The latest information out of France refers to Francois Hollande and his own officials, and the scandal is far worse than some wealthy old woman who is claimed to have dementia giving a large donation. The latest French scandal involves offshore accounts.
This seems to be a repeat of the rubbish prior to the 2008 U.S. Presidential election when a certain person proclaimed that he would run an Administration that was transparent… and yet he has the most corrupt Administration ever in the USA.
The Socialists cannot help themselves it seems. They like to think that they are “clean” and “ethical” but scratch below the surface and there are lots of corruption hidden in plain sight.
These revelations though, are nothing compared to what has been revealed by the NSW ICAC inquiry relating to the former ALP NSW government… now that is truly entertainment.
First of all, I apologize for the lack of posts. This year is an election year in the USA, and there is not much there that I wish to discuss at this point in time. The US economy as far as I am aware remains weak and it continues to have a problem with burgeoning government debt, with no end in sight because the US Senate will not pass a budget!! There are some new developments in Europe and especially with a renewed Greek crisis. However, I do need to spend some time on the Australian economy.
For a long time, I have pointed out that much of what we have been experiencing is similar to the situation in the 1970s when Gough Whitlam came to power, and nothing has changed in the past year to change my mind on that subject, except of course we are now seeing the nastiness and ugliness of an attempt at class warfare that has been started by the Gillard government. I am not addressing the topic of the class warfare, rather I want to address the stupidity of the Gillard government and its introduction of a tax on the air that we breathe.
The US is already aware of what happens when some bright spark (read that rather stupid Nancy Pelosi) says that you have to pass the the legislation to know what is in it. Well, here in Australia something similar happened when the tax on the air that we breathe was introduced. Insuficient time was spent on vetting the legislation. It was introduced and passed at some haste. Needless to say the whole thing is a lemon, a white elephant and it will do nothing to save the world from the predicted doom and gloom of the green (really sick) doomsayers who claim that the world will end if average temperatures are raised by 1/2 of 1/4 per cent… or something like that, over the next century. The climate debate is also not the subject of this particular post. What is relevant is the impact of this tax upon the Australian economy.
It needs to be pointed out that a price on carbon of $23 per tonne is absolutely ridiculous, especially when those silly contracts in Europe are worth no more than about $5 per tonne. It is also worth pointing out that it is really ridiculous that some people seem to be self-satisfied and smug by letting the world know that they either drive a Prius or have purchased a timber plantation (or whatever the sign on the back of their car proclaimed that allowed them to claim that they were emission neutral – what a load of tosh!!). What is more significant is that the tax itself is going to have a very negative impact upon the Australian economy over the next 15 years.
Whilst in my view I continue to see indicators pointing to stagflation, not all of the indicators have pointed in the same direction so it would seem that my thoughts on the subject might still be a little bit premature…. or are they? Let’s take unemployment as an example here. In the 1970s unemployment was very high. By the time that I graduated from university even graduates were not guaranteed finding employment in their chosen field. In fact the positions available to accounting and economics graduates were extremely tight because the big accounting firms were not hiring new staff in any great numbers. The level of unemployment for graduates by 1976 was at an all time high. The lack of jobs for graduates was indeed a signal that something was very wrong within the economy. Whilst I am not up with the current situation for graduates I can comment upon a slightly different aspect – the hidden unemployed. It has remained pretty much the same, and the percentage right now is probably as high as it was in 1975-1976. The hidden unemployed is usually defined as those who have given up looking for work. It should include all those who are not eligible for unemployment benefits but who want to work. These are people who are enrolled with employment agencies. The discrepancy in unemployment numbers as determined by say Roy Morgan research and the official figures from the ABS is something like 5%, and this actually takes in some of the hidden unemployed (those enrolled with the employment agencies). Australia has other structural employment problems as more and more people find themselves in part time work rather than full time employment. In other words, the number of under-employed has been rising.
Another indicator for stagflation is rising inflation. Surprisingly inflation remains a non-problem, or does it? What I would look at here is the basket of goods. The basket of goods since the 1970s have changed. What the government has done, to disguise the inflation rate has been to remove items from the basket of goods and add others. This is not the whole story because in the electronics side of the equation there have been decrease in the prices of goods. Normally, this takes a few cycles after a product has been introduced. As an example take the price of HDTVs which are imported from Japan, South Korea, Malaysia and other Asian nations. When they are introduced the price is normally high, but leave the purchase for a year or two after introduction and the prices have dropped dramatically. This can be explained by at least 2 factors: a change in the exchange rate that has made imports cheaper, and an increase in competition for the goods. So perhaps this is a reason that the level of inflation has not been so dramatic, but then again I have my doubts because items such as doctor fees and prescriptions have continued to rise, as have increases in the price of petrol, the cost of our utilities such as gas and electricity as well as rates. The Reserve Bank continues to moniter inflation, adjusting the interest rates as required. All the same at this point in time there is no measurement available relating to the impact of the tax on the air that we breathe.
