And demotion, losing his Shadow Finance Minister portfolio.
But in the end, the truth will out.
The worm has begun to turn.
And some economic “experts” are beginning to agree.
Barnaby is right, on his most fundamental and politically courageous warning – the steeply rising “trajectory” (trend) of Australian government debt:
From the Herald Sun (my bold emphasis added):
GILLARD Government debt levels are forecast to blow out by 80 per cent to $165 billion in this term alone – equal to more than $14,000 for every working Australian.
Analysis of Budget documents reveals that between the 2010 election and Federal Treasury’s update in October last year, the 2012-13 net debt estimate rose $54 billion to $144 billion.
With Wayne Swan having junked the Government’s commitment to a surplus this financial year, Bank of America Merrill Lynch now forecasts Treasury will raise the estimate by a further $21 billion in the May budget.
“The government is starting to develop some form when it comes to over-estimating the improvement in its budget balance,” Bank of America Merrill Lynch chief economist Saul Eslake said yesterday…
Mr Swan’s spokesman said the Government had no plans to raise the gross debt limit. Mr Eslake said the increase that had already occurred was “troubling”.
Monash University Professor of Business and Economics Jakob Madsen said the gross debt rise was “disturbing”.
“It’s a dangerous trend and it’s at the wrong time.
…
Business Council of Australia CEO Jennifer Westacott said spending had grown “out of step” with revenue.
“If that doesn’t change we are going to have serious public debt problem,” Ms Westacott said.
Mr Eslake, Professor Madsen and Ms Westacott all said Australia did not currently have a debt crisis.
But, Ms Westacott said, “we do have a budget management crisis”.
Really?
Shame these “experts” did not notice this problem and speak up earlier. Have we not had to endure 5 years of constantly being told that the ALP government have given us “sound economic management”?
Do not be misled by all those who (still) downplay the importance of Australia’s government debt position.
Do not be misled by all those who prefer to pull the wool over your eyes, by talking about government debt using only the “net” figure rather than the gross, because the “net” figure is lower and does not sound so bad – conveniently ignoring the highly important fact that the $13 – $14 billion per year in interest expenses due are payable on the much larger gross figure:
Budget 2012-13 – Budget Paper No.1, Statement 9, Note 10
Do not be misled either, by those who – intentionally, or accidentally – distract from and dismiss the importance of ever-rising government debt, when they (quite correctly) point out that an even bigger problem is our world-leading private debt.
As your humble blogger reaffirmed less than a week ago:
“This is the #1 reason why, even though it is true that private debt is much worse than public debt, I believe that Barnaby Is Right in constantly expressing concern over the rapidly rising trajectory of public debt in Australia. Because, regardless of whether or not you agree that our public debt is “low compared to other OECD countries,” the undeniable fact remains that our rapidly rising government debt does represent a weakening of the government’s balance sheet… even before any banking crisis arrives! Foreseeing that our banking system was, just like the rest of the West, our key vulnerability, and that weakening the government balance sheet unnecessarily would only make our future problems far more calamitous, was one of the main reasons why I launched this blog in early 2010. When you hear some distinguished-looking, eminent economic “expert” – or politician – reassuring us that Australia’s public debt is “low”, just keep one word at the front of your mind. Ireland. And remember what happens to the public debt level, when a government with previously “low” public debt suddenly finds itself borrowing to the stratosphere – often from the IMF – in trying to bail out an over-leveraged banking system.”
Australia’s total government debt – using the popular “as a percentage of GDP” measure (which I loathe) – is now worse than where Ireland’s was before their private debt bubble burst. And ours hasn’t. Yet. Note well: the following charts are only current through 2011; our Green-Labor government has piled on an awful lot of additional debt since then –
IRELAND – click to enlarge
AUSTRALIA – click to enlarge
Australians should never forget that, prior to their real estate (private debt) bubbles bursting, Ireland and Spain were considered the “outstanding” economies of the EU.
From the New York Times, June 2011 (my bold added):
Where Private Borrowing Led To Public Debt
FIVE years ago, a survey of the euro zone would have shown two star countries. They were growing rapidly and running government budget surpluses. Their national debts were low. Other countries sought to emulate their success.
Which is almost exactly the same situation Australia is in.
Minus the government surpluses.
For many years our massive banking sector – now bigger by market cap than all of Europe’s combined – has borrowed heavily overseas to finance our world-leading overpriced housing bubble.
It does not take an “expert” economist to see what the future holds for us.
Just “a little ol’ country accountant”, with the courage to speak up and call it as he sees it.
Barnaby Joyce.
UPDATE: And yet another expert comes out. To say the same thing Barnaby has been warning of, for the last 3.5 years –
ONE of the nation’s top financiers yesterday joined the debate on the country’s rising debt level – describing it as dangerously high.
AMP chief economist Shane Oliver also urged the government to stop using economic comparisons to countries in Europe and the US to justify a predicted 80 per cent blowout to $165 billion this term.
“It just shouldn’t be this high,” said Mr Oliver, who said the government hadn’t taken advantage of the decade-long resources boom.
“If you take Ireland for example, it has had a similar level of public debt to Australia in 2007 and only six years later, debt is over 100 per cent of GDP.”
Speaking at the The Australian-Melbourne Institute Growth Challenge conference in Melbourne, Mr Abbott said economists should not be taken in by Labor’s use of the term “market-based mechanisms’’.
“It may well be, as you say, that most Australian economists think that the carbon tax or emissions trading scheme is the way to go,’’ he said.
Not one of these economists who are calling for a carbon “X”, saw the GFC coming.
Not one.
Australians lost billions from their retirement savings.
