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The Forum > General Discussion > Fuel, the economy and the coming recession

Fuel, the economy and the coming recession

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Make no mistake about it, fuel or the increasing cost of it, will kill the economy, forcing the nation and potentially the world into a recession and the collapse of financial markets.

Oil should be reserved for the manufacture of plastics and industry, not used to power cars. Growing our own fuel via ethanol for transportation is well …madness, food is far too valuable. On the other hand, Aust has an abundance of cheap, clean, Natural Gas, piped to the home, yet we are paying over $1.70 Lt for petrol. What’s gone wrong?

Bring on the Natural Gas car as the norm.
Posted by The Bull, Thursday, 3 July 2008 12:53:46 PM
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"Oil should be reserved for the manufacture of plastics and industry, not used to power cars.

That would cause an even greater recession.
Posted by freediver, Thursday, 3 July 2008 1:41:35 PM
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Yes, LNG seems like the way to go.

But what I’d like to know is just how feasible it is to quickly substitute gas for oil/petrol/diesel on a massive nationwide scale, and what the complicating factors might be.

Can anyone enlighten me?
Posted by Ludwig, Thursday, 3 July 2008 2:27:30 PM
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Users of oil, in whatever form it is applied, are the ones most suited to deciding for themselves whether they should use it in cars of plastic packaging around their Oreos.

I remember the 1973 oil crisis. The sharp escalation caused a recession then and I agree I think we are entering one now.

The test is the restaurants. When those fellows start to feel the economic pinch, then worse s to come. Eating out is a marginal indulgence and one of the first things to be “cut back” upon when people are feeling less confident about their personal life-style security.

The next test are unemployment numbers, lead by unemployed waiters and chefs from all those fore-closing restaurants.

Then the hard one, mortgage walk-aways, where people simply leave the property they have been buying because they can no longer afford the repayments and of course, in that climate, house prices start to fall, suggesting that “housing affordability” will no longer be a problem.

Unfortunately with folks departing their properties and a prospective buyers looking at their own circumstances and deciding not to risk additional commitments until the economy is more buoyant, housing sales stall and building workers are no longer required, adding to the unemployed.

Of course, apart form oil, base food prices have soured in the past 6 months or so, flour, margarine, milk based products have all experienced heavy escalations in price.

So what to do?

Well government is having a hey-day, record surpluses.

Conventional wisdom is the pump prime the economy with a dearth of infrastructure spending.

Problem is if you reduce general economic activity, it tends to undermine the point and viability of a lot of that infrastructure. So this is a dumb strategy.

The best way for government “to come to the party” is to pull in its own spending and what it spends on itself leaving it in the hands of those who risk the most in creating real employment.

Cut civil servants incomes by 1/3 and also cut parliamentarians and senators and their state based cohorts the same.
Posted by Col Rouge, Thursday, 3 July 2008 2:29:36 PM
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Col has justed recommended the traditional remedy for solving a depression. This is the remedy that was applied in the 1930s prolonging the depression for everyone until Germany started spending on infrastructure. Pity the Germans were building an army but Britain and the United States were pulled out of recession by the desperate need to play catch up and rearm.

Yes we should spend more on infrastructure, installing train lines to the outer reaches of suburbia, and building freight hubs so that interstate freight goes by rail and trucks are only used at either end of the journey. What about building low cost housing located close to transport hubs. Might be the perfect opportunity to compulsorily acquire existing housing stock to redevelop whole blocks rather than adopting a piecemeal approach. Can't see the social benefit of an ad-hoc approach in the hands of small developers.

Quite happy to see politicians pay cut but does Col really want to see teachers, nurses, tramdrivers and policemen's salary cut by a third. Well all the students can say goodbye to their part time jobs at Chadstone.
Posted by billie, Thursday, 3 July 2008 2:48:02 PM
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Billie ,they either take a pay cuts or look for jobs in private enterprise.Michael Coster in NSW said 2yrs ago that we have 30,000 too many public servants.Either they go or the PS generally suffer pay cuts.It is the private system that makes the real economy work and pays the taxes to support you.

The Truckies are losing money.They cannot even make the most basic wage.Why should they carry the can for lazy public servants and pay taxes to support them?

Labor has done what it is best at,ie killing incentive for people to be both autonomous and prosperous.
"I want to buy myself some time'
In the Shade of your weakness"
Posted by Arjay, Thursday, 3 July 2008 9:53:41 PM
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