The remaining indicators are related to any increase in industrial disputes as well as increases in wages that is not justified by a rise in the cost of living. There has been an increase in the number of industrial disputes after industrial laws were changed to once again favour the unions. Of anything we will see a greater impact from this industrial down the track because of lags in the economy. I would think that within the next 12 months we will have a better idea about what effect, if any industrial disputes have had on the economy. One thing is certain, and that is we do not have right now the kind of disruption that we had during the 1970s when it was a union free-for-all.
Despite the fact that the indicators do not totally suggest stagflation, I continue to believe that if Australia does not reverse some of its policies then we will have stagflation and the effects this time around will be even more prolonged because of the impact of the rise in government debt for our nation. This is probably what David Murray, the former Future Fund Chairman and CEO of the Commonwealth Bank means when he warns about the difficult economic times ahead in Australia.
As a result of these developments I will be keeping a sharper eye on the Australian economy than I have done in the past 12 months, because I forsee that Australia could be heading for a downward spiral and it is not in a strong enough position for a fast recovery. This is not 2008 when we had the GFC in full swing and Australia was relatively insulated because of the budget surpluses of the Howard Government – these surpluses were wasted by the Rudd Government and in particular by that goose, Wayne Swan. There are other problems such as the fact that the expenditure on the NBN white elephant remains off balance, and then there is the over-estimation for taxation reciepts by billions of dollars.
Australia has a problem – we have a Marxist Prime Minister by the name of Julia(r)-the Marxist – Gillard (Dullard). This particular woman grabbed power last year when she stabbed Kevin Rudd (equally inefficient) in the back. We went to the polls in August and the result was a hung Parliament. That bitch, Gillard, was willing to deal with the devil (Bob Brown of the Green Party) in order to grab power and to continue her wrecking ball game. There is very little difference between the disaster in the USA and the impending disaster in Australia. In 2007 when Krudd won the election, Australia was in a good financial position. However, it took very little time before KRUDD had run through the budget surplus and created a large budget deficit – this of course is what ALP governments tend to deliver to the Australian public. It has been one failed program after another, and all of them costing far more money than was necessary, due to wastage and stupidity of the Public Servants who are overseeing these programs. At least when I was a public servant, we had some controls over spending via the contracts system that had been put in place (even though it can be argued that even this could lead to corruption). The controls under Paul Keating as Prime Minister were superior to what is in place right now.
Julia Gillard lied to the voting public. During the election last year, the bitch stated that she would not implement a carbon tax. SHE LIED. She is now in the process of attempting to implement a tax that will have dire consequences for the Australian economy and for families that are already struggling because of higher electricity and gas charges. All of this is happening because of a non-existent crisis that the Marxists are claiming is real – that is Climate Change or Global Warming or whatever the euphamism for the redistribution of income happens to be this year. The fact is, the earth is not warming like it is claimed by climate alarmists. The fact is that this is just one giant scam.
If the tax is so necessary, why are they trying to work out a “compensation package”? The fact is that any industry that is hit with this unnecessary tax is going to pass on the costs to the consumer. The logical consequence is going to be cost-push inflation.
As I have been writing on this particular blog, I have tried to come back to the things that caused the prolongation of the stagflation of the 1970s, and I have tried to compare that situation to the present. One of the indicators of the 1970s was cost-push inflation, due in part to the union demands for higher wages, which was fuelled by inflation. It was a wages-price spiral. It was the Fraser government that attempted to bring this under control through the implementation of a wages freeze. The Whitlam government had attempted to control prices through the implementation of the Prices Justification Tribunal, but that tribunal did nothing to bring prices under control because of the nature of the inflation. It is obvious that if the cost of production rises because of both increases in materials and labour, then the price of the product must also rise. In other words, you cannot control one element without controlling the other elements. BIG FAIL.
