Waves of financial crisis crash on Australian shores
There is no doubt that, economically, Australia is in a better position than most other countries. However, these could possibly be the most challenging times Australians have ever faced.
In January 2008, The American Dialect Society named ‘subprime' the most interesting new word of the year (see ADS Press Release, 4 Jan 2008). They deemed this to be the word that had best caught the public mood in 2007, the one that most people could relate to or had experience with.
This is a worrisome thought as ‘subprime' is the word that is increasingly becoming synonymous with the financial distress being felt as the Global Financial Crisis (GFC) continues to destroy wealth across the world.
So what makes the ‘GFC' different from other financial crisis we have experienced in the past?
The answer lies in its source. In the recession of 1991, we saw the collapse of large corporate entities such as Quintex, Bond Corp and Westmex. While the collapse of these no doubt had a major ripple effect on the economy, it's like the difference between throwing a stone in a pond or throwing a giant boulder. The boulder is always going to make more waves.
This time round it's not the satellites that have been falling out of the sky, it's the mother ships. The mother ships being the banks that keep the blood flowing through the system. When we saw the collapse of the subprime lenders, and then the mortgage insurers, and then US mortgage lenders, Fannie Mae and Freddie Mac, we saw the mother ships start to come down, and this of course meant that the waves of distress were going to spread across the global financial community.
There is no doubt that, economically, Australia is in a better position than most other countries. This is for two key reasons.
Firstly, our financial services regulation is amongst the best in the world – if not the best. It is regulation that we, the Coalition under the Howard Government, thought very carefully about and which, in effect, ensured that Australia could not go down the path of the US in offering credit to people who could not afford to repay it. With the creation of APRA and ASIC and the separation of the three regulators into individual regulators – the central bank, the prudential regulator and the corporate regulator – what you effectively get is three separate entities who can focus on the challenges that directly affect their stakeholders, instead of trying to conquer battles on all fronts.
The second reason is that we have a budget in surplus and the Australian Government has no debt. This is a legacy of eleven years of good economic management under John Howard and Peter Costello and has undoubtedly left us in better stead than most comparable nations.
However, in saying that I believe that it is important we recognise that this is going to be a very challenging time. In fact, I'm going to be quite frank and say that these could possibly be the most challenging times Australians have ever faced. Despite the series of cuts by the Reserve Bank to the official interest rate, credit card rates remain at an average of 19.75 per cent. If you consider on average, every Australian has $3136 worth of credit card debt, this is a worrisome statistic.
Last week I called on the Government to put pressure on the banks to drop these ludicrious rates and so far we are yet to see the Government take any initiative on the matter. We will continue to raise this issue until action is taken.
The greatest fear I have is that the Rudd Government just isn't up to making the right economic decisions at the right time to get us through unscathed.
They have already shown a remarkable ability to make rash and incorrect decisions – such as the blunder over the 100% deposit guarantee, or their failure to recognise the importance of legislating the whole funding guarantee. The effect of these policy blunders has been increased distortions in markets resulting in financial hardship and distress for thousands of Australian investors.
The government has many tough decisions to take in the months ahead and we hope that they will consider the implications and impacts more carefully than their "Hollowmen" record would suggest.
The Hon. Joe Hockey MP is the Federal Member for North Sydney, Shadow Minister for Finance, Competition Policy and Deregulation and Manager of Opposition Business in the House of Representatives. Joe was elected to represent the seat of North Sydney at the 1996 Federal Election. Three years later he was appointed a Minister, initially for Financial Services and Regulation. In the following nine years his portfolios included Tourism and Small Business, Human Services, and in Cabinet as Minster for Employment and Workplace Relations. Before entering politics, Joe worked as a banking and financial lawyer with a major Australian law firm and was the Director of Public Policy to former NSW Premier John Fahey. Joe studied law at the University of Sydney, was elected President of the Students' Representative Council in 1986, and is a former State President of the NSW Young Liberals.
alchemicyoga
March 9, 2009 at 11:37 am
What is really going on?
