Tag Archives: debt

Barnaby On All The Bloated Lunch-Eaters In Canberra

23 Mar

Senator Joyce writes … brilliantlyagain … for the Canberra Times (emphasis added):

Labor will be history in Queensland

The lingering fear of many in a sedentary job is the unreasonable expansion of the body mass. In Parliament you have the tactic of those lobbying you that if they can hold you down and feed you, like a French goose for the purpose of pate de foie, they will get a favourable hearing, and in many instances they are right.

It is hardly a parade of the siblings of the Greek Adonis that are ceremonially carted into Parliament each day. Since we are not digging post holes, nor shearing sheep, meagre attempts and a few rather hyper intense ones are made to stay in nick. On Sunday I am going in the Mooloolaba triathlon. I will come in somewhere at the back of my age group but I am more fearful of Sunday’s pain than Saturday’s Queensland State election. It would be disingenuous to sprout the line that the result is uncertain.

The physical appearance of politicians is no recommendation for their managerial expertise. Lack of managerial expertise is usually covered up by consultants, an ever increasing bureaucracy and an ever escalating debt.

Labor is continually plastering up the holes with borrowed funds and external consultants and Canberra seems to be resounding with this theme at the moment as well. The Canberra Times revealed this week that the Labor party has spent $500 million a year on consultants in their four years in government.

Canberra would feel the nervousness of those employed by the government in Brisbane who are going to be lumbered with the lunacy of the previous government’s ineptness.

Labor is going to lose and lose quite convincingly in Queensland. The fear is that in the engagement in tight seats within the wider electoral battle, telling the truth about the electoral scorecard could be discerned as public hubris. My hope is that people vote with their head and not their heart; sympathy for the arrangement that has dragged Queensland to the bottom of the Commonwealth is misplaced.

You would not marry someone on the premise that you felt sorry for them. You would not go and have a dentist put a drill in your teeth because you think they are a good bloke, but incompetent and clumsy. It stands to reason therefore that you should vote on competency and capacity to deliver your state an outcome not on sympathy. Unemployment in Queensland is the highest on the mainland at 5.7 per cent. Queensland lost its credit rating long before many countries in debt ridden Europe did. Queensland has been home to the farcical health debacle where, for the life of them, they could not get the payroll system to work in a fashion that paid the nurses, however, they did manage to pay a ”Tahitian Prince” about $15 million.

The main east-west highway to the vital mineral provinces, the Warrego Highway, is a two-lane bumper to bumper disgrace once you have managed to crawl over the Toowoomba Range. Queensland debt is booked to hit $85 billion.

This is the same Queensland that used to be the powerhouse of the Commonwealth, with the same people, and resources that are now selling at a record price beyond that received in the past.

Queensland matters for the whole country. It is our third biggest state. When the floods hit late last year, and the coal couldn’t be exported, we experienced our biggest fall in economic activity since the early 1990s recession. The Queensland economy’s stumbles over the past few years have held back the economic performance of all Australia.

In a previous time Queensland built the dams, airports, motorways, electrified the rail, developed the Gold Coast, opened up the coal fields, built the beef roads and built South Bank, built the Art Gallery, developed Gladstone, ran hospitals that weren’t in the news every second week. While they did all of this and more they left government with the treasury overflowing with money.

The only difference between then and now is the Labor Government. Queensland people are not going to feel sorry for them, they are just going to get rid of them.

Barnaby Pings Wong On Carbon Tax Impacts

14 Mar

“The government stands by the Treasury modelling … the government stands by the Treasury modelling…” – Penny Wong


Watch it all, and note in particular (a) Wong’s obfuscation, misdirection, and abject failure to answer, and (b) Bob Brown’s intervention, attempting to silence questioning of the Green-Labor CO2 derivatives scam:

Enjoy also Barnaby’s speech to the Senate yesterday:

“‘We are us’ … what exactly, what on earth does that mean? ‘We are us’ … I mean, who else could you be? We are somebody else? Somebody else is us?”

