AUSTRALIA'S DEBT LEVEL GREW BY AU$200 BILLION LAST YEAR (I.E. 20% OF ECONOMIC OUTPUT)

Other points I have neglected to mention include Australia's dependency upon debt as economist Steve Keen author of "Debunking Economics". A very interesting, as well as alarming, interview can be found at:

http://www.abc.net.au/worldtoday/content/2007/s2036407.htm

According to Keen "the INCREASE in debt last year was $200-billion, 20 per cent of the level of output of the economy."

So, it appears that all those other indicators (the value of which I question, anyway) which are cited by the Govenmenment and their various media spin-merchants as evidence of the Government's economic competence, are depenedant upon an unsatainable increase in Australia's foreign debt. Accoriding to Keen, when this is reined in, as must happen soon, Australia will fall into recession.

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See also post at "And Deeper In Debt" at http://www.debtdeflation.com/blogs/?p=39#comment-312

"Yes, I agree with both of you that the Coalition government so-called economic superiority is complete rubbish. For example, look at some of their false claims:

"Myth 1: The economy requires careful management that only they can deliver"

...

"Myth 2: Under Labor, interest rates would be higher than under Coalition.

"Reply: Although it is true that under the previous Labor government, interest rates was high (18%+ was the figure right?). But people do not understand that during that period of time, global interest rates was high too. For example, Singapore's interest rates was higher than 20% at that time. ...

"I remember that in an ABC interview just before the previous interest rates rise, Peter Costello was confident in predicting that price inflation will turn out to be benign and that there wouldn't be any interest rates rise. It turns out that he was COMPLETELY WRONG. Price inflation figures was bad and interest rates rose. Either he is a complete moron or he was just sprouting out propaganda to soothe the ears of the electorate.

"The Coalition government is behaving like Baghdad's Comical Ali. The scary thing is that no one cares or takes notice."

James Sinnamon (author)

Daggett,
Yes, outstanding credit has increased substantially, but bear in mind about $100 billion of the increase in the past year was borrowed by business, where the risk falls mainly on shareholders and lenders (and anyway business debt levels are historically low and manageable, as Keen says).

Household sector debt has also increased rapidly, but assets have increased more rapidly still, not just in housing but in shares, bank accounts, superannuation etc. Over the past 10 years household debt as a percentage of household disposable income has risen from 75% to 160%, but financial assets (superannuation etc) have risen from 210% to 315% of income, and total assets (including housing) have risen from 530% to more than 800% of income.

Overall the household sector’s balance sheet – assets minus liabilities – is as healthy as its been since this data series began in the 1970s:

(see table B21 here: http://www.rba.gov.au/Statistics/Bulletin/index.html)

I’d agree that the current rate of growth in debt cannot go on forever, but that doesn’t mean it will end in crisis, or that special government intervention is needed to make it stop. Many economic variables take unsustainable trends for often quite long periods of time then turn themselves around naturally as markets rebalance. For example, the negative household savings ratio of the beginning of this decade was not sustainable, and has now disappeared.

It makes good sense for households to continue borrowing to accumulate assets when the growth in their asset values exceeds growth in liabilities, and servicing costs are manageable. As and when this ceases to be the case, borrowing will slow.

As Stein’s law says: “if something cannot go on forever, it will stop."

Rhian,

When you talk about the increasing assets, you are talking about ultimately, in large party paper property values, which have been inflated well beyond what median income earners can hope to pay, let alone low income earners, as discussed above.

If a large of corporations are in debt to foreign interests, the potential for this to seriously affect all Australians is obvious.

An example is how Chris Corrigan's debt to financiers, who had bankrolled his operation to destroy the Maritime Union with mercenary strikebreakers and rottweilers, tied his hands in being able to reach a settlement with the Maritime Union in 1998. As consequence, the Maritime Union saw no option but to accept the second-rate settlement on offer from Corrigan. (If I had been a member of the Maritime Union I would have voted against it, but that is another argument.)

In the same fashion, large borrowings by Australian Corporations could easily lead to circumstances where these companies could either collapse outright or be forced to shed jobs and reduces wages. Of course, this is the explicit goal of private equity deals, such as the recently aborted plans to ransack QANTAS. So clearly it is of concern to all Australians.

If those Australians who have borrowed against the equity of their own home (inflated by immigration-driven population growth and speculation) are unable to repay, then large numbers of Australians face ruin.

We can make assertion and counter assertion, but I think Howard apologists should at least have the honesty to mention foreign debt when they list all those other stats to prove the brilliance of Howard and Costello and allow Australians to judge for themselves.

I suggest that if you are so confident of your case, that you take it up directly with Steve Keen at http://www.debtdeflation.com/blogs/?p=39 (Currently you may have problems registering an account, but that should be fixed soon.)

