Gee whiz, we now have people writing for dead blokes. It would be nice if the person/people who wrote this were game enough to put their name to their work.

Besides stating the obvious, that our spending is greater than our income, there seems to be some expectation that ordinary folk should support the rich.

How are the IR changes supposed to hedge us against the doom and gloom of recession? With less money in workers pockets, company profits will fall. People will not work harder for less money.
Looking at the wealth distribution of the world, it is concentrated in the hands of very few elites.

What will happen to the wealth of the landed gentry, the owners of expensive land in Sydney etc, when people can no longer afford to pay their rent? They will sell out to their wealthier mates.

Please no more justification by the far-right for their deliberate exploitation of workers. The attempts to re-introduce a feudalist society are simply obscene.

Good if its a downtown. We can make even more money.

"The attempts to re-introduce a feudalist society are simply obscene. "

Sorry, we ARE a feudalist society and what better person to enforce it than King John.

Some things about the Downturn:

1. Humans are basically Thermodynamic machines. The efficiency of our population's output and expectation of happiness are proportional to the free energy available (energy sources like oil) and the purity of our waste disposal sinks (oceans and atmosphere). With both our thermodynamic source and sink shrinking and our population growing, thermodynamic theory predicts a violent, catastrophic adjustment to global population numbers as a new thermal equilibrium is established in the biosphere. Things like ethics, memories of past wars, the veil of humanity and the veneer of civilisation mean NOTHING in a thermodynamic context. It will take people some time to realise this truth but realise they will.
The dynamic situations resulting from adjustments in these energy equivalences have been seen in Rwanda, but most people still believe these were backward historically diseased people. WRONG! And the thing with catastrophes. The thing is you never know when its going to snap.

2. Governments pretend to invest in alternative energy whilst they are not investing in alternative energy research. This is a Clayton's investment. Their feudal empires are built on OIL and it's hard for them to let go. Further, their answer to the coming catastrophe is to build markets and thus populations so they have the capital to invest in military equipment and new technology. This allows them to KILL and CULL most efficiently when the eventual thermodynamic catastrophe occurs. They get to keep their feudal empires no matter what the outcome.

continuing ..

Continued ..

3. When oil effectively runs out in the next 20 years, we will be back to the 1800's and coal power in thermodynamics terms. Since the world population then was around 2 billion people, it is easy to see that 4 billion of the current 6 billion people will have to be killed for thermodynamic equations to balance. There will be no rhyme or reson, no causes or deliberations, it will just happen. World governments KNOW this. It's time ordinary people put aside their squeamishness and accept the physics involved. Only then will we get to vote on how our future pans out.

People do not need terrorism to avert the coming wars and woes. The trick is to form and vote for governments that put a cap on population and market growth and a gilt edged priority on cleaning coastal oceans (energy sinks). A government that will put a cap on immigration and a show a willingness to pay for pure research and whatever else it takes to deliver alternative energy sources here and now.

For example Australia can afford to PAY to convert every vehicle to gas NOW and expand pipeline and refill services to meet demand.
That alone with zero net immigration will solve our alternative energy problem for at leat 20 years.

Australia can also afford a specialised Packet Switching non-manned flight space program with the sole purpose of setting up boiler/dynamo systems to generate and relay power from Earth orbit and eventually from as far away as Mercury orbit where energy density is 12 times that of Earth. We have the technology!

This latter initiative also shows that we don't need to stunt human growth forever. We can take a few steps back, 20 or 30 years maybe and develop space markets and populations to fulfill every Type 'A' personality's wildest dreams. But not here, not now .. Yeah?

kaep, keep off the green stuff brother.

The "miracle economy" appears to be largely paper based. It seems to rely on billions of investment (? super and other managed funds) dollars chasing a limited number of shares and limited amount of property. As in the 1930's, it will contract.

As for the solution that continuing to depress wages and demand through ever more reactionary IR laws might I suggest that much of the grass roots economy is based on the ability of ordinary workers to spend their disposable incomes. As wages decrease in real terms, and prices increase (which they are despite the official inflation figures) these ordinary people will respond in the only way they can. They will reduce their spending. Indeed they will be forced to as they cannot earn more, nor will financial institutions be forever willing to lend more given a reducing capacity to repay. This will result in a strong contraction of those employment creating industries such as tourism and entertainment and hospitality. Ordinary people cannot run a deficit household budget for long.

