Is it surprising, or is it not?

Has it been Johnnie, or even Keating that has held us in good stead, or has it been the current Labor government that has held our heads above water?
The recession, personally I've hardly even noticed it, even though work may have been a bit hard to come by at times.
As far as any comparisons with the great depression, wtf? -  we haven't seen anything remotely close.


http://money.ninemsn.com.au/article.aspx?id=989532

We didn't have a recession in Australia technically speaking.  There was a serious downturn, but no negative growth.

We didn't outperform China, and the real reason Australia did so well was due to resources and the fact that China kept buying the stuff that comes out of the ground in Australia. That's all there is to it.

The government had nothing to do with it.

I agree that our resources have had a lot to do with us staving off a large downturn, even though a recession will cause a lack of demand.

Similarly, a coach need not be too tactically brilliant if he has a team of champions to work with. In fact, he can just let his players go off to make better decisions than he ever could.
Do you think it's much the same with politics? ie: The coach is essentially worthless?

The government does play a significant role. The difficulty is in figuring out when to take a 'hands off' approach and when to intervene. The rhetoric you hear from the two major parties is often wildly inaccurate. At it's best, it only just scratches the surface of what is really going on.

The parties do have access to the most intelligent economists, but they also have access to opinion polls, and in the end it is the opinion polls that count. The only saviour in this situation is that the public and the press also have access to those economists. With a few recent exceptions, they go to far more effort than most academics to keep the press informed, or at least correct the obvious mistakes.

If you have an interest, I would strongly recommend studying a bit of economics. It is one of the most enlightening and interesting topics I have delved into.

It is just "funny money" at work.

Wander what will happen when we go to real world and start repayments?

Quote:

Wander what will happen when we go to real world and start repayments?

That's a bit of a pressing question isn't it Happy?
Do we ever need to repay debts, or is it just smoke and mirrors?

As FD alluded to, world economics is a very different animal than the usual debt animal that us plebs are forced to fight everyday.
There is really no necessity to repay national debts, because a nation's money realizes itself for what it is - just a gauge.

Every nation has debt, and there's not much value in forcing another nation to repay it's debt because that would not be productive to the particluar nation's economy, or to the world economy.

At one stage, Clinton even offered to wipe the slate clean of debt to some of the poorer nations in close proximity to the U.S.

The U.S. has loaned money from China, but if they were forced to pay it back, China's economy would then suffer.
So, it's a very different mentality than the one that we live by, although us plebs need to keep the faith in it for all economies to work.

Amadd wrote on Jan 2^nd, 2010 at 10:12pm:

There is really no necessity to repay national debts, because a nation's money realizes itself for what it is - just a gauge.

That does not quite agree with the news I heard about Greece this morning... which pictured govt riot troops in full battlegear teargassing and charging with truncheons into their own citizens who were trying to protest about austerity measures their govt claims it is forced to introduce until its debt is paid. Previous day a German spokesman was telling the Greeks to sell off some of its offshore islands to pay off their debt.

Don't think similar things could not happen in Australia.  Only a few years ago there were fears being expressed that our Fraser Island was being prepared for a sell-off to pay off Australia's massive debt.

The Greeks have been charging and teargassing their citizens for a while now.
They did so when their citizens tried to revolt against unfair treatment, extremely similar to the treatment of our own citizens that we endured with the apathy that has come to be accepted within this country.

If we stood up for our rights, then I have no doubt that we'd be teargassed as well.
It's nothing at all to do with "national debt", it's all to do with control of the people.
National debt is all but insignificant.

Amadd wrote on Mar 7^th, 2010 at 4:23am:

The Greeks have been charging and teargassing their citizens for a while now.

Why do you think that is?  Are the people in Greece's government just sadistic, nasty people? Or are they being driven to it by external forces?


Amadd wrote on Mar 7^th, 2010 at 4:23am:

It's nothing at all to do with "national debt", it's all to do with control of the people. National debt is all but insignificant.

