A world in economic crisis

The severe economic consequences of the imposition of a carbon tax

Posted in ALP, stagflation, watermelons aka Greens by Aussie on July 2, 2011

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.

 

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An economy that is anaemic

Posted in Cap and Tax, stagflation, unemployment, watermelons aka Greens by Aussie on June 5, 2011

The economy in the USA remains more or less moribund. The official unemployment rate has once again increased to 9.1%, but of course the hidden unemployed – those who are no longer looking for work – means that the unemployment rate is a lot higher than the 9.1%.

According to this report, Larry Kudlow has a few things to say about the state of the US economy as a result of the latest figures. It is anaemic. Kudlow actually identifies a few factors which were present in the 1970s when we went through a period of prolonged stagflation:

“We’re not creating jobs,” he said, adding that “the energy spike, the energy price shock and the commodity price shock is basically eating into the economy.” For this he blamed the Federal Reserve and stimulus spending.

Read more: http://dailycaller.com/2011/06/03/economists-say-slow-economic-growth-evidenced-by-jobs-report-is-becoming-more-problematic/#ixzz1OOXGrIxL

There are at least 2 factors that he mentions that were considered a reason for the prolongation of the stagflation in the 1970s:
 
1. the oil price shock (there were 2 of those in the 1970s)
2. the energy spike
3. the commodity price shock
 
I note that he also blames the stimulus spending and the policies of the Federal Reserve. I agree with Kudlow in this instance. It is my belief that the stagflation of the 1970s was prolonged because of wasteful government spending, together with the other factors that were outside the control of any one country.
 
However, when you look at the factors he named, there is something that has struck me, with regard to the American situation: the oil price shock in the USA is a result of the deliberate policies of the Østupid Administration. The refusal to grant offshore leases, and the locking up of land that is oil rich has meant that these resources are not being mined, which in turn has been leading to an increase in world oil prices because countries without oil reserves are scrambling to obtain oil. 
 
The market for oil is one that is termed an oligopoly, that is the price is determined by a cartel, known as OPEC. It was the decision making of OPEC that caused the first oil shock, and the second was due to things like the takeover in Iran, followed by the Iran-Iraq war.
 
The next factor is that of the energy spike, and again there is a man-made element in that spike. Once again it is the activity of the watermelons aka the Greens, that is helping to cause the situation. It is the climate change crap that is causing governments to re-evaluate energy policy and to implement expensive and useless technology such as wind power and solar power. (The solar power is probably less useless than wind).  Those policies have also led to a rapid rise in the price of energy as some sources of energy generation are being shut down, and replaced by the more expensive alternatives. 
 
The commodity price shock sounds more like a description of inflation, which is on the rise in most countries, due in part to government policies relating to energy.
 
The stiumulus spending was never going to work because it was always the wrong remedy for the situation that had developed in 2008. A government led stimulus like we saw in the USA and also in Australia was nothing more than an exercise in pork-barrelling on steroids. In Australia we had the government wasting a budget surplus by giving money to people who had not paid taxes in the first place, whilst the middle income tax payers received no relief, and we also had things like:
 
1. the failed pink batt program (it caused fires and deaths);
2. the overpriced and failed schools BER program ( this one is really bad)
3. the white elephant NBN rollout which most householders will not be able to afford.
 
One of the problems that I see with the “stimulus” is that money was not being injected into the economy via the private sector, which led to government competing with the private sector for the investment dollar. It also meant that government was spending on a bunch of useless programs that were meant to benefit most the regions were the government had the most voters. 
 
An additional problem that can be identified, especially in Australia, is the uncertainty being created by the determination to introduce the useless price on carbon. Those who are clamouring for the introduction of this iniquitous tax do not seem to understand that putting a price on carbon-dioxide is not going to change anything. The whole thing is nothing more than a scam.

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More on who should be the next IMF chief

Personally, I like the idea of Christine Lagarde getting the post. She has a well rounded career and she would bring a fresh face to the role. She has the respect in Europe as well.

However, there are some countries that seem to have other ideas about who should lead the IMF. As regards to the opinions of the Goose (Wayne Swan) from Australia, he is such a bad Treasurer that his opinions should not matter in the slightest. He is one person who has absolutely no idea about what is required in the top job. Put it this way, I would value the opinion of Paul Keating (a man I detest anyway) over that of the Goose.

If the person is chosen on merits then Christine Lagarde should remain the number one contender. Amongst the other names being mentioned is the failed politician UK Gordon Brown. It is well known that he aspires to this type of role, but, he does not have the support of the present leadership in the UK. On top of that Gordon Brown messed up the economy in the UK in both of his roles.

Socialism and pushing socialism through the IMF is not going to help the world’s woes. At present the IMF has a big problem in Europe. It really does need someone with credibility in Europe to head the group. Gordon Brown does not have that credibility. Christine Lagarde has the credibility. The people being pushed from Singapore and other countries do not have that credibility. There is one other new contender from Brussels.

Some of the issues that I have with the IMF structure includes the heavy socialist emphasis. The challenges of the eurozone has meant that there has been a need to catapult some of the present ideas. Keynesian economics will not work in a time of stagflation. This is the lesson that should have been learned from the 1970s and the 1980s when the stagflation was prolonged. There is a need for a different set of responses to the crises that occur.