Our country was plunged, unprepared, into a massive Labor and greenie-Ken Henry-inspired monster debt-a-thon.
Why?
Because NOT ONE of these #JAFA’s saw the GFC coming.
Including the latest #JAFA economist to be given charge over the Australian economy – and your future – the new Treasury Secretary, former student of “Helicopter Ben” Bernanke, Martin Mini-me Parkinson.
Only one (1) Australian economist did see it coming.
Dr Steve Keen –
And only twelve other economists, worldwide, along with him.
This paper presents evidence that accounting (or flow-of-fund) macroeconomic models helped anticipate the credit crisis and economic recession. Equilibrium models ubiquitous in mainstream policy and research did not.
Note that well.
It was only those rare economists who shun the kind of modelling that is “ubiquitous in mainstream policy”, and instead use “accounting” models, that got it right.
In other words, it was only the few economists worldwide who think like accountants, who were able to see the GFC coming.
REMEMBER back in 2009 when Barnaby Joyce pondered aloud the possibility of the US defaulting on its debt?
Just to recap in the concisest way, things went badly for Joyce. We found ourselves pondering this yesterday as we listened to the dulcet tones of the ABC’s Eleanor Hall on The World Today: “. . . the [US] Treasury has warned that Congress has only until August 2 to come up with a compromise to lift the $US14 trillion debt ceiling or risk a default and a default would have drastic consequences, not just for the US but for the global economy”.
Is the time approaching where Joyce must be acknowledged as a clear-eyed prophet?
“Alas, Cassandras are rarely enjoyable company in any party. It was hardly the greatest feat of the prefrontal cortex amygdala [utilised for intuition, he explains] to foresee that one, but politically it had to wait for the economic karaoke to bravely sing all together prompted by the big bouncing cheque.”
Amen.
But wait, dear reader.
There’s another outstanding reason why no sane person should trust the “leading” “mainstream” economists’ opinions about “pricing carbon”.
The majority of these economists you are hearing from on the subject, have a massive conflict-of-interest.
They are owned.
By banks.
Take a look at this little online stoush that I had right here on barnabyisright.com, with “leading” #JAFA economist Saul Eslake.
He objected to my portrayal of his and his fellow dozen economists’ Open Letter in support of “pricing carbon”, as being a Banksters’ Glee Club.
Then under return fire, he foolishly conceded that, as far as he knows, 77% of those economists (including himself) are current and/or former employees of banks.
Mr Eslake himself being former chief economist of the ANZ Bank, and now employed by BHP Billiton (who stand to make a killing from “pricing carbon” – really!), and the Australian Government via the “independent” Grattan Institute.
Tony Abbott – who has an economics degree himself – is actually demonstrating both brains and balls, by defying the “mainstream wisdom” of economists over the carbon “X”.
No sane person should trust economists at all after the GFC.
And especially, no sane person should ever trust those “leading” mainstream economists who are now out there publicly singing for their supper, on behalf of the bankstering industry.
Here is Climate Change Minister Greg Combet’s oh-so-obviously fallacious attempt at sledging Barnaby’s economic nous on June 2, 2011 (or, see it here on the ALP’s own website):
“Barnaby blunders as economicsts (sic) back carbon price”
Ok, ok, maybe I’m just a spelling nazi. I still think it’s hilarious … and somewhat of a Freudian slip.
Notice too, that the apparently illiterate Combet loudly and proudly bangs on about “13 of Australia’s most prominent economists” who had written an Open Letter in support of a carbon (dioxide) price.
Funny how he neglected to mention that at least 7 of those 13 “economicsts” (sic) are employed by banks. And, that at least another 3 were previously employed by banks.
Yes, that’s right. At least 77% of those Open Letter “economicsts” (sic) were and/or still are employed by the very same parasites who are pressing the hardest for carbon dioxide “pricing” as the basis for their new global casino.
Do you think that little nugget of truth might just have some influence on their “support” for it?
Oh yes. One other thing.
Did you know that one of those “13 most prominent” “economicsts” – Mr Saul Eslake – had himself a little dummy spit right here on this lowly blog, because he didn’t like his little group of rent-seeking parasites being referred to as “The Banksters’ Glee Club”?
Yes indeed. Mr Eslake threw his rattle right out of the cot. See for yourself.
And a good thing it is too.
Because thanks to his little tantrums – yes, more than one – we have now seen a further glimpse of both the heights of vanity, and the depths of deception, that these “economicsts”, banksters, and their dyslexic political lackeys like Combet et al will go to, in order to get the legislation needed to implement their megalithic new derivatives trading casino scam passed through our Parliament.
Seriously – would you trust an ocean-front dwelling former union hack who can’t even spell the word “economist” to successfully implement a multi-billion dollar, economy-altering energy taxation scheme?
Have you stopped to think carefully … and deeply … about why a (supposedly) democratic and (supposedly) poll-driven government persists with pushing through big “tax” policies, when polls consistently prove that the majority of citizens oppose them?
Is it really a matter of high-minded “belief” and “principle”?
Or, is it really about something far more low-brow and prosaic – selling out Australia for the benefit of big foreign interests.
One only need pause to scratch below the surface of the political rhetoric, and reflect carefully on the evidence, for the answer to become crystal clear.
From The Australian, June 15, 2011 (emphasis added):
“I think there are many companies, a government or two, and ourselves, who will mount a High Court challenge,” Mr Forrest said.
“It is not my preference. My preference is to speak to the Treasurer, explain to him that the reason why the multinationals agreed to this tax in just three days from (Julia) Gillard being appointed (Prime Minister) was because they were protected from it and everyone else had to pay.”
