)
The Governor of the Reserve Bank of Australia implies that Australia is looking quite rosy and weathering the global financial recession.
They never mention recession here. The Reserve Bank, like the Australian government Treasury Department, failed to perceive what was
coming some time back and now they are having another euphoric stab at
predicting, guessing and soothsaying.
"...recall the events that led to the crisis on Wall Street. Think of the legions of bankers
who who were paid enormous sums for creating products that supposedly removed the risk from financial transactions,
yet they left the worst mess the world has seen in 80 years. So long as the reward system was tailored to the production of ever more exotic products,
the bankers obliged by churning them out in increasingly larger numbers. With hindsight, this proved to be a disaster." (Source:The fallacy of “growth at all costs” (part three)
Thursday, 21 May 2009, 12:00 pm, Rajiv Chaudhry / Writer - http://theonlinecitizen.com/2009/05/the-fallacy-of-growth-at-all-costs-part-three/)
According to Australia's "rigged unemployment statistics" we are have about 7% out of work. This is not simply a misrepresentation to the gullible, it is an unethical, but common, practice of the federal government.
Every government, labor amd liberal, lies about unemployment. The level of unemployment varies dramatically across Australia. The national average is stated to be the figure above. Unemployent ranges between 3% and 40% (and higher, up to 70% - 90%!) depending on which region.
Average unemployment for the nation is really above 10% but the government does not want this truth reinforced. It is demographically (by age) in
a range of 10% to 30%. Lies, lies and more lies. The Rudd labor governmeht strategy, by those before it is to ficus on shallow, short term programmes,w hich place people into low level and low skilled jobs in fluffy parts of the economy. They then claim success.
There is no linkage of government training to life long, deeper learning. In this they are myopic and short term ficused. There is
no education revolution in Australia.
There is a sheep like assumption, and embrace of falsehoods and fallacies, optimism in the extreme, that Australia is somehow
insulated and going to get away with having the cake and eating it too. Saved by Kevin Rudd's quick economic thinking and wayne Swan's daring audacity in the face of ridicule.
The opposition under former merchant banker, Malcolm Turnbull, roll out the same, lame propehcies baseed on their own fallacies and framing of history to suit.
There are however some hometruths. Debt for each Australian consumer, partivularly in the middle income sector, is way too high.
The more gulible in our society have rushed in and bought over priced dwellings and embraced the cash handout.
Internationally there will be a crisis in 2009 - 2010. In the US somewhere between 400 and 1,400 small to medium banks, and financial cooperatives, are going to fail. A large number of banks and cooperatives will
fail in Europe. What effect will this have on Australia and the world?
In China, the engined room of saving grace, local government is debt burdened. The global bond market cannot sustain the flood of issuance and countries like the US are printing money.
According to the experts the stock market is the indicator of ecomomic health and future calm. This is quite simply a narrow and optimistic view of what is really going on.
The slide is coming and the debt will crush the unwary as unemployment rises across Australia. Again they have got it wrong.
It is however immaterial because the system is designed to maintain the power collective's self interest and position whilst the
nation pays the bill for their ignorance and performance. What will happen? I have no idea.
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AUSTRALIA LOOKING ROSY - Really?
AMERICA ON THE MEND, Really?
CHINA THE SAVIOUR - Really?
Hysterical laughter, and relief, as a statistical movement of 0.4% in some magic
formula causes elation and heralds recovery.
Australia has dodged the bullet of recession by 0.000001%, a marvel of political engineering.
Housing values are rocketing by 1% - 3% and there are high impacting intrest and stock moves of 1%. This is the hyperbole and
tendency to overstatement exhibited in media and
reportage, political spin and diatribe that insults the intelligence of many. We see it also in every day lanuguage of the cognitively
challenged - awesome, fantastic, fully sick.
Reality is that the US administration has bet 80% of the nation's GDP into saving the bacon of Wall Street and the high flyers.
The accounting rules for banks, and others, have been altered to take the toxic assets off the front cover of the books, and has put them where?
In the back room out of sight. They are still there. The heady profits of banks being published, in the USA, are false.
The bonuses are paid whether performance is good, bad or indifferent. Fanny Mae, et al, are pouring billions down the drain every day to
try and keep nine million (9,000,000,000) people in their houses. There is no rebound or recovery, since the system itself is ethically and morally bankrupt. It is broken.
In China, local government is so leveraged that in some cases it cannot pay the interest on the debt owed and the Chines government is the
guarantor. Infrastructure and asset bubbles appear and there is social upheaval requiring a crack down.
China swings from disaster to disaster, behind
a silk curtain. In Europe the banks are largely insolvent and unemployment is on the rise as in America and Australia despite the manipulation of statistics to imply otherwise.
Here in Australia, according to lavish and exultant reporting, the banking, and financial, system was saved. By good managemet and government policy? Perhaps. But what of the proposition
that we do not have a large merchant banking sector and an equivalent Wall Street. Australians are still
raped by excessive bank charges, and fees, and by the avaricious across many sectors. Our grocery prices, and other charges,
are amongst the highest in the world and our utility fees (water, electricity, telecommunications and others)
are about to rocket to the moon. Our governments are mired in corrupt, and corroded, practice and behaviour along with political policy and corporate decision makers who have trouble seeing beyond their front doors. We are exuberant.
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STITCHED UP IN A BRILLIANT PLAY
The Australian government has been conned
by the big Australian
energy
companies such as the electricity generators, and coal miners, in the Latrobe Valley, Victoria Australia and the big consumers of electricity.
The generators, bordering on being broke, with limited commercial life cannot believe their luck. The Rudd government will hand them free permits, trading licences, a casino for carbon credits where gaming can be the call of play and a thousand justifications for price rises.
Well done Prime Minister Rudd, Ministers Penny Wong and Peter Garrett. Come in
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WAKE IN FRIGHT
THE SECOND PHASE OF RECESSION TO HIT AUSTRALIA PREDICTING TRENDS AND EVENTS - JULY 2009 - JULY 2012
Article date - July 2009: The cost of recovery programme implemented by Prime Minister Rudd and the Australian federal labor government, will absorb 6% of the Australian Gross Domestic Product. This is 1% more than the
official predictions of 5%. I predict that in the years 2009 - 2012 debt will rise above $A200 billion representing almost 15% of the gross domestic product of the nation if it stays at predicted levels but it will not. GDP will decline by 1% - 2%.
The Australian national debt will, I think, be closer to 20% of the Australian GDP.
The public debt of the G20 nations will rise above 100% of GDP within this time scale. The Australian economy, particularly retail, is not durable.
The Australian consumer is saddled with debt and they are at the mercy, and ruin, of inflation which will rise to 4% in 2010 and onwards to 7%, 2011 and 12% at 2012.
The Australian economy at July 2009 is ridden with distorted prices, masked inefficiencies, hidden prices and gouging, particularly in the
grocery, fuel and energy sectors. There are too many motor vehicle manufacturers and sellers and too many defence contractors building military systems and supplying services. These and the building industries are relying on government subsidies and revenues. Governments are too big
and incompetent in policy and implementation. Money in the tens of millions is wasted for many reasons including grasping political interest.
There is the looming demographic shock of aging as people live longer and require more from governments. health costs spiral
with technological advances. We are experiencing deteriorating social dynamics which increase costs - such as law and order and exacerbate social breakdown.
Lenders will eventually refuse to buy "global" government bonds including Australia's and the states will face a crisis in funding in 2009 - 2010. Bond offerings in Australia will top $A300 billion.
central banks, including Australia, will print money creating creeping inflation and the lenders will continually add a premium to their demands until they no longer wish to take the paper. China will not be able to support the United States in 2010 creating a crisis in that nation's economy that has seen no parallel in history.
A surge in bank lending in China is creating unproductive, speculative, investments in property and stocks at the expense of manufacturing. This lending is masking the future and
makes many believe that China will be the saving grace of the world including Australia. The government of China is engaged in a 4 trillion yuan stimulus package funded from current account surpluses. These are being eatn up
at a prolofic rate. The Chinese current account surplus will fall in 2010. Commodity imports are increasing, driving up prices. Excess liquidity is the enemy of growth and sustainaable economies.
The Austraaian
Department of Treasury predicts unemployment to rise to a maximum of 8.5%. They are wrong. It will be more like 10.3% and rise to above 11% in mid, to late, 2010. The benefits from the 2009 programme of fiscal stimulus in Australia are
over staated and over estimated. Rudd and Swan are spinning a fantasy of their own making. They are borrowing agiants the output and production of the future. This will lead to a stagnation and decline in growth and activity in 2010 - 2011.