“In the last four weeks the Labor party have borrowed … an extra ten billion dollars, just in the last four weeks … that would buy about 20,000 houses in Brisbane”

“Treasurer Wayne Swan … is the Treasurer of the Millennium … we are so lucky to be blessed with him”

“What’s a Midas Touch backwards? … a Sadim, perhaps”

Say ‘Bye Bye Surplus’, Swanny

14 Mar

What happens when your business is massively reliant on one customer … and that customer stops needing as much of your product?

Ask Wayne Swan:

RBA Chart Pack - March 2012

Steel production not looking good. And total production growth gently sliding.

Why might that be?

RBA Chart Pack - March 2012

House prices topped out and rolling over. Floor space sold falling.

And fixed asset investments ground to a halt:

RBA Chart Pack - March 2012

Why is all this happening?

RBA Chart Pack - March 2012

The same old story, as seen throughout the Western world, now in China too.

When the “credit” (ie, debt) needed to keep blowing up a bubble slows and falls, the end is nigh.

And without all that debt-fuelled building activity to drive “GDP growth”?

RBA Chart Pack - March 2012

Say “bye bye” to that surplus fantasy, Swanny.

Oh yes, no doubt you will loudly trumpet a forecast surplus in the May budget.

But I for one am willing to bet you that, come end June 2013, there is not a snowflake’s chance in hell of your delivering one.

Bracing For Another $50 Billion Deficit

12 Mar

No surprises here:

Company tax slump threatens surplus plan

If company tax receipts perform as poorly in the June half year as they did in the December half, the government will face a deficit this year approaching $50 billion.

It would be beyond the reach of the creative accounting evident in last November’s budget update to turn this into a 2012-13 surplus.

Treasury secretary Martin Parkinson yesterday underlined the serious weakening in the structural budget positions of both commonwealth and state governments.

Tax has fallen as a share of GDP by four percentage points since the global financial crisis, equivalent to a shortfall of about $60bn a year.

It “is not expected to recover to its pre-crisis level for many years to come”, he said.

Nearly two weeks ago, Barnaby Is Right readers saw that the government’s management of the budget for this financial year was tracking almost identically to 2010-11, when Labor delivered a record $51.5 billion deficit:

According to the RBA, Labor has racked up a $30.26 billion loss for the first half of 2011-12:

That’s just $3 billion less than the record deficit they racked up for the first half of 2010-11:

Now, it is worth recalling that in the November MYEFO budget update, Wayne had to revise his original May budget “estimate” for a $22.6 billion deficit this year. He told us it would blow out to $37.1 billion.

Don’t you just love economic forecasting?

$22.6 billion deficit, forecast in May.

$37.1 billion, forecast in November.

$5? billion deficit actually achieved, at the end of June.

But never mind all that.

We are all going to believe the headlines, and the TV sound bites, and the rants in Question Time, when Wayne and Co. loudly proclaim that much-promised “return to surplus” in the May budget.

Even though it will be nothing more than a forecast.

With even less credibility than all four of their previous #epicFAIL budget forecasts.

There are only two chances of Labor achieving anything like a surplus in 2012-13.

Buckley’s. And none.

Wake me up on June 30, 2013, dear reader.

Then we shall see just how large a budget deficit for 2012-13 Labor actually delivers.

A Fancy Name For Theft And Destitution

2 Mar

Media Release – Senator Barnaby Joyce, 2 March 2012:

Bligh’s Green corridor is a plan to make Queenslanders poorer

You run a government that is racing towards $85 billion in debt, what do you do next?

Well, if you were Anna Bligh you borrow more money to retire productive assets.

Anna Bligh’s Border to Beach Green corridor is nothing but a plan to make Queenslanders poorer, more in debt and deny them the productive assets to get them out of it. Worse, all for no siginficant environmental benefit.

This so-called “green” corridor is a fancy name for theft and destitution, as Green-Labor governments shut down the economic future for people in between.

Retiring vast tracts of otherwise productive farming assets will leave thousands of other Queenslanders, particularly in rural and remote Queensland, behind. If you take out of business assets that can make money, that’s less wealth and less cash flow in a community to maintain schools, roads, hospitals and businesses.

Once upon a time the Labor party was formed in the shearing sheds of Barcaldine, now it wants to shut down the places that midwifed its birth.