The twist in the current situation is that too much attention is being given to Green or Watermelon policies. The Watermelons have an agenda that is designed to hurt the community as a whole. Their economic policies absolutely stink to high heaven. They have absolutely no idea when it comes to the consequences of their total stupidity. It is the Watermelons who have been pushing for the carbon price or carbon tax, and it is the Watermelons who have been pushing inefficient methods of producing energy, such as windpower, whilst at the same time rejecting other methods such as hydro-electricity, as well as attempting to get rid of the coal powered stations such as Yallourn and Hazelwood in Victoria, with their bullshit lies that these are heavy polluters, and as such these power stations are somehow responsible for the normal changes in the climate and the weather.
What is even worse, is that Australia exports its coal to countries such as China and India where there is no effort to control the “pollution” from their power stations. The Watermelons want to shut down the coal mining industry. If this happened then this would hurt the Australian balance of trade. The watermelons have already severely affected our live meat exports to countries such as Indonesia and the Middle East. It is as if they also want to shut down the rural industry as well. All this because they live in an ideological vaccuum.
If the bitch of a Prime Minister is not stopped, and if the Greens are allowed to continue to hold the country to ransom with their nonsense, then the consquences for the economic well-being of Australia will be absolutely dire. This is because those policies are affecting the industries that actually export product to other countries. We need to have exports in order to pay for our imports. The proposed carbon tax will also harm our exports, making the Australian products too expensive on the open market.
The ABC news site is running with a story that mortgagees, that is home owners and others who have a mortgage will soon be hit with higher interest rates because of the continuing global financial crisis.
Up until now, Australia had been somewhat isolated from the crisis. In fact I had argued that the “stimulus” in 2008 was totally unnecessary because Australia did not have a problem – it was a problem for the USA and Europe at the time. I should add here that my husband was one of thousands made redundant or who lost their jobs in the November (his redundancy was delayed until January 2009) of 2008 as some companies such as QANTAS responded to their own crisis needs.
Australians are being hit by a rather stupid Federal Government who wants to increase our taxes over non-existent climate change (they do not seem to understand that it is called “weather”). As a result we are being burdened with the likelihood of a new carbon tax that will cause an increasing amount of stress and strain on families. Many of us are also burdened by the introduction of a flood levy that covers the butt of the Queensland government because it does not have disaster insurance. If tha levy had been a fair one, then the burden would be shared by all taxpayers. Well it is not, and it was a tax on the middle class a la the usual Marxist pap.
This is what the ABC has to say about the coming interest rate hikes:
Analysts say the increasing cost of funding for the banks will mean higher interest rates, creating another headache for consumers already under pressure from rising rents and utility prices.
Investors bailed out of banking stocks on Monday morning, wiping $8 billion off the banking index.
They are concerned that bank profits are coming under pressure from the rising cost of sourcing wholesale funds offshore, particularly from Europe.
James Rosenberg, a private client stockbroker with Macquarie Bank, says the whole banking sector was affected by the bailout.
“I think ongoing issues in sovereign debt, particularly in the Iberian and Mediterranean nations, are leading to a view that there will be a scramble for wholesale funding,” he said.
“And given the Australian banks have a wholesale funding gap, the costs of it will be putting them under pressure and we’re seeing a pretty broad sell-off across the sector.”
The Australian banking sector may not be under threat yet, but the risks remain for homeowners.
Mr Rosenberg says the banks have a history of passing their cost increases onto customers.
“[The] simple fact is that Australian banks have to source a lot of their funding offshore,” he said.
“As the rises in that funding cost go on, some of it is often passed on to shareholders and some of it to customers.”
He predicts mortgage holders will be hit by a sharp rise in interest rates.
“There has been quite well-publicised history recently of banks passing on rate rises over and above the Reserve Bank rises,” he said.
“That’s because they don’t source their funding primarily from the Reserve Bank; they’ve sourced a lot of it from overseas.
If this report is correct, and there is yet another hike in mortgage interest rates, because Australian banks are sourcing gap funds from overseas, and having to pay higher interest for those funds, then this will be yet another sign that we are hitting a period of stagflation.
The measures taken in 2008 are now starting to come home to roost. This is because the Government borrowings have increased and the Government budget is in deficit instead of surplus. This is due to the wasteful spending which is still not being brought under control. Giving $900 tax rebate to people who do not pay taxes was not going to help a non-existent problem in Australia. The schools building program is well over budget due to the misappropriation of money (what has been built for the money expended is very small i.e. the builders were overcharging for their services). The Insulation program was a total disaster and a bungle and there was a lot of waste – there has been some clawback on the money expended. The Solar panel installation program is also a debacle and with some of the same problems associated with the insuatlion program – unscrupulous people cashing in on the free money. The NBN network rollout is another disaster in the making, especially when it is more than likely that there will be a very slow uptake for the services (the pricing so far is very high).