June 2009: The United States - President Obama is about to issue his financial regulatory proposals. This will initiate a fierce response form vested interests.
The US philosophy and psyche is predicated on the individual and the proposition that anyone can make it big in America if they but try.
Thus there is an antipathy towards welfare and social services, health care and education that is not funded by the individual.
There is also the entrenched distribution of wealth and the gross inequity. Society is tiered, parts of cities, and the states, are segmented based on money.
The rich, influential and powerful, control governments at every level. They hire servants. The definition of a servant, to my mind,
may range from the elected government representative, the elected officials, high paid lawyers and advisers, business associates and others in the professions
all the way down to the housekeeper, cleaner, gardener and the nanny.
Within this broad scope definition of servant one can find a class structure and the incumbents vary in income with the lesser socio - economic share incumbents working on
for slave wages.
Big corporations such as Disney, and wal mart, have been exposed for paying low wages that require social welfare top up. They are part of the web of support for the rich and play a role
across the nation in how wealth is distributed, policies and actions are enacted by governmenst at the federal, and state, levels.
President Obama will, quite quickly, be brought to heel and his regulatory reforms, and other contentious,
proposals will be watered down to conform to the underlying psyche and individual interests. He says he will not raise taxes. Thus debt will be endemic.
The US debt is enormous and investors such as the Chinese who own slabs of US treasury bonds, and investments, have to be reassured less they flee.
The rating agencies, which should be irrelevant after their inept, and psychphantic, pronouncements will still hold sway.
One can only admire the American peoples' optimism, and resolve, to struggle forward even in the face of adversity and fantasy.
They look for green shoots and grasp at straws. For some this is a glitch and the world will return to normal in the sway of the American empire.
This is somewhat delusional.
Across the globe governments have been pouring public funds into their economies. This is coming to and end and then what?
The recession has not yet gripped Australia and the wave is coming.
The Prime Minister Kevin Rudd and Treasurer Wayne Swan were elated to the point of giggling.
The national accounts for May 2009
apparently showed that the economy had grown 0.4% technically avoiding a receession. The elation was hardly edifying given that beklieving the figure of 0.4% stretched the imagination.
The measures used tp calculate this "mythical figure" are very broad and represent a range of inputs and outputs. The figure used by Kevin Rudd and Wayne Swan
was made to order. The government fiscal stimulus has created a false retail market and consumer spending
trend in Australia during 2009.
"Dr. Woody Bock’s Essay: The Future Evolution of the Debt-to-GDP Ratio, BY DAN DENNING @ THE DAILY RECKONING - 20/05/2009
Now to Dr. Woody Bock's essay. It's called, "The End Game Draws Nigh - The Future Evolution of the Debt-to-GDP Ratio." We've
picked some of our favourite parts of the essay. You can read the whole thing here, although we'd advise you to
turn off the TV and turn on the coffee pot. He first puts paid to the idea that a revival of consumer demand
(which can be stimulated with transfer payments) is the key to recovery from a credit bust. "According to standard business cycle theory,"
Dr. Bock writes, "pent-up demand on the part of consumers is a principal driver of recovery-but it will not be this time around. The shift
towards less consumption and more savings due to the implosion of household balance sheets and to demographics is most probably permanent.
If so, this bodes poorly for hopes of a pent-up demand-driven recovery."
This reinforces the unique nature of this recession as a "balance sheet recession." In a balance sheet recession, businesses and households
devote most of their resources (extra income) to paying off liabilities and reducing debt. They deleverage. Lowering interest rates, then,
on the hope that it will revive a mythical pent up demand, ignores the psychological and economic reality of the desire and the need to reduce debts.
The recent retail sales figures in America bear this point out.
So in comes the government, under Keynesian orthodoxy, to fill the consumption gap." (Source: The Future Evolution of the Debt-to-GDP Ratio, BY DAN DENNING - http://www.sharecafe.com.au/dreck.asp?a=AV&ai=12934)
As the Australian government moves to infrastructure spending away from cash handouts to cosnumers, retail will
slump dramatically causing large segments of unemployment particularly in the over
represented retailers of "hospitality", "cheap clothing, footwear and trinkets", electrical goods and over represented luxury items such as cosmetics. Car manufacturers will suffer greater losses as some dealerships close.
The first home buyers grant has created a false bubble housing market ensuring that prices remained high. Many purchasers are over extended because the low interest rates cannot be sustained for years to come. The Reserve Bank is well aware that
low rate policy hurts Australia's retirees who need a decent rate of terurn for teir cash. This demographic far outweighs the younger generation in sheer numbers.
The so cllaed working families is a narrow demographic and demonstrates a fickle, and myopic, approach to policy and equal voter representation on the part of the major political parties.
The BHP and Rio Tinto joint venture for iron ore in Australia will be blocked on competition grounds causing a fall in the sahre price. Job losses from such a venture would be high in Western Australia.
The government has miscalculated the real rates of return in thr economyu by at least 2% meaning that growth will stall and fall into negative in July - September period with extensive declines in the latter part of the year across all
economic sectors. The Australian government Emissions Trading Scheme will cause further disruption in investment in thermal assets. Renewable energy technologies will suffer an international decline affecting policy here and at the world trade organisation.
The growth figure of 0.4% as at June 2009, is a myth.
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WHAT MECHANISMS ALLOW CITIZENS TO INTERVENE IN THEIR GOVERNMENTS BETWEEN ELECTONS?
May 2009: The Rudd labor government's first budget
In undertaking predictive analysis of the first budget delivered by Treasurer, the Honourable
Wayne Swan, let us dismiss a number of
irrelevant, but nurturing factors, put about by the herds of haters, analysts and media, and the moribund, and somewhat, mediocre parliamentary
membership.
The first maybe ten minutes of delivery by Mr Swan, was pure motherhood drivel, manufactured by the
parasites of the public purse, the unelected political operatives in the prime minister's office and the Ministries.
I am not talking of the people transferred from the public service departments to the politicians' offices, nor of the
receptionists, meeting secretaries etc, I am talking about the
Chief's of Staff and the party faithful who infest thes eplaces and demean and corrode democracy and the operation of the parliament.
The rest was hardly of Mr Swan's cant was hardly worth entertaining, or examining in depth,
since Mr Swan lived up to the commentary contained in my examination of the performance of the Treasurer, since being appointed, in the
context
of the Rudd federal government performance, to date.
In his response Mr Turnbull had a singular idea, to add atax to cigarettes. This is the measure of innovation of the leader of the Opposition?
Are his spin mercahnts and parasitic party faithful, on the public purse, similarly imbuedc with myopia?
Let's ignore the moral bankruptcy of the former Howard government and its Ministry, inluding the former Treasurer, Peter Costello,
who sat back observing, and participating, in the "ponzi economics" of the golden years, reaping the benefits of the taxes on
greed, and stupidity, and corruption, and unbelievable money market gains
dressing it up as
economic prowess, and policy, using the parasites and the spin doctors of the day. Do we assume that they are detached from analytical skill and assessment capacity?
They were ably assisted by the state labor governments, the conservative opposition in each state government, the regulatory agencies
who did not realise (APRA, Reserve Bank), and the Australian Federal Treasury (who enjoy an unearned level of trust and respect), the
banks, the corporations and the business associations, and everyone else who had their snouts in the rodiculous trough of excess. They
failed to predict, or simply
turned a blind eye, to the obvious.
These elected representatives, and paid public agencies. should have done their jobs and they did not.
They all followed their own interest agendas.
A host of people across government and business, collectively, allowed the nation of Australia to be exposed. Now,
collectively they plead ignorance, embellish and create their own history, lie and mislead. They are silent on their complicity in all of this and the greedy are back thinking they can begin again.
Let us ignore the stupidity of using two major benchmarks of economic resilience and health, (a) new car registrations and (b)
housing construction. These are domestic and contrived.
Note the very large amount of money being spent on these two in Mr Rudd's fiscal stimulus.
The first home grants are inflationary in terms of price, interest and effect and will prolong, down the track the agony and the expanding
bankruptcies that will follow.
Banks are loaning up to 40% plus, of the purchaser's, annual net income. The greedy are jacking up the prices.
Mr. Rudd is dressing this future fiasco
up, as good fiscal policy and in that
he joins the ranks of the morally bankrupt politicians including the Premiers of the states, who cannot determine, and predict,
the future because they are part of the herd mentality.
Out of this, I predict that the Reserve Bank Board will be shown to have failed in its analysis, decisions and endeavours, and current reading of the futiure 9as at May 2009)
and prove to be extraordinarily mediocre in prescient capacities. The federal government Treasurey Department, under the hand of Dr. Ken Henry,
will
also fail in its predictoons and analysis. They predict a conservative futire of return to growth after a few years.
