Kevin Rudd’s Labor Government May Face Economic Problems Due to US

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How about some reader mail? One reader has put a lot of thought into the possible similarities between Kevin Rudd and James Scullin, Australia’s Prime Minister in 1929

“For well over two years, on my website, I was suggesting that John Howard may suffer the same fate as Stanley Bruce in 1929 when he lost his seat over his industrial relations laws – cp. 1926 and 2006

“Not only is the Scullin Labor Party win reminiscent for Rudd so is Whitlam’s. Below is an extract from my website in this regard:

“The Hawke boom is the primary rhyme for viewing the Howard boom, but the Labor bust associated with the world recession of 1990-91, becomes the tertiary rhyme behind the primary Labor bust associated with the world recession of 1974-75 and the close secondary Labor bust associated with the 1929-33 world depression for viewing the coming Labor bust associated with a world depression…

“Kevin Rudd’s election win in 2007 may have ominous “rhymes” with Gough Whitlam’s election win in 1972 and James Scullin’s election in 1929.

“The Labor party defeated Conservative parties and came to power just as the American post-war booms – 1921-1929 and 1949-1973 – were about to go bust. The Great Depression of the 1930s and the Great Stagflation of the 1970s were arguably the primary reason for Labor being in office for just over 2 years and just under three years respectfully.

“The nominal high in the American blue-chip sharemarket index the Dow Jones Industrial Average peaked six weeks before the Labor took office in 1929 and the Dow peaked four weeks after Labor took office in 1972.

“The fortunes of the Rudd government may therefore depend on the American financial sector. The nominal high of the Dow is likely to occur over the next two years, if it has not occurred already. If “Wall Street” is able to weather the 2007 crises as did in 1927 and 1998 and the Dow nominal peaks in another sharemarket boom then this may be favourable for the longevity of the Rudd Labor government.

“Kevin Rudd is inheriting an economy supercharge by a commodities and stockmarket bubble. This is similar to George Bush inheriting an economy supercharged by the dotcom boom. Clinton and Howard enjoined the bubble years but did not experience, in office, the fall-out from the bust. Rudd to follow Bush?…

“NB. The Scullin (1929) and Whitlam (1972) Labor victories occurred at the end of American booms while the Hawke (1983) victory occurred at the beginning of an American boom.

“NB. The end of the Gold Standard was sealed by the Great Depression; the end of the Bretton Woods quasi-gold standard was sealed by the Great Stagflation and the end of the American Dollar Standard – dubbed Bretton Woods II – will be sealed by the coming Great Depression.

“The Rudd victory, at the end (?) of the post-Cold War boom is similar to the Scullin and the Whitlam victories, at the ends of the post-WW1 boom and the post-Cold War boom respectively.

The above three wars are turning point wars in the Future Watch “Anglo-American Hegemonic Cycle”, with 1787 as its chosen starting point…

“WW2 begins at an upwave of the cycle while WW1 and the Cold War end at the end of the first stage of the upwave. 1815 and 1865 also marks the end of the first stage upwaves.

“The post WW1 and post Cold War booms will end in deflation, as opposed to the end of the post-WW2 boom of hyper-inflation.

“The end of the post-WW2 boom was not, as mentioned above, at the end of the first stage of the upwave in the Anglo-American Hegemonic Cycle. The second stage – the asset price inflation stage – results in the debt-saturation point being reached in the cycle – which then contributes to deflation. The American Total Credit Market Debt as a Percentage of GDP in 1973 doesn’t rate compared to today and 1929. This along with the inflationary imprint of the Cold War, were arguably, two main reasons why the boom post WW2 boom ended with inflation.

“This implies that the ‘rhyme’ for the severity of the post Rudd election downturn is the 1930s and not the 1970s. In an interview in October on the ABC Dr Steve Keen from the University of Western Sydney pointed out “the levels of personal debt, as a proportion of the economy are now twice what they were during the 1930s”.

The Australian banking sector in the 1920s was also conservative due in part to the memory of the 1890s bust. The debt levels of today spell big trouble. Taking the 1890s and 1930s into account the Next Great Depression is going to combine the worst features of the last two Australian Great Depressions.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. I never liked “ALL THE MONIES OF THE WORLD”. because, once the politicans turn away from speaking and dialouge, they start running the printing presses…and there’s no human way that government regulation can eliminate boom busts cycles…

    well the chinese invented paper money long before the west so i doubt americans have any say in australians future.

    and in the early eighties the first modern breakup of a hyper inflationary society was argentina in the early eighties.

    i suppose it’s like any person would do… throw away the credit cards, balance the check book, and get back to work and earn instead of speculating…

    or as the brother of brothers would say: “go forth and sin no more”

    taxation is theft
    inflation is a ‘hidden’ tax

    buy a radiation monitor ;
    understanding gamma radiation is the key too unlocking unlt’d solar energy and also the key to spacetravel…

    Reply
  2. In light of today’s election of a new Liberal Party leader I have added this to the above comment:

    Perhaps the Liberals may once again lose an “unlosable” election. A rhyme involves the Federal upper-class Sydney electorate of Wentworth. After the Liberals, under Andrew Peacock, lost the 1990 election to Labor, John Hewson, a founding executive director of the investment bank Macquarie Bank became leader of the Liberal Party.

    Now after the Liberals, under John Howard, lost the 2007 election to Labor, Malcolm Turnbull, former chairman and managing director of the investment bank Goldman Sachs Australia is a candidate for leader of the Liberal Party.

