Export volumes have not risen so far this century. Export prices have risen — that’s the famous “terms of trade” in action — but when this rise stops, Australia’s Current Account Deficit (CAD) will be unsustainable.
John Edwards is an old (well oldish) economic warrior who worked for Paul Keating in his prime. Edwards has seen the CAD bite a Labor government on the bum, and he is alert to this possibility recurring. Edwards’s paper will be released by the Committee for the Economic Development of Australia (CEDA) later today and we may comment further.
But it is worth remembering that history repeats itself, the second time as farce.
Comrade Rudd has apparently pledged to avoid too much fiscal folly and will not be matching the burst of cash for good causes he expects from the Howard Government. Gadzooks, another fiscally conservative Labor leader, like Paul Keating in his final years. A fiscally profligate Coalition versus a fiscally conservative Labor Opposition, with an electorate playing mind games with both parties. What was that crack about tragedy and farce?
In Keating’s time — until his fiscal conversion — it was government budget deficits that drove the CAD. Now, it is the household sector that is running the big deficits and building debt. This is “consenting adults doing their thing”, and so, in one view, is a far more benign source of growth of debt.
The interesting question is whether Comrade Rudd is fighting the last war. And if he is, will the electorate see this and re-elect a new age, (household) debt-friendly Coalition.
Finally, Henry is happy to present a ripper article on global warming:
There is an insidious source that has been ignored by science up to this point –mobile, dispersed and covering much of the Earth’s land mass, although it can be found on water at times. It is almost impossible to halt its hunger for carbon-based fuel, although it can be legislated, taxed or forced to comply by various means. This source today continues unabated and utterly oblivious to its horror. Scientific manipulation appears useless in its growing size and diversity.
This source is living, breathing man or woman. In other words, you are guilty. Now, before you disregard the Malthusian argument and use this manuscript to generate additional carbon dioxide, let us look at the data.
Read more at Henry Thornton.