Don’t mention the debt: It is Australia’s Ponzi scheme

There’s been a lot of debate about the economy and the differing views of both political parties.  But what we need are real facts and figures to play with and I’m confident we now have something real to go off.

I’ve got to say that I’ve come to respect the analysis and opinions of business and finance writer Michael West, from the SMH.  He’s a straight shooter and rarely pulls his punches.  And this article is no exception.

Don’t mention the debt

Michael West

Our overseas borrowing is the great unspoken. It is the one subject assiduously avoided in public by Kevin Rudd, Malcolm Turnbull, Ken Henry, APRA, the Reserve Bank and the big banks. They probably even gloss over the matter when chatting privately among themselves.

Continue reading

De-exodus from medical insurance

Back on Blogocracy we had a couple of discussions about the increase to the medicare levy surcharge. When the policy was first announced Tim posted this thread.

The medical insurance industry was saying that it would lead to the membership dropping below the 40 per cent threshold. And some posters were declaring how this was a disasterous policy. Continue reading

China Gets Tough

In a previous thread I mentioned signs of China’s “rapidly deteriorating economy, with trade volumes collapsing and a trend towards deflation, is fracturing Australia’s resources industry and support sectors,and increasing the chances of a local recession.”

It now seems that this is the stark reality we’ll have to come to terms with.

Chinese get tough: recession looms for Australia

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AUSTRALIA’S once-triumphant iron ore and coal miners face price cuts of between 30 and 50 per cent, which would slash export income by the equivalent of 4 per cent of gross domestic product and increase the likelihood of recession.

Secret annual iron ore contract negotiations are under way at Baosteel’s Shanghai steelworks and Rio Tinto and BHP Billiton are on the back foot for the first time in six years.

Zou Jian, a director of the China Iron & Steel Association and head of the China Metallurgical Mines Association, told the Herald that benchmark iron ore price cuts of between 30 and 50 per cent would be “reasonable” – on top of eliminating a large “freight premium” handed to Australian miners last year.

Australia’s coal negotiators face an even tougher battle because of their dependence on the crippled markets of Japan, South Korea and Taiwan.

Australia earned $31 billion from exporting iron ore last year and $46 billion from coal. “The lost export revenue from cutting iron ore prices by a third and coal prices by a half would be equivalent to 3.8 per cent of GDP,” said an ABN Amro economist, Kieran Davies.

Sources said the Federal Government had no intention of intervening.

What will this mean for government deficits and our ability to ride out the economic storm without suffering from a severe and prolonged downturn?

Over to you