The Gillard government’s carbon dioxide “tax” scheme is designed with exactly the same malevolent, Australia-loathing intent as the mining tax.
Global mining giant BHP Billiton’s South African CEO, Marius Kloppers, has been directly and intimately involved in the by-invitation-only, closed-doors negotiation over the design of both of our Green-Labor government’s great big new “tax” schemes.
Consider very carefully what Kloppers has angled for, in his sweetheart deal with Gillard on the carbon dioxide “tax”.
From The Australian, September 16, 2010:
A(nother) key consideration would be to give industries exposed to the tax a rebate, Mr Kloppers said, because without a global price, these companies would become uncompetitive and might consider shifting polluting assets to countries without a carbon tax.
Sounds reasonable, right?
Wrong.
It’s a sneaky, deceitful, anti-competitive, market-monopolising ploy. One that would completely absolve BHP of any costs at all under the “carbon tax”, while penalising all of their smaller competitors – our local, up-and-coming Aussie miners.
Which is why our much-maligned local Aussie businessman (and indigenous philanthropist of the first order), Andrew “Twiggy” Forrest, was on to this scam like a flash.
From the Herald Sun, Sept 22, 2010 (emphasis added):
Mr Forrest said that Mr Kloppers’ carbon tax plan was designed to help BHP.
An Open Letter whose leading light, former ANZ bank economist Saul Eslake, is now employed by the Grattan Institute. An “independent public policy think-tank”. One that was set up and funded by the Australian Government… and BHP Billiton. An “independent” institute featuring none other than … you guessed it … BHP Billiton’s Marius Kloppers on its Board of directors.
“Independent” my @$$!
Let there be no misunderstanding.
Everything that this government does, is done with the deliberate intention of weakening our country – destroying our local industries, impoverishing households, and weakening our government financial position.
Why? Because our every act of wilful economic self-harm, has benefits for non-local (ie, foreign) interests.
The evidence is unmistakable.
They really are, quite literally, selling us out.
Once upon a time, what they are doing was called “treason”.
And punished accordingly.
The MRRT and the proposed “carbon pricing mechanism” have both been deliberately designed – and secretly negotiated – to place an unfair burden only on local Aussie companies. To the benefit of the monster multinationals such as BHP Billiton and RIO.
The carbon dioxide “tax” / trading scheme is deliberately designed to destroy our nation’s natural low-cost energy advantage (coal-fired power). To the benefit of the international bankstering cartels such as Goldman Sachs and friends.
Now, the “independent” (there’s that word again) Reserve Bank of Australia “estimates” that 73% of our debt is owed to (unidentified) “non-residents” of Australia. But our government’s own department, the one that actually sells our debt, officially doesn’t have a clue.
The writing is on the wall, dear reader.
Because both of the two big economic “reforms” that are about to be legislated by our Green-Labor government – led by life-long“creeping communist” Julia Gillard – are designed to devour Australia.
From the Liberal Party’s website, Latest News, 3 June 2011:
The Coalition will relieve the red tape burden from Australia’s small businesses by giving them the option to remit the compulsory superannuation payments made on behalf of workers, directly to the ATO.
Small business will be given the option to remit superannuation payments to the ATO at the same time as they remit their PAYG payments.
Senator Barnaby Joyce writing for The Punch, 13 May 2011:
On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.
Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.
The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.
Labor has already introduced legislation in the 2011-12 Budget that aims to grab your super too.
In fact, Labor’s Minister for Financial Services and Superannuation, Bill Shorten, published an op-ed a month ago stating that he views your super as “our sovereign wealth fund”.
There is a wave of government confiscations of private retirement savings rolling around the Western world right now. The first ripples have quietly rolled onto our shores already.
Treasury Secretary Timothy F. Geithner has warned for months that the government would soon hit the $14.3 trillion debt ceiling — a legal limit on how much it can borrow. With that limit reached Monday, Geithner is undertaking special measures in an effort to postpone the day when he will no longer have enough funds to pay all of the government’s bills.
Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers.
The USA is taking public servants’ pension funds, to pay government bills.
Note that well.
Because just over 3 weeks ago – and 4 days before that Washington Post story hit the wires – our own Senator Barnaby Joyce made a very disturbing revelation (below).
Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.
“This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”
But Argentina and Hungary are not like us, right? That couldn’t ever happen in a Western economy like ours, could it?
Oh, but that’s France. They’ve got hangover problems from the Global Financial Crisis, right? That couldn’t happen in a really strong economy like ours, one that sailed through the GFC without even having a recession … right?
… another recent reversal we’ve seen has come from Latin America. In the 1990s, Bolivia’s decision to move its pension assets from the state to private managers placed it among the most advanced pension systems in the region. However, the current government has decided to nationalise the assets once more claiming it is creating a pension system that is equal for all.
Oh yes, but Poland is really just a Central European economy, not long removed from communism. Something like that couldn’t ever happen in a mid-level, “advanced Western economy” like ours … right?
From Business Insider, 10 May 2011:
Irish Bombshell: Government Raids PRIVATE Pensions To Pay For Spending
Capital city dwelling values fell by a seasonally adjusted 2.1 per cent in the first quarter of the year, according to the latest RP Data-Rismark Home Value Index.
The quarterly change was the steepest since the index series began in June 1999, RP Data research director Tim Lawless said.
And from the Sydney Morning Herald, 17 May 2011:
Real estate slump will leave banks in pain too
Australian real estate, long the subject of global concern, bears all the symptoms of a market that simply has run out of puff.
About that $20 billion in RMBS that Wayne Swan purchased. With borrowed money. Just how safe is that $20 billion “investment” looking?
