Darrin Hodges discusses the current economic crisis and its effects upon Australia.
Economic crisis
This time in world history is one which the nationalists have been warning people about for years, if not decades. The current economic crisis that is engulfing the world’s financial institutions isn’t about the failure of capitalism as left-wing pundits like to crow, it represents the failure of globalism.
The best example of this is the collapse of Iceland’s three major banks which has all but made Iceland insolvent. Not only are the savings of Icelanders under threat, but large institutions in Britain stand to lose millions of pounds. Institutions like Scotland Yard stand to lose investments, local councils which provide public housing and trash collection may face financial ruin, and various charities are under threat. In response to this, the British government enacted its anti-terror laws in order to freeze the assets of the three collapsed Icelandic banks, which has set off a severe diplomatic row between the two countries [1].
Multiculturalism
At the heart of this failure of globalism is multiculturalism. The process that is behind the collapse of major financial institutions was the bi-partisan approach by the Democrats and the Republicans in the United States that forced banks to make loans to people who simply should not have been loaned money.
Janet Albrechtsen summed up the caused in a column in The Australian [2]:
On ABC radio last Thursday afternoon, Jennifer Byrne offered her take on the crisis. She was furious about the bailout, given that chief executives had pocketed millions of dollars. Sensing an opportunity to push their anti-market ideology, the uninformed have a simple and alluring solution: rein in unregulated greed to build a more socially progressive world.
But here’s the rub. Socially progressive regulation caused much of the mess that has enveloped the US. In pursuit of the perceived social benefits of home ownership, the mortgage dice has been ridiculously loaded in favour of American borrowers. The American dream of home ownership for all is a fraud. Not everyone can own a home. But politicians pimped this dream, creating an unsustainable mortgage industry whose collapse is surprising only because it didn’t happen sooner. (The Australian, 8 October 2008)
And according to Steve Sailer [3], this “diversity recession” was caused by affirmative action backed by multiculturalism, demographic change and illegal immigration. The highest number of defaults are occurring in areas that have the highest concentration of “undocumented workers” who have “undocumented incomes” and received “undocumented mortgages”.
The banks were forced through legal threats of racial discrimination to make these unsound loans to uncreditworthy minorities.
Subprime mortgages
These subprime mortgages were handed out with zero money down and usually contained a honeymoon period of very low interest rates that at the end of the honeymoon would blossom into enormous unaffordable repayments.
This is what actuated the crises, the sudden expiry of thousands and thousands of low interest periods, leaving financial institutions with what amounted to toxic waste on their books – unpaid debt and almost worthless property.
The situation was exacerbated by financial institutions creating new financial instruments that allowed them to trade these subprime mortgages, known as CDOs (Collaterised Debt Obligations) as derivatives and sometimes as derivatives of derivatives, creating artificial wealth that was added to the company’s worth.
These subprime junk bonds (CDOs) are essentially worthless and many large institutions have had billions of artificial dollars wiped off their real-life bottom lines, which is why governments around the world are scrambling to nationalize or subsidise (at the expense of the taxpayer) to prop them up and guarantee savings deposits.
As a side note, the executives of the American AIG went on a $500,000AUD company-funded holiday after being bailed out by U.S taxpayers [4]. This would have to make these people the most highly paid welfare recipients in the history of welfare. Their arrogance is breathtaking.
Effects upon Australia
What effect will this crisis have on Australia? In some respects it is having a positive effect in creating a defacto tariff or protection. The Australian dollar has slid down to around 0.68 US cents which is good for our exports and, in my view, good for Australian industry, or what’s left of it. The low Australian dollar will make imported goods more expensive and thus will (hopefully) encourage Australian consumers to purchase more locally produced goods, where possible.
The highest cost will be in the loss of superannuation funds held by most Australians — this will force many people to either have to return to the workforce or claim more on social security, putting doubt on whether the government will increase the pension as promised in this year’s budget.
Effect upon families
What may make this recession particularly bad, and impose a high social cost, is the level of private debt held by individuals and families.
If a company experiences a debt problem or economic downturn they can reduce their budget, cut back on non-viable business and reduce their staff; however, a family cannot reduce spending by very much, and the kids still have to be fed. A family cannot reduce it’s staff, you cannot make your wife redundant or sack your kids to save costs.
The national debt ratio
According to Steve Keen, Associate Professor of Economics and Finance at the University of Western Sydney, Australia’s debt ratio is three times what it was at the time of the October 1929 crash. At that time our debt ratio was 64% (of GDP), but today it is 165% of GDP and Australians collectively owe a staggering $42 billion on credit cards. According to Keens, this private debt is a key pre-condition for a prolonged depression [5].