As we all know the cycle of contraction can spiral out of control very quickly yet the 'economists' seem incapable of learning from economic history and they and their fellow travellers in the right wing media continue to propose more and more strong medicine for the workers as the 'only' option. They are wrong. They were wrong in the 1890's, the 1930's and they will be proven wrong again should they, their monopolistic business masters and their compliant politicians persist.

Well then...it looks like it's time for the Liberal party to make way for a Labor government so they can blame them for the global economic downturn.

"IR and tax reform are the two big reforms that could help Australia to maintain its "miracle economy" status through the virtually inevitable global economic downturn."

Did anyone else find this comment as scarey as I did?. In other words, those who can least afford it will now take the blow of an economic downturn while the rich will be too busy on their yachts, snorting cocaine off the butt-cracks of Moroccan boys to even notice it.

Unhelpful and otiose article I thought, by a writer whom, as a previous contributor has pointed out, is unwilling to reveal his, her or its identity.

Sooner or later there is always going to be another downturn.

There is no agreement amongst economists as to when, and there is no way of knowing.

Thornton's concluding remarks have little or nothing to do with it: "That is the big economic issue we face, and to maximise our chances of coping in good shape we need to become far more competitive than we are at present. The current IR reforms are, I believe, biting far harder than currently discussed and this will be helpful."

Australia's metropolitan housing price bubble, abysmal rate of domestic saving and ruinous international trade balance are of rather more significance. Iceland and New Zealand are suffering similar problems.

There again, the US metropolitan housing price bubble, abysmal rate of domestic saving, marginally less ruinous international trade balance and yawning federal government deficit may turn out to be more important.

To paraphrase what Rick Blaine (Humphrey Bogart) said in "Casablanca", "It doesn't take much to see that the problems of three tiny nations don't amount to a hill of beans in this crazy world. Someday, you'll understand that. Now, now... here's looking at you kid."

The real question is whether Reserve Bank Governor Ian Macfarlane will tomorrow allow that toast to be drunk.

Or will he perform the traditional central banker's job of taking away the punch bowl just as the party gets going - by raising interest rates again?

Yes domestic saving sucks. Yes supply side economics rules.
Go and look at M3 on the RBA website, and you can actually see where inflation comes from.
M3 has been blasting along at 10% year on year between 2001 and 2004, and has now gradually moderated (?) to 7%.
Meanwhile the ABS tells us that the CPI is only moving along at 2 - 3%. And GDP is only "growing" at 2.7% (the GDP figure is not inflation adjusted). So if the economy grew 2.7%, why did we need to increase money supply by 7%, and where has it gone ? Cheap money fuels poor investment decisions, creating imbalances in the economy (negative impact on savings). We and USA have similar inflation (judged by M3 - the real inflation). Perhaps RBA is trying to maintain exchange rate ?

KAEP, I am stimulated by your comments.

I agree, the whole thing is energy dependent - and our physical economy depends upon oil energy - the nearest thing we ever had to something for nothing. Quite irreplaceable in terms of the lifestyle we now lead.

Having lived in a monetary economy for my whole life, it is hard to see around, through and beyond it - like trying to imagine an existence outside of my body (metaphorically).

Money is just a way of organising the human world, but I think we have turned economics into some sort of mystical cult, because it no longer reflects the laws of natural abundance. Money creates dreams, but only useful energy (say, oil energy) can fulfil those dreams. No-one dares to talk about this publicly, because the money-dream will collapse if the sleeper wakes.

Even an alternative backup currency will not suffice to solve the problem. No, not gold nor silver.

I suspect that the whole problem stems from our natural human desire to have a store of "value" that is redeemable over time. Of course, there is no such thing in nature. In other words, money, gold, silver (as tradeable value) is simply a reflection of our collective insecurity - our primitive paranoia. Other than their practical applications, "precious" substances have no value whatsoever. Only our dreaming makes it so.

I sometimes reflect upon the Easter Islanders, who seem to have been so blinded by their cult, that they cut the legs out from under their children's future. In a like manner, we invented cling-wrap and plasma screens - but have we had one original idea - really?

If it were not so serious, it would be 'Hilarious'.

DOWNTURN ? you betcha, but it may happen in the USA quicker than we realize.
WHY/HOW ? simple. ILLEGAL IMMIGRATION. Sound like an 'axe' of mind about to be sharpened ? yep...spot on.

POLITICAL IMPACT. Consider this. 12 million illegals.
First, they are 'there' because of the addiction by capitalist pig dogs for 'cheap labor'. Suddenly the 'cheap labor' is biting them in their bums. CHOMP !
-We demand 'immigrant rights' (while waving Mexican flags)
-Today we march, TOMMORROW WE VOTE!