From the Sydney Morning Herald, 26 May 2011:
Arrears on mortgage repayments spiked to a record high in the first three months of 2011, as more Australians struggle with rising costs, Fitch ratings agency says.
Arrears on prime residential mortgage-backed securities (RMBS) of 30 days or more hit a record high of 1.79 per cent in the first quarter, from 1.37 in the final quarter of 2010, the group said, as Christmas spending and the Queensland floods forced more Australians to struggle in repaying their mortgages.
The increase in arrears for the most fragile band of mortgage borrowers, low-doc loans, with payment delays of 30 days or more hit 6.74 per cent in the first quarter, up from 5.7 per cent in the final quarter of 2010, a higher level than December 2008 quarter, when the financial crisis hit and the Reserve Bank began rapidly lowering rates.
Low-doc mortgages are written for riskier borrowers than prime mortgages, which are written for customers who have a reasonably safe ability to borrow.
Delinquencies of three months or more on conforming low-doc mortgages, which are used by people who are self-employed for example, soared past 5 per cent in the March quarter, from about 3 per cent the December 2010 quarter.
Would our Wayne have “invested” any of that borrowed $20 billion in low-doc RMBS? Or, did he stick with prime RMBS?
From the Australian Office Of Financial Management website:
$20 billion worth of RMBS. With low-doc loans included. A brilliant government “investment” in keeping our property bubble inflated. And now that investment too, is failing, with record-high arrears on the mortgages backing those “securities”.
But there’s nothing really to worry about, because we’ve got the “strongest banking system in the world”, right? Even if the property bubble does pop, our government would never need to go looking for even more money, to bail out our banks … right?
Moody’s Investors Service has downgraded the long-term debt ratings of Australia’s big four banks to Aa2 from Aa1, citing their relatively high reliance on overseas funds rather than local deposits.
Moody’s explanatory paper effectively stated that our banks are Too Big Too Fail. That the Big Four’s liabilities must continue to be supported by the Australian Government Guarantee For Large Deposits And Wholesale Funding that Labor “decisively” introduced (like Ireland) in response to the GFC. And if the guarantee is removed, Moody’s indicated that the Big Four’s long-term debt ratings will be downgraded by at least two further ‘notches’.
Meaning?
Moody’s has just placed our government on notice. Australian taxpayers are now effectively on the hook – permanently – to bail out our banks when our housing bubble bursts.
Exactly the same thing that happened in the USA, UK, Ireland, Spain et al.
Don’t believe that we have a housing bubble? Think the nightmare housing-driven bank collapse scenario that is throttling the rest of the Western world won’t ever happen here?
Fine.
If the housing-collapse trigger event is not enough to bother you, then take a moment to think about derivatives.
Those “exotic” financial instruments that were at the heart of the Global Financial Crisis. The ones that famously prudent investor Warren Buffet referred to as “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”, way back in 2003.
The same kind of exotic instruments that lauded economist Saul Eslake also referred to just a few days ago, in an argument with me on my blog over my criticism of his public lobbying for a carbon dioxide “pricing” scheme (emphasis added):
And exactly what kind of “business” makes up 92.3% of that “Off-Balance Sheet” $15 Trillion – more than 10 times our nation’s annual GDP?
You guessed it. Derivatives. Those “financial weapons of mass destruction” which so nearly blew up the whole world in 2008-09.
Finding it a bit difficult to get your head around these huge numbers? Pictures often help.
Take a look at this simple chart comparing our “safe as houses” banks’ On-Balance Sheet “Assets” (blue line) – which are 66% loans – versus their Off-Balance Sheet “Business”, 92.3% of which is derivatives (click to enlarge):
$2.66 Trillion in "Assets" versus $15 Trillion in Off-Balance Sheet "Business"
Still feeling confident about our banking system?
There’s more.
Australia’s banking system only just dodged a bullet in 2008-09, thanks almost entirely to the government (taxpayer) guarantee which is still in place today.
“Almost” entirely thanks to the government guarantee, you say?
That’s right. Something else helped save our banking system too.
The Australian public remains blissfully unaware that during the GFC, two of our Big Four banks, and our very own central bank, the RBA, all obtained secret emergency loans from the US Federal Reserve – which is simply printing new money, Zimbabwe-style.
Data released by the Fed shows the RBA borrowed $US53 billion in 10 separate transactions during the financial crisis… according to a report in The Australian Financial Review.
NAB borrowed $US4.5 billion, and a New York-based entity owned by Westpac borrowed $US1 billion, according to The Age.
If you think “it could never happen here”, if you think that our government would never take away your super to pay for its massively wasteful spending, its crappy “investments”, or to bail out our Too Big Too Fail, very recently downgraded, multi-Trillion derivatives-laden banking system, then it’s time for you to think again.
Were you one of the many who ridiculed Barnaby Joyce’s warnings in late 2009, about the possibility of a US debt default (“Barnaby Warns Of Bigger GFC“)?
That’s coming to pass right now. Trying desperately to avoid a default is the reason why the US Treasury has now resorted to stealing federal workers’ retirement savings, to pay government bills.
On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.
Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.
The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.
That is exactly what is happening in America. Right now.
And Barnaby is warning that it could happen here too.
The first steps in that direction have already begun.
From Global Custodian (Australia edition), 11 May 2011:
The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.
In light of the botched “school halls” program, and the stalled white elephant NBN – which so far has only achieved a 12% takeup rate, versus their predicted 58% – would you really trust this government to wisely and prudently invest your super in Government infrastructure projects?
Others have their doubts.
From The Australian, 12 May 2011:
The government’s plan to use tax incentives to encourage superannuation funds to invest in new infrastructure could be thwarted by inadequate returns on projects and a reluctance by the states to take on project risk, experts say.
