Ever wonder how Barnaby’s economic qualifications stack up against Lindsay Tanner’s? Or against Wayne Swan’s, for that matter?
You might be surprised.
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Barnaby Warns of Bigger GFC
25 FebCould the USA default on its debts? Barnaby thinks so… and said as much in October and December last year:
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.
Is Barnaby alone in expressing this concern? Rudd Labor would have you think so. Others agree with Barnaby:
It is not literally impossible that the Federal Reserve could unleash the Zimbabwe option and repudiate the national debt indirectly through hyperinflation, rather than have the Treasury repudiate it directly. But my guess is that, faced with the alternatives of seeing both the dollar and the debt become worthless or defaulting on the debt while saving the dollar, the U.S. government will choose the latter.
And this:
The economic landscape still looks pretty gloomy despite (because of?) massive increases in federal government spending by Congress. Want something else to worry about? What if your government suddenly went “belly up” on some or all of its public debt IOU’s?
Impossible you say? Not really.
And this:
The specter of a wave of sovereign debt defaults is becoming more of a possibility daily. Historically, waves of sovereign debt defaults follow periods of relative calm in credit markets. In short, sovereign defaults are contagious.
And this:
Mr Ip believes the government will sooner try and inflate down the debt than default, which is probably true. But he reckons that in the unlikely event America must choose between hyperinflation and default, the unthinkable could occur.
And this:
The list of countries at risk of bankruptcy is increasing by the day. The acronym used to be PIGS (Portugal, Ireland, Greece and Spain). It is now PIIGSJUKUS and growing. The main contenders are currently: USA, UK, Japan, Spain, Italy, Greece, Ireland, France, Portugal, Baltic States, Eastern Europe and many more. On a proper accounting basis all of these countries are already bankrupt, but since many nations can either print money, like the US and the UK, or increase their already high borrowings, like Greece and the Baltic States, they have technically avoided bankruptcy.
And this:
But the ultimate financial question – until recently, unthinkable – is now being asked. Yes siree, the mighty US government could default. That’s how much the world has changed.
So why do Kevin Rudd, Wayne Swan, Lindsay Tanner, Ken Henry, and Glenn Stevens, not wish to discuss concerns about US debt, and the implications of a possible sovereign default on the Australian economy? According to Treasury secretary Ken Henry, to do so 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.
Right. This is the same Ken Henry who never saw the GFC coming. No doubt he would have considered it just another “extreme” hypothetical back in 2007.
Tanner $6B Out on Debt
25 FebMedia Release – Senator Barnaby Joyce, 25 Feb 2010
Finance Minister Lindsay Tanner today on Fairfax Media, shows yet again he is a person who doesn’t “dot the i’s and cross the t’s”.
Asked what Australia‘s government gross debt was, he said and I quote, “The most recent actual number is about $120 billion, that’s the gross, I don’t check day on day, week on week”.
Australia‘s gross debt is actually $126.083 billion. It cracked $120 billion back before the 28thJanuary. So is the best we can hope for month on month? But don’t worry, Mr Tanner, it’s only somebody else’s money and I suppose somebody else has to repay it.
Mr Tanner you should be checking day on day, week on week. You should be dotting the” i’s and crossing the t’s”. You should be doing everything in your power to stop the trajectory that this debt is on.
When you are out by $6 billion and you are the Finance Minister, you do not leave a sense of confidence that you are managing the problem. It appears you are not even closely watching the problem. Mr Tanner you would have got closer to the number if instead of waving my media releases around in the chamber, you actually read them.
So Mr Tanner, if you are not watching our debt, who in the government is?
For more information –
Jenny Swan
Office of Senator Barnaby Joyce,
Leader of the Nationals in the Senate
02 6277 3697
0438 578 402
jenny.swan@aph.gov.au
Note: Unlike Lindsay Tanner – the responsible Finance minister – Barnaby Joyce is right up-to-the-minute with his knowledge of the debt numbers. Even the Australian Office of Financial Management (AOFM) has not yet updated their home page to reflect the additional $600 million in Commonwealth Treasury Notes that were auctioned off today.
Finance Minister Lindsay Tanner today on Fairfax Media, shows yet again he is a person who doesn’t “dot the i’s and cross the t’s”.
Asked what Australia‘s government gross debt was, he said and I quote, “The most recent actual number is about $120 billion, that’s the gross, I don’t check day on day, week on week”.
Australia‘s gross debt is actually $126.083 billion. It cracked $120 billion back before the 28th January. So is the best we can hope for month on month? But don’t worry, Mr Tanner, it’s only somebody else’s money and I suppose somebody else has to repay it.
Mr Tanner you should be checking day on day, week on week. You should be dotting the” i’s and crossing the t’s”. You should be doing everything in your power to stop the trajectory that this debt is on.
