WHILE K Rudd and W Swan are talking up the Australian economy, and T Abbott and J Hockey are trying to quieten B Joyce, serious thinkers are prepared to write such things, about finance, that would make one have complete faith in Barnaby Joyce knowing what he is talking about.
Glen Stevens, when asked about Joyce’s warning that Australia might have to default on its national debt, said that it was “unlikely to happen”. He does not say categorically that it will not, or cannot, happen to
Australia.
Of the $1227 billion dollars Australia owes, some say that the net amount is about $650 billion because of our overseas investments, while another report states that Australian banks owe $635 billion dollars overseas which, if true, would almost make them technically insolvent.
In any case this debt is labeled “The National Debt” for obvious reasons. If part or any of the debt is owed by other than the Government, then its rightful place is on the balance sheets of those companies, or state governments.
Furthermore, some even argue (2gb radio talkback) that given the vast profits of companies like BHP-Billiton, Australia is well situated to pay the foreign debt.
It never occurred to them that the profits of companies such as BHP-Billiton belong to the shareholders (even if they come from some foreign country), and cannot be used to pay down other private or sovereign debt.
The OECD is getting concerned about the rising government debt as a percentage of GDP (OECD nations). In the year 2000 the gross government debt of all OECD nations was just on 70 percent of GDP. In the year 2011 OECD member nations will be able to boast that their gross government debt as a percentage of GDP had risen to 106 per cent.
Time Magazine, March 1 2010, and News Weekly July 25, 2009, are just two periodicals that address these problems to the public.
No one in government or those experts that advise governments will say who the debt is owed to, or how governments can rack up this kind of debt without even trying. Current account deficits, currency fluctuations, currency conversion, and uneven global trade are the main culprits.
I would challenge all those who are politicians, advisers, economists, and general apparatchik, that have access to your newspaper to put in print why.
1. Why, and how, have we created this huge debt.
2. How we can repay this debt.
3. Why the leaders of this country are unconcerned about the debt.
4. What role must the Reserve Bank play in Australia’s future.
5. To whom is this massive debt owed.
Apparently in Greece “the crisis has opened their eyes” is the comment of people who are the poor consumers, yet are agitating against what the government proposes to do try and pay the debt.
Standard and Poors warns: “There is hope that the square can be circled”, while the same realisation will have to come to governments across the developed world (that includes us).
But, they go on: “It is going to be increasingly hard to say there aren’t difficult choices to be made”.
The article (in Time) is concluded by the author saying: “Hopefully our political leaders won’t just skip town.”
Neil Forscutt
WILLOW TREE
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