All so that the Queensland Labor government can show its usual administrative competence by managing vast tracts of our state. Private landholders will look after their land better than governments because it is their land.

Governments can’t even run the national parks they have at the moment, with much of it infested with weeds and invaded by pests.

They should get their own backyard in shape first before they start invading the backyards of others.

Feel Free To Quote Me

25 Feb

One week ago your humble blogger coined a phrase about debt, and popular social attitudes towards debt.

Less humbly, I’m beginning to think it is up there with Senator Joyce’s prophetic line of exactly two years ago:

“If you do not manage debt, debt manages you”.

So without further ado, I’m going to proudly copyright my little phrase, and ask readers to kindly credit your not-so-humble blogger should you choose to use it:

Debt is not the new black. It is the old red. ©

Barnaby Is Right … is right.

Barnaby: Debt One Day, High Taxes The Next

4 Feb

Senator Joyce writes for the Canberra Times:

The Queensland Labor Government has been ahead of its time. It lost our AAA credit rating long before many others, before the United States, before France and before Australia. In 10 years, Labor has increased Queensland’s public debt by $45 billion. That is $10,000 of extra debt for every Queenslander.

Remember when Peter Beattie said we would be the ”smart state”. Well it doesn’t seem too smart to be racing towards $85 billion in debt. We have seen what too much debt can do to other countries and we would be mad to replicate that approach here. The fact always remains the same; if you can’t manage debt, debt will manage you.

What has Queensland seen for this reckless spending? The traffic is worse, housing is less available and we are paying more for essential services such as electricity and water. A lot more. Electricity prices are up 38 per cent and water prices are up 46 per cent in just four years. Labor spent $10 billion on a water plan to take infrastructure from local councils and is now giving some of those assets back.

It spent billions on a desalination plant that was beset by cost overruns and so many delays that while we were waiting for it, it rained. The plant has barely been used but Queenslanders are paying for it through their water bills.

Now Premier Anna Bligh thinks Queenslanders aren’t paying enough for basic services and supports the Gillard Government’s moves to introduce a carbon tax. Under the carbon tax, households will pay an extra 10 per cent for their electricity and businesses will pay up to 20 per cent more.

Nowhere will be hit harder by a carbon tax than Queensland. Even the Labor government’s own modelling finds that under a carbon tax there will be 41,000 fewer jobs in Queensland over time. The worst hit areas form an arc from Mackay to Gladstone, where so many of the state’s mining industry resides. Hundreds more jobs based in Brisbane and elsewhere are linked to the mining boom.

Labor has simply stopped standing up for Queensland. Anna Bligh promised to ”put Queensland first” when assessing whether to support the carbon tax, but she gave her support anyway despite achieving no concessions from her federal Labor counterparts. No Queensland government that stood up for Queensland would support a tax that cost Queenslanders jobs.

Over the past four years Queensland’s unemployment rate has increased from 3.4 per cent to 5.4 per cent and 60,000 more Queenslanders have joined the unemployed queue. Lucky we are winning the State of Origin because we are getting the wooden spoon on economic performance despite the mining boom. Queensland was once the engine room of the Australian economy. We were also the low tax state.

Now we seem to better other states at nothing except bureaucracy. Sometimes it seems like this is a government driving via the rear vision mirror. They are constantly reacting to events. By their own admission they failed to invest in infrastructure for years. They can’t pay nurses on time, coordinate the labyrinth of water departments and agencies they created or stop a claimed Tahitian prince from ripping off millions of dollars from Queensland taxpayers.

This is a soap opera of a government and for the benefit of Queensland it has to stop. Many Queenslanders are young enough to remember the last Coalition government, a government that balanced the books, electrified the rail lines, built the Gold Coast, constructed dams and the international airport in Cairns. Queensland can have that economic management again but it’s going to get more of the same from more spending and more debt from Labor.

Australia’s Debt Dreamtime

18 Dec

Mark McGovern of the Queensland University of Technology’s Business School recently had a paper published in the peer-reviewed free online journal Economic Analysis and Policy.

It is entitled Beyond the Australian Debt Dreamtime: Recognising Imbalances, and is well worth a read. Only 24 pages.