When you are out by $6 billion and you are the Finance Minister, you do not leave a sense of confidence that you are managing the problem. It appears you are not even closely watching the problem. Mr Tanner you would have got closer to the number if instead of waving my media releases around in the chamber, you actually read them.
So Mr Tanner, if you are not watching our debt, who in the government is?
For more information, Jenny Swan
Office of Senator Barnaby Joyce,
Leader of the Nationals in the Senate
02 6277 3697
0438 578 402
jenny.swan@aph.gov.au
Deeper In Debt
25 FebAssociate Professor Steve Keen has been warning about Australia’s rising debt burden for some years:
Australians have an unsustainable debt addiction, which will be hard to kick, and painful to recover from. A new report by CPD fellow Steve Keen has found that in just 18 months time we may be spending as much of the national income on interest payments as we were in 1990 – when interest rates were at 17 per cent.
That was in 2007.
Things are far worse now, since the Labor Government has so dramatically increased public debt, while encouraging even greater levels of private debt thanks to its recently wound down “First Home Buyers Boost”.
Rogoff Sees Sovereign Defaults
25 FebFrom Bloomberg –
Ballooning debt is likely to force several countries to default and the U.S. to cut spending, according to Harvard University Professor Kenneth Rogoff, who in 2008 predicted the failure of big American banks:
Following banking crises, “we usually see a bunch of sovereign defaults, say in a few years,” Rogoff, a former chief economist at the International Monetary Fund, said at a forum in Tokyo yesterday. “I predict we will again.”
“Most countries have reached a point where it would be much wiser to phase out fiscal stimulus,” said Rogoff, who co- wrote a history of financial crises published in 2009.
A Clear Picture of Australia’s Debt
25 FebBarnaby Joyce produces a chart that says it all:
A picture paints a thousand words so a good understanding of our gross debt is seen in the graph (above).
It shows clearly that the Coalition is a government that pays off debt and that Labor is a government that creates debt and Mr Rudd is creating debt at a faster rate than has been seen in recent history. With gross debt currently in excess of $125 billion one would be foolish if they were not concerned by the trajectory of the growth in debt. How would you feel taking this to your local bank manager as an example of your fiscal prudence, and the ceiling insulation program as an example of your management technique?
If we continue on the trajectory that is self evident in this graph we are most definitely going to arrive at a point of reckoning.
Read the entire article here.
UPDATE: Barnaby offers an updated version of the above graph –
If we continue on the trajectory that is self evident in this graph we are most definitely going to arrive at a point of reckoning. This point of reckoning will place immense pressure on the budget and the delivery of such services as health, education, defence, foreign aid, childcare and everything else that relies on the public purse for payment.
Labor cannot just go on borrowing money at the rate that is portrayed in this graph and it is absurd to look at the trajectory of this graph and say that you do not have a concern. It is vastly easier to manage problems when they are manageable. It is far more prudent to “dot the i’s and cross the t’s” and manage the problem now than to wander into the chamber at a later date with a sorrowful look on your face wishing if only we had that time again we’d have done things differently.
Don’t Mention the Debt
25 FebEven 12 months ago – before the Rudd Government began its massive second round of “stimulus” spending on school halls and insulation – noone wanted to talk about our debt problem:
Our overseas borrowing is the great unspoken. It is the one subject assiduously avoided in public by Kevin Rudd, Malcolm Turnbull, Ken Henry, APRA, the Reserve Bank and the big banks. They probably even gloss over the matter when chatting privately among themselves.
It is Australia’s Ponzi scheme. Bernie Madoff goes to Bondi. We keep getting those foreign dollars in while sending plenty out, but never quite as much, hoping no one will blow the whistle lest the whole game end.
Read the full article in the Feb 19, 2009 Sydney Morning Herald.
The Great Reckoning Begins
25 FebA must-read article by the Business Spectator and ABC finance commentator, Alan Kohler:
Ken Henry and David Gruen of Treasury should spend less time sneering at Barnaby Joyce and more time contemplating the unfolding calamity in Europe, and coming to grips with what’s really going on in Australia.
As I explain below, Australia’s debt-funded fiscal stimulus is double what was announced and is only half-spent. In other words, the government is still in stimulus mode while interest rates are going up and unemployment is falling.
If you do not wish to register with the Business Spectator’s website to read the entire article, it is reproduced in full here.
Rogoff Warns of China Crisis
25 FebFormer chief economist of the IMF, Ken Rogoff, warns of a regional crisis when the China “bubble” collapses:
China’s economic growth will plunge to as low as 2 percent following the collapse of a “debt-fueled bubble” within 10 years, sparking a regional recession, according to Harvard University Professor Ken Rogoff.
“We would learn just how important China is when that happens. It would cause a recession everywhere surrounding” the country, including Japan and South Korea, and be “horrible” for Latin American commodity exporters, he said.
The impacts on Australia – a leading commodity exporter – arising from a collapse in demand from China are obvious.
Rogoff was one of very few economists who predicted the GFC.
Barnaby Is Right 
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