Tag Archives: manufacturing

“Our Elite Are Pursuing… National Self-Sabotage”

1 Mar

MacroBusiness principal David Llewellyn-Smith has today published what is, in this blogger’s opinion, arguably the best article yet written about the way in which the Australian political and bureaucratic elite have pursued a deliberate policy of reshaping the economy.

A “must read”, and a “must share” article (excerpt below):

Just two days ago, Prime Minister Julia Gillard announced that:

“We can still be a country that manufactures things. But we’re going to have to do it differently”

She was spot on, if by differently she means we’ll make things without investing any capital. That will be very different indeed.

The truth is Australian manufacturing is not adapting, it’s being wiped out. It’s not restructuring, it’s flat out collapsing. Yesterday’s private capex survey was a bloodbath, sending manufacturing investment intentions back to levels last seen in the 2001 global recession, and first seen in 1989. And that’s in nominal dollars. Inflation adjusted is far worse. In the following chart of capex intentions, the arrow points to expected spending levels for the next year:

Screen shot 2013-03-01 at 11.06.47 AM

It was not always thus. It’s easy to forget, especially with a gorked media, that manufacturing’s proportion of capex matched that of mining until 2004:

Screen shot 2013-03-01 at 11.07.03 AM

But now it’s all about the dirt:

Screen shot 2013-03-01 at 11.07.23 AM

That’s fair enough. This post is not about bashing mining. What it is about is imbalances.

Australia’s economic elite – public and private – are engaged in a grand experiment. They have decided, in their wisdom, to delete Australia’s industrial base and replace it with mines.

And there is another argument worth considering. Without a manufacturing base, how does a country defend itself? Sure, production can always be ramped up if needed in a time of strife. But not if you no longer posses the human capital to do it. The death of manufacturing is the permanent loss of the skills and intellectual property that enables such a ramp up to occur. It will be a short meeting when our enemy’s generals sits down to plan which industrial targets to bomb.

The various imbalances created by the annihilation of Australian manufacturing are neither inevitable nor benign. Our elite are pursuing one of the great experiments in national self-sabotage.

Read the entire article at the link.

 

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Australian Dollar To 1.25 – Who Cares?

9 Mar

This article cross-posted from Lighthouse Securities, with kind permission of Greg McKenna. You can follow Greg on Twitter, and at MacroBusiness where he blogs as “Deus Forex Machina”.

Let me ask you a question.

Do you care if the Aussie Dollar heads toward 1.20 or 1.25 in the next 12 to 18 months as Australia’s alternative Treasurer Joe Hockey said the other day.

In the Sydney Morning Herald Mr Hockey was quoted as saying,

”it is not inconceivable for the Australian dollar to reach $US1.25 over the next 12 to 18 months”

I agree, it is not inconceivable that the Aussie heads to these levels not seen since the 1970′s its a low probability I think that one that has enough serious implications that we need to have a planned response for industry from government.

So I was encouraged that the SMH also reported Mr Hockey said,

It is time to carefully consider what a comparatively high Australian dollar means for key sectors of our economy.

Big tick Joe! Or at least I thought there was a big tick but then I saw that he also said,

In a warning to those in the Coalition advocating protectionism, Mr Hockey said it would not be propping up unsustainable industries.

While it was worth providing help to those industries facing short-to-medium-term pressures, such as the high dollar, industries which are proving unsustainable over the longer term for many reasons would not be saved.

While they could be eligible for such assistance as retraining or relocating workers, ”we should not, however, be in the business of propping up industries that for many reasons do not have a sustainable future in Australia”, he said.

He said the ”brutal truth” was that managers and consumers, not government, would determine the fate of individual businesses

Theoretically and politically I have probably always been to the right of centre, as I age and since I’ve become a dad I find myself moving to the left on social issues but in general I’d normally agree with the sentiment of what Mr hockey is saying above.

Certainly I welcome the fact that he is thinking about my oft mooted plan to assist companies and industries that are being buffeted by the high dollar  and in general why would you prop up other industries that are on the way out. Its my typewriter/iPad analogy I’ve used a few times now.

But what bothers me about the political class in Australia at the moment is that they take acceptable and plausible theoretical constructs and write them into stone as laws.

Take the Budget surplus at any cost pact between the two parties as an example – at a time of massive structural change in the economy, structural change that has the RBA on the back foot in managing this sports car/draft horse economy there may be, probably is a need for some support in some parts of the economy.

