A “perfect storm” of fiscal woe in the U.S., a slowdown in China, European debt restructuring and stagnation in Japan may converge on the global economy, New York University professor Nouriel Roubini said.
“There are already elements of fragility,” he said. “Everybody’s kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.”
Nouriel Roubini is the New York University professor who came to fame as one of the dozen or so economists – including Australia’s own Dr Steve Keen – who predicted the GFC.
Mind you, he was running a little late. Dr Keen began publicly warning of a GFC in December 2005. Roubini issued his warnings from mid-late 2006.
Now he’s running a little late again, with this warning of a “perfect storm”.
Barnaby Joyce began warning of the risk of “economic Armageddon” nearly 18 months ago. And for exactly the same reasons – rising levels of public and private debt in the USA, and around the world.
It’s worth taking a minute or two to clearly recall just what Barnaby had to say.
From the Brisbane Times, October 23, 2009 (emphasis added):
The Nationals Senate leader Barnaby Joyce is openly canvassing an economic upheaval that would dwarf the current global financial crisis, triggered by the US defaulting on its sovereign debt within the next few years.
In unusually pessimistic comments for a senior political figure, Senator Joyce said the US Government was running such large deficits and building up so much debt that it was in a similar position to Iceland or Germany before World War II.
In a Senate estimates hearing on Wednesday night, he asked Treasury secretary Ken Henry what would be the implications of an American debt default for the Australian economy.
Dr Henry warned that canvassing extreme scenarios could alarm the community.
”I don’t mind discussing hypotheticals in general … [but] one has to be careful not to discuss publicly hypotheticals that are that extreme,” Dr Henry said.
”I don’t, myself, consider that outcome to be a high probability outcome, certainly not one that I would want to say much about in a public forum.”
”It is the elephant in the room,” Senator Joyce said. ”This is a huge risk that Australia faces. What is the game plan, what happens if it comes unstuck?
And from the Sydney Morning Herald, December 11, 2009 (emphasis added):
The Opposition finance spokesman, Barnaby Joyce, believes the United States government could default on its debt, triggering an ”economic Armageddon” which will make the recent global financial crisis pale into insignificance.
Senator Joyce told the Herald yesterday he did not mean to alarm the public but there needed to be a debate about Australia’s ”contingency plan” for a sovereign debt default by the US or even by a local state government.
”A default by the US means complete economic collapse around the world and the question we have got to ask ourselves is where are we in that,” Senator Joyce said.
His warning came as the Rudd Government ramped up its attack on Senator Joyce as an economic extremist…
Senator Joyce said that if the US recovered, global funds would flow back into North America. ”There will be only one way Australia will be able to keep funds here and that is by putting up interest rates, which will therefore bring real costs back to households,” he said.
”That is the first scenario, which is extremely bad for Australia. The worse scenario is where the US doesn’t repay its debt – the $2 trillion in debt it owes to the Chinese, the $1 trillion in debt it has to the Japanese and the $US1 trillion in debt to others – and then we are really nailed.
”The outcome is a shift away from the US dollar as the international trading currency and a shift to the Chinese yuan, and China becomes an immensely powerful player overnight.
”It’s the real financial crisis, and the real financial crisis will mean this preamble we have just had pales into insignificance.”
Asked what sort of contingency plan he would advocate, Senator Joyce said it was like trying to prepare for a tidal wave but the local economy should have more self-reliance.
”Things you look for in that economic Armageddon are the capacity to feed ourselves, the capacity to provide the fundamentals in medicines and basic fundamental requirements for our nation.”
Barnaby was right.
And noone took any notice. 18 months later, Australia has no contingency plan. Just a dramatically weakened government financial position.
This blog was created for the express purpose of sourcing and sharing information from around the world, in support of Barnaby’s prophetic warning.
If you browse the pages here, especially over the past month or so, you will find many news articles referencing the US debt default crisis.
Watch and listen to this interview just 8 days ago, where respected US congressman and 2012 Presidential Candidate Ron Paul, the Chairman of the House Financial Services Subcommittee on Domestic Monetary Policy, openly confirmed that the US is defaulting on its debts.
The big risk event that Barnaby predicted was “distant but real” in late 2009 … is happening right now.
Barnaby was mocked and ridiculed out of his new job as Opposition Finance spokesman, for daring to speak out. For daring to talk publicly about risks contrary to the “received wisdom” of the “experts”.
Who were those “experts”?
Let’s begin a Name ‘n Shame list of all the pompous, know-it-all cretins who now owe Barnaby a wimpering, grovelling apology.
Treasurer Wayne “Half a million new jobs” Swan.
And former Finance Minister Lindsay “dark arts” Tanner.
And, pretty much the entire Canberra press gallery.
They were all wrong. Totally, utterly, catastrophically wrong.
Time is proving our country accountant Senator from Queensland to be a veritable modern day prophet.
With more wisdom, commonsense, foresight, and courage, than the entire Labor Party, Treasury department, RBA Board of governors, and Canberra press pack of financial “journalists” combined.
So let us all pay close heed to his most recent warning – that the government plans to steal our super to pay down debt.
Barnaby is right.