Australian government debt (Federal) crossed the $200 billion barrier last year. In a few short years, then, the government has gone from a modest $20 billion surplus to a $200 billion debt. That debt is still small as percentage of GDP compared to the US, Japan, and the UK. But it's a lot larger than it was a few years ago...and once these things get rolling, they have a way of building momentum.
Incidentally, for you Poms out there, the UK has passed the £1 trillion debt level for the first time in its history. Government debt is now 64% of GDP. Well done Anglo-Saxons! But you'll have some work to do if you want to catch up with our homeland. US government debt is over $15 trillion and counting-more than 100% of US GDP.
You can see where all this is going, can't you? Systemic, chronic public sector debts in the Western world. Low productivity. Lazy people. Distorted incentives. Corrupt finance systems. Rot, corruption, putrefaction everywhere. Zombies running the show...zombies with no brains, but a bottomless appetite for the contents of your wallet and an increasing determination to strip you of your pride, dignity, and liberty in public places.
Pretty encouraging, isn't it?
But wait! We have reached an epiphany of sorts in the last week. We don't care anymore. About the zombies, the Greeks, the central bankers, the politicians, and the ne'er do wells. We finally realised they'll always be around.
Things might be a little worse now than in the past. And it may get worse still. But you're not going to change it. You just have to figure out how to live with it, survive it, laugh at it, and, when you can, punch it in the mouth if it gets too intrusive.
That doesn't mean we won't be analysing things in detail and figuring out what to do. But we've given up taking a lot of it seriously. Seriously...how long can you pretend that Greece will not default...and how long can you take each new round of negotiation seriously...before you realise it's all a big charade designed to delay and obscure a simple fact?
And what is that fact? The fiat-money-based global credit boom has gone bust. The Welfare State model is broken. Much of the world is broke and will face lower standards of living for many years as household and government balance sheets are rebuilt. A great many people will endure a lot of personal pain and privation because they were led to believe the world owed them something.
The golden parachute, so to speak, for Australian investors, is that while Australia has the same economic DNA as the UK and the US, and is subject to the same financial and cultural diseases and decay, it's also in the same economic ecosystem as China and India.
The Eastern ecosystem could replace the Western one. If it does, Australia can exist in a peaceful, prosperous, symbiotic relationship with those rising powers, if it adapts to the new circumstances of the global economy. Or it can fail to adapt and view its regional neighbours as predators.
But if you think we're taking this East-West passing of the torch business a bit too seriously, you should see what Warren Buffett is up to! The greatest investor ever, turned rent-seeker extraordinaire has serenaded 1.2 billion Chinese in honour of the Lunar New Year, celebrated on Monday.
In the Chinese calendar, 2012 is the Year of the Dragon. Is the Oracle of Omaha, a man who says he's still bullish on America, placing an each way bet on who will win the commanding economic heights of the 21st century? Or does he just like trains and ukuleles? More to come...
Regards,
Dan Denning
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by watcher7 on 25 January 2012:
“The Eastern ecosystem could replace the Western one.”
No it couldn’t and never will.
A key to understanding the working relationship of nations is seen in this Scripture:
"God shall enlarge Japheth, and he shall dwell in the tents of Shem and Canaan shall be his servants" (AV).
“he” refers to both God and Japheth.
This post concerns the Japhethic interpretation.
Modern Japhethic nations include Japan, South Korea and China; while modern Shemitic nations include Britain, America and Germany. (France is western Japhetic).
God’s design was that the Shemitic nations, one in particular, should provide the ‘umbrella’ that all nations could “dwell’ under in peace, harmony, and prosperity.
(Cp. the mythic idea of the ‘cosmic tree’).
"While most of the credit for Asian development rests squarely with Asians themselves, it is also irrefutable that no progress would have been possible without the intellectual framework and institutional infrastructure imported en masse from the West over the past century" (Shoaib Raza Naqvi, Asian Wall Street Journal, November 8, 1995).
“Virtually all the ideas, knowledge, techniques and institutions around which the world revolves came from the European theatre and its ocean offshoots; many of them came explicitly from England, which was the principle matrix of modern society. Moreover, the West is still the chief repository of free institutions; and these alone, in the long run, guarantee further progress in ideas and inventions... The sober and unpopular truth is that whatever hope there is for mankind - at least for the foreseeable future - lies in the ingenuity and the civilised standards of the West, above all in those western elements permeated by English ideas and traditions...” (Paul Johnson, “Offshore Islanders”, p.9).