For those not sufficiently motivated, here’s the Abstract (emphasis added)

Sadly, all the efforts of a generation of Australian men and women have only made them more indebted to the rest of the world. Australia’s external net wealth is negative, soon passing minus $900b on an accelerating downward trajectory. This ongoing dissipation of national resources is unsustainable. Australians live in a debt dreamtime, one from which the rest of the world has been rudely awakened. After years of inadequate policies, the nation has a large external debt and significant government exposures. Servicing pressures are growing as rising uncertainties permeate global credit markets. Reserve Bank policies are worsening Australia’s external position and needlessly driving up internal costs. Major policy rethinking is warranted. Relevant issues are still little considered, crowded out of dialogues by comforting myths that accompany the Australian Debt Dreamtime. Imbalances need proper recognition with new approaches and strategies developed. Automatic corrections will not occur as history and current overseas experiences demonstrate. A real awakening, improved positioning and a touch of luck are required if Australians are to avoid being seriously impoverished by world events and their own confused Dreaming.

Got your attention now?


Here’s some more selected quotations (bold emphasis is mine, italics and underline in author’s original):

Rising problems have gone addressed because current preferences ignore them. Australians and their policy makers need to wake from their economic and financial dreams before they stumble into an economic crisis.

The net external wealth of Australia has deteriorated across the generation (McGovern 2010b, from which Figure 1 is drawn). Calculation of external wealth is based upon cumulative financial surpluses from an essentially zero basis in 1960. As is evident, Australia has been increasingly building external liabilities. A particularly marked decline has occurred over the last decade resulting in a total external exposure of $820b as at June 2010 with an annual deterioration of over $50b.

Click to enlarge

The central conclusion is stark: all the efforts of a generation of Australian men and women have only made them more obligated to the rest of the world. All that reform, all those industry and government initiatives, all those strategies, all that talk of productivity, all the promises of a previous boom in mining – all have come to naught. Today, we stride the world stage with external debts and other net liabilities above seventy percent of GDP, and increasing. Unaddressed, this is a precursor for crisis…

Manasse and Roubini (2005) empirically explore past crisis experiences to investigate “the set of economic and political conditions that are associated with a likely occurrence of a sovereign debt crisis”. They derive rules of thumb for likely default. Their schema is applied to Australia as shown in Figure 2. Importantly, Australian external obligations are largely held privately so at face value the sovereign appears little exposed externally. Importantly also, these are held in Australian dollars. However, the sheer bulk of obligations held by banks deemed “too big to fail” in the Australian context, the sizeable Commonwealth, State and local government debts (Section IV), the uncertainties of currency regimes, the indirect sourcing of some monies and the existence of various guarantees and understandings drive de facto and potential de jure exposures.

It is just this uncertainty about “who bears which risks” and “who guarantees whom” that has made resolution of existing crises so difficult, and the escalation of some crises so rapid and devastating. Just ask the Indonesians, Icelanders, Irish and Italians – amongst many. In the long history of defaults, there were 48 sovereign defaults between 1976 and 1989 and 16 more from 1998 to 2002 (Feenstra and Taylor 2011, p. 864) but virtually none between 1950 and 1970…

This is precisely what your humble blogger has long argued.

That for all the reassuring rhetoric from Goose (and assorted singing-for-their-supper, vested-interest economists) about how our debt is nothing to worry about, the truth is this. Their constant references to our “comparatively” “low” public debt “as a percentage of GDP”, is a red herring to distract our attention.  The real risk lies hidden just below the surface.

The real risk is in the liabilities of our banking system.

Which the Labor government has guaranteed.

From this perspective the Australian governments are currently not crisis prone. They do have three vulnerabilities. External financing and public external debt to revenue ratios currently appear well under posited trigger points but this could change rapidly with adverse global conditions, unsupportable interest positions or local bank fund-raising failures

Events in Europe have shown how quickly and broadly crises can build. It was only two years ago that the European Commission praised Italy, including its “greater resilience to external shocks”. Now Italy is under administration with no politician in the new cabinet (Squires 2011) as, in PM Monti’s words, this “will remove one ground for disagreement”. How the government of Italy is for Italy will be revealed in the days to come. There is much to ponder in current developments, and lessons for Australia.

