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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.

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Philip Tang:

http://mises.org/story/3355
Posted by Peter Hume, Tuesday, 3 March 2009 10:41:10 AM
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Philip,
Very interesting link on your msg.
I won't pretend that I fully understood it all.

My understanding is that interest and growth are directly related.
ie you cannot have one without the other.

If because of energy limitations growth is impossible then it follows
if there is no growth there is no source of money to pay interest.
This being so because all the income from the investment just repays
the investment.

It does all sound like smake and mirrors.
Posted by Bazz, Tuesday, 3 March 2009 1:29:45 PM
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<This is just more of the Keynesian quackery that caused the whole problem in the first place.>

I seemed to have missed something in this debate. I thought we arrived at this financial debacle because the world ignored Keynes. If the world had followed Keynes we would not have the aberration of the IMF, World Bank or WYO. We would not have been in the position where American greed could totally stuff up the world.

If we had followed Keynes we would have a world currency for international trade whilst retaining our own internal economy. This round of American greed would have been an inconvenience but not the disaster we now face.

We need to start planning an economy for the future that gives us control of our own destiny. This might mean a slightly lower standard of living if measured solely as GNP but how much is stability and being able plan with a degree of certainty.

We seem to have forgotten that the financial sector is only there to lubricate the real economy. The real economy in Australia belongs to Australians. It is our infrastructure and manufacturing not the Americans. It is time we started looking after what is ours.

The WTO is presently pleading with the world not to employ protectionism. No wonder. If countries started looking after themselves the Americans instrumentalities like the IMF would no longer be able to rape the poor to feed American greed.
Posted by Daviy, Wednesday, 4 March 2009 10:54:09 PM
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As the Global crunch morphs, it becomes increasing obvious the Leaders of G20 are in disarray and found wanting. Obamanomics in it's current form is spreading the wrong signals. Until the US, 44th President rids himself of his defacto minders Bernarke, Paulson and Tim Geither, his toxic asset stimulus package, TARP,FSP's will falter, and Congress will have to raise the ante to satiate unquenchable appetites. Wall street overlaps the White House. Business as usual.

GM/Chrysler wheedled $ 30.9 B out of the Administration. They are demanding $ 116 B even though they have shown NIL profits since 2004. $ 354 B was pumped into 28 Banks. $2 B went on bonuses/perks/ long lunches. Fannie Mae, and Freddy Mac - mortgage defaulters, have their claws out for more, even though their ponzi scam: NINJA mortgages - no income, no assets, weak credit rating contributed largely to the sub-prime debacle.

Obama is saddled with a $ 1.75 T deficit. All told US has the highest debt encumberance in History. $ 53 Trillion. $ 175,154 for every man, woman and child. Mostly incurred by Feds, State, Foreign, and consumer debt. In 1957, for every greenback $ 1.86 was debt. 2007 $1:4.20 debt. USA is a debtor/ importer Nation. 70 % of Oil is imported.Materials, energy, consumer products etc.

Hilary Clinton's inaugural visit to China urged increased buying of Treasury Bonds, script,cash. China owns a staggering $ 696 B of US Bonds etc. There's a limit to how much printed money is actually worth. Since 1970 shedding of the Gold standard, the value of the greenback has plummeted. Hyper inflation has eroded it's diminishing value against other currencies.

But for China, and the United Arab Republics (OPEC), the US would be in deep excreta.

With 7.6 % unemployment and rising. Obama's myopic vision splendid is dimming.15 million illegal's are on welfare. 31.1 million receive food stamps. 5.1 million are unemployed.

Meanwhile in Denysville, we are in hot pursuit of the American Dream. Business Analysist keep repeating the Rudd mantra. Talk up the economy, stupid ! Why do they keep quoting Rudd's $ 42 B
Posted by jacinta, Friday, 6 March 2009 11:17:46 AM
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handout, when it's common knowledge, to win Senate approval, $ 1 B went to Senator Xenephon in bribes, $ 500m for Fielding, $ 800 M for the Greenies. An extra $ 2.3 impost for every aussie bleeder in perpetualty.

Like the US, we are a borrower / debtor / importer Nation. Were it not for our ore, mineral deposits which Donal Horne refers as the Lucky Country, we would be sharing the insufferable pain of the Brit's and Third World. Diminishing Commodity exports to China, Japan, S Korea etc is not going to save the economy. Half of our GDP in 2005/9 was borrowed money. Household consumption exceeds income. Negative savings since 2002/3. By 2004/5 we owed $ 3.8 B. The ABS keep changing the modus operandi to reflect it's Political affiliations, like the RBA. Trade. Over a 50 year span, only thrice did exports exceed imports. Imports have always exceeded exports by margins of 1.5 to 3 %.

RBA now concedes Aust is in official recession - 19 years since Keating's recession we had to have. Profits 5.4 % down. Sales 17 % down at $ 162 B. By 2010 we will see 60 % ( Melb Institute ) drop. Economy has contracted, after 8 years of negligible growth. The mining sector suffered most. The boom never matured. Our trading partners went into remission. Our manufacturing Industry ceased to exist. Firms are relocating overseas to escape the Union's increased popularity following Gillard's draconian work place relations gambit.Employers are running scared.

Paradoxically, despite the Wizard of Oz, Kevingate indemnifying the 4 Pillar Banks with RBA's fiscal backing. Moody's, S & P down graded the fab-four to Aa1-( negative ) in terms of Financial strength, long term deposits, and debt rating. The impact ? It now cost more to borrow from banks - if at all. Economic guru ?

Govt watchdog, the ASIC exec Tony Alorsio recently announced he championed budget deficits, derivatives, short selling, and hedge fund trading. Rigorously defending the financial debacles of Storm, ABC, MFS, Opes etc which have lost billions of investors funds in shonky manipulations that..cont.
Posted by jacinta, Friday, 6 March 2009 11:57:48 AM
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Jacinta and others,
It does not matter a fig what the government pays
out in largess or by other means it is all just pixel money.

I suggest you read this link.
I warn it is a worse case as the writer emphasises.

http://www.theoildrum.com/node/5160

However I will add a couple of other bits of information one of which
will make Australia's situation worse than the world average.

The first is that it now appears that Saudi Arabia's oil output
peaked in 2005, therefore it is virtually certain that the world has
peaked.

The second is that Australia produces a bit less than half of our
oil consumption. The half that we do import is so small in the world
market that it will be gobbled up by the EU, US and China in their
rush to get enough supply.

Right now demand is down so we are not seeing a supply problem.
However the International Energy Authority expects depletion to be 6.9% a year.

If we have no increased energy production we cannot have growth.
We are now in a new paradigm, a no growth economy.
In fact we can expect a negative growth economy permanently.

It will be interesting to see if this scenario plays out like this
or will there be some techniques that will mitigate the problem ?
Posted by Bazz, Friday, 6 March 2009 12:39:20 PM
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