I like Barnaby Joyce. Not because his father named him after me, but because I think he is one of the few people who is not scared to say what he thinks, regardless of party lines or the fact that his outspokenness may bring down opprobrium on his head.
The other thing is, he could quite conceivably be right!
‘So whereas Kevin Rudd’s fiscal stimulus announcements in December 2008 ($10 billion) and February 2009 ($41 billion) do add up to 4.6 per cent of GDP, there is $44.7 billion of discretionary spending unaccounted for, taking the actual stimulus to 9 per cent – easily the world’s largest.’ …Alan Kohler .. The Business Spectator.
In Europe, the cracks are starting to show. Greece has defaulted on its debt repayments throwing the first of the spanners into the works. Spain and Portugal are teetering on the edge and the rest of the EU is catching a cold. Iceland was one of the first to go under and Britain and Ireland ain’t looking too healthy either. Maybe this is the start of the domino effect?
Across the waters, Obama has recently announced that he is about to throw another $1.7 trillion into the mix to keep America afloat. That’s on top of the $13.7 trillion of stimulus debt they have already racked up and largely donated to the bankers.
Then there’s the little matter of derivatives! …Ugh!
According to some estimates, the Western World, by its inflated lifestyle and stimulus packages, has managed to rack up debts that exceed the total GDP of the ENTIRE WORLD by a factor of 7.9! Nearly eight times what the whole world can produce in a year.
Can you imagine your boss or your bank manager telling you that for the next eight years you are going to have to work at full capacity, but you aren’t going to get any money, or food, or clothing, or anything else until your debt is repaid?
Then there is the other problem. Who owns this debt? Currently this is the two emerging giants – China and India, with a few minor Asian players for make-up. Because their labour is cheap and they don’t demand the living standards of the West, they have collared the world’s manufacturing markets and are the few countries that produce the majority of the world’s goods and are also the largest consumers of the world’s raw materials.
Because of this lopsided arrangement whereby they do all the work and own all the money, it also creates a huge problem for them as well. Once they have collected and own all the real money in the world, it is tightrope situation. No-one has any money to spend with them, so they are reduced to accepting toxic bonds and lending out their capital so that their customers can continue to buy their goods and keep their own economies up and running. The major nations have only got to default on their payments and these economies start to collapse as well. They end up having a huge workforce and no money to pay them, with a plethora of goods piling up without any customers. (Sound familiar?)
So for a limited time, even the richest nations have to stimulate their own economy internally, and hope the rest of the world can solve its problems before the entire system comes toppling down like a house of cards. One of the other things these rich nations do, is try to protect their basic supply chain, by taking advantage of their wealth and buying into the natural reserves of all their supplier nations.
However, Australia is not in this boat. We have it from the lips of Kevin Rudd, Wayne Swann and Lindsay Tanner. “Our economy is in better shape than most of the world and we have weathered this recession better than nearly all of them.”
But then, one has to ask, what is the basis of ‘our own economy’? We import almost everything that is manufactured from China, we outsource most of our service industries to India in exchange for students who become hairdressers, cooks and accountants, and our food largely comes from places like Taiwan, Vietnam and other Asian countries. What WE have in abundance is masses of raw materials, such as coal, iron ore, bauxite and natural gas – all very much in demand from basically a single customer – China! And our economic projections are based on a continuing demand and increasing sales of these, our natural assets.
But if the worst happens, and the Western economies DO collapse, so also will the demand for our minerals. Even if world trade doesn’t decline completely, China has already taken the steps to ensure that their economy is somewhat protected by buying up large tracts of our minerals and shares in our mining companies. That will safeguard their supply without having that embarrassing situation of having to pay the Rudd government for the privilege.
‘Thank you for all that lovely infrastructure. We very pleased!’
Barnaby Joyce may just turn out to be a prophet in his own land….!