But no we can’t do that – Swanny and Hockey are too busy leading the war cry each morning.

SURPLUS, SURPLUS, SURPLUS, Oi, Oi, Oi.

Even if the Treasury Secretary Martin Parkinson says they are going to be “only wafer thin”

And so it is with the Aussie Dollar’s strength – we know its high because the central banks of Russia, Brazil, China and others are buying and have bought lots of Aussie. We know its high because in a moribund economic global outlook even a print of 0.4% GDP growth seems still ok. We know the Aussie Dollar is high because our interest rates are high and we know that unless or until China slows and lets their currency float the Aussie Dollar remains its proxy.

So nothing is going to be done it seems as RBA Deputy Governor Lowe pointed out the other day. Bloomberg quoted him the other day saying they are watching things,

“It is possible for exchange rates to overshoot,” Lowe said in his prepared remarks. “While the evidence of the past 30 years is that movements in the exchange rate have been an important stabilizing force for the Australian economy, the unusual nature of the current forces means that we need to watch things closely.”

But I’ve always got the sense they are glad the Aussie is as high as it is cause it reduces the pressure to smash households even further with interest rate increases. I think Lowe makes this point below,

“On the evidence to date, something like the current combination of exchange rates and interest rates appears to be what is needed to maintain overall macroeconomic stability,” Lowe told the AIG, whose members include manufacturers hurt by the currency. “The high exchange rate and the high interest rates relative to the rest of the world are both being driven by the fact that Australia is a major beneficiary of the change in world relative prices.”

Indeed Deputy Governor Lowe feels the Aussie is not misaligned fundamentally

“It’s difficult to make a strong case that the exchange rate is fundamentally misaligned,” Lowe said in response to a question from the audience after a speech today in Sydney, citing the nation’s solid economy. “That makes the hurdle for intervention quite high.”

But part of this argument I think is flawed and circular. The price of our commodity exports is largely denominated in US Dollars and the US is actively engaged in a policy of making the Greenback as weak as possible without cause it to crash. And they are succeeding in using this to increase exports as a total percentage of GDP, quite a few percentage points over the past few years.

So while they win, commodities are pushed higher in price than underlying demand warrants because the USD is weak and we just suck it up and continue the experiment all the while knowing that other nations are deliberately manipulating their currencies to their own best interests.

I even saw an article in the Atlantic last weekend arguing that currency wars are good . The author argues that beggar-thy-neighbour policies are good,

Rather than cooperating, countries are fighting over trade. But in this case, some fighting is good, and more fighting is better. Countries that lose exports want to get them back. And the best way to do that is to devalue their own currencies too. This, of course, causes more countries to lose exports. They also want to get their exports back, so they also push down their currencies. It’s devaluation all the way down. All thanks to economic peer pressure.

Nobody wins if everyone does it. But for those who are happy with their theoretical purity that seems to pervade Australia economic thinking its a death spiral for currency exposed industries.

At a time of massive structural change where, as Bill Evans said yesterday, the mining boom is simply eye watering but the rest of the economy is under intense pressure I would like to think that we wont be trying to pick winners but we might find some money to ensure that we at least give ourselves and our industry a chance for survival.

It is clear to me that the push back from the policy making and political class on this topic of the Aussie Dollar’s strength is such that they recognise there is an issue but it is also clear they are trying to manage the issue rather than deal with it.

We are a small open economy with a currency that trades far too much for our relevance in the global economy and thus there is little we can do to halt its strength. We just dont have the fire power unless we want to print lots and lots of Aussie Dollars.

So it’s not easy but it would be good if as Joe Hockey said we consider carefully what the impact is going to be on our industry, on our jobs and on the fabric of our society in the years ahead.

You’re probably sick of hearing this from me but I think at a time of structural change it is important we talk about the structure of the change and the structure that in the end results from the change. now, ex-ante not in the future, ex-poste.

Have a great day.

Gregory McKenna

Disclaimer: The views expressed in the above article are the author’s own. They should not be interpreted as reflecting any views held by Senator Barnaby Joyce or The Nationals.

The Single Biggest Reason Why I Will Vote For Bob Katter’s Australian Party

18 Feb

The Australian Dollar.

It is way too high relative to all our major trading partners’ currencies.