First, a little “encouragement” for super funds to invest in government spending programs.
Then, when the costs blow out, or when the government debt becomes unmanageable … or when the banks need bailing?
And, he is the only politician in Australia with the honesty, decency, and courage, to (once again) try to forewarn the public about the risks of debt, and where this debt train is taking us.
Still not convinced there’s anything to worry about?
Then consider the words of Labor’s PM-in-waiting, the Minister for Financial Services and Superannuation, Bill Shorten. He already thinks of your super as a “significant national asset” … a kind of “sovereign wealth fund”.
From Shorten’s op-ed published in The Australian, 4 May 2011:
This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.
… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.
Superannuation “strengthens our financial sector”? Can you see where this is going?
Shorten and his cohorts already have their eyes on our $1.3 Trillion in super savings. In Labor’s view, your retirement savings are “our sovereign wealth fund”.
When our Too Big Too Fail, derivative-laden banks inevitably run into trouble again – as indeed they are right now with a falling housing market – you should have no doubt that our government will follow the lead of the USA, France, Ireland, Poland, and all the rest, and simply take your super to prop up our “financial sector”.
After all, they have “guaranteed” our banks. Your future taxes … and if necessary, your super … are the collateral for those guarantees.
But if the Coalition wins government everything will be fine, right? They’re far better economic managers, right? We can all trust the Liberal Party not to put their hands on our super, to pay down Labor-incurred debts … right?
Wrong.
Just this past Friday 3 June 2011, the Liberal Party announced a new policy that they will take to the next election. Loaded with weasel words, it is yet another harbinger of the super theft to come, sneakily disguised as a helpful “reform”.
From the Liberal Party website:
Further relief for small business
The Coalition will relieve the red tape burden from Australia’s small businesses by giving them the option to remit the compulsory superannuation payments made on behalf of workers, directly to the ATO.
Small business will be given the option to remit superannuation payments to the ATO at the same time as they remit their PAYG payments.
Billions and billions of dollars in compulsory superannuation payments, going directly from our employers’ bank accounts to the government’s tax department , every 3 months. And we have to simply trust the government of the day, that every cent of it will immediately be passed on to our private super funds. Not siphoned off into special “investments”, or government accounts. Or simply “sat on” for a month or so, in order to prop up the government’s weekly cashflow needs.
Oh, but not to worry … it will just be an “option” for “small” businesses to do this, of course.
Right. If you believe that, then I’ve got an air-backed derivative called a “carbon permit” to sell you. Ever heard the old saying, “It’s the thin end of the wedge”?
A final thought.
Our government is presently considering the Garnaut proposal for introduction of a carbon dioxide “pricing mechanism”. A key part of this proposal that has (surprise surprise) drawn strong public support from economists employed by the banking sector, is the suggestion that the billions of dollars raised should be administered by an “independent” Carbon Bank. One that …
In other words, a Carbon Bank run by unelected, unaccountable parasites – chosen from the banking sector, no doubt – with the government … meaning taxpayers … acting as the final guarantor for any losses made on their “green” “investments”.
Does that prospect concern you?
Can you see where this is all heading?
We have a government that has already racked up nearly $200 billion in gross debt.
Is running a “forecast” $50 billion annual budget deficit.
And – like an America’s “Mini-me” – has now moved to raise our debt ceiling by another $50 billion (ie, a 25% increase), to a new record quarter of a Trillion dollars.
This is the same government of completely unqualified economic incompetents behind a string of costly disasters – killer ceiling insulation, overpriced school halls, “green scheme” rorts, subsidised Toyota hybrids (that noone except government is buying), the problem-plagued Nation Bankrupting Network … and their latest rort-ridden debacle, “free” set-top boxes.
Do you honestly believe that this government would not end up burying taxpayers with even bigger losses from their carbon dioxide “air tax” scheme too?
Do you honestly believe that this government would never follow the lead of Argentina, Hungary, Bolivia, France, Poland, Ireland, and now the superpower USA … and steal your super to pay for massive debts that they have racked up?
These are just some of the many sound reasons why Senator Joyce has persistently tried to raise public awareness of the real and grave peril of ever-increasing government debt and deficit, in a (supposedly) post-GFC world.
Your retirement savings depend upon your taking notice of his warnings.
Barnaby is right.
If like me you are under 50 years old – indeed, if you are under 60 years old – then I’m willing to bet you all of my super that you will never see all of yours.
And unlike our bank(st)ers and government … I never bet.
Anyhow, from the Guardian UK newspaper, 1 June 2011:
World Bank warns of ‘failing’ international carbon market
The international market in carbon credits has suffered an almost total collapse, with only $1.5bn (£916m) of credits traded last year – the lowest since the market opened in 2005, according to a report from the World Bank.
And yet, only yesterday we saw 13 “eminent”, “high profile” Australian economists – 10/13 with connections to the banking sector – publish an Open Letter to our government, advocating for an emissions trading scheme here in our pissant little (but great) nation.
It is abundantly clear that these very “economists” are – unsurprisingly – still as contemptibly useless a bunch of ivory-towered, commonsense-bereft tea-leaf readers as when they all utterly failed to foresee and forewarn of the onrushing GFC. Only the biggest, most catastrophic financial disaster in almost a century.
These “experts” are either ignorant, or simply dismissive of, the parlous state of carbon dioxide “schemes” around the world.
These “experts'” advocacy for an “independent” authority to administer a carbon “pricing” scheme, represents a blatant attack on the democratic (and Constitutional?) rights of the citizens of this country, to elect those who will be afforded the power to determine and impose taxes and levies by popular ballot.