Of particular interest to your humble blogger is the following excerpt concerning the long run effects of so-called trade “liberalisation” on Australia’s ever-deteriorating external wealth situation.

Mr McGovern’s words here, along with his chart above, should be slapped in the face of every “free trade” spruiking clown who arrogantly criticises Barnaby Joyce (and indeed, Bob Katter), for their so-called “protectionist” views on trade. In so doing, they act as blissfully ignorant mouthpieces and sloganeers for the internationalist banksters behind the “globalisation” movement:

… the stunning thing about Australian External Wealth (Figure 1) is that we have now being waiting for some thirty year for payoffs from hosting visiting funds and investments yet the position is, if anything, deteriorating more rapidly. More tellingly, the most optimistic figures about the current boom do not adequately address Australia’s External Wealth/Obligations problem… Dreaming of resurrecting Doha or of Trans-Pacific Partnerships introduces nothing new, and some fundamental changes are now of the essence. While political exaggerations from “delighted” and “excited” Ministers are understandable, the proper response by the governments of Australia is to demonstrate how mooted changes will be good for Australia, specifically in rectifying Australian external imbalances.

Put bluntly, Australia’s external position deteriorated as trade liberalisation advanced so any net opportunities that may have been on offer were not realised. Why should the impacts of any further liberalisations been any different? When Finance Ministers agree that across APEC “growth and job creation have weakened, inflation remains elevated [and] Capital flow volatility has intensified in response to heightened risk aversion” (APEC 2011), proponents need to demonstrate with convincing evidence how proposals will reduce risks and rectify problems in the current environment and going forward. More of the same is not an answer.


McGovern has an entire section devoted to interest rates, and their real impacts on investment, growth, and imbalances in our economy. It’s excellent.

In a nutshell, he demonstrates that compared with the rest of the world Australians are being shafted; that RBA interest rate policy not only does not achieve its purported aims (inflation targeting, stable currency) but actually contributes to the further impoverishing of Australians through their paying higher than necessary interest rates on loans, and, the encouragement of the international currency “carry trade” which results in windfall profits for bankers through financing asset bubbles here … like the housing bubble … which must eventually burst:

Australians have been paying historically high real interest rates for some decades now. The interest-only component of a 30-year loan has been steadily rising, from zero in real terms for loans terminating around 1980 to five-and-a-half percent for those terminating today (McGovern 2010a). Meanwhile, real growth rates in Australia and around the world have been declining.

Indeed … just as we saw in our recent debunking of Wayne’s/Treasury’s still ridiculous “growth” forecasts in the MYEFO:

Click to enlarge

Back to McGovern:

Arguably, in recent decades the reliance on interest rate movements in inflation targeting along with an insensitive allocation of rates across investment classes have compounded problems and raised investment risk while doing little for inflation objectives. Clearly this challenges current conventions in Australia, and elsewhere, but an argument needs to be had. Reserve Bank of Australia decisions of interest rates may be well be worsening not only Australian competitiveness (since investment becomes markedly more expensive and unattractive as next discussed) but also its external position (as then discussed).

High Australian interest rates also impact on Australia via the carry trade. While the potential profits from this are recognised (making even the textbooks, Feenstra and Taylor 2008), the impacts on domestic monies are less appreciated. Monies that flow into a nation’s currency pool may well be utilised within the nation by eager lenders sitting on these substantial deposits… there is a marked and little monitored (let alone regulated) increase in the quantity of money in circulation. It is then but a short step to an asset bubble, particularly in investments such as housing which are deemed “prime” by distant institutions.

The possibility that actions by the Reserve Bank in Australia may be worsening the external situation in a variety of ways needs to be investigated further.

I’ve said it before. It bears repeating.

Abolish the RBA!

And with it, the $1 million salaries of “public servants” like RBA Governor Stevens.