About 30% too high, in fact.

No Malcolm Farr, it does not prove that the Aussie Dollar is a “safe haven”.

No Wayne Swan, it is not because we have an economy that is “the envy of the world”.

Yes Alan Kohler, it is because speculators are borrowing billions in Zero Interest Rate Policy (ZIRP) money in the USA, UK, EU et al, and using it to gamble on the relatively high interest rate Aussie Dollar. To make easy, fast profits.

It is called the “carry trade”.

Or “hot money”.

And it seems that no one … repeat NO ONE … in Australian politics has the brains to recognise that fact. Or, the balls to do anything about it.

Except Bob Katter.

Now, let me be the first to say that I do not agree with how Bob wants to weaken the currency.

He advocates forcing the RBA to slash interest rates to 2%.

I think we should follow the lead of China … and Switzerland … and introduce a currency peg.

Nevertheless, despite this difference in preferred method, the simple fact that Bob has loudly proclaimed that he wants to weaken the dollar, and, that he is prepared to dismantle the RBA if necessary in order to do so, places him a country mile ahead of any other politician in the nation.

(Yes, including my beloved debt-warning prophet Barnaby Joyce, whose office has to date not even responded to my communications on this matter. He has been very busy with a drowned home town though, so we shall wait and see…)

A little historical background on our present currency dilemma.

Remember the year prior to the GFC crescendo in September-October 2008?

Remember how the AUD turned sharply down in July 2007, falling 9c (10%) in less than a month, when the warning signs began in the USA with the collapse of two Bear Stearns’ hedge funds? And remember how the AUD turned sharply up again, when the RBA lifted interest rates for the first time in 9 months, in August 2007?

GFC begins July 2007 in USA | Click to enlarge

Remember how the RBA kept raising interest rates into the teeth of the oncoming storm, and the AUD climbed from less than 80c US in August 2007, to nearly 98c US in July 2008 … a 21% appreciation in less than a year?

Remember how the AUD fell off a cliff when the GFC peaked? Indeed, it fell so far so fast – a near 40% collapse from 98c to 60c in just a few months – that the RBA intervened in foreign exchange markets to prop up the dollar:

Click to enlarge

“Safe haven” currency, you say (Malcolm Farr)?

Utter ignorant nonsense!

The Aussie Dollar is a “speculative play”.

A profit-seekers’ gamble.

That rushing tide of “hot money” driving up the AUD exchange rate is just as likely to race out again, exactly as it did in the GFC.

But until it does, and the AUD returns to a reasonable and sustainable level, vital sectors of the Australian economy are rapidly being white-anted … and jobs destroyed in the process.

Manufacturing. Tourism. Retail. Education (ie, foreign students). To name but a few.

Many of those industries and the jobs they provide, once lost, will never come back.

And despite this disaster occurring all around us right now, both “sides” of Australian politics have done a Pontius Pilate impersonation, washing their hands of the problem, proclaiming that there’s “nothing we can do” about the dollar. That’s up to the “independent” RBA, you see. And woe betide anyone daring to question the sanctity of the RBA’s “independence”. So instead, we have an escalating, puerile argument over whether or not (and how much) to financially support affected industries.

With more borrowed money, of course.

Idiots. Invertebrates. Sans testicles.

In stark demonstration of the clueless eunuch status of both “sides” of Australian politics – and indeed, of the “independent” Reserve Bank of Australia – on the matter of dealing with a speculator-driven appreciation in your national currency, let us examine a favourite example of mine.

Norway.

Unlike the RBA’s Glenn Stevens, the Norwegian central bank governor recognises the dangers of a government over-relying on the nation’s commodities wealth, spending too much money, and putting its manufacturing industry at risk (sound familiar?):

Feb. 16 (Bloomberg) — Norway’s central bank Governor Oeystein Olsen told the government to spend less of the country’s oil money and avoid an over-reliance on its commodities wealth or risk killing manufacturing jobs.

The government should tighten its fiscal policy guidelines and limit the use of petroleum revenue to 3 percent of Norway’s sovereign wealth fund from the current 4 percent, Olsen said today in the text of his annual speech on the economy and monetary policy.

“Even though petroleum revenues are phased in gradually, a phasing out of manufacturing and other private industries may not be as smooth,” he said. “Entire industries could be lost. If spending proves to be excessive, such structural changes may be difficult, or impossible, to reverse.”