Also you should post to the form in relation to Klaas Wolkdring's article "The Lucky Country revisited" about the shambles that Howard and Costello have made of this country at http://www.onlineopinion.com.au/view.asp?article=6421 and tell him why he is wrong.

This is a response to what Rhian posted to the forum related to my article "Can Labor bring about a Just society?" at http://forum.onlineopinion.com.au/thread.asp?article=6395#94835

Rhian,

You wrote:

"Falling living standards are (or were) central to your hypothesis. ..."

No they were not, and your quote does not prove that to be the case. My central hypothesis, which I have proven with many examples is that the indicators incessantly cited by Howard and his apologists, which 'prove' that living standards have risen since he came into Government, are highly suspect.

To simply provide a handful of counter examples, where factors, which have improved our standards of living, have also not been accounted for in these ABS indicators, is not a refutation of my case.

Given these many examples, and given that it takes two incomes these days and not one and, at that, with 30, 40 and 50 year loan repayment periods to purchase a house, then it is clearly nonsense to suggest as many that living standards have doubled since the 1970's as, for example, I recall neo-liberal ideologue Peter Saunders claimed on page 6 of "The Welfare Habit".

I offered my own subjective view that if if all these factors were accurately measured then they would "probably reveal a substantial drop in the actual standard of living of most Australians and a massive drop for many on the lower end of the income spectrum," and that is also the subjective view of most posters to this forum.

I would also give back all the technological advances that have been made since the 1970's to return the country to the way it was then, for all of its faults, and I think I would not be alone in holding that opinion.

(tobecontinued)

This is a response to Rhian's; question posed on another forum in relation to the article, "Can Labor bring about a just society?" at http://forum.onlineopinion.com.au/thread.asp?article=6395#95419

"Can you name a single non-capitalist country whose citizens enjoy either the freedom or the prosperity that we do?"

I am posting my response here because I believe it is more relevant to this thread and because of the OLO restrictions.

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Rhian, I would suggest to you that large numbers of this society are neither free and prosperous. This might have been the case for those people before Keating's and Howard's economic 'reforms', but it is not today. The evidence has been provided in my article "Living Standards and Material Prosperity" and this related forum discussion.

In this forum you attempted to side-step the hard evidence severe hardships intentionally caused to at least a very large minority of the people of this country by implying that, somehow, if Howard, can convince a majority of the population to vote for him, then that somehow makes it OK for him to go on kicking in the guts those sectors of society he deems to be expendable: the low-skilled, the unemployed, welfare recipients, middle-managers scrapped in many successive waves of 'downsizing', those who don't own their own homes etc. In your own words: "If most people really are worse off, and believe the policies of the mainstream parties to be responsible, then these parties would lose votes." (http://forum.onlineopinion.com.au/thread.asp?article=6326#94074)

Anyone who has no choice but to spend most of their time in activities year after year in which they have no interest is not free in my opinion, and that is the lot of Australia's low-paid unskilled and semi-skilled workforce. It is commonplace for many to have more than one job, because they cannot make ends meet on one income alone. That is what I learnt from a discussion with a large group of hospital cleaners the other day.

(tobecontinued)

(continuedfromabove)

What sort of quality of life is that? How do you think that sits with Howard's claims of having raised everybody's real standards of living by 20% since he won office?

It is also the lot of many of Australia's professionals who are forced to apply their talents to occupations that they find morally repugnant, for example architects working on environmentally destructive housing developments, or senior public servants or company executives forced to lie through their teeth for their masters everyday, because they would face financial ruined if they, instead, followed their consciences and told the truth (remember Michael Scrafton?).

On top of that our guarantees of political freedoms have been largely removed by measures ostensibly aimed at fighting terrorism, and by libel laws which often penalise community activists who speak out against wealthy corporate interests (e.g. Gunns).

I consider your challenge to compare the freedoms of non-capitalist societies with those of our own to be a red herring to divert attention away from the important political questions I have raised. I don't intend to pursue it further here except to state that the argument that socialism has been tried and found to have failed is rubbish. Every attempt to establish a socialist society since at least 1871 has faced ferocious adversity by capitalist nations with enormous resources at their disposal. In the case of the Soviet Union the devastation caused by the First World War, Civil War and the military intervention of ten capitalist nations made it possible for Stalin and the corrupt political caste he represented to take control. Those who hold Stalin's ghastly police state to be the embodiment of socialism conveniently neglect to mention that by the mid-1930's he had murdered, imprisoned or exiled nearly all the original leaders of the 1917 revolution.

Having written this, I am not uncritical of the socialist movement or the original leaders of the Russian Revolution as I have written at http://candobetter.org/socialism and http://candobetter.org/node/110