These “experts'” advocacy for an “independent” Carbon Bank with the power to borrow against future government (ie, taxpayer) revenues, represents a wilful moral and intellectual dereliction of responsibility, one that is especially repugnant given their “eminent” positions of “authority” on matters concerning finance and banking.
It’s long past time that the Australian public clearly recognised these shills for Big Corporate interests for what they actually are.
Former chief economist for ANZ Bank. Now director of the Grattan Institute – a “public policy” “think tank” whose telling provenance we will return to shortly.
Oh what a cheap shot. I don’t work for a bank any more, and neither do two of the other signatories; while three others have, as far as I know, never worked for a bank. And while it is true that banks might make money from an emissions trading scheme, they could just as likely lose (as many banks have done from trading other ‘derivatives’. However there’s no way that banks would make any money out of a carbon tax. Moreover, none of the signatories of this open letter are likely to derive much if any benefit from whatever ‘compensation’ arrangements accompany whatever means is eventually adopted to put a price on carbon emissions.
So you are way, way off beam in accusing any of us of being motivated by self-interest – which is a typical accusation made by those who can’t be bothered debating the issue itself. Playing the man, not the ball, as we say in the southern states
Let us very closely examine each one of Mr Eslake’s comments.
In so doing, we will see clearly not only the heights of vanity and hypersensitivity to which much-lauded #JAFA‘s such as Mr Eslake climb (he has found and bitten at a post by a lowly and insignificant blogger, after all).
We will also see clearly the depths of deception to which they will stoop.
Shall we begin? (emphasis added):
ESLAKE: I don’t work for a bank any more…
1. Not working for a bank “any more” is misleading, and entirely beside the point. What is important to note is what Mr Eslake does not say. He does not claim to have abandoned all financial or other interest in his former employer (the ANZ Bank), its executive managment, shareholders, former colleagues, or those of any other bank or related financial entity.
Unless Mr Eslake will categorically state that neither he, his family, former colleagues, nor any other person associated with himself stands to benefit in any way, at any time, from the introduction of a “pricing carbon” scheme, then this simplistic defence is a Red Herring, and as such is, IMO, thoroughly misleading and (intellectually) dishonest.
2. Mr Eslake is director for the Grattan Institute. The Grattan Institute’s website states that:
So, is Mr Eslake’s employer the Grattan Institute? Or, is his directorship of the institute entirely unpaid?
If he does in fact receive any form of remuneration from the Grattan Institute, then who is really his employer?
It is the Australian and Victorian Governments, a university, and/or … BHP Billiton. The CEO of whom (Marius Kloppers) appears on the Grattan Institute’s Board of Directors.
We have previously seen (“BHP’s 100% Carbon Tax Rebate, While You Pay Higher Electricity“) that BHP Billiton – the world’s largest miner – will likely not suffer losses under a carbon dioxide trading scheme. Rather, the mighty BHP Billiton stands to benefit from the incestuously cosy relationship it has formed with this Labor Government. Remember those closed-door, by invitation-only MRRT “negotiations”, that excluded the small-medium mining companies?
Mr Eslake too, appears to be intimately associated with the current and future fortunes of BHP Billiton, its executive management, employees, and shareholders, through his directorship of the BHP Billiton-funded Grattan Institute.
This fact alone – entirely separate to and irrespective of his former relationship with a major bank – raises a serious conflict-of-interest question mark over the integrity and credibility of any public policy “advice” that Mr Eslake chooses to make, wherever such advice or comment may influence public policy decisions relevant to the financial interests of BHP Billiton.
Moving on (emphasis added):
ESLAKE: … and neither do two of the other signatories;
There are “13 eminent economists” who co-signed the Open Letter in favour of a carbon “tax” / pricing scheme.
According to Mr Eslake, only three (3) of the thirteen (13) economists (himself included) “don’t work for a bank anymore”.
Can we take it then, that ten (10) of the thirteen (13) signatories DO work for a bank?
ESLAKE: … while three others have, as far as I know, never worked for a bank.
Ok. Let’s generously take Mr Eslake at his word on this, and accept that (a) 3/13 co-signatories “don’t work for a bank anymore“, and (b) another 3/13 have never worked for a bank “as far as (he) knows”.
So, let’s do the sums shall we?
According to Mr Eslake’s own words, we can take it as read that a clear majority 7/13 of the co-signatories to the Open Letter supporting a carbon pricing scheme, are presently employed by banks.
Another 3/13 have previously worked for banks.
Making a total of 10/13 signatories having past or present direct connections with the banking industry. The very same industry that “might make money from an emissions trading scheme”.
Leaving a mere 3/13 who have no past or present connections with the banking industry … “as far as I know”.
Enough said?
No, let’s go deeper.
Let’s move on to the nitty gritty of Mr Eslake’s defence of the banking industry – on behalf of whom we are expected to believe he is not arguing, despite his very post’s self-evidence to the contrary (emphasis added):
And while it is true that banks might make money from an emissions trading scheme, they could just as likely lose (as many banks have done from trading other ‘derivatives’.
Consider.
1. Mr Eslake openly concedes – though his concession is adulterated with the weasel word“might” – that “it is true” that banks stand to make money from an emissions trading scheme. Therefore, on the basis of this concession, the Open Letter co-signed by 13 economists, 10 of whom Mr Eslake concedes have past and/or present direct connections with banks – clearly represents a blatant example of lobbying, under the deceitful guise of “eminent” economic advice.
The moral and intellectual integrity of Mr Eslake and each one of his co-signatories is immediately called into question by the openly conceded profit-making opportunity that legislative passage of a CO2 pricing scheme represents to the current and/or former employers of the great majority (10/13) of the Open Letter’s co-signatories.