The world’s seventh-largest oil exporter, which boasts the biggest budget surplus of any AAA rated nation, has largely been shielded from the global financial crisis, in part after spending a record amount of its oil money.

Witness the stark contrast to our own Reserve Bank board of governors.

They have repeatedly indicated that they believe in crowding out (ie, screwing) the rest of the economy, to “make room” for the mining boom. Your non-mining industry and job be damned.

The high Australian dollar is actually great news to the RBA. It is helping their goal of hollowing out the rest of the economy, to “make room” for more mining.

And the high dollar is also great news to the village idiot of our national government, Treasurer Wayne Swan. With little else of substance to boast of, he proudly and deceitfully points to the high dollar as somehow representing “proof” of his own wonderful economic management!

But it is not just concerns about how the government is running the country, short-sightedly squandering its natural advantages, that show parallels between Australia and Norway.

The Norwegians too, have been faced with the problem of speculator-driven “hot money” driving up the value of their currency.

Thanks to the ongoing European debt crisis, in 2010-11 “investors” (read also, “speculators”) had been selling (borrowing) the near zero-interest-rate Euro currency, and investing (speculating) in the traditional “safe haven” currency, the Swiss Franc.  As a result, the Swiss Franc had been rising precipitously, causing problems for their economy. So, in September last year, the Swiss central bank acted to protect their economy, by pegging the value of the Franc to the Euro.

Result?

With the Swiss central bank effectively having put a cap on their potential profits, the European “hot money” went looking for profits elsewhere. They turned to Norway, with their strong economy, budget surpluses, vast nationalised commodities wealth, and AAA rating.

Now, witness the contrast between Norway’s central bank response to “hot money” flowing their way, and our RBA’s response to exactly the same situation:

Feb. 17 (Bloomberg) — Norway’s central bank is monitoring the krone after its recent gains and remains ready to act should the currency’s appreciation warrant a response, Governor Oeystein Olsen said.

“We follow closely the krone developments,” he said yesterday in an interview in Oslo. “We have observed, of course, the recent development of the krone, we’re close to the level” in September, when it touched an eight-year high, he said.

The central bank, which in December lowered its main rate by half a percentage point to 1.75 percent, will respond to krone swings to the extent that they affect inflation. The currency this week touched the highest level since Sept. 8, when the Swiss National Bank’s decision to peg the franc to the euro prompted investors to seek alternative havens…

The exchange rate continues to be a “challenge” for the government, Trade Minister Trond Giske said Feb. 13. The central bank in September signaled it was ready to take steps to curb the krone’s appreciation. Those comments helped weaken the exchange rate, triggering a 4.8 percent decline from a Sept. 8 peak through a trough two weeks later.

The Norwegian central bank acted promptly, to “talk down” the Krone back in September. It worked, for a little while.  Then they slashed interest rates by an effective 22.2% (2.25 to 1.75) in one hit in December. And now that their currency is appreciating again, they are attempting to “talk down” their currency, by reminding markets that they stand ready to act again, to protect local jobs and industry.

Our central bank is doing nothing.

Indeed, they are happy that we have an over-valued dollar that is squeezing (ie, wiping out) the “old economy” sectors.

Because it wants the non-mining sectors of the economy to shrink (ie, die), in order to “make room” for mining, which the RBA mistakenly believes will enjoy a multi-decade boom.

This is your rapidly approaching future, dear reader.

Gillard’s “New Economy”.

Australia. “Poor white trash” quarry to the world.

There are some in the Australian (alternative) financial media who have written on this problem.

The estimable “Houses and Holes” – whose clever nom de plume sardonically depicts the long-running economic policy/vision of both “sides” of Australian politics – and his team at Macro Business is a standout example.

Unfortunately, it is apparent to this humble blogger that few if any in the mainstream financial commentariat have any greater “vision” than the clueless eunuchs in Canberra for whom they act as Press agents.

So if anything is going to be done about the Aussie Dollar, it will only happen if you, dear reader, are concerned enough about the future of this country (and your job) to take action yourself.

You can start by doing as I have been doing.

Contact the invertebrates in Canberra.

Educate.

Inform.

Complain.

Harass.

Abuse.

Point out to the self-interested, overpaid, trough swilling imbeciles on both “sides” of Australian politics that there is no excuse … none … for Australia’s government and Reserve Bank deliberately failing to act to address the root of the problem – a speculator-driven AUD exchange rate.