Do you accept that debt is at least the plausible excuse being offered for mistreatment of the Greek people?

The Greek debt is in euros, not their former national currency. The Greek govt can't just issue Euros because it is controlled by the ECB.

We, OTOH, or rather our govt, can issue dollars whenever it wants and repayment of our national debt is not a problem.

Ah the hoary old chestnut "China kept us going." If that is the case, why are WA & Qld the slowest growing, highest unemployment states? Our terms of trade plummeted with the onset of the GFC and volumes plunged as well.

Keatings floating of the dollar saw us through the Asian meltdown and helped here but the govt's prompt, targeted big stimulus really helped. without the wholesale funding guarantee at least one of the big four banks would have fallen over, unable to repay and re-borrow huge lumps of money--$160Bn was borrowed under the guarantee.

Basically, it's the coal.

Amadd wrote on Jan 2^nd, 2010 at 10:12pm:

There is really no necessity to repay national debts

Not unless those nations in debt want to go on paying interest forever, without receiving anything further in compensation


Amadd wrote on Jan 2^nd, 2010 at 10:12pm:

a nation's money realizes itself for what it is - just a gauge.

A gauge of what?


Amadd wrote on Jan 2^nd, 2010 at 10:12pm:

Every nation has debt, and there's not much value in forcing another nation to repay it's debt because that would not be productive to the particluar nation's economy, or to the world economy.

The world is comprised only of nations, so let us take care of the nations and the world economy will take care of itself.
Your claim "that forcing another nation to repay it's debt would not be productive to the particluar nation's economy" is obviously wrong from the point of view of the nation receiving payment... especially if it is paying a higher interest rate on monies it borrows than on monies it is owed. Collecting monies owed and using it to pay off loans outstanding is an obvious strategy for them.


Amadd wrote on Jan 2^nd, 2010 at 10:12pm:

At one stage, Clinton even offered to wipe the slate clean of debt to some of the poorer nations in close proximity to the U.S.

No doubt Clinton would be even happier to have all the debts of the USA wiped clean!  Whilst it keeps on squandering money on unnecessary wars, the USA has demonstrated no ability to pay off the loans itself.


Amadd wrote on Jan 2^nd, 2010 at 10:12pm:

The U.S. has loaned money from China, but if they were forced to pay it back, China's economy would then suffer.

Are you referring to money the USA has borrowed from China? If that money were repaid, China would have more wealth, the USA less. How is that going to make China's economy suffer?


Darwin wrote on Mar 8^th, 2010 at 9:19am:

our govt, can issue dollars whenever it wants and repayment of our national debt is not a problem.

If that were true Darwin, the govt could have issued the extra dollars in the first place, without  borrowing from anyone.  Of course the govt is constrained in how much money it can issue, by the damaging inflation that issuing too much money can cause.

What I was referring to Fawkes, was that nations want other nations to trade with. They need other nations buying their product for the good of their own economy, even to the point of lending them money so that they can continue to buy.

With economic thinking like that on the loose Amadd, it's no wonder we see nearly everyone in debt, and economic crises both behind and ahead of us!   Many places have no real need to continually trade, export and grow, despite what misled politicians and commentators might tell you. Australia for example could be almost completely self-sufficient if we wanted to be, having reserves of nearly all known minerals and natural resources.

Yeah of course Australia could be self-sufficient.
I could be self-sufficient if I walked into the bush and never came back.

It's everybody else who is personal debt, not me, so go talk to them about how capitalism is a rort. I totally agree with you.
If the investors don't get their returns, they jump up and down and pull out their investments. Economic growth seems a necessity for capitalism to work, but can it go on forever? That doesn't seem logical, but maybe it can.
Can foreign debts go on forever? Well, conceivably yes, if the debt is just a number, or a gauge as to how one nation compares against another. How many nations have unpayable debt (unpayable interest) these days? Plenty, but they don't seem to think it matters too much. After all, Clinton showed that it's possible to just strike it out and start again.