The end result of these disasters and bungles happens to be that we Australians will be paying for the Government waste through our taxes, but we will be paying a much higher price as stagflation begins to take hold.
This is further evidence that the mistakes of the Whitlam government have been repeated with steroids, and that as a result of these mistakes Australia is about to enter a period of prolonged stagflation. Once the increase in interest rates begins to hit, one can expect further increases in prices leading to higher inflation, followed by an increase in strikes and demands for higher wages, as more and more Australians will find themselves floundering because they are being squeezed.
None of this would have been necessary if the government had been one that was committed to a balanced budget. However with the ALP in charge, and a Marxist as Prime Minister, the aim of a balance budget is nothing but a pipe dream.
Prior to the election of the Rudd Government and the usurping of the Gillard government, the Australian economy was doing reasonably ok. The Howard government had delivered a budget surplus. It has taken a very short time to see a complete reversal of this situation. Specifically, Andrew Robb points to the billions that have been wasted on a “stimulus” that was not needed in the Australian economy.
Andrew Robb, the Opposition Finance spokesman predicts that the budget deficit will be a lot higher than suggested by the incumbent ALP government Treasurer, Wayne Swan. From Swan we can expect to hear the tired old and lame excuses as to why it is necessary to impose a draconian budget. From Robb, you will hear that it is the government waste that is the cause of the problem, and not the excuses offered by Wayne Swan.
My point however, is that given the state of the economy when the Howard government was defeated, any downturn is the responsibility of the treasurer Wayne Swan, as well as Kevin Rudd and the Marxist Julia Gillard. The money that has been wasted on the school hall BER is staggering, as is the money that has been wasted on a number of other projects that were nominated in the name looking like a green frog.
When I began this blog, it was with the purpose of looking at world-wide situations that was leading me to the conclusion that what we are witnessing is a repeat of the conditions that led to the prolongation of the stagflation that hit in the 1970s. I have been looking at the prevailing conditions, and attempting to compare these conditions with those that existed just prior to the period when stagflation was initially recognized by economists in the 1970s. There are many similarities that can be considered in this comparison. In particular I am concentrating on the impact of government spending wastage upon the economy as a whole. I have looked the ongoing crises in a number of countries in Europe. The most moribund of those countries is Greece, where the people have a very real attitude problem and seem unwilling to accept the necessity of austerity measures. I have not covered the problems in the USA, and have touched on a few of the problems in Australia. My perspective is actually an Australian one, and I am specifically wanting to compare the spending excesses of the Whitlam government to that of the KRUDD/Gillard governments. At the same I want to recognize that these difficulties are indeed world-wide, just as they were in the 1970s.
At this point in time there is still one indicator that is missing when it comes to comparing the situation that existed in the 1970s to situation that we are experiencing right now – it is high wages driven by inflation. Otherwise, there are similar indicators in 2011 that we had in the 1970s. Here is a little bit of a checklist:
Socialist government – check.
Out of control spending – check.
Increasing inflation – check.
Oil shock – check.
Increasing interest rates – check.
The uncertainty that is being experienced by business at the current time is based upon things like the threat of a mining tax as well as a most unnecessary carbon tax. Fancy having to pay a tax on breathing!! The uncertainty has led to a downturn in the economy.
Australia has experienced a very difficult year with all of the flood disasters around the country. In fact the last time that Brisbane was flooded as severly as this year was in the 1970s!! All the same we Australians should not be hit by an extra tax to pay for the Queensland government not having insurance for flood and cyclone hit regions. The Federal government should have been able to find the funds via what is collected from the GST. The funds should have been found by diverting away from the expensive and wasteful NBN project.
It is my contention that the reason that the stagflation of the 1970s was prolonged was the wastage of government expenditure at that time. It is also my contention that should Australia slip into a situation of stagflation again, then it will be the same kind of government expenditure wastage that will be responsible.
There is something strange going on at the moment. For the first time in my lifetime, the USA is on the brink of being forced into Marxism. I am not going to beat around the bush, and I will name the beast as Marxism. What is so strange is that this is like deja vu, but only as it relates to Australian politics. The issue is precisely the same one that was controversial in Australia in 1973 – universal health cover. There were other issues, such as the out of control spending of the Whitlam government, that also seem to be reflected in everything that is going down in the USA. Or so it seems, because it is like “everything old is new again”, just like in that song…..