Other “safe havens” have done it.

Switzerland has done it.

Norway has done it.

Indeed, one of the keys to China’s economic success story, has been its use of an adjustable currency peg, which has allowed their industries time to adapt to changing economic and market conditions:

Click to enlarge

You see, dear reader, our politicians, Treasury bureaucrats (looking at you, Martin “Mini-me” Parkinson!), and Reserve Bank governors are simply too beholden to flawed and failed economic ideologies.

Neo-Keynesianism.

Laissez faire capitalism.

“Free trade”.

“Free markets”.

Globalisation.

“Government debts don’t matter, if you have your own currency … you can just print, and inflate your debts away”.

They fail to recognise that the world has fundamentally changed since 2008.

Thirty-plus years of global debt-binging is over.

The masses have had their long overdue big fright … and have begun to wake up.

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

And as a result, an over-leveraged debt-laden world economy, is now de-leveraging.

And in the inevitable race to the bottom, “currency wars” (ie, devaluing your currency) are a key factor.

Australia’s major trading partners are Japan and China. Both protect local industry, with a weak currency. Zero Interest Rate Policy (ZIRP) for Japan. A currency peg for China.

The USA, UK, and the European Union are all trying to protect their economies, to support and restore their manufacturing sectors, by weakening their currencies through ZIRP, QE (Quantitative Easing ie, printing money), and similar schemes via their central banks.

As usual, Australia is roughly 3 years behind the rest of the world.

But the currency wars is not a game that one can win by coming from way way behind.

Accept no excuses from our political “servants”.

Every other major “developed economy” on the planet is supporting local industry and jobs, by acting to ensure and maintain a weak currency.

Only Australia is doing nothing.

Call, write, or email our politicians now.

And if they give you the same (indeed, any) pathetic, close-minded, imbecilic excuses for not acting on the over-valued, speculator-driven Aussie dollar?

KAP the useless bastards.

Vote 1 Bob Katter.

Vote 1 Katter’s Australian Party.

If the “old” parties won’t act on the most urgent issues facing the nation … I will vote for someone who will.

And will loudly proclaim my intent, all the way to the next election.

UPDATE:

By the way … do not fall for the Coalition’s line, that job losses and business shutdowns are due to businesses preparing for the carbon “tax”. Regular readers know that I have been and remain a vehement opponent of the banksters’ CO2 derivatives scam … and even I don’t buy that bullshit.

Sure, job losses will inevitably mount when the derivatives scam launches.

But right now, job losses and business shutdowns are primarily a result of the speculator-driven AUD:

Death knell looms for Caltex jobs

The global dance of death could come quickly to Caltex’s two refineries after it slashed the value of its refining assets by $1.5 billion due to a confluence of factors strangling profits in this part of its business.

It is another example of Australia’s manufacturing going to the wall due to the strong Australian dollar, rising costs and stiff competition from Asia.

The rise of big Asian refineries with an overcapacity of product is turning the screws for local operators and has prompted Caltex management to announce a strategic review of two key refineries of its own – the Kurnell plant in Sydney and Lytton in Brisbane.

And this comes on the heels of Caltex closing one of its petrol-making units at Kurnell last year.

The review was instigated six months ago and is expected to take another six months before investors and customers know the verdict, which could include the sale, closure or further investment in the business.

Given today’s writedown of $1.5 billion of assets due to expectations of a prolonged period of pain, the market is expecting the review will recommend closure of at least one of these two plants which convert oil into petrol and diesel.

Indeed, Caltex supplies one third of Australia’s transport fuels, so the review will need to make sure it does not adversely impact its customers.

Soon, we will not only have given up our food security, by selling the farm to foreigners.

We will not only have sold off our mineral wealth and sent the profits abroad, thanks to a disaster-in-waiting “mining tax” that will actually help the Big 3 multi-national miners to grow their oligopoly.

Soon, we will have given up fuel security too.

And with no manufacturing sector left either, well, any future war would be fun, wouldn’t it?

Carbon permit face-slapping, anyone?  To the death?

Oh wait … they’re not even paper.

They’re just electronic digits.

Exactly like your “cash” in the bank.