The crisis has also induced the Reserve Bank of Australia (RBA) to drop interest rates in October by a full 100 basis points. This allows Swan and Rudd to save some face after previously making vague threats against the banks for not passing on rate cuts (or raising them without the imprimatur of the RBA).
The banks consequently passed on a 80 basis point cut, so Rudd and Swan can preen themselves on their sound economic management skills, although it was actually a legacy of the Howard years.
According to the IMF, Australia will avoid a recession. It’s hard to see how, given that the rest of the world will be in recession and, according to Katie Dean of the ANZ Bank, the “downturn” may be long-lasting and investors are not confident that governments and central banks are doing enough to avert a serious global recession. James McGlew of Argonaut Securities was even more succinct [6]:
“No one who is alive has seen anything like this before, there is nowhere to hide.”
A worrisome outlook
At the time of writing Kevin Rudd is denying that Australia will be affected by the coming global recession, citing a report from the IMF that states that the Australian economy will grow at 2.2% in 2009.
However the IMF forecasted positive growth for Australia during the last global recession but the economy actually contracted by -0.6%.
The truth is that nobody knows where this will end, today the 10th October is already being called “Black Friday” as $95 billion dollars are wiped off Australian shares.
In light of this bad economic news, job growth for 2009 is set to contract, shedding as least 300,000 jobs. Rudd has announced a delay to the fraudulent carbon trading scheme as one of the measures to help stave of recession, but what is he doing about job creation? Will he renounce the high immigration quota announced by Chris Evans during the 2008 budget?
The Rudd government had planned to import massive numbers of low-skilled laborers, most likely Africans or Asians, amounting to about 1,000,000 over a period of three years – an immigration rate that rivals Britain.
We are already in the midst of a housing crisis, and next year will see an employment crisis. Will Kevin Rudd renounce his government’s suicidal immigration policy?
If he continues with this high immigration policy, it won’t be our children competing with Third World labour, it will be us, the current adult generation.
Having high African immigration is also a recipe for high crime rates, as we are seeing in Melbourne suburbs such as Coburg. Combined with high unemployment, we will see ethnic tensions and disorder such has never been experienced before in this country.
The Rudd government has also put forward a package to spend $10.4 Billion dollars on an economic stimulus package after Wayne Swan returned from a high level meeting of G20 leaders in the United States.
After running a platform of being a fiscal conservative during the 2007 federal elections, Rudd is now spending money like a drunken sailor. The payments are not for the benefit of Australians however, they are for the benefit of big business as they want us to go and spend, spend, spend for Christmas to prop up their bottom lines and ultimately provide political points for the Rudd government at the next election. Spending the capital bequeathed to them from the Howard years may well see the 2009 budget in deficit and Australia in debt once again.
This spending combined with other governments has caused a momentary bounce in the markets that was tempered by the news that the US had entered recession. The problem from this spending spree to prop up global capital and ensure no banker will live in poverty is that it has caused the markets to be over valued – this effectively sets us up for the mother of all collapse in the not too distance future once punters realise the true worth of the market.
Work to be done
As Nationalists we are not doom-mongers, we are Protectionists, we want positive change for our people. Yes, we can see the dangers ahead, and therefore it is our duty to guide our country away from the danger.
We cannot easily overcome the present “system”, our people depend on the “system” for all their comforts and they will not give it up. However, it looks like the “system” may collapse under its own excesses and our people will be looking for somebody to look after their interests.
That somebody must be the Australian Protectionist Party — it is our responsibility to imbue a sense of trust of Nationalism into the minds of our people.
As such we must continue the work of getting our message out to our people. This means contesting elections where practicable, attracting good media attention, participating in community-building activities, and continuing with seemingly menial and low-reward tasks such as letter-boxing and leafleting.
The Australian Protectionist Party has been doing all this and more for the last twelve months but there is still much to do. The Australian Protectionist Party needs you. If you are not a member, join now! If you are a member, contact your state chairman and ask how you can help. Remember, this is a struggle for the future, our future and that of our people.
[References added to the on-line edition:]
[1] “Iceland crisis hits UK councils”, Sydney Morning Herald, 10 October 2008
[2] Janet Albrechtsen. “House of cards built with good intentions”, The Australian, 8 October 2008
[3] Steve Sailer. “The Diversity Recession, or How Affirmative Action Helped Cause the Housing Crisis”, Taki’s Magazine, 22 June 2008
[4] Kim Dixon and Rachelle Younglai. “AIG execs splurged on perks before bailout”, Herald Sun, 8 October 2008
[5] Steve Keen. “The Failure of Central Banks”, Steve Keen’s Debtwatch, 27 October 2008
[6] Matt O’Sullivan and Jacob Saulwick. “Black Friday”, Sydney Morning Herald, 11 October 2008
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