The market thinks the stock exchange is a berometer of the return to normalcy. Corporations around the world, governmments and superannuation funds, hedge funds and any number of entities have written off trillions.
Where has it all gone that we can return to noraml as if it never occurred? Here in Australia we have not yet written down our over valuations in property and assets.
People go on oblivious. A million may be unemployed. It is as if this was a glitch. It is not a receession that we have knwon or experienced. We do not know its
hidden effects and the lag.
I think the Australian nation will be in recession until the end of 2012. The policy makers and the regulators will work on the
measure and test of the "historical experience - rear view mirror" analysis techniques, and gut feeling, in lieu of a lateral
thinking and "outside the box" capability.
What of the proposition that no one should buy a house yet in mid 2009, using the federal, and state, governments' subsidies,
as their primary underlying source of funds. This is a recipe for disaster since housing prices are still to drop extensively across the Australian
nation. The real estate agents do not even have this on their horizon since they think that there is insufficient hosuing stock. What there is insufficient of is income in the hands of burdened indebted households and individuals.
As for the Rudd and Swan (labor cabinet) budget, and the major issues of debate today, in the media and the parliament? Humbug.
Much of te budget is based on ideology,
inexperience as to the real world and effects of their prognosis, a compounding lack of knowledge, and information, and poor intelligence gathering and assessment
within the political ranks and the adviser royal court, questionable modelling, and analysis,
by the public service, inability to see over the horizon and link the dots, healthy egos and a general belief in the power collective self that
is unjustified and the product of reinforced spin. The head of Treasury, Dr. Ken Henry, seems confused as to his role. He is a public servant but delivers speeches as if he is a
politician. he advises the government publicly, chides and castigates, informs and cajoles, as if he has an open role in the whole process. He does not. He is a publioc servant who is there, according to the
dysfunctional Australian democratic model, as a servant of the government.
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WHEN RECOVERY TAKES PLACE? PIFFLE AND HOLLOW DREAMING
May 2009: Below in this web site I opined that an Australian bank would surprise the market and announce a shocking revelation.
The bank name was known but not published herein. April 29, 2009, the Australian and New Zealand Bank announced a major profit downgrade due
to bad debts. To my mind, no analyst, or econoic commentator or newspaper columnist, etc, had predicted this. The
government Treasury, office of the Prime Minister and the Minister for Finance and the Treasurer have not responded to
my communications, pointing out this and other predictions. There is no response to my communications which are often at
odds with expert predictions and formal government analysis and planning. By now they should be wondering why my crystal ball is better than
their own expensive methodologies. But they are not. They are consumed with their own self prowess. To admit they are wrong would be a major blow to internal government, and public service,
expertise and credibility.
So what about the awaited recovery?
Well it is not going to be what they think it is. The growth of financial services across the globe has driven much of the
calamity and the economic expansion. Coupled with the belief that the
rainbow stretches forever. China was, and is still, expected to be the power house of economic growth. This is just a very bad glitch.
Financial services and the questionable products that have ben sold and the manner of operation of the sector will not return to what it was.
Growth will be in the order of 1% to 3% each year, not the 8%, or greater per year,
that has been the escalating trend for the past fifteen years. The party is well, and truly, over.
The financial services sector will shrink drastically, here in Australia and globally, and consumers, will turn away from exotic offerings.
Gambling on stock rises, and gaming the system, will be casualties of the economic crisis.
Below, in previous articles, I predict what the value of things will be. Living on debt will be a thing of the past as everyone realises
that it was a facade and feckless pursuit. The young hot shots, who have been engineered into believing their own infallibility, are learning hard
lessons. The crisis is harvesting the inadequate, and the poor management, out of enterprises. The once lauded Board members are
struggling for credibility, maintenance and reloevance.
The focus on the stock market, by experts and commentators, as a sign of recovery or change is misguided.
Economists, and market watchers, are looking
at indicators, and measures, that are no longer valid and never were. Studying the effects of herd mentality, in the stock markets,
on an hour by hour basis, is not a
good indicator of the health of economies and the likely future. The major indicator, for the future, is consumer behaviour
which is altering dramatically. Consumers are eschewing debt and handing in their credit cards for debit cards, to live within their means.
Since the poor make up the greater part of the US economy this spells danger indeed. It is escalating in Europe and will flow into Australia. Bad debts, unemployment and
lower incomes are the levers that will ensure there is no immediate recovery.
Billions, and very soon trillions, is being written off, never to be recovered.
This will continue into 2010 - 2011 before the full impact can be determined. There will be no recovery of the dimension perceived.
Empires
come and go. Is the end of the American empire? Who knows.
America can barely save itself let alone the rest of the world. And China probably does not want to.
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Australia's Broadband Project
April 2009: The leader of the opposition in the federal parliament, Malcolm Turnbull, has rushed in without thinking, debunking the
labor government's proposal for a national high speed broadband. He will be caught out, and have to eat humble pie, having framed a narrow response lacking in awareness and understanding.
His argument is
debunked here.
Alt-A Loans and Bonanza-land Ends
The Bloomberg interviewer asked George Soros if the worst of the recession was over for America?
Why is it that the people of the world's largest economy think that this is a passing phase? Thisn is not the end or the closing stages, it is the first quarter to maybe half way.
There is another year or more to go before we come to grips with the new order and how we relate the whole financial, market and consumer equation. The herd mentality still rules.
This is a profound earthquake registering ten on the richter scale. It is a series of tidal waves and tsunamis.
The US banking system is going to go to the wall and it will be a drain on the nation for years to come. Wall Street will become a little desolate and isolated like a ghost town of its former self.
The US dollar is goiung down during April, May and June 2009.
US and European and the smaller nation banks, being undercapitalsed, will charge their way out of the crisis reaping devastation on innovation and growth. They are pariah.
Here in Australia we are already seeing the rapacious, and caprecious, nature of Australian banks, their managers and their boards.
These people take on a whole new persona when they come to work.
If the Rudd government is not careful the Australian banks will also dampen Australian enthusiasm, creativity and resilience and deny small to medium business a future. They are not good corporate citizens.
I heard a real estate agent, in Australia, talking about the Australian property market, and another economist talking about
when the recession ends and the stock market starts to regain its losses. What intrigues me is the proposition that somehow this is just a glitch in the
gloal financial market and system that will pass. That we will return to normality and growth will again be started.
That is not how it will turn out. The world's governments will first have to grapple with the next round of defaults, the Alt - A list. They are a few steps up from
the "toxic" sub prime mortgages. These are loans to people who are on the borderline and who rely upon a certain set of economic, financial and personal circumstances to keep everything reasonablt balanced.
Here in Australia the federal government, banks, real estate agents and housing corporations are fueeling a whole new generation of Alt - A borrowers. The
Australian government, uder Prime Minister Rudd, has doubled the first home buyers grant for the purcahse of an existing house from $A7,000 to $A14,000 and created a new catergory, the $A26,000 first home builders grant.
People, young people, are rushing in to be self builders without any umderstanding of the implications. A majority of banks are lending between $A390,000 and $A430,000 to people on incomes of
$A70,000 per annum or above. The repayments at the current rate of housing interest equate to approximately 60% of annual dispoasble income.
This borders on the Alt - A description. The borrower has to take out mortgage insurance at significant cost. There is reliance on house prices remaining the same or rising.
In the second half of this year (2009) and in early 2010 hosuing prices across Australia will take a dive. Unemployment will have reached 10% and growth will have stalled dramatically.
The world financial system may have stabilised but the debt will remain. Not the debt on bank balance hseets but the debt of soceities and individuals.
Some 15% - 20% of all small business, new businesses and some larger iconic ones will disappear. Consuerism is dead as we know it. It died in a flurry of stupidity, gredd and technology where the
"the medium is the massage" (McLuhan and Fiore, Penguin 1967). One may well ponder that the last ten years have been described by many as the "golden age" of prosperity. Consumerism, individualism and advances in society -
"The major advances in civilization are processes that all but wreck the societies in which they occur" (A.N.Whitehead)
"..something is happening but you don't know wjat it is, do you mr. ones?", Bob Dylan. The economists and the commentators sruil "rite words in rite order" or may we well say "trite words in any order"? Thus the west will shake the east awake while
ye have the night for morn", (James Joyce). What we have today is propaganda in different forms
put about by different interests. We can only reach a concensus on what is going to happen, through the beginning of mutual, open and honest
dialogue, at every level. Then the propoganda will end and solutions discovery, and enlightenment, begin. All governments, here in Australia and elsewhere, must tap new sources and new voices that to date have not been heard or who have been denied an audience.