As I continue my topics, I hope to be able to find information off the Internet that will shed light on the Whitlam years in Australia, and I hope without the hysterics that surround some of the situations that arose at the time. I remember the Whitlam government because I was on the brink of adulthood and I was studying economics and related subjects during the Whitlam years. I remember the whirlwind of spending – health, welfare, education, regional development… and the list goes on. I remember the scandals that erupted, and the final one – the Kemlanhi affair – that in the end helped to bring down the Whitlam government. I remember the fuss when the Opposition parties in the Senate withheld Supply, which brought on the last crisis that culminated in the sacking of the Whitlam Government by the Governor General. I remember the public servants getting their knickers in a twist with all of their protests over the “sacking”. In fact, who can forget when each year the ABC gets its lather going by remembering this “incident” with their rose coloured glasses firmly planted on the face.
From the political point of view, the one thing that is overlooked by the Australian lame stream media is that the people did speak, and give their view at the ballot box. Gough Whitlam was defeated in the election that followed the sacking by the Governor General. Malcolm Fraser had formed a caretaker government until the ballot could be held, and “we the people” spoke, with a resounding landslide victory against Gough Whitlam and his government.What the ABC and cronies do not tell however, is that in some areas of Australia the news was not greeted with anger, but with joy. In fact when I heard the news I was “dancing in the streets”, happy in the knowledge that Whitlam had been sacked and was no longer causing havoc as far as the Australian economy was concerned. Most of my neighbours were equally happy with the news, and so despite what the Australian lame stream media continues to portray about these events, there is another untold side to the story on the sacking of the Whitlam Government. We did get rid of the closest thing we had to a Marxist takeover in Australia since the second world war.
Even though we managed to get rid of Gough Whitlam, it would seem that people soon forget the kind of devastation that comes from these Marxist policies. Also, younger people who have had no knowledge of what really took place are on the voting rolls. They only have the version of events as depicted by the Australian lame stream media. They are unaware of what in fact took place, and why it was that the majority of the voters kicked Whitlam out. As a result, we find ourselves in a similar predicament today. Kevin Rudd seems to be intent upon having a reputation as a big spender that is far worse than that of Gough Whitlam. He has spent unnecessarily on a “stimulus”, providing money for pork projects and schemes that are both foolish and wasteful. (these projects include the insulation debacle, as well as the solar panel debacle that is still brewing and about to blow up). Under Malcolm Fraser, Bob Hawke, Paul Keating and John Howard Australia had prospered. Yes we had some hard times, especially in the 1980s, but with the introduction of the GST the Australian budget went into surplus – then the Rudd Government was elected and the surplus very quickly disappeared due to the wasteful policies that have been implemented.
From the analytical point of view there is much study to be done. One of the things that marked the Whitlam years, and also the Fraser years (a lag effect) was stagflation. We had high unemployment, high interest rates and high inflation. The stagflation was prolonged (which explains why it affected the Fraser years) which meant that it took Australia a long time to recover from the excesses of the Whitlam government. Some of the measures taken by the Fraser government and then again by the Hawke-Keating governments were painful at the time. We had very high interest rates. During that period we could get a high interest yielding term deposit account for something like 17% p.a. It also meant that the mortgage interest rates were high. By 1986 we saw interest rates reaching more than 19% p.a. which was extremely painful for new homeowners (we purchased our first home just before the interest rates rose steeply but after the period where some homeowners had their interest rates frozen, so yes we got hit by the high interest rates).
For the first time since the failure of the Whitlam Government Australia has a government that could be described as Marxist. This time the policy pursuits include the attempt to foist cap n tax (or crap and tax) upon us. The thing is that initiating legislation that will set up hedge funds for the selling of greenhouse licenses is going to do zip for pollution. On top of that AGW has already been proven as a fraudulent theory, but Rudd will not give in and let it go.
During the Whitlam years Australia had its battle over healthcare legislation and health insurance takeover. You could say that the doctors did have a minor win on the subject because a complete takeover did not happen. However, what we have is in my view disgusting. We do not need government determining how much can be paid to doctors for their fees. The artificial fee that is imposed actually makes it more expensive to see a doctor or get a medical service than if the government had no say in the subject. It really is a joke, and yes the out of pocket expenses are quite high, especially when the government refuses to recognize a procedure such as the thin prep which is better than the Pap smear for detecting cancer.