Rudd : I Will Not Say What You Want Me To Say No Matter How Many Times You Ask Me To Say It

By Darryl Mason

Why won't Kevin Rudd go on TV or radio and say the words "$300 billion", in reference to a possible future Australian debt?

Because Rudd knows that the Liberals are going to use any video or audio clip of Rudd saying "$300 billion" in their attack ads in the next election campaign, and he's not going to give that word bomb to them to use against him.

Tony Jones on Lateline almost managed to crack Rudd open on Monday night. Almost. He gave it a good go, but relented when time was running out. Jones should have taken the approach of the BBC's Jeremy Paxman and asked the question he wanted the answer to at least 14 times in a row.



Still, even then, if Jones asked Rudd "can you say $300 billion debt" 14 times, or more, Rudd wouldn't have said those words.

He learned a lot from the mess John Howard made of election promises about "keeping interest rates low" and "keeping interest rates at record lows".

Trying to pre-empt a Liberal Party attack ad this far out from an election is a pathetic, trivial thing for the prime minister to be worrying about when the economy is rupturing, but Rudd is a political animal, first and foremost.

The Liberal Party, even Malcolm Turnbull, a once formidable manipulator of minds and emotions, still don't seem to understand this essential psychological fact about Kevin Rudd : He was, is and will remain, a mind fucker. He hasn't stopped fucking with the minds of the Liberal Party since he took over the Labor Party leadership in late 2006. And short of a stroke, he won't be stopping the head games anytime soon.

UPDATE : Not only can Rudd say "$300 billion" he can also say "$200 billion", but he still didn't say those monumental levels of debt in any kind of sentence that the Liberals can make sure come back and haunt him, or harass him, leading into the next election, though no doubt they will surely try :

HOST: And Paul Keating had a problem with the R word. Do you have a problem with the B word, billion, I notice and this was on Lateline, you wouldn’t say $200 billion and you still haven’t said it. You say 200 and 300.

PM: That’s exactly right, $200 billion, $300 billion, all I was explaining to you is the actual comparisons which exist between it and the performance of other relevant economies around the world.

Nobody Saw The Financial Crisis Or An Australian Recession Coming?

Bullshit

By Darryl Mason

There seems to be more and more people popping up in the media claiming "nobody saw it coming", the IT being an Australian recession, plunging house prices, a global financial crisis.

But it's not true. You just probably didn't see it coming if you were only reading the business sections of supposedly reputable Australian newspapers, or believing the guff that flowed from so many now discredited financial experts on the evening news, always promising that everything was okay, that stocks were the safest place to park your money, and it still wasn't too late to take out yet another loan on your heavily mortgaged home to buy another $20,000 worth.

If I could see it all coming back in 2006, why didn't the financial experts? That the world was heading for a major, if not unprecedented, financial crisis wasn't exactly a big secret, and you didn't have to search too long or hard to find the stories that told the blindingly obvious truth about what was coming. You just didn't find many of them in the mainstream media, particularly not in that media's business sections.

I published the following story near right on three years ago at the Your New Reality blog :

US Faces "Impending Financial Disaster"

"Tremors Through The Global Financial System"

May 16, 2006

By Darryl Mason

Those kinds of headlines are exactly the words you want to see in a news story about the US Dollar and US stock markets and the growing loss of global market faith in both.

The US, like Australia, has been borrowing more from central bankers than the value of the goods and services it produces.

The US and Australia has been living on vast credit, and now the international lenders look like they're going to start calling in some of the debts, as stock markets in the US and Australia go through an "adjustment", or "downturn".

Is the US on the brink of a recession? Yes. It hasn't tipped over into recession yet, but it's on the brink.

The rush to turn US dollars into gold, and even copper, is the simplest and most obvious sign that the US Dollar is fading rapidly. Gold is regarded as a faithful standard during years of economic turmoil, and some predict it may even reach an incredible $1000 per ounce with the next six to twelve months.

Mind-blowing. A few years back, the first websites I saw that pitched the positives of turning dollars and savings into gold were the alternative news ones.

That was less than two years ago when gold was still at $325 an ounce. Buy gold, buy gold, 'radical' economists chanted, while Bloomberg, Forbes and the Wall Street Journal sniffed at and quickly dismissed the likelihood of gold rising dramatically anytime soon.

So much for the experts.

One of these so-called radical, or alternate, new rhythm economists is Paul Craig Roberts. He's an older, wiser gentlemen of vast experience with the US economy, having served as the Assistant Secretary of the US Treasury during Ronald Reagan's administration.