A coming lesson of WW3 is that it should not be the Germans who hold that ‘umbrella’.
As mentioned in previous posts a German-dominated European superpower, enthused by a revival of Roman Catholicism, will arise out of the coming Great Depression and will provide, for a very short time, a time of great prosperity; but it will meet its match in the “Kings of the East”.
After the Great Depression of the Nineteenth Century (1873 to 1896) this happened:
"In 1897 the Kaiser, already in possession of Europe's most powerful army, had ordered the construction of a German High Seas Fleet. He had seen it from the start as a deliberate challenge to Britain's command of the seas, and so to the established order of things. One day, he told his admirals and constructors, it would be God's Instrument of Justice - 'until then, silence and work'. By 1914, the work was done, the silence broken, and as Europe burst like an abscess into war, Queen Victoria's Empire found itself challenged by equal force of arms for the first time since she had succeeded to the throne, almost eighty years before. The grand illusion was collapsing" (Jan Morris, Farewell the Trumpets, (London: Faber & Faber Ltd, 1998), pp.155-56).
The coming German-dominated superpower and her allies are going to punish, as “God’s Instrument of Justice, the Anglo-Saxon-Celtic and kindred peoples for abusing their position of responsibility towards themselves and the world.
By the way Ross I believe in a role for imperialism, at least over certain nations, but one that follows somewhat the thoughts reflected in this comment:
“An elite is needed, not to govern, but to enable the people to govern themselves” (Paul Johnson, Offshore Islanders, p.314); and this Scripture:
Mk 10:43 Not so with you. Instead, whoever wants to become great among you must be your servant,
A look at Globalization MK3, through its defeat:
Rev 18:11 “The merchants of the earth will weep and mourn over her because no one buys their cargoes any more-
Rev 18:12 cargoes of gold, silver, precious stones and pearls; fine linen, purple, silk and scarlet cloth; every sort of citron wood, and articles of every kind made of ivory, costly wood, bronze, iron and marble;
Rev 18:13 cargoes of cinnamon and spice, of incense, myrrh and frankincense, of wine and olive oil, of fine flour and wheat; cattle and sheep; horses and carriages; and bodies and souls of men.
Rev 18:14 “They will say, ‘The fruit you longed for is gone from you. All your riches and splendor have vanished, never to be recovered.’
Rev 18:15 The merchants who sold these things and gained their wealth from her will stand far off, terrified at her torment. They will weep and mourn
Rev 18:16 and cry out:
“ ‘Woe! Woe, O great city, dressed in fine linen, purple and scarlet,
and glittering with gold, precious stones and pearls!
Rev 18:17 In one hour such great wealth has been brought to ruin!’ “Every sea captain, and all who travel by ship, the sailors, and all who earn their living from the sea, will stand far off.
Rev 18:18 When they see the smoke of her burning, they will exclaim, ‘Was there ever a city like this great city ?’
Rev 18:19 They will throw dust on their heads, and with weeping and mourning cry out:
“ ‘Woe! Woe, O great city, where all who had ships on the sea became rich through her wealth! In one hour she has been brought to ruin!
(The coming European superpower will be the last manifestation of Nimrod’s Babylonian city-state).
You will note that in verse 18:13 that there was/ will be trade in the “bodies and souls of men”. The type for the Anglo-Saxon Celtic peoples in the future is seen in this WW2 plan:
"The Nazi German invasion of Britain would have not been a gentle affair. The captured German papers leave no doubt of that. On September 9 [1940] Brauchitsch, the Commander in chief of the Army, signed a directive providing that "the able-bodied male population between the ages of seventeen and forty-five [in Britain] will, unless the local situation calls for an exceptional ruling, be interned and dispatched to the Continent... In no other conquered country, not even in Poland, had the Germans begun with such a drastic step ...[the plans]... seem designed to ensure the systematic plunder of the island and the terrorization of its inhabitants ... Everything but normal household stocks were to be confiscated at once" (William L. Shirer, “The Rise and Fall of the Third Reich”, (Sydney: Random House Australia, 1998), p.782).
Bismarck famously remarked that political judgment was the ability to hear, before anyone else, the distant hoofbeats of the horse of history.
So it is very disheartening that humans being can’t learn the lessons of history; for those with “eyes to see” know we are destroying ourselves. The Anglo-Saxon-Celtic peoples are going to experience the worst horrors that world will ever see.