Moving on from trade and interest rates, what does McGovern have to say about The Situations Of Australian Governments? His opening paragraph is a beauty:

It is fascinating that Government financial situations were not assessed in either Henry (2010) or in the lead up to the Tax Forum (Commonwealth Treasury 2011). Instead the focus has essentially settled on who to tax more, and the purported efficiencies of different ways to do it. Why there is a need for governments to raise more tax goes unaddressed, as do other relevant considerations. Such myopia appears to be risky and, probably, dangerous.

Indeed. His comments about the state governments are particularly interesting:

The Commonwealth has a stated net exposure of $124b as at June 30 2010 (with an additional $67b in liabilities taken on in the following year). The States generally appear close to financial balance. However, those States using Treasury Corporation are on-lending to their various agencies with high interest repayments expected in return. Rising utility service prices, for example, appear influenced by high bond servicing costs, an issue not commonly recognized. Inflationary effects result.

There you have it folks. State government borrowings, on-lent at high interest rates to state government “agencies”, are driving up your electricity and water charges.

Again these figures need further elaboration but observations include:

•    the singularly high net exposure of the Commonwealth;
•    that bonds and notes totaled around $340b or over 25 percent of current GDP across all governments with an annual interest expense of $17.6b;
•    that the net exposure (Assets less Liabilities) is around 10 percent of GDP;
•    that the liquidity of underlying Assets is unclear, as is the appropriateness of booked valuations;
•    the stated interest repayments for Queensland and NSW are particularly high (with deducible interest rates of 6.9 and 5.3 percent respectively) compared to Victoria (around 4.7 percent) and the Commonwealth (4.0 percent);
•    Queensland has assets (and liabilities) valued markedly more than those of New South Wales and Victoria;
•    that more adequate, consistent and complete reports are needed.

Queensland which is not projecting a surplus (of $0.1b) across the general government sector until 2015- 16 increased its debt by $4.2b in the last year. It is planning to continue capital investments of over $10b annually for some years (Queensland Treasury Corporation 2011a). Why State debt more than doubled in four years, from $32.1b in 2006-07 to $73.1b in 2010-11, despite around $15b from asset sales (ibid) is an unexplained mystery, as is the lack of discussion of such a significant increase in exposure while global conditions were deteriorating markedly.

Queensland state debt only doubled in four years?


Federal Labor have more than quadrupled Commonwealth government debt in four years.  From just over $50b when they came to office in Nov 2007, to over $223b today.

Back to McGovern:

Which of the challenges raised by Moody’s in 2009 have been adequately addressed, in Queensland and elsewhere?

The [Queensland] downgrade reflects the state’s deteriorating financial and debt performance and the absence of a medium-term strategy that would over time restore budgetary performance and financial flexibility… the state is expected to produce a series of very large, recurring deficits. The widening budget gaps and the resulting additional borrowing that is being projected place the state on a debt trajectory that is no longer consistent with Aaa debt metrics. Additional budgetary pressures could emerge should economic growth be slower than currently anticipated. Queensland’s financial performance is also expected to be challenged by the difficulties in reducing operating spending following a period of accelerated growth.” (Moody’s Investor Services 2009).

It is clear that not only are liabilities, specifically debts, high. In terms of the presented accounts, assets appear to reasonably match liabilities given current valuations. If so, any anticipated problems would be ones of liquidity rather than solvency. That is, the central problem is one of achieving appropriate flows of revenues and payments while maintaining (or perhaps improving upon) the stock situation.

If however, assets were not realizable at the stated values then solvency problems can arise. As evident in Europe, one response is partial or full default on obligations.

If interest rates rise (strongly), then liabilities may escalate (markedly) due to the exposures and linkages demonstrated earlier…

If a debt-deflation were to occur then the States could be quickly squeezed as asset values fall while liabilities at least remain.

Note that well.

What McGovern is arguing is that it is the state government balance sheets that pose a risk. That’s important, as you will see in a moment.

Finally, some pertinent remarks from the paper’s conclusion, entitled Up A Gumtree In A Bushfire? The Australian Dilemma:

As the fires feeding on years of lush credit growth rage in many parts of the world, Australia has been so far only a little affected. Significant exposures exist, however, and these need to be assessed and redressed. While no one can know just what blazes will break out next or where, prudence mandates risk assessments, readiness, firebreaks and controlled burns. Recovery is much more expensive after an unanticipated fire, and some losses are never really replaced. As even Kunbul knows, this is not a time to be dreaming up a gum tree.

