The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
The Forum - On Line Opinion's article discussion area



Syndicate
RSS/XML


RSS 2.0

Main Articles General

Sign In      Register

The Forum > Article Comments > The financial future guessing game > Comments

The financial future guessing game : Comments

By Bruce Haigh, published 2/3/2009

Australia should exercise more control, discipline, stimulus and protection over its own economy.

  1. Pages:
  2. Page 1
  3. 2
  4. All
Bruce Haigh, "This depression is a direct result of GLOBALISATION [emphasis added]. Australia should seek future protection from the buffeting of overseas financial institutions by exercising more control, discipline, stimulus and protection of its own economy."

Very true indeed.

In China the people who were responsible for the adding melamine to milk were prosecuted and some were executed. The same should apply for the US bankers.

Protectionism and sensible trading policies is the way to go. Now is the right time to nationalise ALL the banks.
Posted by Philip Tang, Monday, 2 March 2009 12:21:01 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Bruce, I wonder if you have considered that with oil depletion the
global economy is going to end anyway.

There is no point in trying to save globalisation.
All industry will be local as the cost of freight will be just too expensive.

It probably won't just drop dead overnight (there are those that say it will)
but there will be a gradual tightening of freight costs.
Australia may well be in a worse situation than many countries as our
oil companies are foreign owned and they will fill their requirements first.
We produce about 45% of our own crude, depleting at about 4% a year.

Localisation will be the next trade buzz word.
Posted by Bazz, Monday, 2 March 2009 3:08:53 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
"To help pull Australia out of this depression Mr Rudd will need to take some drastic and decisive action, taking into account the lessons learnt from the last Great Depression. He will need to cancel some overseas defence orders and rethink defence requirements and strategies, utilising local capacity, particularly in ship building. He will need to take over the local car manufacturing industry, which can also be used for defence production. These decisions will protect and provide new jobs as well as build a local defence production capacity in what will be uncertain times."

The author is clearly quite unaware of the lessons of the Great Depression. The erection of high tariff walls killed international trade and made the Depression a lot more severe than it otherwise would have been.

Obviously the GFC has affected Australia because we now live in a globalised world. But the benefits of trade have been so considerable in terms of raising GDP levels that we are far better off as a result of globalisation. We would be a lot poorer now if trade liberalisation had not occurred over the last 30 years.
Posted by AJFA, Monday, 2 March 2009 7:01:08 PM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
This is just more of the Keynesian quackery that caused the whole problem in the first place.

There are two main problems:
1. Government monetary policy causes the recession. Government has a direct conflict of interest with the rest of the population over the control of the money supply; and
2. Even if government didn’t cause the problem, which it did, it is incapable of fixing it up. All the measures you mentioned can only make the problem worse not better.

What causes recessions is government manipulation of the money supply.

In a nutshell, absent the lower interest rates, the price of money signals to the entrepreneur that he has enough capital to a) replace wear and tear, and b) produce the total amount of goods which that capital could make available for consumption without prejudicing further production.

But with the inflation, the price of money signals to the entrepreneur that he has enough capital for a) and b) above, *as well as* for producing d) additional goods of the same kind as, and e) additional goods of a different kind than produced before.

Lowering interest rates makes the costs of the affected investments seem lower than they really are, and makes capital look more abundant than it really is. So entrepreneurs invest in the sectors where the new money enters the economy (eg housing). Capital and labour flow into the bubble. The inflation spreads a general expectation that prices will continue to rise. People spend more, both on capital and consumption, than they otherwise would. The price of both capital goods and labour rises.

It is important to understand that there is no possible manipulation of the banks, or of money, or of credit, or of wages, or of the economy in general that can maintain the artificial boom set off by government’s lowering of interest rates, any more than we can repeal the law of gravity by throwing stuff up in the air. The boom must collapse sooner or later.

All government policies pretending otherwise are fraud, including all those suggested by the author.

Something must give.

(cont.)
Posted by Wing Ah Ling, Monday, 2 March 2009 8:10:07 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
The reason is because the diversion of capital into unproductive lines that cannot be completed causes the massive destruction of capital. The supply of capital – real capital like machine tools, ovens, etc. - is not enough for all the projects in demand in reality, as well as in the fake demand caused by government’s cute trick.

The government has only two choices: either stop interfering, and let society liquidate the malinvestments now through supply and demand. Or keep inflating the currency and trying to ‘stimulate’ the economy – to keep prices and wages at the levels they were in the bubble. This ignorant madness is what Obama and Rudd are both trying to do. It will only deepen and prolong the recession because that’s all it *can* do.

2.
The stupidity of Keynesian beliefs is obvious even to a sixth-grader. We as a society can’t get richer by burning our houses down. We can’t get richer by taking money from productive people and paying it to people to dig holes and fill them in again.

The bad economist looks only at what is seen, or the short-run effects, or the benefits to one section of society. The good economist looks also at what is not seen, and the long-run effects, and the benefits to all of society.

When government decides to build a road to provide ‘jobs’, it doesn’t get the money from a moonbeam. It takes it from someone else. Even if all it did was take with one hand, and give with another, we would be no better off. Taking from the productive so as to fund unproductive activity is what caused the problem in the first place: and the Keynesians cure is more of the same, while blaming ‘unregulated’ capitalism.

All the measures suggested by the author actively promote unemployment and poverty, which is why the Great Depression lasted as long as it did.

By contrast, the long-forgotten recession of 1921, when government didn’t intervene to try to fix it, lasted one year.

Government control of the money supply should be abolished
Posted by Wing Ah Ling, Monday, 2 March 2009 8:11:36 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
It is not that long ago that Paul Keating gave us the “recession we had to have”. Interest rates were at 17%, Federal Government debt at $92Bn, and unemployment at 10.7%.

2nd quarter figures for current year are 1% growth, not yet even a recession in Australia, certainly not good and certainly could be worse. Remember, as at 2007, no $92Bn national debt, interest rates, even after several hikes, at less than 7%, record low unemployment at less than 4%.

The next generation of Australians will have to again pay off the debts. May I remind you that you will not only have to pay, through your taxes, the $42Bn that has been spent, but the Queensland Labor Government has racked up a staggering $74Bn on its own, goodness know what the other Labor Governments have put on our credit card.

You might want to stop having a nice cozy intellectual debate on “micro economics” and get out on the streets and shout, as loud as you can, STOP SPENDING MY FUTURE.
Posted by spindoc, Tuesday, 3 March 2009 9:47:45 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
  1. Pages:
  2. Page 1
  3. 2
  4. All

About Us :: Search :: Discuss :: Feedback :: Legals :: Privacy