2. Mr Eslake openly concedes that banks “could just as likely lose” money from trading on the back of a CO2 pricing scheme. In particular, it is important to note that Mr Eslake concedes that “many banks have [lost money] from trading other ‘derivatives’.”
Conveniently, in conceding that banks “could just as likely lose” money, and that “many banks have” lost money “from trading other ‘derivatives'”, Mr Eslake fails to address crucially pertinent facts relating to the past and present state of the Australian banking industry.
Nor does he address the fact that he and his co-signatories are not only publicly advocating for a “carbon pricing mechanism”, they are also publicly supporting the Garnaut proposal for an “independent” – unelected, unaccountable – Carbon Bank to administer the money from the scheme. A “bank” empowered to borrow against future government “carbon tax” earnings – meaning the taxpayer is placed on the hook for any losses incurred by said “independent” Carbon Bank.
Nor does he address the fact that none of these “leading”, “eminent” economists had the wisdom, foresight, or indeed the simple commonsense to see and forewarn of the oncoming Global Financial Crisis. And hence, he does not address the fact that there is no logical reason why any sane citizen, government official, or elected representative, should ever again trust these same failed economists’ “wisdom” and “insight” when it comes to another, far bigger ‘derivatives’-based financial scheme, and/or the means of administering the finances thereof.
In light of all these concerns about our banking industry and the proposed Carbon Bank, for Mr Eslake to argue in defence of carbon pricing the view that banks “could just as likely lose” money, clearly represents a gross dereliction of moral and intellectual responsibility to the Australian public as a whole. As a “leading” and “eminent”, “high profile” economist, Mr Eslake should be utterly condemned for advocating a public policy that would – by his own tacit admission – manifestly increase financial risk to Australian taxpayers.
Especially when said public policy “might make money” for his and/or his co-signatories past and/or former employers, and/or any of their respective personal and/or professional connections in the banking and business world.
Moving on (emphasis added):
However there’s no way that banks would make any money out of a carbon tax.
Mr Eslake stoops to blatant dishonesty here. Either that, or he is ignorant of what this government’s own website has to say about the “carbon pricing” mechanism it is proposing, and that Mr Eslake and his co-signatories are publicly supporting. From the government’s official Climate Change website:
Broad architecture of the carbon price mechanism
A carbon price mechanism could commence with a fixed price (through the issuance of fixed price units within an emissions trading scheme)
The government is not proposing a carbon “tax”. Though they have apparently become content to have that misconception widely perpetrated by the media, and their own party members.
What the government is proposing, is a “fixed price” Emissions Trading Scheme. As a temporary, interim step towards a “flexible price” ETS. Once again from the government’s official Climate Change website:
Transition arrangements
At the end of the fixed price period, the clear intent would be that the scheme convert to a flexible price cap-and-trade emissions trading scheme.
There you have it. The government is proposing a “fixed price” ETS, for a limited period before a “transition” to a full, “flexible price” cap-and-trade ETS.
And what is it that Mr Eslake and his 10/13 majority bankster-connected Open Letter co-signatories really want? What sort of scheme are they advocating as their “preferred option”?
In my opinion, it is highly implausible that an “eminent” economist such as Mr Eslake could be ignorant of the fact that the government is proposing an introductory fixed price ETS, and not a “tax”.
To argue that “there’s no way that banks would make any money out of a carbon tax” is misleading and deceptive. Furthermore, it conveniently distracts attention from the fact that Mr Eslake and his co-signatories are themselves not advocating a “tax” either, but rather, an ETS.
Moving on (emphasis added):
Moreover, none of the signatories of this open letter are likely to derive much if any benefit from whatever ‘compensation’ arrangements accompany whatever means is eventually adopted to put a price on carbon emissions.
Once again, Mr Eslake employs a misleading and deceptive misdirection.
Noone – certainly not this blogger – has either claimed or inferred that Mr Eslake, or any of his co-signatories, stand to derive benefit from “compensation arrangements” arising from a “carbon pricing” mechanism.
Having initially resorted to a misleading and deceptive Red Herring (“there’s no way that banks would make any money out of a carbon tax“), to very weakly (“much if any”) single out “compensation arrangements” as his sole remaining argument, is to have secondarily resorted to the use of the misleading and deceptive Straw Man fallacy.
If Mr Eslake’s moral and intellectual credibility is ever to be taken remotely seriously, he must cease from employing such blatant rhetorical dishonesties, and address the actual points of his opponent’s arguments, without obfuscation, distraction, misdirection, and diversion.
What has been inferred, both in this blog and in myriad commentaries elsewhere, is that the banking industry clearly stands to benefit from a “carbon pricing” mechanism.
And whilst still resorting to the deceitful use of weasel words (“might”), Mr Eslake has nonetheless openly conceded that this inference is in fact, true:
And while it is true that banks might make money from an emissions trading scheme…
Finally, it is noteworthy that Mr Eslake chose to respond again to my comments made in response to his assertions. What is remarkable about this is his failure to address the simple, direct questions asked, preferring instead to demonstrate remarkable hypocrisy by “playing the man and not the ball” throughout.
Indeed, Mr Eslake demonstrates this hypocrisy most ably in making this loaded comment in his follow up response:
It’s easier to argue by re-iterative assertion … than to engage with facts or arguments.
… and yet he proceeds to again avoid engaging with any of the facts or arguments himself, with regard to (eg) the banking industry, its profitability, derivatives trading history, and independently verified (by international credit rating agencies) risk concerns, that I have presented in my numerous arguments posited previously on this blog, and now again in direct comments in response to Mr Eslake.
Most notably, he either ignores or semi-skillfully attempts to sidestep the direct questions originally posed to him.