Here's what he's thinking today :

The US current account deficit as a percent of Gross Domestic Product is unprecedented.

As more jobs and manufacturing are moved offshore, Americans become more dependent on foreign made goods.

This year the deficit could reach $1 trillion.The US pays its current account deficit by giving up ownership of its existing assets or wealth. Foreigners don't simply hold the $800 billion in cash. They use it to acquire US equities, real estate, bonds, and entire companies.American consumers are heavily indebted.

The growth of consumer debt is what has been fueling the economy.....is this the economic picture of a superpower that can dictate to the world, or is it the picture of a second-rate country dependent on foreigners to finance its consumption and the operation of its government?

You could say virtually the exact same thing about Australia today (not including the word 'superpower').

We, too, depend heavily on foreign lenders to help fuel our recent economic booms. Australians were allowed to borrow vast sums of money to buy houses, cars that depreciated spectacularly and consumer goods that took years longer to pay off than their warranties lasted.

Unlike the US, however, we've had a massive wave of mineral markets boom-time, which sadly is now drawing to a close.

The Howard government collected more than $100 billion in "extra" taxes, over the past four years, on the back of the minerals boom, and blew most of it on the War On Terror, the War On Iraq, meeting superannuation commitments for former politicians and government workers and tax cuts for the richest of all Australians.

The Howard government used virtually none of it for major infrastructure projects or new technical training schemes. The state governments were just as wasteful.

So now we don't have a human stockpile of skilled workers, or the manufacturing facilities for them to work in, we don't yet have a national broadband system (the one alleged to be coming is still years away), and our roads and train lines couldn't cope with all the plugged-in, high-tech workers even if they existed.

What is unique about the Howard government is that they were so brilliantly able to bamboozle the media and the public at large that Australia was one of the leaders of the global economy and, at the same time, convince most Australians (with a spectacular program of propaganda and double-speak) that interest rates were not going to rise.

Of course, Howard actually asked "Who do you trust to keep interest rates low?" But his minions made sure the public understood that to mean "Who do you trust to stop interest rates from rising?"


If you walk out of the casino with $10,000 in cash, but you owe the casino $100,000, you are not a winner, and they will catch up with you. Sooner, rather than later.

For the average credit-card using, mortgage paying, $50,000 per year earning Australian family, the worst is well and truly yet to come.

Hundreds of thousands of Australian families got suckered into the home ownership scam of the past four years, when house prices were over-valued by tens of thousands of dollars, from Brisbane all the way down to Melbourne (with the exception of most rural and country towns).

And, at the same time, they were tossed credit cards to buy white goods to fill those huge homes and to purchase mega-wide screen TVs as fast as China could churn them out.

More than 100 houses a week are now being repossessed by the banks and average credit card debts are spiraling well above $5000. Average household debts, outside of the mortgage, are racketing up to between $10,000 and $15,000.

For a few thousand Australian families, a further half a percent rise in interest rates will mean ruin. For tens of thousands of Australian families, a two or three per cent rise in interest rates will be absolutely devastating. Even if both parents manage to hold onto their jobs. In a recession, their wages will be cut, of course, and with the recent IR reforms there will be little they can do to stop that from happening to them. And if they protest too much about working a 60 hour week, they can now be fired without recourse.

In a recession, you are not rich if you are you paying off a house that has lost 20-30% of its value in the past two years, or if you are struggling to the meet the interest payments alone on credit card debts. And families will be using them, of course, to pay the phone bill and to buy groceries.

And you are certainly not rich, even if it may feel like it, if you own a $10,000 mega-wide screen TV and surround sound system that isn't worth a tenth of that at a hock shop less than year after you purchased it on low interest credit. It might take you five to ten years to pay off that TV, but there will be 3D holographic TV soon enough.

In a recession era economy, you are as good as rich if you are debt-free, regardless of the accumulation of possessions in your rented home.

Debt-free and freedom become virtually one and the same when the economy stumbles and falls and the true value of the dollars you earn drops, as your wages drop and interest rates rise.

Australians are being told that we must "be more competitive" with international rates of pay and productivity levels.

The problem for Australian workers is that the powerhouse of productivity today is China, where 70 and 80 hour work weeks are not unusual and the average hourly rate of pay there is a mere 57 cents.

Actually, forget what I said about the mega-wide screen TVs. For the average Australian worker, with a crippling mortgage to pay off, kids to put through school and a mountain of credit card debt to deal with, a mega-wide screen TV with surround sound might be just the thing to take the edge off after a 14 hour workday. That is, if you can afford to buy the fuel you need to drive those traffic-clogged roads to work because there are not enough engineers to keep the buses, trains and ferries running on time.