The problem for people like Mr Rudd is that this would mean maginalising his loyal troops who have been with him in his rise to the Prime Ministership. A cutting of the political umbillical cord that gives sustenance to
apparatchiks who surround him. He must seek out others beyond the existing ranks of the public service, the Australian Business Council,
the Australian industry Group, the big name corporate enterprises, the
academia and the power collectives, for they have been found wanting. They are unable to glean the future or see the ramifications and the mosaic. It is for this reason that Malcolm Turnbull, the
leader of the Opposition in the Australian government cannot mount a crdeitable argument and plan.
So it probably goes with President Obama also. The exoerts have, and still are, failing.
The establishment, the media and the soothwayers, still pay homage to the market and yet the market is a hopeless beast of a thing that behaves in herd fashion.
The market moves up because a US toy company, or home maker store, posts a better than expected profit.
This is shallow subservience to a hollow dream. The market itself, and its
speculative behaviour, does not signify that the world is moving out of the dark depths of its agony or going deeper. The market is nothing but a casino.
We have a long way to go down yet. Why? Because the individual is still saddled with debt and the rampant consumer is gone.
Spending is not a cathartic solution. It is a placebo.
Economic prosperity of the past decade has been at the mercy of doing anything that anyone can get away with. "The past went that-a-away. When faced with a totally new situation, we tend always tp attach ourselves to the objects, to the flavor of the most
recent past. We look at the present through a rear-view mirror. We march backwards into the future. Suburbia lives imaginatively in Bonanza-land", (McLuhan and Fiore, 1967).
There is no greater delusional Bonnza-land than the United States of America. Once its population consumed 25% of the world's resources but no more. So what does that do to the world?
If we know what the new consumption figure will be, and when, then we will have a starting point to work out what the future may hold.
It is a shrinking of the world economy of probably 10% - 15% overall, and a devaluing in the order of $USD150,000,000,000,000. In the meantime as a forecast growth of 3%, in any economy,
excited the economists and governments, so a forecast decline of 5% and more will shatter them.
Here in Australia the Treasury forecasts were so far off the mark as to raise questions about the quality of advice, and research,
being offered to governments across the nation. The same can be posed for Europe,
Great Britain and the United States. Yet the same people remain in their influential roles, here in Australia, as if all of this could
not be forecast. It was, could and can be, but no one in the public service, in government or the big business associations were, would,
or will listen. They work to maintain their positions least they fall by the way side. They will put their interests first and try and come up with another idea or two. When they stumble on something they will spin it for all of its worth.
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Labor has a brilliant strategy for the broadband headache
The question is
can they deliver it?
They need a complex mix of investment and support both in delivery and sustainability. The short answer is, with care, innoavtive thinking,
and risk they can. They just to get away from the ailed methodologies employed by the Departments using tendering and market testing processes
and the questionable expertise of external big name advisers, consultants and experts and the embedded interests within agencies.
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April - June 2009: Rudd Stimulus Plan Fails to Ignite Economy
The Australian government is in the process (April 2009) of handing out around $950 to
people who pay tax and earn less than $A80,000 per annum. Its first stimulus package for the rebuilding of schools and public works is yet to get going.
It will help local communities but the lag time is extensive. There will be another stimulus announced in May 2009. Small business has been lobbying the government hard claiming that the banks are abandoning them to their own fates.
At first the Minister tried to bat the issue away stating that he had met the banks and had their reassurances. Howvere actual examples are being sent to Dr. Emerson and the banks are
being caught out massaging the truth. meanwhile the banks have lwoered interest rates on cash accounts to protect their nargins at the expense of self retirees.
They are charging $A2.00 (except for the National Australia bank that charges $A1.50) to use their ATM machines. Suncorp charges $A2.20. The theory, as put out by the Resereve bank, is that competition will
lower such charges. The Resserve Bank has as much credibility in its vision, and accuracy, as the Australian governmment Treasury Department.
The liberal - national opposition in the federal parliament are spare at the activity that is demolishing the surplus they built up under the reign of John Howard. They sputter eco speak with no effect because the world is different to
the one they are familiar with. There is too much debt on each working individual and the self employed and the self funded retirees are having their invsetments struck down. The
demand to consume is falling on deal ears. Below I predicted a rise in the frugality movement. Those who would have us grow our own vegies, spend less and live more frigally are shouting loud.
The Governor of the State of Victoria, Australia, has joined the humbug.
Kevin Rudd has hung his political reputation on the stimulus package and he is headed for a nasty situation.
It will not work. The only way that the world can be taken out of the dark economic age is to reduce the value of property, hosuing and write off individual debt. Low interest rates, first time home garnts from the
government, giving people money to spend and the whole idea of rampant consumeism keeping the wheels turning is passe. Add to this the
facade of Kevin Rudd and the
stumbles
of the government Ministers and party apparatchiks
in their social engineering goals and 2009 - 2010 will be a nightmare for the Australian government and the states and territories.
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MINISTER FOR DEFENCE JOEL FITZGIBBON
March 2009 and the Minister has continued to be embroiled in debales with his department and also casts doubt on ethical integrity.
Prime Minister
Kevin Rudd's orientation for risk
may play well for the moment but Mr Fitzgibbon probably has but a
short time to go in the defence portfolio.
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THE DERIVATIVE EARTHQUAKE WILL HIT THE WORLD FINANCIAL SYSTEM IN JUNE 2009
The Obama fiscal programme for toxic assets will spectaculraly back fire.
Whilst investors salivate at getting cheap assets off the poor for next to nothing via the US banking system, the
whole process will fail to realise the investor benefits and they will panic as derivates bite hard.
Local governments here and in the US, states and institutions, will go broke, small banks will become insolvent and small superannuation funds will fold
into larger ones. The US economy will be wrecked along with the new satellite nations that were once part of the Soviet Empire.
China will suffer decline, riots and
will abandon the US Treasury bonds, third world countries will collapse and the wealth of the middle east be plundered.
Japan's export economy will suffer a serious desckine. An age of economic darkness will descend. Those who endorsed the US approach to removing toxic debts such as Australia's
Prime Minister Rudd, will be seriously embarassed.
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THERE WILL BE NO EMMISSIONS TRADING SCHEME IN AUSTRALIA IN 2010.
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WHAT WILL HAPPEN TO THE ECONOMY? IT WILL LOSE AT LEAST 10% to 30% OFF ITS CURRENT GLOBAL BASE. VALUES WILL FALL ON EVERY ITEM, PROPERTY, HOUSES, SHARES, BUSINESSES AND CORPORATIONS.
No matter what anyone outside the power collectives says the
experts, politicians, regulators and the business executives will continue to be the blind leading the blind.>br>
The world leaders need
to understand this quickly.
Kevin R Beck is a consultant with
Professional Managers and Associates.
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IN THE GRIP OF MEDIOCRITY
THE SAME PEOPLE WHO FAILED TO ANALYSE, AND PREDICT AND REACT, DESPITE ALL OF THE WARNING
SIGNALS ARE STILL THE PEOPLE CALLED UPON FOR SOLUTIONS, IDEAS, POLICY, ACTIONS AND LEADERSHIP. THEY HAVE COLLECTIVELY FAILED. BUT TO ADMIT THIS IS ANATHEMA>
Human nature dictates that they would persevere in the vain hope that it willeventually end
and they spin their stories, warm in the community of similar thinking, and types, in the world of networks they inhabit, mateship. President
Obama has clearly indicated that he follows this pathway with his choices of cabinet in his first term. He did not look beyond further than his nose. Seduced by the "business card".
That these experts would fail, in their predictive analysis, intuition and anticipation, is not
surprising.
The governments of nations, the businesses, the world of finances and economies are in the hands of a group who
represent a slice of average. There is no one here in
Australia, or in the wolrd of political leadership, that seems capable of making it otherwise. They turn to those they know and the
fallacy, and myths of the past, endure. They take their valium in the collective solidarity, a falsehood that no one could
have predicted how bad this would be. They ignore a unique group of people across the world.
"The one word which captures the unique style of INTPs is architect - the architect of
ideas and systems as well as the architect of edifices. This type is found in only 1 percent of the population and
therefore is not encountered as frequently as some of the other types. INTPs detect contradictions in statements no matter how distant in
space or time the contradictory statements were produced.
The intellectual scanning of INTPs has a principled quality; that is, INTPs search for whatever is relevant and pertinent to the issue at hand.
Consequently, INTPs can concentrate better than any other type.
Authority derived from office, position, or wide acceptance does not impress INTPs. Only statements that are logical and coherent carry weight.