Amadd wrote on Mar 20^th, 2010 at 8:58am:

Can foreign debts go on forever? Well, conceivably yes, if the debt is just a number, or a gauge as to how one nation compares against another. How many nations have unpayable debt (unpayable interest) these days? Plenty, but they don't seem to think it matters too much. After all, Clinton showed that it's possible to just strike it out and start again.

What do you think would happen if the Greek government announced that it was striking out all its debt, and would no longer be paying interest on it?

A dive in the Euro, a spike in the price of gold in Europe, an improvement in the US dollar and USDX, calls for Greece to be expelled from the EU, a political crisis in Greece, a complete collapse of the Greek economy, massive social unrest not seen since WW2. Serious debate about the viability of the EU itself.

In that order, I reckon.

What do you think would happen if the USA government announced that it was striking out all its debt, and would no longer be paying interest on it?

fawkes wrote on Mar 21^st, 2010 at 10:28am:

What do you think would happen if the USA government announced that it was striking out all its debt, and would no longer be paying interest on it?

A dive in the Euro, a spike in the price of gold in Europe, an improvement in the US dollar and USDX, calls in Greece to also cancel its debt despite risking a further dive in the Euro, a further spike in the price of gold in Europe, a further improvement in the US dollar and USDX, expulsion from the EU, a political crisis in Greece, a complete collapse of the Greek economy, massive social unrest not seen since WW2 and serious debate about the viability of the EU itself.

NorthOfNorth wrote on Mar 21^st, 2010 at 11:02am:

fawkes wrote on Mar 21st, 2010 at 10:28am: What do you think would happen if the USA government announced that it was striking out all its debt, and would no longer be paying interest on it? A dive in the Euro, a spike in the price of gold in Europe, an improvement in the US dollar and USDX, calls in Greece to also cancel its debt despite risking a further dive in the Euro, a further spike in the price of gold in Europe, a further improvement in the US dollar and USDX, expulsion from the EU, a political crisis in Greece, a complete collapse of the Greek economy, massive social unrest not seen since WW2 and serious debate about the viability of the EU itself.

Bring it on. The EU is the triumpgh of the Soviet Union, from beyond the grave. European Union? A typical euro-weeny misunderstanding of Swiss and American (and Australian and Canadian) federalism. Europeans are sooo parochial, they wouldn't notice a misunderstanding until the  tanks are rolling down the boulevards.

Some of my best friends are European , though.i

I wasn't talking about the U.S. striking out it's own debts, I was talking about striking out the debts of others.

Obama had the same plan:


Quote:

Provide sustainable debt relief to developing countries: The poorest countries in the world suffer under the weight of an enormous burden of external debt. Barack Obama wants to see 100% debt cancellation for the world’s heavily-indebted poor countries. He is committed to living up to the promise to fully fund debt cancellation for Heavily-Indebted Poor Countries (HIPC). An Obama administration will press for reforms at the World Bank to ensure that poor countries receive grants rather than loans, and that countries have the resources they need to respond to the external shocks that threaten to derail economic progress.

Then you have the Icelandic people who were shafted by the banks:


Quote:

People in Iceland have rejected their government's pledge to repay a debt of more than US$5 billion left by the collapse of Icesave Internet bank. 93 per cent of people voted “no” in a referendum. “The bailout would be for roughly US$5.4 billion, which would go to the Dutch and the British depositors in Icesave, which was the largest online bank that went under,” Marshall says. “And this is basically asking the Icelandic people to pay for the bad debts of their bankers and the bad regulations of their government. And it’s sort of endemic of this corporatist economic undertaking that is going on around the world, where the private debt has become a public obligation. So you privatize profit and you socialize the risk.”

If we can believe helian, a default, on all its debt by the USA would lead to
Quote:

A dive in the Euro, a spike in the price of gold in Europe, an improvement in the US dollar and USDX, calls in Greece to also cancel its debt despite risking a further dive in the Euro, a further spike in the price of gold in Europe, a further improvement in the US dollar and USDX, expulsion from the EU, a political crisis in Greece, a complete collapse of the Greek economy, massive social unrest not seen since WW2 and serious debate about the viability of the EU itself.