Enjoy Australia Day as it is likely that within twenty years, maybe a little longer, the Australia of today will no longer exist.
Comment by Rocket on 25 January 2012:
Imagine public servants losing their 12% super, 9 day fortnight and actually having to be productive. There will be riots in the streets.
Comment by Moray on 27 January 2012:
Re Comment Number 1. Stay off the drugs..
Comment by Ross on 27 January 2012:
Unfortunately watcher, any narrative that owes its existence to a body of work created by institutions committed to the "chosen ones" narrative leaves me cold.
I was reading Gibbon and his Decline and Fall of the Roman Empire this week and found his description of the radical Roman reaction to the Christian "sect" and the Jews quite usefull. He set about describing why Rome would not have continued its tradition of tolerance toward religious traditions of all manners within and beyond their own empire when it came to dealing with the Jews and Christians. His answer on the Roman elite's behalf delved into their intellectual view of Judeo-Christian intolerance and that ethnic group's failure to observe live and let live traditions and reserve in prosyletising.
The accounts of JC himself don't speak in an intolerant manner, but the degenerative institutional inertia regained the ascendancy and control of the narrative well before the Creed of Chalcedon.
Like Thomas Acquinas, I couldn't even nominally be a Christian without reference to the intellectual foundations of the Trinity observed by Aristotle.
Comment by Biker on 29 January 2012:
Watcher7's comments are no stranger now than they were back in late March 2009, when he predicted: "The peak to trough fall in Sydney house prices maybe anywhere from 60 to 80 percent, in the Next Great Depression..."
http://www.dailyreckoning.com.au/geithner-and-his-toxic-asset-bailout-plan/2009/03/23/
Comment by watcher7 on 29 January 2012:
“ ‘Now these always go well, and we know you like them,’ the auctioneer, Gary Murphy, says, referring to a one-bedroom flat in a large block in the Dublin Docklands. ‘You’ll look back at this day and think, I could have got that – it’s just so cheap,’ Murphy encourages, as the bidding reaches €110,000. It sells a few minutes later for €124,000; at the height of the Irish property boom in 2007, similar flats in the same block sold for €390,000” (Philip Watson, “Ireland at the end of the road”, telegraph.co.uk, January 14, 2012).
“Ireland’s landscape is dotted with empty and unfinished buildings, started during the decade-long real estate boom that ground to a halt in 2008. Commercial real-estate prices have fallen as much as 65 percent since the market peaked in 2007, according to CBRE, deterring developers from putting more unwanted properties on the market” (Dara Doyle, “Irish Move Into Empty Offices Escalates Bust Legacy Battle,” bloomberg.com, January 18, 2012).
A Dublin one-bedroom flat potentially down 68% and some commercial real-estate down 65% and the Great Depression hasn’t even started.
(House-price appreciation from 1997-2008, Ireland 193%; Spain 184%, Australia 163%; US Case-Shiller ten city index 104%).
Dow Jones up 5.24% in 2011, history was suggesting, especially with the Pittsburgh Steelers in the superbowl, a target of around 4.19%.
(In 2009 Dow up 18.81%, Steelers in superbowl, the target was 15.98%).
Steelers not in the 2012 superbowl, but hope is not lost as the Patriots are. Coach Belichick and quarterback Brady of the Patriots in 2012 will be attempting to match the fourth super Bowl win of the Steelers coach Noll and quarterback Bradshaw in 1980.
If the rise in the Dow of 2012 was to be in the ballpark of 1980 that would be in conflict with the suggested Future Watch top of the Dow around say 13,667 to 13,790 in 2013 - history would suggest that the October 9, 2007 high would not be topped before the next great depression.
But anything is possible in the Global Government Bailout Bubble.
So despite Romney losing in South Carolina he is still the preferred candidate for the Republican contestant for President in 2012 as per the betting on Intrade.
But while Intrade has Obama as the likely presidential winner Romney is given the benefit of the doubt, at this stage, as history suggest, that if the next great depression will begin soon, it would be in a Republican administration and that a former governor that ran and lost in 2008 would be the next American President.
But then history rhymes until it doesn’t.
And while the above maybe voodoo economics at least it insulates somewhat from conventional wisdom.
Comment by Biker on 30 January 2012:
Moray (27/01/2012) is definitely onto something here.
Ireland? You're raising my ire, son...