External authority per se is irrelevant. INTPs abhor redundancy and incoherence. Possessing a desire to understand the universe, an INTP is
constantly looking for natural law. Curiosity concerning these keys to the universe is a driving force in this type.
INTPs prize intelligence in themselves and in others, but can become intellectual dilettantes as a result of their need too amass ideas, principles,
or understanding of behavior. And once they know something, it is remembered. INTPs can become obsessed with analysis. Once caught up in a thought
process, that thought process seems to have a will of its own for INTPs, and they persevere until the issue is comprehended in all its complexity.
They can be intellectual snobs and may show impatience at times with others less endowed intellectually. This quality, INTPs find, generates hostility and
defensive behavior on the part of others, who may describe an INTP as arrogant.
For INTPs, the world exists primarily to be understood. Reality is trivial, a mere arena for proving ideas.
It is essential that the universe is understood and that whatever is stated about the universe is stated correctly,
with coherence and without redundancy. This is the INTPs final purpose. It matters not whether others understand or accept his or her truths." (source: http://www.gesher.org/Myers-Briggs/Profiles--NP.HTM)
The head of Australia's Treasury Dr Ken Henry has a record, along with his employees in the Department of getting it wrong. The Resereve Bank Board simi;arly, the
previous government of John Howard and the former treasurer Peter Costello did not anticipate and nor did any of the world's leading economic and analytical
institutions. Onl;y 1% of the global popu;ation got it right and they were ignored because they are unusual.
Australia's Prime Minister of the current day, (March 2009), surrounds himself with like minded and those who fit his view and perspectives. He has the young bucks just like businesses like Enron hired the
youthful smarts. This is the power collective, a world wide group of like minded, that has brought everyone to their knees.
Then again they would not have achieved this but through the disinterest, and stupidity, of the general population
that took no interest in their economies, decline of
ethics replaced by mountains of bullshit,
until it was, and is, too late. Now we suffer medicrity and the blather of
self importance, vapid analysis and the thirty second grab of an uninspiring media.
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Politicians, political advisers, senior public servants,
members of corporate boards and managers of businesses might
consider these predictions. The predictions, even if partially accurate, impact on governments and businesses. These impacts wil be massive, long lasting and
a shock like no other.
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March 2009: American business interests demonstrate the core of the crisis
The US Congress, and media, are consumed with the
bonuses that AIG paid
themselves
from taxpayers funds. Their defence is the legal contractual requirements.
This demonstrates the focus that American business executives have. We can look to moral outrage, or as one member of the Congress has
suggested that AIG executives follow the Japanese code of ethics.
"GOP Senator: AIG Execs Should Follow Japanese Model -- Suicide or Apology, March 16, 2009 7:55 PM
In an interview with Cedar Rapids, Iowa, radio station WMT-AM today, Sen. Chuck Grassley, R-Iowa,
ranking Republican on the Senate Finance Committee, said executives of AIG should consider following what he
described of the Japanese model of shamed corporate executives: apology or suicide." (source: http://blogs.abcnews.com/politicalpunch/2009/03/gop-senator-aig.html, ABC News, USA)
All of this outrage does not reflect the reality that a large number of people, who have assumed
positions in society within the US, seem to fail to understand that the way they have done things is probably no longer going to be relevant or tolerated.
The focus on minutae that promises sustenance and return, the
graspoing at straws further demonstrates the appalling lack of awareness of the underlying human behaviour and the nature of markets and economies.
On March 18, 2009 new housing (apartments and condominiums) of 583,000
was announced in the United States, and the US share market rallied with people opining that this may be the dawn of the horizon of resurgence.
The US population is about 300,000,000 so the 538,000 represents 0.00194433%.
The herd mentality grasps as anything in their freny to recover what has all but gone. Unemployment in the USA (and in Australia and elsewhere)
rises near 10% and the greater part of the US nation lives in borderline poverty. They are held to ransom by casulaisation and the false feeling of
freedom that casualisation apparently brings or not. 90% of the
wealth in the United States sits in the hands of the few and much of that is gone or going. This is the order of things and apparently everyone can aspire to that
within the American dream. Precisley that - a dream. Marketing hype from birth to grave shapes the US society to repond to the stpory tellers and
the purveyors of self empowerment. In a population of 300,000,000 a seller of things does not require much of the consumer dollars to
create a multi million dollar business. There are many gullible, and under educated people, all believing the dream, in a population of that size.
In the words of one wealthy American commentator on Bloomberg Television, "they can't spend if they can't borrow".
This encapsulates everything. This is the foundation of the global economy of 1990 - 2009. Debt.
The consumer, average or below average salary and wage earners, are required to be in debt, to service debt and be on a merry go round,
in order for the economic model to work. It is not a little debt either it is a credit card debt of at least $10,000 plus and a housing debt of somewhere around $380,000 to $700,000. It is about being on the
buy now, no deposit and no repayments for 18 months to 3 year debt fulled platform of good living. It is about endless consumption. It is about the tehory taht the poor people of China and India will aspire to consumer godds and will
fuel the rest of the world's economies with demand. It is about building cities and sucking the life out of rural areas of countries until food production is threatened. It is fundamentally about myth, delusion,
hubris, greed and stupidity. The practice of slicing and dicing everything down to small bits - time, debt, risk and desire, and spread it around. Nice theory, doesn't quite work. It is about
shallow concepts - quality time, the power nap, the internet where you can choose your snippets, where you can make thousands every month from some new scheme,
nothing too hard and taxing, nothing too deep and complex. The American concept of prepackaged food in the ubiquitous diner and take away, taken to a new dimension of prepackaged everything. Australia has embraced this dross and
now must pay the price.
There is no capacity, or appetite, for that debt level now, anywhere. The value of everything - shares, houses, products, salaries and bonuese of the rich, the price paid to film stars and the world of loxury and staples must drop.
The slice and dice has to be thrown away and with ecah bit a billion or so dollars. The American fantasy of their own making,
to be at the forefront of the world in everything is indeed a fantasy. The danger is that other governments, like the Rudd gvernment here in Australia,
will continue to embrace the proposition that consumers must borrow, and debt (credit), is the foundation of economic growth
and prosperity into the future. It is one ting to invest in infrastructure and economic well being items, quite another to continue with the less valuable
consumer market for feckless products, cheap and vast shopaholic all with shallow meaning and no return.
Meanwhie the Chinese government, have long memories.
They are well aware that the western nations, particularly the US and Britain, have reaped the wind at the expense of the Chinese, in the past.
The Chinese government holds a large slice of US debt bonds. Below in this site I
refer to a modern
Boxer Rebellion.
People familiar with that
historical event
will realise what I am implying. Political statements, and soothing responses to the USA, were at stark contrast to what was happening behind the '
scenes. Opportunists in the corporate world across the gobe, talk of China emerging. However I contend that they are emerging not in the way that the speculators are expecting. Australia has to be vigilant particularly as so much of our trade is tied up with China, in the
resources sector. They may very well turn on us and Rudd could face a modern Boxer rebellion designed to humiliate, aggravate and bring us to heel.
I would not be doing business in China in 2009, and beyond, in these times, unless I was very sure that I was in with the right crowd, the state security police and the
ruling communist leaders.
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March 2009: What do they (governments, legislators, commentators and industry and commerce) not
understand regarding spending in 2009 and beyond?
Prime Minister Kevin Rudd needs to get a new circle of advisers from many walks of life particularly those who will
confront the government in their own private deliberations. He also needs more diverse, and constantly challenging, reszerach capability in his office, wider data
and analytical sources. There should be a sweep of the Reserve Bank Board and the senior ranks of the Australian public service.
The Prime Minister can also
help Aldi create jobs too.
by ending the collusion, manipulation and barrier creation against this retail group competing in the
Australian market. However to date, despite time passing since the enquiry conducted by the ACCC, into the Australian grocery industry, there is no
indication that the Prime Minister intends to distance himself from the corrosive forces of the state labor party branches.
Ethics
is a low, even non existent, priority in Australian political life.
Listening to the commentators and others in the USA I
hear that they are hoping that consumers will feel secure and return to the spending spree perhpas later this year.
They say things like "it is tough but how you execute the strategy and how you ...."
replay the old records is the key to the future. They seem to think the rules of yeterday and the
operational methods are still relevant. Chief Executive Liddy of the AIG corporation in the USA talks of putting assets that cannot be sold into trusts with self evaluation,
some securitization, a little equity raiisng and a timeframe of say a year and AIFG can pay back the $USD38 billion it owes to the American taxpayer.
These sort of numbers are splashed around and can apparently be made at the drop of a hat in the wink of an eye
indicating that there are serious issues with accounting principles, the real
state of corporations and economies and credibility. The US bonds on offer are not worth the money and if China stops buying them as they will in the next six months then the USA, as a nation, will slide into bankruptcy.