How much political impact will 12 million PRE-DISPOSED DEMOCRAT voters have on the USA political balance ? (if they are legalized)

How much impact would this have on their CHEAP LABOR ? Once they are legal, greedy pig dogs cannot hold over them the threat of deportation when they grumble about 'low wages'.

If Democrats were 'enshrined' on the political stage of USA, they might be weak on Iran, which could see Iran gaining Thermo Nuclear capability,(along with their 'colorful' theological leanings to the Islamic Marhdi emerging from an unmeasurable conflagration of destruction.)

World OIL is 'turned off', and economic disaster ensues for the West.

Some might say its a long string to stretch over a bow, but seeing a connection between illegal immigration, and economic disaster via political re-shaping is not entirely without credibility.

WHICH OF COURSE...effects us.

So, a downturn ? maybe, who's fault ? "greed's" fault.

Solution ? None from this world.

What most of us fail to comprehend, is that our current 'peace' is really a short parenthesis in a long essay of war.

Dave………Sometimes I wonder. Your conclusion to the impending mayhem is greed. Part of human nature I am sure. “We’ll all be doomed”. Yes. And also that is part of life. It all ends with death and destruction, just be glad. It f…n ends.

Oh my,

Yes Australia is going to collapse into a deep depression at the next pin drop, yes welfare states like France are going to collapse even further, possibly into the realms of a third world nation.

Yes, these problems are caused by greed, greedy workers. Workers in Australia who happily live here in utopia and send some crumbs over to the third world. The game worked for a while, we all got fat and plump, we forgot what 'real' work was.

However, the we're been caught, the third world realised something, something amazing, if they work really hard for a very low amount of money, they can substantially improve their lives. So they go into their sweatshops, they make our shoes, build our tables and process our resources. Then one day, we look at our current account deficit and realise that Australia is headed for a collapse of biblical proportions. So we search around for answers, yet blinded by our own ignorance we go around chasing white elephants.

Instead of taking a hard look at our selves and realising if we took away the minium wage, allowed people to freely enter our country and slash taxes, we could reverse our decline. We put up more walls to immigration, we set up an arbitrary commission that cannot lower the minium wage regardless of economic circumstance and we refuse to part with our precious tax revenue, instead calling upon the government to spend more and more on nostrums of increasing enormity.

Australia is the titanic headed for that iceberg, when will we see beyond the haze?

DLC,

You want to live like a King, waited on by immigrant slaves while we run out of petrol, head towards Mad MaxII and need less people than ever to avoid coming chaos and mayhem.

That is not only OBSCENE it is selfish and stupid.

Petrol will all but run out within the next 20 years and the best strategy for SURVIVAL is to stop immigration and research alternative energy strategies including unmanned Space options. We need to ensure total independence from foreign oil in the 20 years of cheap fuel we have left. Otherwise, Australia will have its killing fields like all other nations when planetary thermodynamics rebalance to account for missing oil and gas energy inputs.

Thermodynamic endpoints are not negotiable and human civilisations are neither invincible nor infallible.

Me? selfish? Not at all, I simply wish to allow people in other countries to share in the capital that exists in this country because of the resource boom. Working in Australia on 5 dollars an hour would be 100% better than living in one of the many failed states in the pacific region on less than a dollar a day. You simply wish to keep them in their prison of poverty and depravity so that you may bask in your fools utopia, you do not even consider them as humans you deride them as some sort of thermodynamic unit.

Petrol will not run out in 20 years, that is a great fallacy, I am surprised you could go far to make such a claim. The most Liberal estimates I have heard on the subject are far closer to 50 years. In any event, you fail to note that running out of oil is a good thing, if we run out oil will have to turn to alternative energy sources, even coal when used in a steam engine is far cleaner and more efficient than a petroleum combustion engine.

This is how a market makes a transition, as one resource dries up it gets more expensive, as that resource becomes more expensive, people begin looking for alternative resource that can perform the same task at a lower price.

Of course there's going to be global economic meltdown, "Peak Oil" will see to that. Here's what ex-USA President Bill Clinton said on the 28th March 2006 (London Business School):-

"We may be at a point of peak oil production. You may see $100 a barrel oil in the next two or three years."

Link here:-

http://www.energybulletin.net/15300.html

And here's my direct questions to Australia's 2nd largest pension fund investment manager (QIC), vis a vis "Peak Oil." They originally told me to "Get lost" (in not quite those words), but I'm persistent:-

http://www.kimspages.org/qsuperletter.htm#six