But that's another story altogether.

Brrr. A Cold Wind.

Try Not To Weep : Australia's Mega-Billionaires Now Only Multi-Billionaires

How much of the many billions lost by Australia's richest businessmen was actual, quantifiable wealth anyway? Most of it was imaginary, speculation, fake. It never existed, so if it's gone, does it really matter at all? Not so much when you've still got a billion or two left. For now.

From The Australian :

Just 10 Australian citizens made the Forbes rich list of US-dollar billionaires this year, down from 14 in 2007, with their total fortunes slashed by more than half.

The biggest loser has been iron ore miner Mr Forrest, who has seen the value of his stake in Fortescue Metals Group slump from $US6.5billion to $US1.9billion, causing him to slip from 145th on the list to 376th.

Westfield Group founder Frank Lowy also took a king hit, with his fortune plummeting from $US6.4billion to $US2.7billion.

He is followed by casino owner James Packer, worth $US2.5billion and iron ore heiress Gina Rinehart with $US1.9billion.

"America, Can You Hold? We Have China On The Other Line"

"So what's the good news?"
"You keep digging it up, we'll keep buying it."
"Are you sure? Can I announce that?"
"Of course. Just don't try to put up your prices any time soon. That would not please us."
"That's great news. Thank you. Thank you so much. Thank you..."
"Please do not grovel. We find it very unattractive."


The United States stumbles out of the casino, pockets empty, pants around the ankles, cleaned out, gutted, dropping near worthless IOUs nobody inside wants to cash anymore. China still sits at the high stakes tables, hanging onto most of its mountain of chips. A few big bets go down, there are substantial losses, but the chip mountain remains formidable, and the game is not over for them yet. Waiting, waiting, waiting...

You can almost hear Kevin Rudd humming that old Hunters & Collectors song, 'don't rock the boat, keep your head down...'

Kevin Rudd has sought and received a personal assurance from the Chinese Premier, Wen Jiabao, that China's demand for exports would remain strong enough to prop up the Australian economy in the face of the global slowdown.

With the rapidly slowing global economy now a reality, Mr Rudd said he rang Mr Wen at 9pm on Monday to quiz him about his growth projections for China. Mr Rudd said he was told growth would slip from "something like 11 and 12 per cent down to 9 and 10 per cent", still strong enough to sustain a healthy demand for Australian commodity exports.

Mr Rudd believes China is the greatest militating factor against the global crisis and said the Communist nation was "now critical for Australia's continued economic performance".

"Part of the long-term strategy of this Government, and the strategy for the period immediately ahead, is how to more deeply and broadly engage with the Chinese economy," he said.

Asia will set the rules for the New Economic World Order, now that the UK, the EU and the US are busted out, choking on debt, shocked and staggered by the collapse (or demolition) of their banks and once AAA-rated financial institutions.

So the Communists didn't really lose, in the end, did they?

Just another confirmed lie, to heap onto the festering pile of lies we've been fed for decades, about free markets, globalisation, investing vs saving, and the bitter freedom of bountiful credit.

Reserve Bank : Our Debt Binge Is Over

The Reserve Bank has sounded the alarm. Put away those credit cards. It's Frugal Days ahead :

Australia's decade-and-a-half-long debt binge is coming to an end and a new era of austerity, in which consumers pay down their debts, live within their means and save for the future, is beginning, the Reserve Bank governor, Glenn Stevens, has predicted.

As US authorities were forced to stump up $US85 billion to prevent the collapse of the insurance giant American International Group, Mr Stevens said it was time for a debate about how debt-fuelled asset bubbles could be prevented in the first place, as opposed to regulators simply waiting to "clean up the mess afterwards".

... amid the financial maelstrom, Australian households were likely to hunker down and focus on repairing their debt-burdened balance sheets.

"There is … a good chance that households will for some time seek to contain and consolidate their debt, grow their consumption spending at a pace closer to income, and perhaps look to save more of their current income than in the recent past," he said.

Since the early 1990s, households had run up their gross debt as a proportion of annual disposable income from about 50 per cent to 160 per cent. A period of low inflation, low interest rates and rising incomes had enabled Australians to indulge their love affair with housing. "As we have become wealthier, our aspirations for housing in terms of position, quality and size have naturally enough increased. But … there is only so much well-located land … In the end, a lot more of our income is devoted to housing, acquired by servicing mortgages, than was once the case."

Relaxed lending standards had also fuelled the debt boom to the point where "anyone who was creditworthy - and some who were not - have been able to access ample amounts of credit".