For interest and clarity, I will repeat verbatim each of the direct questions originally asked of Mr Eslake:
1. Will you come out and categorically deny that banks stand to make profits from an ETS?
2. What does recent history show us all very clearly about who picks up the cost when (“if”, to use your weasel words) those banks do “just as likely lose” from their trading on the back of a CO2 scheme?
3. Would you care to publicly and categorically state that (a) you, and/or (b) each one of your fellow signatories to your Open letter, will NEVER receive ANY personal financial benefit, either directly OR indirectly, from the introduction by government of the proposed scheme for “pricing carbon”?
I note that Mr Eslake did subsequently respond in part to the third of those questions, as follows:
I can’t speak for the other signatories to that letter…
[Interesting. Mr Eslake showed no such reluctance to speak out in defence of his co-signatories in his original comments]
But I can say, categorically, that I can think of no way in which I will personally benefit from the introduction of a carbon tax or ETS. (Hydro Tasmania, of which I am a non-executive director, thinks it will benefit from the introduction of a carbon price or ETS; but the remuneration I derive from that position is entirely unaffected by Hydro Tasmania’s financial results).
“I can think of no way” is, again, an example of the use of weasel words.
I would refer Mr Eslake to the very specifically worded question previously posed (emphasis added):
Would you care to publicly and categorically state that (a) you, and/or (b) each one of your fellow signatories to your Open letter, will NEVER receive ANY personal financial benefit, either directly OR indirectly, from the introduction by government of the proposed scheme for “pricing carbon”?
By way of particular example, I refer to Mr Eslake’s present directorship of the (Labor) Australian Government + BHP Billiton-founded/co-sponsored/co-funded Grattan Institute, and pose the following questions:
1. Will he categorically affirm that his relationship with the Grattan Institute, and/or BHP Billiton, and/or the Australian Government, would in no way be affected were he to refuse to publicly support carbon (dioxide) pricing?
2. Will he categorically affirm that his relationship with the Grattan Institute, and/or BHP Billiton, and/or the Australian Government, wouldin no way be affectedwere he to publicly denounce carbon pricing as representing an increased risk to the Australian banking sector, and thus to Australian taxpayers, whose explicit and implicit government-invoked “guarantee/s” are directly influential upon the banks’ credit ratings, cost of wholesale funding, and thus their ultimate profitability?
3. Will he categorically affirm that his relationship with the Grattan Institute, and/or BHP Billiton, and/or the Australian Government, wouldin no way be affectedwere he to publicly denounce the proposal for an “independent” Carbon Bank as representing an (unelected, unaccountable) increased risk to the financial well-being of Australian taxpayers?
4. Will he categorically affirm identical answers to each of the above questions, as pertaining to each and every one of his twelve (12) Open Letter co-signatories vis-a-vis their relationships with their respective past and/or present employers?
In closing, I note that Mr Eslake – in hypocritically accusing me of “playing the man and not the ball” before repeatedly doing precisely this himself – has indulged in the classically-totalitarian inclination to either proclaim, or simply infer, a willingness to exercise force in order to silence those who oppose their views:
Easy to tweet that I’m a “liar” – simply because my view is different from yours – free of the risk of being sued, because you don’t have the balls to identify yourself.
Mr Eslake expresses a threatening dissatisfaction with the fact that I am a (barely) anonymous blogger exercising my Universal Human Right of free speech in criticising his public position on a controversial proposed public policy.
It is truly remarkable – and telling – that an “eminent” and “high profile” economist such as Mr Eslake should even find, much less feel the need to retaliate against, the musings of a lowly and insignificant blogger.
One with a public-opinion-steering grand total of little more than 170 Twitter followers, across the entire planet.
I can only interpret Mr Eslake’s actions here – quite irrespective of his words – as being indicative of a most revealing hypersensitivity to any kind of public criticism of his position on this multi-billion-dollar topic.
A high profile “group of senior economists” – read “corporate shills for the bankstering industry” – have come out in support of their fellow #JAFA Ross Garnaut’s proposal for an “independent” Carbon Bank:
The group of high-profile economists includes Grattan Institute director Saul Eslake, St George chief economist Besa Deda, Citigroup Global Markets’ Paul Brennan and Westpac chief economist Bill Evans.
Saul Eslake is the former chief economist for ANZ Bank.
Macquarie Bank‘s chief economist Richard Gibbs is also mentioned in the above article.
Given that banksters like these stand to make a killing on any carbon “tax” / emissions trading scheme, it’s hardly a surprise at all to see their glee club out on stage singing for their supper.
We can’t allow this to happen.
Handing the money from a “carbon tax” over to an “independent” Carbon Bank guarantees that this country will be bankrupted by the same greedy scum who brought the GFC on the world.
Ever wonder why things cost so much more today, than they did when you were a child?
Here’s a simple little exercise that shows how the Reserve Bank of Australia has robbed all of us by stealth. And continues to do so.
Take a look at the RBA’s Inflation Calculator. Try it out for yourself. And be prepared for quite a shock.
Australia changed from the old imperial currency (pounds, shillings, pence) to decimal currency (dollars and cents) in 1966. So let’s take a look at how RBA-managed inflation has robbed us blind since 1966.
According to the RBA’s own calculator, an item costing $10 in 1966 would have cost you $106.81 in 2009.
Helpfully, their calculator also tells us that equals 968% inflation. In 43 years. At an average rate of 5.7% per year.
Why is this so important to know? Because – as you can easily see – inflation robs the national currency of its “buying power”. Simply and bluntly, inflation robs you and I, the “working families” of Australia.
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Barnaby Is Right 
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