That may be the best thing to happen to the world economy, who knows. Maybe they (300 million people) will not consume 25% plus of the world's resources in the future as they have done in the past.
Then there is the ever expected stimulus package from China that will save us all. When did we arrive at a position in the world when the
future of the world economy rested on one nation? A nation which is relatively poor in comparison to the developed world.
A country with little if any social infrastructure and safety nets for its citizens, a country where the annual per capital income can be
encompassed in a one month American, European or Australian pay packet.
Many USA corporate executives appear to be saying this recession will end quite soon at the behest of China
and all will return to what it should be, a triumphal march back. According to these kings of commerce there is only one worthwhile system, and ownership,
of capital and revenue and all else is heresy and
not to be allowed. The pending pseudo nationalisation of their major banks is causing them to question the existence of life itself as they know it. Nationalisation of the banking system,
what is the justification they squeal?
For this commentator the real solution to the current scenario can be found in looking at the value of assets, the real value of debt, reorganising the processes, remving and distributing power and control, kicking out the charalatans,
breaking down the American hegemony of bullshit, greed, smoke and mirrors. Rethinking what is truly important and worthwhile in the world.
It is not feckless technology and China's whims nor whether General Motors survives as a car company.
Just because a billion people are thought by the myopic, and too often ignorant Americans,
to aspire to their way of excess this is not, and should not be, the sole objective and solution of this crisis?
Excess destroys the soul along with everything else in the human condition. Perhaps what would be a good thing is if
America was just to end up like
any
other nation. To be humble without thinking its rightful position in the world is to be always at the front. The United States of America has no moral authority and is given
too much credence by the rest of the world.
Here in Australia, the aspirant for the Premiership of Queensland, Mr Springbord claims to be able to pay for his election promises using an efficiency dividend to be
extracted from the Queensland public sector. This is quite simply rubbish. The proposition that a nebulous amount of money (in this case) 3%
can simply be dictated treats the electorate with lacking intelligence. In the same set of innovative, and exciting, pledges the liberal nationals talk of creating 10,000 jobs.
Underpinned by the fantasy of the efficiency dividend. The liberal and national parties, locked in the ideology of a
political derivative. They seem shell schocked by the collapse of the global financial system and may be oblivious to the coming derivative storm that
will bankrupt Australian local governments, many investors and cause small superannuation funds to fold into larger ones.
The notion of being able to mainatin a surplus, and avoid debt, is a dead horse being flogged by a party, and set of leaders, out of touch with a reality in which they
played a role. The unblinking embrace of US hegemony and financial experimentation.
In Western Australia the Premier there claims the same mythical capability.
This eronious assumption comes form the ideology that the public sector is inefficient and that every
governmment in office engages in waste. In NSW it is probably very true which is the exception. The public service, like the parliament, needs to be cleaned out. In Queensland the returned Premier Anna Bligh will take a broom to the public sector in a significant reshuffle in April 2009.
The incoming federal labor government, under the tuttellage of
Minister Lindsay Tanner engaged in cooking the books demanding a similar effiiency dividend. There is no evaluation just guessing. It is like the modeliing of the Australian Treasury,
incorrect on every occasion. Why does the Treasury have any credibility along with its head Dr Ken Henry?
Meanwhile the public services of Australia at state and federal level
bear the brunt of political fantasy and ideology trying to serve the political masters rather than the public interest. Democracy and governance is corrupted by this onerous and vandalous demand.
Fantasy is the order of the day in Australian politics. The federal opposition leader, Malcolm Turnbull extolls the virtues of the Howard - Costello era.
The era of rampant capitaalism where we all apparently rode a wave of prosperity. True, the federal government under these two political leaders
paid down government debt but
they did not, during their eleven years in government, do anything worthwhile with the surplus.
Investment in Australia by every government for the past fifty years has been derelict. In the modern age (2000 - 2008) these two politicians and their collleagues did not invest, other than in building an economically questionable rail line to Darwin.
They did not expand education and services. They did not expand the ports nor
pester the states particularly NSW to invest in assets for the future. Instead they wasted billions on failed experiments, played meaningless political games with neanderthal morons in the Australian
telecommunications industry over theory and one upmanship. Peter Costello, and the Coalition, spins a story that
under his Treasureship people in Australia became more wealthy. Many people squandered that wealth and went into massive debt seemingly believing that the good times would never end.
Property, housing, rents and other prices rose dramatically. That wealth strangely disspeared in 2009. Was it an illusion on paper?
It may not be evident to the commentators and the legislators but a very large section of world population is in debt. A debt as mcuh as 33% of their annual nett revenue. A very large segment of the population have assets that are now very much diminshed and as interest rates are
lowered by questionable Reserve bank decision their earnings are plundered. The Australian government is focused on first home buyers. These are the people with the lowest level of incomes and
they are having to be subsidised by $A26,000 plus to get them into a home and into debt. In focusing here the government is crippling another 60% of the Australian population's earning potential and thus psending capability.
To determine just how much people have to spend the Australian Bureau of Statistics would have to conduct a census
to determine, across the whole population, the current debt and repalyment levels against the annual nett income of every citizen.
Only then can we determine what the capability to spend is. Idiots still run commercial
advertisements offering no deposit, no interest and no repayments for
months and years as if the consumer can
go on and buy, buy, buy as in the past.
Below in this web site (in January 2009) I
predicted
that the $A10.2 billion given to citizens would not deliver the outcome beleived by the government and the Reserve Bank. I wrote to the office of the Prime Minister wityh this view but received
no acknowledgement. People in decision making roles surround themselves with like minded associates who reinforce what they ant to hear and believe. The proposition of
fearless and open communication, and advice, from public servants, is only realisable if the service has the capacity for thinking beyond the traditional. Tresaury does not and in any event it is unlikely
that alternative opinions to the that of the
titular head of the Treasury, DrKen Henry, will ever be presented to Ministers and the Prime Minister, from lower levels of the public service where the brighter public servants may be found.
The federal opposition, with a memory capacity measured in days changes its story. Turnbull says that there will be no receession, then says there may be and then says Australia is in one and then not in one. One has to catch this former
merchant banker on the right day. It is unlikely given his background and participation in the frenzy of the recent decade that he has any inkling what to do. Peter Cotsello is as devoid of solutions, but
this does not stop them from trotting out their drivel and self interested parodies. The government wants to invest in schools and infrastructre but this is heresy in the opposition's eyes.
To borrow to build is alright for citizens but it is apparently a catastrophe for the government to ddo so on behalf of all people in Australia.
In the USA the government is giving the billions, not to people to pay off their massive debdts, but to worthless banks and companies like general Motors, insurance companies and others, where the
Board, and management, are proven to be incompetent and in some cases unethical and worse.
The current government still fiddles with broadband and the supposed massive benefit that high speed internet will bring to the economy. Those benefits are mythical.
The theory of diminishing returns has no place in the thinking of the modern politician, advisers and public servants. Spending $A4.5 billion on a wire to the node is the continued story of technology's
fantasy of return on investment. The applied electronics industry has collapsed, the surfuit of chip makers are being culled.
The public's love afafir with trinkets such as LCD television, ipods and iphones etc is ended.
Chinese made junk and copied technologies are no longer the engine drivers.
Movie downloads, games and the feckless offerings of the internet and broadband are on the wain. Broadband will be the new
impetus in services like health, medicine, science and education. Real things not play things.
Then we have
climate change and the Emmission Trading Scheme.
The Minister in charge, Senator Penny Wong, is a soft spoken proponent of government policy.
For some reason, given that she is highly intelligent, she does not sell the government's ETS well.
Arguments for inclusion of agriculture (not in Kyoto) fall on deaf ears and thus bio alternatives are not considered.
There is not much substance when she speaks about climate change and the impact of the ETS but the voice is melodic and
comforting. This is not enough to get it over the line.
The ETS comes at a very bad time for the government. The climate change hacks are shrill that we must not be diverted from their cave dwelling doomsday agenda and must bear the pain for our past sins.
the Australian Treasury salivates at the wondrous billions that will flow to the Australian government coffers. Critics intone
that it will flow out again swiftly to a greedy industry that will not change its ways. Looking at Ms Wong's capabilities there is no confidence that she has any idea how to regulate, and control,
the new casino of the ETS. One thing is certain, there will be players, like banks and gamers, as are present in the electricity industry, taking their slice of the cash for little contribution.
Nevertheless, without any convincing modelling, federal Treasury (they have such a model record on assessmenst and accuracy)
is likely to produce erroneous justification.