Current external policies favour a major expansion of mining to lead export growth. However, the current mining sector would need to roughly double its exports for Australia to stand still externally. It is not only the trade balance that has to be rectified but also the net factor income outflows. Given that mining is focused in three States that already have high public liabilities, funding further infrastructure becomes even more problematic.

Superficially the Governments of Australia appear in a reasonable position when compared to much of the world. Servicing of obligations appear problematic, however, even under optimistic scenarios. Closer investigations of positions is clearly warranted. This initial review has revealed significant potential vulnerabilities. Adverse conditions externally could lead to a rapid deterioration due to refinancing risks while recession would reduce the ability to raise sufficient net revenues to service existing obligations.

Reduced ability to “service existing obligations”, eh?

What was it exactly that Senator Joyce warned of in 2009-10?

What was it that unleashed all the verbal fire and brimstone that cost Barnaby his new job?

What exactly did he say that so angered the Labor government, then Treasury secretary Ken Henry, and all the “leading” talking head economists in the land?

No, it was not just his warning about the dangers of the ever rising US debt level.

It was his warning about Australia, and the vulnerability of the state governments’ finances, that really fired them up.

From the Sydney Morning Herald, 11 December 2009:

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

He said the Federal Government’s debt would push up interest rates and predicted that some state Labor governments would not be able to repay their borrowings.

”The Federal Government has $115.7 billion in debt, Australian government securities, notes and bonds on issue, and the states have another $170 billion in debt.

We have to ask whether the states have the capacity to repay that. I would say in some instances they do not, particularly Queensland.”

And from The Age, 11 December 2009:

Senior government figures have taken aim at Barnaby Joyce’s dire warning about a global financial meltdown if the United States government defaults on its debt. Mr Joyce also came under fire for comments about the financial health of Australian states.

”That’s shooting from the lip, making it up on the run,” Prime Minister Kevin Rudd said of the new opposition finance spokesman’s comments.

Senator Joyce is concerned that demand for Australia’s resources would ”go through the floor” if the US was not able to pay off its burgeoning foreign debt.

Mr Rudd dismissed the senator’s comments, describing them as ”not responsible economic policy”.

Assistant Treasurer Chris Bowen went further saying Senator Joyce’s comments were extremist.

”His comments on the United States need to be taken with a grain of salt,” he said, adding the vast majority of economists believed US debt levels were manageable.

He accused Senator Joyce of engaging in a series of thought bubbles that were unbecoming of a senior economics spokesman from either government or opposition.

”Senator Joyce adopts very extreme positions, he is an extremist.”

States ‘rock solid’

Separately, Mr Rudd criticised comments made by Senator Joyce that some Australian state governments might not be able to repay billions of dollars in debt.

The states were carrying $170 billion in debt and rising interest rates were affecting their capacity to make repayments, Mr Joyce said.

”I would say in some instances they do not, particularly Queensland,” he told Fairfax Media.

The Prime Minister said such ”erratic and ill-considered” comments should not be made by a senior opposition spokesman.

Mr Rudd described as the ”most serious charge” the coalition’s view that state governments could default on their debt.

In light of Mr McGovern’s paper, and the reality of world events over the past 2 years, the truth is clear.

Barnaby was right.

Why The Global Financial System Is Broken, Explained In Under 3 Minutes

25 Nov

Humour + Truth = Genius.

Starve The Beast

17 Oct

In observing the “Occupy” movement now growing around the Western World, your humble blogger recalls an old wisdom story, attributed to a Native American elder:

“Inside of me there are two dogs. One of the dogs is mean and evil. The other dog is good. The mean dog fights the good dog, all of the time.” When asked which dog wins, he reflected for a moment and replied, “The one I feed the most.”

On the weekend I was reminded of this wisdom, upon reading the following article in Australia’s Sunday Telegraph:

Banks are handing out bonuses to staff who upsize your debt

BANK staff are being offered Christmas party bonuses, free meals and other prizes to push more credit cards, loans, insurance policies and other products to customers.