    It is possible that we have two former merchant bankers and journalists, with university degrees gained in Australia and overseas, from the electorate of Wentworth, both elected to parliament in the preceding elections, leading the Liberal Party in times of recession during a Labor bust?

    “Shortly after the leadership change, Hewson made up ground on the Hawke government in the opinion polls as the Australian economy went into deep recession and unemployment skyrocketed…

    “At the March 1993 election Hewson was defeated by Keating, losing what many had described as “the unloseable election” for the Liberals” (John Hewson, Wikipedia)].

    Reply
  3. Kevin Rudd is a stooge

    Joe Rossi of RPData
    May 31, 2010
    Reply
  4. KRudd might be a stooge but now we have Julia Gillard AKA Bozo the Clown. What will this bring, more spin, desperation to win at all costs, a gigantic ego and most of all a nauseating drone voice!

    More broken promises to follow! Hopefully voted out of office.

    Joe Rossi of RPData
    June 24, 2010
    Reply
  5. The Labor Prime Ministers’ Curse

    In previous posts I have presented most of the information below, but with a new PM, an update is provided.

    Using history as a guide to the future, the 1930s and 1970s are arguably the best decades to view the present. This is argued in the article “1930s, 1970s and Today – Contraction, Expansion and Contraction?”.

    The Australian perspective may be viewed through the “James Scullin, Gough Whitlam and Kevin Rudd Rhyme”.

    With the end of Kevin Rudd’s prime-ministership, it may alternatively be termed the Labor Prime Ministers’ Curse – the curse of coming to power at the end of post-war booms.

    Some of the similarities and differences of the times of these Labor prime minsters are presented below.

    James Scullin – Labor PM, October 22, 1929 – January 6, 1932 – 2 years and 2 full months in office.

    “Scullin had tried to grapple with the financial and social problems thrown up by the Depression but he failed. The Australian electorate was unable to associate Labor with financial expertise – a quality more readily seen in their opponents. Furthermore, the Labor Party had not been in power since 1917, and it came to the Treasury benches precisely when the profligate spending in the 1920s had begun to reap its fruit… Nonetheless, the inability of the Federal Government under Scullin to present to the electorate a carefully thought-out plan for economic recovery, even if it were defective, was a major cause of its downfall” (John Molony, History of Australia, (Ringwood: Viking, 1987), p.264).

    James Scullin came to power at the end of the post-World War 1 boom.

    The Dow Jones Industrial Average valuation and nominal peak occurred on September 3, 1929, six weeks before Scullin took office.

    The sitting prime minister in the 1929 election, Stanley Bruce, was the first PM to lose his seat.

    John Howard became the second prime-minister to lose his seat in the election of 2007. Both Bruce and Howard had surnames that are also Christian names.

    Scullin was succeeded by Joseph Lyons, a former minister in his government, who was then the leader of the United Australia Party.

    Rudd was succeeded by Julia Gillard, a minster in his government.

    Gough Whitlam – Labor PM, December 5, 1972 – November 11, 1975 – 2 years and 11 full months in office.

    “This recession, the end of one era in the international economy and the beginning of another, was fully global in scope. No Australian government could have withstood the shock of 1973-75. Accordingly, one cannot agree with those who argue that sources of the economic difficulty facing the Whitlam government after mid-1974 were fundamentally domestic or that if a coalition government had held office at this time the difficulties faced might have been avoided. Yet more here needs to be said. It was Whitlam’s great misfortune that he came to power at the moment when the postwar capitalist Golden Age came to an end. It was his great weakness that he lacked the political skills to prevent this misfortune from turning the last eighteen months of his government into a period of high constitutional crisis and low political farce” (Robert Manne, “The Whitlam Revolution,” The Australian Century, Edited and Introduced by Robert Manne, (Melbourne Text Publishing Company, 1999, p.204).

    Gough Whitlam came to power at the end of the post-World War 2 boom.

    The Dow valuation peak was in 1966. The nominal peak occurred roughly seven years later on January 11, 1973, five weeks after Labor took office in 1972.

    Whitlam was ‘dismissed’ from his prime-ministership by the Governor General in 1975 and then lost the election that followed.

    Rudd was, for all intents and purposes, ‘dismissed’ by his party in 2010 and an election is to follow.

    Kevin Rudd – Labor PM, December 3, 2007 – June 24, 2010 – 2 years and 6 full months.

    “Mr Richardson described Mr Rudd as “the unluckiest prime minister ever elected. There are few politicians who’ve lost popularity as quickly as Rudd but he’s had a shocking run of luck. You get elected and then the worst financial crisis in 80 years comes along…” (The Sunday Telegraph, Kevin Rudd unluckiest PM ever, says ALP hardman Graham Richardson, news.com.au, May 30, 2010).

    Kevin Rudd came to power at the end of the post-Cold War boom.

    The Dow valuation peak was in 2000. The nominal peal occurred roughly seven years and nine months later on October 9, 2007, eight weeks before the Rudd Labor government took office.

    The American ‘left’ political parallel is the “Barak Obama, Jimmy Carter and JFK Rhyme”.

    The Australian and American rhymes suggests that a Dow Jones high, in the expansion phase between the two contractions, is to occur in the future (cp. the Dow high of 1,014.79 on September 21, 1976 – 3.5% below the 1973 nominal peak – after the Nixon recession of 1973-75; cp. also the Dow high of 1,024.05, on April 27,1981, after the Carter recession of 1980, which preceded the Reagan recession of 1981-82); with Obama a one-term President; with a Hoover-like recession (1929-33) to occur in a future Republican Administration, in the aftermath of the bursting of the Government Bail-out Bubble.

    Reply

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