For too long Europe has turned to socialism (which is not quite the same as Communism) in order to offer a raft of welfare benefits to their communities. What most of these governments have forgotten is that there is a need to have people working in order to gather taxes, and there is a need for business and industry in order to have people working. Policies such as high taxes on business do not work because in the long term employers make the decision to leave the marketplace. When this happens the consequence is a drop in tax revenue as well as higher unemployment which in turn leads to higher welfare benefits.

Europe also has another problem that desparately needs attention: open borders attracts the wrong kind of immigrants. This can be seen in countries such as Spain, France, England and Germany, as well as in Norway and Denmark. These immigrants see this as an opportunity to place their wives on welfare, and they soak up all of the other welfare state benefits such as free medical, free education etc. etc. If this is not kept under control, inevitably it leads to a break-down in the whole system. At the root of this problem is taxation, or rather taxation receipts.

Under Dominique Strauss-Khan the IMF has steered a number of European countries towards putting in place austerity measures that are supposed to bring about a restructure of their economies. Those governments can only be compliant if the people are compliant and stop their protests that cause disruption, and in the instance of Greece, become extremely costly in terms of property lost, as well as lives lost due to the riots. The Greek attitude has not been conducive to the necessary reform required.  Greece is the typical example of a country where the expenditure on welfare outstrips by a long shot the taxation receipts, but the lazy Greeks do not seem to understand the implications of their own bad welfare system.

I am not against some form of welfare buffer for the most vulnerable in the community. There is a need to protect such individuals. I am not against short term unemployment benefits for those who are able-bodied. I do think that government needs to have other structures in place that will help the unemployed find work. What I am really against is the expenditure of government funds on projects such as wind farms that are inefficient and will never deliver according to government expectations. The windfarms do not increase employment, but decreases employment in some sectors.

The watermelon policies and the claims regarding AGW or climate change need to be challenged, and governments everywhere need to stop wasting money on bogus research. This also means that I am against the use of IMF funds going third world countries, where such funds would only be wasted upon dead in the water projects whilst those third world countries continue to purchase arms and kill their own people.

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A crisis of the future? How the Watermelons aided China’s monopoly over rare earth minerals

Posted in China, Japan, rare eath minerals, watermelons aka Greens by Aussie on October 6, 2010

Recently I noticed a news report relating to China using its monopoly over rare earth minerals to put pressure upon Japan over disputed territory. Specifically, the Japanese won the territory during the Sino-Japanese war.  The incident that has sparked off a confrontation was related to a Chinese boat that had strayed too close to the islands. As a result of the action taken by the Japanese the Chinese have decided to refuse to ship to Japan rare earth minerals that are so necessary for the manufacture of electronics components such as LEDs etc. etc.

The Chinese would not have this monopoly except for the lunacy of the Watermelons aka the Greens.  As a bit of background here, according to Forbes, which has a really good report on the issue, the Chinese has this monopoly because the environmentalists had succeeded in shutting down the existing mines in the USA, and had successfully shut up millions of acres of land where mineral exploration could have yielded a rich deposit of these same rare earth minerals.

What is rare earth?Forbes states it this way:

Rare earth” refers to a collection of 17 elements from the periodic table, with Star Trek-sounding names like holmium, europium, neodymium, and thulium.  They tend to be found together, and exhibit similar chemical properties that make them useful — and in many cases vital — for a whole host of high-tech applications, such as superconductors, magnets, and lasers.  Rare earths are essential ingredients in many emerging “green” technologies, including wind turbines and batteries for electric cars.  A lot of advanced U.S. military hardware, including tank navigation and naval radar systems, also depends on rare earth-based components.

The last mine in the USA was shut down in 2002. For the watermelons the closing of that mine was a victory. However, in 2010 it should be seen as a disaster. The policies of the watermelons has aided and abetted the Chinese in having what is a near monopoly on rare earth. Considering the advancement in technology, as well as acceding to watermelon demands that we seek out new ways of generating electricity via the expensive and not so viable wind farms and solar panels, the reliance upon a near monopolistic source of supply is quite dangerous to the strategic requirements of most other nations.

The shift from manufacturing production in the USA (UK, Australia and Europe) to India, China and other South-East Asian nations is not a good move. What if the Communist Chinese became aggressive again?  The rare earth elements are required in items that are used for strategic defense. On top of that the shift in the manufacturing base has left millions of Americans unemployed.

There is no doubt that many of the watermelon policies must be reversed – and the sooner, the better. There needs to be a move to allow the rare earth mines to be opened and to be operational again. At the same time there needs to be a reversal on all those acres of land that have been locked up as reserves etc. so that the USA will not be as dependent upon other nations for oil, gas, and rare earth minerals.

I see this situation between China and Japan as a crisis in the making. If the monopoly situation is not reversed, and if we cannot reverse the watermelon demands relating to things like the manufacture of wind turbines and solar panels (which are manufactured in China rather than in say USA or Australia) then could be severe consequences in the long term.