If there was any justice in the world, what should happen is other countries lose trust in the US$, switch to other currencies for oil (and other) purchases, stop borrowing US$ to fund development projects, and try to trade any US$ they have in exchange for anything of real value... all of which will cause a drop in the value of the US$ but have little effect on  the value of other countries' currencies. But the world is not always just in matters concerning superpowers, so perhaps the outcome might be completely different.

Whichever way it goes, I think it's obvious that just striking out debt and starting again is not a safe option for everyone.

fawkes wrote on Mar 21^st, 2010 at 10:28am:

What do you think would happen if the USA government announced that it was striking out all its debt, and would no longer be paying interest on it?

Nothing much to the countries that use fiat money and have a free floating exchange rate.  However, if any of them use a pegged standard of any sort, dire trouble.

Aussie economy outperforms the world

Of course it does and not for the first time either.

Successive governments contributed to Australian resilience in the face of the year-old threat to our prosperity.

Introducing the Australian Model Version 1

and the Australian Model Version 2

Senexx wrote on Mar 24^th, 2010 at 2:57pm:

fawkes wrote on Mar 21st, 2010 at 10:28am: What do you think would happen if the USA government announced that it was striking out all its debt, and would no longer be paying interest on it? Nothing much to the countries that use fiat money and have a free floating exchange rate.  However, if any of them use a pegged standard of any sort, dire trouble.

Doesn't seem logical to me. Would you care to explain why?

Gold Standard collapsed in the 30s (pegged standard) and the Bretton Woods system collapsed in the 70s (pegged standard) and ultimately gave us fiat money which exists by legislative fiat alone.

The modern monetary system is characterised by a floating exchange rate (so monetary policy is freed from the need to defend foreign exchange reserves) and the monopoly provision of fiat currency. The monopolist is the national government. Most countries now operate monetary systems that have these characteristics.

Under a fiat currency system, the monetary unit defined by the government has no intrinsic worth. It cannot be legally converted by government, for example, into gold as it was under the gold standard. The viability of the fiat currency is ensured by the fact that it is the only unit which is acceptable for payment of taxes and other financial demands of the government.

In other words $5 is worth $5 because the govt says it is.

The crux of what you ask relates to monetary policy having to defend foreign exchange reserves as this is what happens under a pegged standard.  There is little to no flexibility.

Debt is effectively paid as I have outlined here

The Australian economy is outperforming the world at the expense of the 5-6% unemployed people, although in the USA the unemployment is higher. Australia has also one of the higher interest rates in the developed world so people borrow in Yens,Euros and other currencies and invest in A$, but in the end it will not last forever and it will come home to roost. The worst part is that National debts are usually c=socialised while the profits in the good times are capitalized.

Senexx wrote on Mar 26^th, 2010 at 9:03am:

Under a fiat currency system, the monetary unit defined by the government has no intrinsic worth.

Senexx is taking a lot of space to explain what the value of a unit of currency is said to be, but that is a separate matter from having a country pay an accumulated debt from the past.


Senexx wrote on Mar 26^th, 2010 at 9:03am:

Debt is effectively paid as I have outlined here

All Senexx says there is"

"The Federal Reserve debits (subtracts from) China’s securities account at the Fed.

"And they credit (add to) China’s reserve (savings) account at the Federal Reserve.  

"That’s all debt paid!"

It's a limited outline at best, referring to the debt the USA owes China and saying nothing about other countries which don't have accounts with the American Federal Reserve.

From a commonsense point of view the debt referred to in the example above can not be regarded as paid until the Chinese Federal Reserve(or whatever they call their alternative) receive a shipment of $US currency (or equivalent agreed to by the Chinese) that the Chinese can immediately spend to buy something from places like Iran, Venezuala, Ukraine, or Vietnam.