I'm going to do this briefly, since I should be working but...
Who is to blame for Australia's rising foreign debt?
The current Government blames you and me. It says:
We must work harder and smarter;
We must become more efficient and productive;
We must privatise government enterprise;
We must accept lower pay;
We must accept cutbacks in education and health;
We must save more;
We must be more competitive.
Dear Zahid : You said you'd provide sources, I'd love to see in what Coalition document this gem came from. Really.
For the last 20 years the current account deficit has been equal to the growth in bank credit plus the currency the government has printed.
Dear Zahid : The Government hasn't actually printed money since the 80's. :uhhuh:
Of the total growth in banking lending and currency, 94% is the growth in bank credit and only 6% is the growth in currency. It is the expenditure financed from these sources of funds that causes the economy to buy more than it produces and thereby bring about the current account deficits that raise foreign debt.
Dear Zahid : In simple terms, this is called "growth". "Growth" is good.
None of the Government polices to deal with the problem have had any effect.
Dear Zahid : Could you name any of those policies for me? I am just a retard after all. :uhhuh:
The current account deficit and our growing foreign debt can be prevented. The rules relating to the banking system can be changed so that we buy more Australian products, employ more Australian workers and pay off our debt.
Dear Zahid :
1) I don't know why your making this point again, since it was specifically said why foreign debt and the CAD are not a problem. Maybe you should try and rebut me and rorix?
2) Riiiiiiiiight. So you want to force companies somehow to employ Australian workers, and you want to force consumers to buy Australian products, since consumers and employers shouldn't have a choice in these things. You know what, you haven't actually explained why this foreign debt and CAD is a bad thing, why would we want to take such drastic measures? IT'S ALREADY BEEN POINTED OUT TO YOU THAT OUR CREDIT RATING HAS BEEN BUMPED UP TO THE MAX.
Oh btw, by changing the rules of the banking system, do you mean going back to the regulated, pre float period when Australians couldn't borrow overseas?
So subsidies AND pre-float. Hrrrrm.
But the Government, public servants and Reserve Bank do not want to know that they have a problem in the banking system. They have deregulated the financial system and they want us to think that the system is perfect. They would rather blame the people of Australia for the problems, than accept that they made a mistake. We, the victims of their policies, are being made scapegoats for their failures!
Dear Zahid : Where are those sources you promised? Why is deregulation of the financial sector a bad thing? What problems has it caused? Why are public servants like firemen, teachers and nurses responsible for this?
They do not want to consider the evidence. Unfortunately it is a fact of life that "the greater the impact of new information the more strenuously it will be resisted."
Dear Zahid : Evidentally you have't either since you haven't posted any. lollercoasters.
Many things have been changed in the economy but none has had any effect on this basic relationship between the growth of bank credit and currency and the current account deficit.
The money we earn enables us to buy as much as we have produced. We are entilted to the goods we buy because we have produced goods to sell. We do not cause the nation to buy more than it produces. The banks create more money or the government prints more money and this finances the excess spending. The money they create enables them to buy products to which they are not entitled. It causes the nation to buy more than it has produced. It causes current account deficit and causes foreign debt.
Dear Zahid : This is cute, but really, seriously, THE GOVERNMENT STOPPED PRINTING MONEY IN THE 80'S.
The Government should stop blaming the people of Australia for the current account deficit and foreign debt. It needs to look again at the rules that govern bank lending.
Dear Zahid : Please show me where the government 'blames' the people of Australia. Consenting Adults for all.
It needs to look at its own practices related to printing money.
THE GOVERNMENT DOESN'T FUCKING PRINT MONEY.
When the Howard Government took office, Australia's net foreign debt was $193 billion. It is now more than double that, $393 billion.
It has been pointed out that foreign debt is both, not the responsibility of the government and not directly influenced by government policy. It has also been pointed out that the Howard government has decreased GOVERNMENT NET DEBT BY OVER 20% OF GDP TO THE LOWEST LEVELS OF ANY COUNTRY IN THE DEVELOPED WORLD.
In the past two years alone, export earnings shrank by $10 billion as we borrowed almost $120 billion in new transactions on global markets to keep the big spending going.
Only 10 billion? This is despite the drought and the over-evaluation of the dollar? Wow. We are going strong. Improved terms of trade have been a help to us as well actually.
Since 1980, Australia has managed just three tiny trade surpluses and 21 often large deficits.
I was sure that some with YOUR intelligence would know basic Keynsian economics. *rolls eyes*. It's appropriate to run deficits during periods of poor economic growth and vice versa. YOU DO know that surpluses depress economic activity don't you? Also, I'm sure there were more than 3, though I don't have the stats with me atm.
Last year we ran up a record deficit of $24 billion, or 3 per cent of GDP.
I'd love to see where you got that from. The estimated underlying balance was 2.2 billion when the 03-04 Budget was released, then was calculated at 8 billion later in the fiscal year. Where'd you get THAT stat from?
Since 1997 our export growth has lost pace. From 1986 to 1997 we were an Asian tiger. Export volumes grew on average by 8 per cent a year and manufactured exports by 15 per cent a year. But in the past seven years, that average has crumbled to just 5 per cent a year for manufactures and 3 per cent for all goods and services. Since 2001, export volumes have fallen while import volumes rose 31 per cent.
Dear Zahid : Do you have any idea how good continued real GDP growth over 13 years is? It's a dream run, which has *hypothetically* been achieved by the micro-reform that you're so against.
Foreign money has been the fuel for our house price boom. In five years, the banks have lent out a net $329 billion for housing, but just $87 billion for business. Singapore and Korea borrowed heavily overseas to expand their industries. We did so to expand our houses.
Actually it was the first home buyers grant, and slashing capital gains tax. But think what you will.
They call it the "consenting adults" argument: if one person wants to borrow money and another wants to lend it, why should anyone else care? But economic opinion is swinging away from that view.
Remind me why its the governments problem that people borrow money. Oh yeah, quotes?
Foreign borrowing has inflated real estate values beyond sustainable levels, creating the risk of a bust that could bring down the economy.
The global markets will not keep lending to Australia indefinitely, and the transition could be ugly and brutal. At best, borrowing to consume more means consuming less later, implying a long period of lower growth.
That's why they upped our credit rating. Idiot.
