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The Forum > Article Comments > Debt warnings should be heeded > Comments

Debt warnings should be heeded : Comments

By Julie Bishop, published 25/10/2012

The risk is about the shape of the Australian economy, not the shape of somebody else's economy.

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Julie makes some valid points. The light at the end of the tunnel may well be the economic express train wreck, thundering in our general direction.
The whole world in in an economic mess, thirty or more years in the making.
We can argue the toss for the rest of our lives how we went from unprecedented prosperity, to what we have now.
[Reganism, Thatcherism?]
We were once the third most prosperous nation on the planet, and a debt free creditor one at that! However, since we abandoned the gold standard, we've gone backwards ever since. [Our dollar quite literally floated with the ever changing price of gold.]
We kept on reforming the tax system, adding layer upon layer of complexity, [the tax man's Danish Struddle,] that really, just increased the tax avoidance loopholes!
Once there was a small co-op in every country town, and we sold more to the world than we bought from it.
We need to return to the pragmatism of those times.
We need to massively reform and vastly simplify the tax system, as I've explained in great detail, in earlier posts.
We need to exploit our vast energy resources to attract very high tech manufacture, and our future prosperity to these shores.
Yes sure, we have little choice but to reduce our carbon output, but not by wrecking the economy, but by being smart enough to embrace carbon absorbing strategies, that also provide alternative energy, as well as, myriad economic or wealth creating opportunities. [Cap and tax perhaps?]
We cannot continue to rely on population expansion to grow our economy; but need to set ourselves up for the next boom, which will be a food production one!
However, we will make very little progress in that direction, if we continue to support parasitical, unproductive, middle men profit takers.
WWW/NBN assisted direct sales, could quite literally halve the cost of living/doing business in Oz!
Until or unless we learn the lessons that history presents, we will go on repeating the mistakes of the past; and indeed, confronting the very same or far worse problems!
Rhrosty.
Posted by Rhrosty, Thursday, 25 October 2012 11:46:03 AM
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God forbid, but for once I agree with Julieís comments.

The current Labour Governments assumption on revenue from the Mining Resource Tax and various other venue streams expected from industry, and other budget assumptions are based on pixie dust.

We are, as each passing day rolls forth, heading into a global economic depression.

No country will have the ability to export their way out of any global economic depression.

Exporters are going to feel the pain big time as their markets dry up. We can expect trade wars and protectionism to abound. Take note Germany, Scandinavia, Australia, New Zealand etc.

We have had the inflation, only instead of a currency hyper-inflation; we experienced a 30 year credit hyper-expansion. This amounts to an expansion of money plus credit compared to available goods and services, thus inflation.

Credit is equivalent to money on the way up, but not on the way down. Credit losses and credit instruments are massively devalued in a great deleveraging. This is deflation by definition and it is already underway.

Debt monetisation is nothing in comparison with the scale of the excess claims to underlying real wealth that stand to be eliminated.
Australian taxpayers have private debt ratioís approaching 100% of GDP. Public debt although reasonably low in comparison to some other countries is expanding rapidly in Australia.

The entire model is broken, we will see taxes continuing to rise, Federal, State and Local government, services will and are being curtailed, donít believe the unrest you see in Europe and the US as a unique foreign occurrence, it will start here eventually as we slide further and further into the great deleveraging.
Posted by Geoff of Perth, Thursday, 25 October 2012 12:40:44 PM
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Firstly Switzerland is hardly a model for the rest of the democratic world, to start with modern weaponry (rifles and hand guns) are almost in every household due to its system of national armed service where its members keep their guns at home, so a national armed uprising, although extremely unlikely, is not beyond the bounds of possibility.
Secondly Switzerland is ruled by the financial sector, self regulated,
perhaps this financial sector is becoming worried over the world wide trend to strict government control over its financial sector and its possible ramifications for the Swiss banking system?
Since the 1930's world wide depression governments have progressively tightened the screws on the very loose financial practices said to have caused the depression, giving the world some financial stability.
The Hawke/Keating government policy commenced loosening these restrictions, however over loose self regulatory practices have gradually returned resulting in the present GFC, so once again the screws are being tightened on the financial industry. Australia unlike the US and Europe did not fully implement financial self regulation so, relatively, has seemingly escaped the full impact of the GFC. The financial sector must be controlled and regulated in a well ordered economy, self regulation in this industry just does not work!!
Posted by Jack from Bicton, Thursday, 25 October 2012 2:35:57 PM
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Firstly Switzerland is hardly a model for the rest of the democratic world, to start with modern weaponry (rifles and hand guns) are almost in every household due to its system of national armed service where its members keep their guns at home, so a national armed uprising, although extremely unlikely, is not beyond the bounds of possibility.
Secondly Switzerland is ruled by the financial sector, self regulated,
perhaps this financial sector is becoming worried over the world wide trend to strict government control over its financial sector and its possible ramifications for the "free"Swiss banking system?
Since the 1930's world wide depression governments have progressively tightened the screws on the very loose financial practices said to have caused the depression, consequently giving the world some financial stability.
The Hawke/Keating government policy commenced loosening these restrictions, however over loose self regulatory practices have gradually returned resulting in the present GFC, so once again the screws are being tightened on the financial industry. Australia unlike the US and Europe did not fully implement financial self regulation so, relatively, has seemingly escaped the full impact of the GFC. The financial sector must be controlled and regulated in a well ordered economy, self regulation in this industry just does not work!!
Posted by Jack from Bicton, Thursday, 25 October 2012 2:37:56 PM
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yes yes and if you get into power you'll largley do exactly what labour are doing, apart from a few token changes. And when the train wreck doesn't happen it will becuase Joe is the greatest Teasurer ever.

You might fool the rubes but most thinking people know the aussie Libs have enough sense to know they will not follow the GOp path...Less Tax = surplus.
Posted by Kenny, Thursday, 25 October 2012 3:06:20 PM
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Julia,do you know how the Coalition can save us from more debt? You can get our RBA to do it's job and create some of the money to equal increases in our productivity + inflation.Our banks are borrowing for places like the US Federal Reserve which just create as we all know with the click of a computer mouse.

Why cannot our RBA do likewise for us reducing both our debt and Taxes?
Posted by Arjay, Thursday, 25 October 2012 4:01:00 PM
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