"A Coalition-controlled Senate committee has hired a leading opponent of Australian action to address climate
change to review Treasury’s modelling of the Government’s emissions trading scheme. In an unusual move, Brian Fisher,
described in the announcement as "former Executive Director of ABARE and currently of Concept Economics" has been
directly engaged by the Senate Select Committee on Fuel and Energy to conduct an "independent review" of Treasury’s modelling." (source:
Greenhouse niggard to review treasury ETS modelling, MONDAY, 8 DECEMBER 2008, Canberra correspondent Bernard Keane, Crikey.com.au)
In March 2009 the government shut down the enquiry. The government presses on
regardless.
Under our immature and often childish and spiteful system of politics, and government,
alternative opinions, and critics, are treated as pariah and are locked out of dialogue, and contribution, by
interests within the office of Ministers and the Prime Minister. These are unelected political party parasites feeding on the public purse. They are sustained
under the coalition (liberal national) as well as labor
governments at state, territory and federal level.
The ETS will, create yet another mechanism, and methodology, for greed and profiteering by a few without ever really reducing carbon, and other nasty, emmissions.
Immediately the Prime Minister could assist Aldi to create thousands of jobs by removing the
collusion and anti-competitive practices
that are blocking Adli's investment and business expansion. So why does he not move on this opportunity? Perhaps he is not aware of it?
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When it is all going well there are so many success stories and successful people.
The media, and the oundits, lauds the prowess of John Howard and Peter Costello. The members of the power collective, in corporations and
institutions become legends in their own time.
Then something goes wrong and we see them for what they are. They made their money and their influence within a facade. Yet the legends continue and they remain in charge taking us further into the
mire.
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Slaves to Debt
What is the primary business objectives of banks?
It is to
enslave to debt,
countries, corporations, societies and individuals.
The Australian government, like all governments. is captive to this
primary objective. Why else would Kevin Rudd and the Cabinet spend $A52 billion on creating consumption immediatley? Why would they offer $A26,000 to new home buyers?
Australian Small Business Minister met with the banks and small business representatives, why? Access to credit and debt continuation.
The world is binging on debt and the policy makers, in their myopia, do not see this?
Revisiting the Boxer Rebellion
Centuries ago the Chinese cut themselves off form the wolrd (1420's) and then they reacted against the Western World in their Boxer Rebellion.
The experts, earlier predicted that China would be the saviour of the western nations, including Australia and the USA, by their demand. That did not eventuate. Then in early march 2009 the poor sods thought that
China would enact a multi billion dollar stimulus package. That did not happen. China is the world's laegest holder of US debt. What if they called it up?
Would this be the modern Boxer rebellion? Does China think that they, like many other nations, have been raped by western imperialism one time too far?
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Banks have to take losses
Worldwide $USD 150 trillion, in debt and inflated value, has to be written off by banks and governments.
The banks, across the world, will have to take losses, as will their shareholders. Banks, and corporations, should be allowed to fail.
Across global economies banks have to restructure their loans for houses and credit cards, setting interest at 5%, for ten years.
Companies that are an impost, like the global car companies should be restructured. US car manufacturers should not be headquartered
in the US and should be left to survive or fail with no more government assistance.
Onwers of companies need to shed those executives who are on their Board, and who are CEO's, and in senior management
positions who have come from the
banking sector, investment banking and finance companies. They are not suited to manage the ongoing crisis. US companies will face a decline in their current business ranging from 15% to 60% as they
suffer the fall out of the crisis. It is insufferable that the people who played in the end game are now appearing before the US Congres and Senate extolling their credemtials.
The Obama plan for rescucitating the US will not work and America will go technically bankrupt as its banks fail.
In Australia the banks will have to change their attitude, lower their credit card rates and housing loans. Those companies like Pacific Brands who received millions in tax payer handouts should have to repay the money by an order (legislation)
of the Australian parliament. The power collective (politicians, bankers, corporate executives and the others who reaped the greed) should
get some ethics or be ostracised for what they are. They are
consuming
the nation. The Australian people should choose what they buy and from what companies.
They should cease send a message to politicians by not voting for labor and liberal party candidates at state and federal elections during the next four year period.
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WILL RUDD'S AUSTRALIAN ECONOMIC STIMULUS PACKAGE WORK?
partially but many small to medoum businesses will still fail and people
will lose their jobs and go bankrupt
(February 2009) The foundation of the economic thinking in today's world is one of endless growth.
Thus we must determine if this is real. It is not. The proposition of endless economic growth is a
fallacy.
Then we have the proposition, put about by the Liberal Pary of Australia, most recently bu Shadow
Treasurer Joe Hockey, that
Australians have never been richer. The problem with this claim is that the riches were based on unrealistic property, share and housing values.
They were and still are a facde.
Hosuing and property will, like shares, take a dive as set out below in the articles of this web site. Rising from 12% devaluation through 20% to 30% and to a
revaluation downwards of
50% in some places in the nation. The over valuation of housing damages the economy.
"But the sorts of capital gains we have seen in recent years also have a downside. Rapidly rising house prices make it more difficult for
non-owners to get a foothold on the property ladder (a recent Productivity Commission report confirms that housing affordability declined
considerably in the three years to 2004).] And new buyers who have purchased a home may have over-stretched themselves, for debt levels
are at record heights and a future rise in interest rates could generate severe hardship.
Rapid house price inflation also has wider economic costs, for it can distort the way we use capital. The Productivity Commission notes how,
‘Rising prices can create expectations of further price increases, unrelated to any change in market fundamentals.’[15] Young
workers rush to take out huge mortgages before house prices spiral out of reach, and older buyers are seduced into investing in
rental property while disregarding falling rental returns. Panic buying creates a housing ‘bubble’ which sucks money out of productive
investments and eventually threatens the whole economy.
Just as damaging in the long-term are the sociological effects of high house price inflation. The longer a housing boom goes on,
the more it is likely to foster what Max Weber called a spirit of ‘booty capitalism’ emphasising pursuit of short-term windfall
profits at the expense of hard work, thrift, enterprise and long-term planning. When passive ownership of a house delivers riches
far beyond what most people could accumulate from many years of working and saving, traditional virtues emphasising hard work, saving,
enterprise and deferred gratification are likely to get eroded, yet these are values on which capitalist liberal democracy ultimately depends.[
Savings, certainly, have been in free-fall. The household savings ratio,
which was 10% in 1990, is now negative, and debt servicing is costing an average of 9% of personal incomes." (Source of extract:
After the House Price Boom: Is this the end of the Australian dream?, Peter Saunders in Policy - The Centre for Independent Studies,
http://www.cis.org.au/Policy/autumn05/polaut05-1.htm)
The we come to the cash hand outs from the government. The strategy for growth is based on consumption (spending) and not on ivestment.
Thus people ust spend to keep the house of cards in place. Trouble is they are so indebted. The government gives them a few thousand dollars.
The theory is that they wil spend some, all or nothing. But usually they spend. The money is jam for the big supermarkets. The shaky cards in the stack are the
myriad of cheap under capiatlised small businesses that sell the tacky tee shirts, the trinkets and the electronics, largely produced out of China.
These palces should be left to fail. Problem is that they employ young people. If they fail, and close, thousands of young people will be out of work and many
use the casual job (in reatil and hospitality) to under write their university and college studies. Many Australian small business will fail in 2009.
As many as 15% - 25%.
Investing on infrastructure is positive but it has long lead times. Thus government eveywhere have to fund the stupid people and the businesses that have no capital and too much debt during that lag time.
"Although the benefits of a costly, infrastructure-focused stimulus package based on massive gov ernment
spending may be intuitively attractive, past evidence suggests that the impact of govern ment spending programs that are intended
to encourage economic growth is very modest and unlikely to enhance recovery or deter recession." (source of extract: December 16, 2008,
Learning from Japan: Infrastructure Spending Won't Boost the Economy: by Ronald D. Utt, Ph.D., in The Heritage Foundation, http://www.heritage.org/research/economy/bg2222.cfm)
Added into the mix is the government's
Emission Trading Scheme and the Climate Change debate.
All of the modelling done by Treasury for the price of carbon (circa $A30 per tonne) is all wrong. It is $A9 per tonne. It is not unusual for
the Treasury to be wrong. It is more the norm. Yet Dr. Ken Henry pontificates as if Treasuy's fiction is fact. The Governor of the Reserve bank of Australia, Mr. Glenn Stevens, says that Australia will
have a housing lead receovery later in 2009. This is also a fantasy. People, as gulliblea s evr, are rushing in to get the governments $A26,000 first home buyers subsidy.