But with the world entering a new period of constrained credit and tightened lending criteria, Mr Stevens said he expected Australian consumers would begin to rein in their big-spending ways.

We were relaxed and comfortable under John Howard, but mostly because the lounge chairs were so stuffed with credit card receipts and second mortgage demand letters.

The Australian stock markets have probably just about finished their "adjustments". But where will the credit come from that funds small businesses, that allows a builder to buy a ute, or a delivery man to buy a bigger truck? Nobody seems to know right now. This is the quieter, but far greater concern, amongst economists than share market ups and downs. Who will lend us money now?

The Australian government continues pouring tens of billions into the markets to keep the dream alive, as they keep telling themselves, "It's almost over, it's almost over, it's almost over."

The free market turned out not to be so free, after all.

Australia, Japan Pump $50 Billion Into Markets In 24 Hours

Oz Stocks Slam To Three Year Low

US Crisis Grows, Australia Cops Fallout

Rudd : Our Financial Crisis Has A Long Way To Run

Will Australia Cop A Worse Hammering In The 'Economic Tsunami' Than The US?

Capitalism and the free market are great and wonderful things....until it all goes very, very wrong. And who pays for the 'mistakes' of the world's central bankers and the fetid greed of speculators?

Well, not the bank directors and CEOs. They get bonuses....well, they got their bonuses before it all went tits up, didn't they? They always do. The working poor will pay instead, as they always do. And the central bankers will all look you right in the eye and swear they didn't see any of this coming :

The world's financial storm has swept through Australia and New Zealand this week amid mounting signs of contagion across the Pacific region.

Gabriel Stein, from Lombard Street Research, said Australia could prove vulnerable once the global commodity cycle turns down. It has racked up a current account deficit of 6.2pc of GDP despite enjoying a coal, wheat, and metals boom, effectively spending its resources bonanza in advance. Household debt has reached 177pc of GDP, almost a world record.

"It is amazing that in the midst of the biggest commodity boom ever seen they have still been unable to get a current account surplus. They have been living beyond their means for 10 years. What worries me is that productivity growth has been very low: they have coasting after their reforms in the 1990s," he said.

What happened to us all being Relaxed & Comfortable? How could Peter Costello, 'Australia's Greatest Living Treasurer', not have prepared and insulated the nation from this chaos and misery? And how will the Rudd government stop the destruction spreading further?

Australia's Reserve Bank has had to grapple with vast inflows of Asian capital, especially Japanese money fleeing near zero rates at home. Short of imposing currency controls, it would have been almost impossible to stop the inflows.

"The easy money went straight into real estate," said Hans Redeker, currency chief at BNP Paribas.

"Australia will now have to generate 4pc of GDP to meet payments to foreign holders of its assets," he said. This is twice as high as the burden faced by the US.

Both the Australian and New Zealand dollars have fallen hard in recent days and now appear to be breaking down through key technical support against major currencies, including the US dollar. "The Aussie (dollar) is going down, big time," said Mr Redeker.

UPDATE : Writer Mike Whitney - who managed to predict the economic apocalypse now destroying American families and sending double-shift working men and women to the food banks, all back when the Wall Street Journal was still trumpeting 'We're All Rich! Say Yes To Everything! Max Out Another Credit Card!' - explains why the National Australia Bank's massive billion-plus write-downs this week are set to cause further panic on Wall Street :

We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.

It means the cost of bailing out housing exposures to the two mortgage insurers will be so great that it will leave no room to bail out anything else and there are several US banks that are now in big trouble. NAB says that the dislocation in the residential market is separate from the corporate market, but the flow on is inevitable." (The Business Spectator,"NAB will shock Wall Street")

The conduits are off-balance sheets operations run by the banks which contain hundreds of billions of dollars of bonds which are now essentially worthless.

So far, many of the banks have not accurately reported the losses from these operations hoping that the housing market will stabilize and the value of the bonds will rebound.

The action taken by the National Australia Bank is a "game-changer"; it's like the Grim Reaper swooping down on Wall Street and lopping-off the top of every big investment bank in downtown Manhattan.

Bizarrely, if the Great Central Bankers Swindle continues, and interest rates do not begin to fall soon, those without mortgage and credit card debt will be regarded as wealthy in comparison to millions of fucked over debt slaves, who really believed the lie that always seems to work at least once in every generation : You Can Have It All, And You Can Have It All Now.

In the words of Johnny Rotten : "Do You Ever Get The Feeling You've Been Cheated?"

It's never too soon to start growing some of your own food, in whatever space you have available. You know, just in case.