Australia’s biggest lender – the CBA – has launched a “double up” campaign to push personal bankers and tellers into selling twice as many products, such as increasing credit limits, each week.

The other three major banks – the NAB, ANZ and Westpac – are also forcing branch staff to meet stringent weekly sales targets as the “big four” battle for market share.

An internal CBA document obtained by The Sunday Telegraph reveals the pre-Christmas push to supersize customers – increase their credit limits, convince them to take out home and contents policies and open up new accounts.

“We are under increasing pressure from competitors who are looking for a greater share of our retail banking business,” CBA retail banking boss Ross McEwan says in the document.

The briefing reads: “The campaign encourages sales teams to double their sales productivity during October and November to earn double the fun (and funds) at their end of year team celebrations.”

Staff at the four major banks, which are expected to record a combined profit of $24.2bn this financial year, have also revealed the tactics used to win over customers.

Sales targets differ depending on the branch size and location. Convincing a customer to roll their credit card debt into their mortgage is a target winner.

At Westpac, each personal banker has a revenue target of about $3750 a week.

Selling a credit card earns $150 towards that goal. At NAB, a city branch with four staff would have to sell 72 products a week, while a teller has to make 10 “quality” referrals to personal bankers that result in a sale.

Personal bankers have to sell 13-16 items. Debt products are worth the most because they are more lucrative for the bank.

All banks encourage staff to “cross sell” so when a customer opens a savings account, staff are likely to offer an increased credit card limit or income protection insurance.

“Staff get really desperate, to the point where they will convince customers they need something when they really don’t,” a Westpac staffer said.

Even more telling, the small inset story accompanying this article, in the paper’s print version:

Bank staff say their targets are so high and unrealistic they are selling customers products they don’t need or can’t afford.

Staff from Commonwealth, Westpac, ANZ and NAB describe work as a pressure cooker and say they are forced to meet stringent targets – a claim all four banks categorically deny.

Workers say white boards are used in branches to track sales.

“We don’t want to be pushing debt on to people but you have the pressure of your job security hinging on it,” a CBA staffer told The Sunday Telegraph.

“A home loan is a life long debt. We shouldn’t be selling it like a box of crackers.”

After three years as a CBA teller, the “cut-throat” environment became too much for 20-year-old Tyson Adams.

“The whole time your target is being pushed on you really hard and it is never negotiable … it doesn’t even matter if you are off sick, you have to make it up.”

An NAB worker said” “It is not about whether you are great with the customers; at the end of the day it is how much you have either referred or you have sold.”

A Westpac banker said: “They give us lists of customers who have almost paid out their home loans so we have to call them and get them to borrow more, go get an investment property or something.”

Your humble blogger has a word of advice for the growing thousands in the “Occupy” movement, who are (apparently) protesting against Greed.

Just DON’T Do It.

Borrow, that is.

They say that “money makes the world go ’round”.

They lie.

Our world runs not on “money”, but on debt.

Your agreement to borrow is The Beast’s daily bread.

In the old Native American wisdom tale, the winner in the fight of good versus evil was the one that he fed the most.

A simple, alternative view of the same tale, is that the loser is the one we feed the least.

Starve The Beast.

“After these things I saw another angel coming down from heaven, having great authority, and the earth was illuminated with his glory. And he cried mightily with a loud voice, saying, “Babylon the great is fallen, is fallen, and has become a dwelling place of demons, a prison for every foul spirit, and a cage for every unclean and hated bird! For all the nations have drunk of the wine of the wrath of her fornication, the kings of the earth have committed fornication with her, and the merchants of the earth have become rich through the abundance of her luxury.”

And I heard another voice from heaven saying, “Come out of her, my people, lest you share in her sins, and lest you receive of her plagues.”

* Please see also “The People’s NWO: Every Man His Own Central Banker”


Paying down (y)our debt, and refusing to take out more, is the fastest way to kill the Beast. Most people don’t even realise that the simple act of paying down debt (and not taking out more) reduces the banks’ “assets” on their balance sheet. Eventually, all they have is Liabilities (your actual savings, plus outgoing interest payments owed to you on your savings) … and no Assets.

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