What is it about all these expert commentators who keep raving about opinion polls and political strategies as if Australia somehow won’t get sucked into the vortex of a global depression and massive sovereign debt defaults?
This is Possum Comitatus in Crikey yesterday:
Looking at the Essential Report from yesterday — which was probably the best poll undertaken in the last 12 months by any pollster — the magnitude of how wrong the Coalition not only got the stimulus package, but the broader GFC starts to become apparent.
And this is what a puzzled Insiders host Barrie Cassidy asked Dennis Atkins on Sunday:
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My question on the Coalition is — okay, they voted against it lock, stock and barrel — but who were they going into bat for, who were they representing?
Hello! The Coalition was absolutely right to oppose the reckless debt binge which will only heighten the risk of an Australian sovereign default along with massive Kennett-style spending cuts and tax increases.
We’re now facing a global economy that will contract by 10-20% given the leverage in the system. Total US liabilities are a frightening $US56 trillion with the government component only $US12 trillion. That can never be paid back and borrowing more just delays the solution and increases the size of the inevitable default.
Every day we hear different stories about places being worst affected. The AFR editorialised about Japan today and Glenn Dyer yesterday pointed to the massive liabilities in Russia and Eastern Europe in Crikey.
Try joining the dots. It’s clear that the vast majority of the global banking system will be nationalised. We’re part of this because Australian bank liabilities and deposits have been guaranteed.
With the global banks having huge exposures to weaker countries with falling currencies and huge borrowing requirements, the equity in those countries will be wiped out in what is going to be one gigantic debt for equity swap.
This will leave government backed banks in strong countries controlling vast swathes of assets in weak countries. The Australian banks, for instance, will have huge influence over New Zealand.
As all this happens, the challenge will then be avoiding wars, riots and revolutions.
For instance, the British Government already has enormous influence over many Australian companies with loans owing to the now nationalised HBOS and Royal Bank of Scotland.
Look no further than the teetering Asciano, which controls vital Australian businesses such as Pacific National and Patrick Stevedores. Asciano is being advised by RBS’s ABN Amro division as the British taxpayer attempts to recover up to $500 million in loans.
The Swiss government at UBS and the Germans at Deutsche Bank are doing the same globally, as are the Americans through the likes of JP Morgan, Citigroup and Bank of America
Ultimately, the world’s leading powers will need to get together and collectively wipe out the excess credit in the system. And that also means US sovereign debt, which is being piled on at a ridiculous level.
The trick here is to recognise the problem and move swiftly to complete this global debt for equity swap and then slowly sell all the government controlled assets back into the private market.
Given that the process has and will continue to wipe out much of the world’s retirement savings, governments will need to step up with state pensions funded from the progressive sale of those nationalised assets over time.
In the context of all this, why would you voluntarily surrender your balance sheet strength with $22 billion in reckless cash handouts over a four month period? It’s time the political pundits awoke to the disastrous tactics of the Rudd Government and their debt-addicted state government mates.