Tag Archives: commodities

Digging A Hole For Ourselves

5 Mar

From The Age:

In a series of speeches in recent days, senior economic officials from Reserve governor Glenn Stevens down have spread the same message: the brief interruption of the global financial crisis is over, and Australia has gone back to where it was – into a resources boom so big it will dwarf the booms of the late ’60s and early ’80s.

The Reserve Bank’s best and brightest argue that this will be good for Australia because it will allow us to earn more income now than we would if the minerals stayed in the ground for a few more years.

With the greatest respect, I sharply disagree. I think we need a national debate on whether it really is in our interests to try to sell off our mineral wealth as rapidly as possible, as our economic leaders believe…

We need to think hard about this. The implicit argument from our officials is that we should allow otherwise-viable industries to be put down in the interests of making room for us to extract as many minerals now as possible.

This is wrong: not just because they are picking winners, or just because China, too, has its vulnerabilities and could fall, but because you don’t put all your eggs in one basket.

We need to keep a mix of strong, diverse industries to guarantee our future. We need to debate how we do that, and learn from how others do it.

Japan PM: Nation’s Fiscal State ‘Quite Severe’

5 Mar

From Reuters:

Japanese Prime Minister Yukio Hatoyama said on Thursday there is no doubt that the nation’s fiscal state is quite severe.

“There is no doubt that the current situation is quite severe,” Hatoyama said in a parliamentary committee meeting.

Japan is Australia’s second largest trading partner.  In the December 2009 quarter we sold $38.2bn in exports to Japan. China is our largest trading partner – we sold $42.2bn in exports to China in the same quarter.

A further deterioration in Japan’s ‘quite severe’ financial situation, and/or the predicted bursting of the China real estate bubble, would have disastrous impacts on the Australian economy.

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