UPDATE 2:

Lighthouse Securities’ Greg McKenna, aka “Deus Forex Machina” at Macro Business, has written an excellent overview on this problem too:

The Australian Dollar is higher than it has been in decades. Indeed it is more than 30 cents higher than the average since it was floated in December 1983. Yet while we see businesses constantly in the news contemplating or actualising job losses and off shoring the arms of government and policy makers here in Australia can’t, won’t or don’t want to do anything about it.

This is at a time when most countries in the globe seem intent on manipulating there currency to the best advantage that they can.

I still call the Aussie Dollar “the battler” – its a legacy of it past when it always caught pneumonia at the first signs of the slightest global cold. But back then we didn’t have China, a mining boom and a central bank, our beloved RBA, with a structural bias to tighten in a world necessitating the exact opposite for most countries ( if you are interested why here’s a blog I did last April which explains why the RBA has a bias to tighten ).

It doesn’t battle much anymore though does it, well except for supremacy.

But what to do?

We know the RBA and Australian Treasury are on Board with a multi-decade China boom but do they really want to napalm the rest of the economy and just leave us with an economy full of houses and holes.

I hope not but I fear so.

Please read his article. Greg agrees that action to alleviate the impacts of the high AUD is vital. He also has some important insights on the views expressed by Treasury Secretary Martin “Mini-me” Parkinson. But (unlike myself) Greg does not favour a currency peg, and instead prefers and explains an alternative solution.

This is a debate that must be had. And urgently.

I thank Greg for his contributions to stoking the fires of that discussion.

Still Pointing To The IMF’s Opinion Now, Wayne?

24 Jul

Remember when Treasurer Swan repeatedly pointed to cherry-picked comments by the IMF, as though they should somehow be construed as proof of Labor’s economic management throught the GFC?

In light of his government’s/the Treasury’s “truly extraordinary” assumptions underlying the “stratospheric” growth forecasts in the May budget, any bets that Wayne won’t be pointing out what the IMF is saying now, about China’s darkening economic prospects?

From Dow Jones Newswires via the Australian (emphasis added):

China’s manufacturing sector shrinks, HSBC’s preliminary PMI survey signals

HSBC’S preliminary survey of China’s factories indicated manufacturing activity in the world’s second-biggest economy in July declined from last month, the first such contraction in a year.

The survey comes at a time when various economic indicators in China are pointing in different directions, leaving market participants unsure if they should be more concerned about slowing growth or high inflation.

The International Monetary Fund released its annual review of China today, warning that inflation, real-estate bubbles and weak monetary controls pose “significant risks to financial and macroeconomic stability” in the world’s second-biggest economy.

“Significant risks” to the financial and economic stability of the nation whose massive, regional “shadow-banking” credit-fuelled “stimulus” in the GFC was almost solely responsible for our not following after the USA, UK, and Europe.

I think that I can safely guarantee that you won’t be hearing Wayne trumpet that comment from the IMF.

Barnaby: Selling The Farm Will Hurt All Of Us

30 Jun

Nationals Senator Barnaby Joyce says Australia's best farming land should be off-limits to all foreign investors and mining companies. Picture: Glenn Hampson Source: News Limited

Senator Joyce writes for the Canberra Times (my emphasis, links added):

Maybe I am getting the flu and that is why I am grumpy otherwise it is the complete loss of attention to the major issue of our time, and sorry folks it is not global warming. It is the change in the geopolitical world from one dominated by democracies to a world dominated by quasi-corporate democracies and one party states.

Europe is in more trouble than the early settlers by reason of a loss of control of its borders and a loss of pride in its Judeo-Christian origins. It has morphed into a socially and politically correct nebulous fog with an enormous debt. Debt is generally the honesty pill of rubbish policy.

America is in trouble, as I predicted in 2009, for most of the reasons Europe is. America also seemed to suffer that other affliction worse than the flu, an unbridled belief that others would adhere to the purity of your economic theories coupled with a benevolent romantic feeling of how things will pan out for you ”over the long term”. They don’t.

The global financial crisis was really a global debt crisis. A GDC not GFC. A few years ago the crisis was about private debt but the debt is still there, the crisis is not over, it’s now just public debt. On Tuesday the US hit its Congressional approved debt limit of $14.3 trillion.

There doesn’t seem to be anything on the horizon to change things and while the debt is still building the crisis remains.

We are heading the same way. We promise to repay our debt but Labor never does.