They are signing loans with banks and entering into debt hoping, believing that this is all a glitch. Those who are buying their first home are the
battlers and the people who have jobs created by others. They are most likely to be the lesser eduacted, working in the non professional sector.
Much of the action by Australia's governments, as others in the world, is based on flawed theory and
myth.
In summary, the house of crads will crumble and the natural order of things prevail.
The wealth of the nation, and its citizens, wil decline by between 10% to 15% perhaps higher.
There is nothing that Kevin Rudd or anyone else can do to stop this. Sixty percent of the nation's population has suffered the demolition of their nest egg.
No one in the federal parliament of Australia today knows what to do about it.
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THE END OF THE VICTORIAN DSE'S POWER
DSE, the Departmnet of Sustainability and Environment, heads into a storm of its own making. The name becomes a great irony.
For yaers DSE has held captive the labor government of
Victoria.
Despite evidence and enquiry outcomes the management and ideologs of this inceedibly dangerous, and destructive, agency have maintained a hard line against
mitigation of base fule across Victoria. They have refused to carry out burns. They have prosecuted people for cutting donw trees around their property and
have relived the storm trooper era against the cattlement who would dare to graze their herds in the state's forest and Alpine regions.
This a culpable department aided, and abetted, by incompetent, and craven, Ministers. The current Minister is gavin Jennings, and he is already manipulating the truth and the facts
as he fights to save his political career.
The government pays hundreds of spin merchants
across the public sector to manipulate, lie, distort and deny information. The Premier, John Brumby, is shocked by the devastation of the
2009 Black saturday bushfires.
Not just one fire but tens upon tens.
Hundreds dead, thousands of houses and properties gone, thousands homeless and whole towns wiped out.
Some will say that blame can be laid at feet of DES, its management and
its Ministry. It will be. John Brumby has announced a
Royal Commission,
which will be the agency's slayer. Pity is that these contributors to such devastation will not be individually held accountable and responsible.
What is the criminal definition of arson, and
abetting arson? Does one have to actually light the fire or can they aid the arsonist by providing the fuel?
John Brumby is a politician. He lacks the foresight to immediately anticipate and sack the ideologs of the Department of Sustainability and
Environment leaving the most valuable public servants, those who fight fires, their colleqagues have helped to foster. A restructure will be announced but what will that mean?
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REALITY IS COMING IN 2009 - 2010
At sometime in between 2000 and 2008 the general population came to believe that
houses, property and other assets like shares were always going to go up.
Sure there may be blips but generally it was understood that the status quo would be maintained. Ordinary people ecame gamblers with the self perception that
they knew what they were doing.
Why don't they get it? Everything is over priced! A plumber and a trade person is not worth $150.00 per hour, a
university graduate was not worth $A80,000 a year in salary, a consultant is not worth $200 - $300 per hour, a house is not worth
eight, ten, or twenty times the annual median wage or salary of the bulk of the population, rents are too high,
and the places not worth the money,
shares were over valued, assets procured at over valued costs and entered to books, debt was rejigged to look like an asset in disguise,
debt waas packaged at arms length. Supermarkets and other retailers were, and are still, engaged in rip offs. Australia could afford to add more and more retail and shopping centres. China would make us all rich across the
country and then there were the others burgeoning to enter consumerism and
the lifestyle, India and Asia. Even today (January 27, 2009, real estate agents and property officiandos think that Sydney and other places are immune. They think there is no over supply, that this is
an unfortunate but manageable blip. What don't they get yet?
The period 1999 to 2007 was full of fantasies and speculation. Now comes the reality. Housing will drop 25% to 50% in unexpected places across Australia,
trade wages and other high priced services will be cut by half.
Feckless consumerism is dying and along with it a large slice of worthless enterprise.
Australia is over regulated by zealot officials, Our productivity, infrastructure and investment is stifled by federalism and every tin pot bureaucracy wanting a piece of the
game. The Australian Competition and Consumer Commission (ACCC) sets access rules on certain infrastructure. There is gaming in our major sectors of energy, transport and telecommunications.
If you want to see the over regulation and false market creativity in action look no further than the Australian government's current
broadband tender. The proposal follows the bureaucracy's traditional pathway to learning information whihc they euphemistically call "testing the market". One mioght have thought that they woulod have learnt from the
Access Card exrecise where the taxpayers footed a bill approaching $A60,000,000 for absolutely nothing in return. No doubt Human Services, the
Department in charge of that debacle would claim to have learnt things and added to their knowledge base. Similarly the government will get nothing from the broadband tender (April 2009) and better have a back up plan.
This plan must include dealing with Telstra, Australia's largest telco, and major barrier to progress in communications. The management, and Board, of the company
compromise the public interest, treat consumers and any critics with contempt, and fundamentally run the company as if it is a rerun of the OK Corral or
Custer's Last Stand.
Telstra should have lost its infrastructure backbone domination decades ago but the federal, liberal (coalition) government, of John Howard,
was too greedy in wanting to get top value for selling their shares in Telstra. The Hawke, and Keating, labor governments never got around to making our telecommunications
truly universal in access and cost.
Now the reckoning days are coming for all of the above players, in every sector of the economy. It is very likely that the
Opposition liberal coalition under Malcolm Turnbull will be as mediocre, ill informed and unprepared in their policy response as in the past.
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January 20, 2009: SO WHAT WILL THEY DO, WHAT CAN THEY DO?
The world governments, including Australia, will have to buy the debt of a
large section of the world population
with regard to
home ownership, perhaps credit card debt, and other imposts which are bankrupting economies. The buy out here will be much less onerous because
the major problem with our home sector is it is overvalued dramatically as much as 30% to 100% in some locations and generaly 25% - to 30% across the board
in the sort after locations. The governments should not buy 100% but they can buy the
differential between what the house is actually worth and the
unsustainable value they paid less any funds/convertible assets they may hold.
The basis of the decison as to how cuh should be the economic evaluation of the
multiplier of what a house is worth in the average suburb. It is worth 5 - 9 times the annual average income. Thus a person who earns $50,000 should be able to buy a house
valued at $250.000 to $450,000 maximum. One house, not two and not houses for investment. Those who bought for investment and not for living should
not have their excess debt proportion paid. This is not a concept this is what the governments of the world will have to do.
As for shares and other instrumenst they were all overpriced. They will not return to where they were and will be probably 50% of the values we
have seen during the boom years.
International banks are withdrawing renewal of loans to Australian businesses. Since the banks do not have the billions to replace those funds the government will have to turn to
the superannuation funds. They too have been hard hit. The rules will have to be changed to allow funds to make loans and investments.
Coupled with this will have to be a series of supporting measures.
- The mandated contribution from salary and wages must rise by at least 1.5% preferably 3%, providing a wider capital base to offset risk.
- The funds must charge a premium for the risk and service of 0.25% to 0.50% above market rates the international banks may have provided
- Federal, and state, governments must enter into a partnership to provide guarantees protecting peoples' superannuation
- Lower the fedral government 15% tax contribution rate or abolish it and provide incentives for people to take cash annuities and not lump sums when they want to retire
- Provide incentives for people to stay in the workforce
- The Australian community at large needs to be developed for tourism instead of a focus on the coastal regions and major cities.
The market segments overseas require greater srutiny to match destination and experience to the segnments.
Mass marketing advertismenets are not effective.
The Australian regional travel infrastructure, facilities and services, to take tourists to outer communities is very poor and over priced.
The services are low grade. State governments have faield to build rail lines or closed them in a corrosive impact on development and a stupid fixation with surplus as it suits their political agenda. Now surplus is irrelevant as they face annihilation.
Places like Port fairy and Warrnambool, Ballarat, Cowra, Kyneton,
Camberra, Cooma, inland from the coastal regions, the coast of South Australia, Margaret River, Cable Beach, Mornington Peninsula,
the wilderness of the Northern Territory and Queensland and the outback are gems that are wasted through neglect, poor resource allocation,
by myopic policy, investment and decision making.
Vested interests are controlling and stifling development, opportunity and innovation.
There is a great gap between the incentive, and capacity, of communities with many remainng in the doldrums and others steaming ahead on their
initiatives and talents using what they have with effect, on small, medium and larger scales. Others suffer internal restrictions e.g Swan Hill,
Bega on the south coast of New South wales or Portland in Victoria, where
industry has branded the town and is seen as the economic dominance with tourism, food and
hospitality relegated down the list. There is actual antipathy to tourists in some places.
- The Bendigo Community Bank concept needs greater expansion, and support, from Austarlia's governments.
- The stranglehold Qantas has on air travel needs to be broken by government decision to open up markets and locations.
Incentives for others to come in quickly must be provided
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