The Labor Deficit - China

Kevin Rudd is telling Australians that the problems in Australia are not caused by Australians. Kevin also told us that we were independent from places like the US when it comes to financial concerns. Kevin came into office with a surplus that he managed to turn into a deficit within a year. He blames this on the previous government and other factors over which we have no control like the global financial crisis.

He gives large sums of money to auto manufacturers who's Chief Executives still get their double digit multi-million dollar salaries. He tells us that the way out of the crisis is to have the government manage projects.

If you are not rolling around on the floor by this point, you may not have any grasp of basic economics. Keynes gets a lot of blame these days but how many people have read his theories? I have, and one of the primary conditions for his spending stimulus, apart from the bit where this is described as a short term measure, is that retailers must fix their prices during this process. Another basic fact is that any government run enterprise will lose money and be far less efficient with funds that a private concern.

The facts are simple. Australian financial institutions decided to theory away any risk analysis and led at sub-prime rates, i.e. 100-110% to people with poor collateral and low chance of making payments. They took the risk to make money and got it wrong, that is their fault, not the previous government. If it was, then why hasn’t Rudd et. al. changed the laws on this. Liberal economics does not say to bail out the people who made the bad business decisions but Rudd and Swan are doing and have done just that.

Any first year economics student knows about international trading, finance and the inter connectivity of these things. If Australia was isolated then why has our $ dropped by 30% against other currencies? Why have our resources prices dropped by half? If the previous government got it so wrong then why did we go into deficit so quickly and why will we continue to do so and historically always do so under Labor?

You can ponder your own answers to these questions but I suspect that Kevin is being less that honest when it comes to many of these issues. Or if he doesn’t know then he is very naïve about international finance and Australia's place in that equation.

China – A Developing Nation.

China as a space program, nuclear weapons, a stock exchange with the most transactions per day (Shanghai), some of the most advanced manufacturing systems on the planet and is certainly the biggest manufacturer. It has huge cities like Shanghai that makes Sydney look rural and a growth rate until recently that outstripped everyone.

Since they are still classified as a "developing nation" they get all kinds of favored treatment by the UN, Copenhagen Climate Conference 2009 and others. They have the resources to buy up our resources and the companies that produce them.

China has a saying don’t give a man a fish, instead teach him to fish. In our case they are buying up the whole stream/pond/lake building a fence around it and saying that we have to pay to fish in their pond/Australia.

If China is a developing nation then Australia needs to be reclassified as at the very least a stupid and cowardly nation and be given a third world status of some kind.