Once a country, which is doing quite well by breaking your well meaning trade laws, gets it foot on your throat it increases its pleasure by increasing the pressure. Soft authoritarianism turns into hard authoritarianism backed up by something that the west was good at, a state of the art highly trained and proficient military.

Do we honestly believe that countries which have scant regard for the suite of issues that we hold sacred, such as our legal code and individual rights, are nonetheless going to be leading the charge, hand in hand with Australia, to cool the planet?

They know how to deal with us, mouth the platitudes then carry on regardless; with any luck we can do some more self-inflicted damage to ourselves. Their game plan is pure and ruthless, be No1 by whatever it takes.

We have sold our farm processing sector; we are now selling substantial sections of our better land. We have moved our manufacturing away and increased the price of power so manufacturing does not come back.

Yes, and we now have our debt. The Labor party are trying as hard as it can to make it politically incorrect to discuss debt but I strongly believe that in Canberra its effect will be the only subject in town when it finally hits the fan.

So in Australia how do we manage a future dispute with another nation’s government about its strategic economic interest in our land? Do we believe that a dispute will never arise? There is quite a difference between taking a corporation to court compared to taking what is in fact a 100 per cent owned arm of a foreign government to court. Judicial action in these cases might have some distinct drawbacks.

Those who are making the money from the current sales will say that this is just parochialism and I suppose that is to be expected. They can hardly disagree with the largesse that has set them up for life, but they will not be offering up their windfall to solve the future problem. In the past we have had foreign investment but not ownership by foreign countries like we are getting now, predominantly by China.

The exception to this, of course, is the British empire in its role in Australia around about 1788. I may be going out on a limb here but I do not think indigenous Australia ended up with the strategic upper hand in that engagement. Indigenous Australia should have listened to the sage advice that a foreign government taking ownership of your land is just the market economy helping you out and they would be completely overreacting and unnecessarily parochial if they believe that it would in anyway diminish their ultimate hold on the land.

Just in case you’ve missed your caffeine this morning – I dare to venture that Senator Joyce was employing a touch of irony in his final sentence.

Which is more than one can say for the Great Green Future of those Aussies presently employed in industries associated with the making of iron and steel, et al.

UPDATE:

Barnaby’s having a lot to say today – and getting media play.

From The Australian:

Nationals Senator Barnaby Joyce says Australia’s best farming land should be off-limits to all foreign investors and mining companies as the Greens demand a review of investment rules, accusing the government of putting coal sales ahead of food security.

Amid revelations a Chinese mining giant spent $213 million buying 43 farms for coal exploration in the NSW Northern Tablelands, the opposition regional development spokesman said this morning legislation was urgently needed to protect prime agricultural assets.

“I think prime agricultural land, and we have to remember that we are talking about the very best land here, it should be off limits because it is irreplaceable,” Senator Joyce told ABC Radio. 

“Once it’s gone, it’s gone forever and prime agricultural land is really the agricultural form of the Opera House it is unique and Australia has some of the best in the world and that should always be quarantined from any event that would destroy its nature.”

Senator Joyce said prime agricultural land would be identified by soil structure, yield type, and water bearing capacities, and would be protected by state-based legislation. He said the Foreign Investment Review Board powers should be reviewed and supported independent Senator Nick Xenophon’s call for the threshold for FIRB intervention on purchases to be lowered from the current $231m to $5m. 

Currently foreigners purchasing more than a 15 per cent-plus stake in most assets worth more than $231m are required to seek approval from the FIRB.

“I believe should be lowered. To try and pick a number on your show this morning I think would be slightly nave on my part. But I think it should definitely be looked at,” Senator Joyce said.

“Now exactly what those changes are would be would be subject of an investigation by the appropriate committee.”

Assistant Treasurer Bill Shorten, who has been commissioned by Julia Gillard to review land ownership, yesterday rejected calls for an inquiry into FIRB’s rules.

PM-in-waiting Bill Shorten is Minister for Financial Services and Superannuation.

The same bloke who’s mother-in-law is directly implicated in the infamous Heiner Affair cover up – that was recently covered up again by a Greens-Labor-Steve Fielding travesty in the Senate.

The same bloke who thinks of your super as a “significant national asset” … a kind of “sovereign wealth fund”.

And has already begun implementing first stage policies to steal it.

Read all about that here – “No Super For You!!”

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