Joe Hockey. You will never end your endless quest for attention will you. It is easy for you to say that your government is responsible for the good economic times. Any Government that was reaping the benefits of a resource hungry trading partner could also say the same things. What you fail to acknowledge is that your Government helped perpetuate the current financial dilemma by agreeing to participate in a wholly illegal war that heads of state will surely have to answer for. If John Howard had not agreed to include us in the carnage that has befallen iraq, maybe we would have all that "goverment spending" to help with our position maybe helping keep us out of deficit. You and your political misfits did not realise that you were out of your depth with america. Sure an ally, but one not to be trusted. The whole war in iraq, financial crisis, oil crisis, global warming, and the threat of terrorism are all part of a global agenda, that either you are unaware of, or contributing to, that has been politically orchestrated by the people who provide the most appealing platform for you to discharge your garbage. If you really want to help trying investigating Codex, and adjusting our foreign policy to help those 3 billion people about to die through its implementation by the end of 2009. We are already harming our citizens by puting flouride in our water. What scientists do you have working for you, surely well renumerated yet uneducated ones. But the fun begins in the other countries, those poor developing countries that are surely taking up our resources by keeping all those poor unfortunate people alive. At least with Codex, according to the UN, not me, there are 1 billion people who will die through starvation by 2012, the other 2 billion will be those who die of preventable disease, by the implementation of Codex. We are safe, we have our health standards, but those very country's that the developed world has so obviously exploited will recieve no funding from WHO, unless they accept Codex. You see this financial crises is a smoke screen, you know what that is Joe, don't you. Well its a smoke screen for Globalisation, you see, after the dust settles, and we all know that it will settle in 3 years, the UN will be asked to make a report to identify what can be done to avoid this happening again, and we all know what the answer will be, a One World Government. Not to far off now are we. But the pressing issue comes from another UN report that found that living as peasents, that is farmers, the earth can sustain between 5 and 7 billion people. Although at the current material comfort of the US, only 500 million to 1 billion can be accomodated. This leaves a percieved overpopulation problem. But a problem for whom. Maybe for the so called developed countries so that they can keep their so called quality of life. But because of the corruption wrought throughout the world by our freindly allies, surely they have sold seats of salvation to those who agree to be part of this "cleansing". So the question is, who gets to live and who gets to die. And how do they accomplish this with the permission of the people. First they put up another smoke screen in the shape of an inconvenient truth spokesman Al Gore, imploring the world to help save the planet. But from who, surely not the helpless mass populations that have been held hostage to the greed, and corruption of the so called elite. "Elite"… please!!! Yes, believe it or not, from them. Then to help prepare human consciousness for a mass cleansing they release a movie called, the day the earth stood still, with the same message as that of Al Gore, that the planet needs to be saved from the people destroying her. Those people destroying her are you and your political freinds, on all sides, in all countries, by the fact that you all ignore the real evidence about the crimes being perpetrated through all the worlds governments by the treatises that said governments make with corporate identities. If this sounds too hard to be true, I find it hard to beleive that a US corporation could sue the Australian government if they introduce laws that harm their profit margins, but this too is true, and Joe Hockey, this came about while your government was in power. What other deals have and do governments make on behalf of their constituents, or in the case of the US, their employees, that will befall crisis after crisis after war after bloody war in the name of keeping a select few idiots in the seat of their beloved power. Men don't need men like you Joe Hockey, governing them. Men can govern themselves. But you would have us believe otherwise wouldn't you Joe Hockey? Of course you would, and if we didn't, you know what happens. Suddenly, out of nowhere comes some horrible terrorist attack ( or tactfully allowed to happen, or worse still secretly implemented by the very Government who was the supposed target ). Very convenient isn't it, now they can implement a new set of laws to take away liberties of free innocent people, and god knows they need to, for when this ignorant population is educated about what is really going on, you wouldn't want them being able to organise themselves to restore the balance. No, ideally, you would want them to think fanciful the idea that there is a network of organised crime posing as governments extorting their population into paying taxes so high that they can buy the soul of entire populations. Joe Hockey, if you really want to help, align us with healthy policies, and stop, for goodness sake, stop, playing the blame game with the idiots on the other side. The reason Kevin Rudd won the last election was because he would not be drawn on stupid arguments the your team were baiting him with, resulting on Howard looking old, and his team looking infantile. Please Joe Hockey, you work for me and 20 million other people. It is not your right to be there, it is our right that you act in our best interest, to distance ourselves from countries like the US, until the war crimes attributed to their previous administration are bought to light, and the UK, for the same reasons, and align oursleves with countires like China, Russia, India and Brazil, and maybe we can act as a catalyst for other so called developed countires to do the same and share the balance of power for the benefit of all. Hey, if we all have to grow our own food, then so be it, maybe it could help you shed a few kilo's Joe. Thankyou for your time, have a good evening