October 25th 2008

  Buy Issue 2791

Articles from this issue:

COVER STORY: CANBERRA OBSERVED: Kevin Rudd's desperate gamble

EDITORIAL: Can Australia weather the storm?

NATIONAL AFFAIRS: Defending Australia's independence

CHINA: Milk contamination scandal: tip of the iceberg

NEW ZEALAND: November 8 election: Helen Clark's last hurrah?

FAMILY: Will paid maternity leave help mothers?

VICTORIA: Behind Victoria's radical new abortion law

ECONOMIC AFFAIRS: Can the US adjust to changing world realities?

STRAWS IN THE WIND: Barbarossa II / Our friends

EDUCATION: When the wrong answer is 'right'

SCHOOLS: Minister Gillard backs faulty ranking system

SRI LANKA: Plight of persecuted Tamils worsens

TAIWAN: Ball in Beijing's court for Taiwan's WHO entry

EUROPE: Germany backs Russia against Georgia, Ukraine

AS THE WORLD TURNS: Health and safety obsessions stifle childhood

BOOKS: BLUE PLANET IN GREEN SHACKLES: What is Endangered: Climate or Freedom? by Vaclav Klaus

Books promotion page

Barbarossa II / Our friends

by Max Teichmann

News Weekly, October 25, 2008
Barbarossa II

If anyone remembers any of the politics dictionaries that Dr Dean Jaensch and I used to bring out, you will find me saying that the word depression is never to be used in polite society. It is verboten.

So endless games are played as to whether we have a recession and when we don't have a recession - just part of the puerile, tokenistic distractiveness, which is all we are getting from our gurus and our politicians.

As in the 1930s, the air is thick with Dr Panglosses, seeing lights at the end of tunnels, and demanding that we all pull together, and it's only fear and hysteria that are standing in the way; the basics are fundamentally sound, etc. It's rather like World War I official communiqués and propaganda.

One of the galling things about News Weekly is that we have been predicting events such as are now unfolding for a long, long time. People like Peter Westmore, Pat Byrne and Colin Teese have written reams about foreign debt, credit blow-outs, and funny money. Either we have gone below the radar, or the usual censorship has been at work. We must do something about this.

Most voters and investors don't believe anyone now. They are ignoring the politicians, the polls and the statistics, for they now know there is no truth to be found there. A total lack of Trust.

At the end of World War I, life went on and people picked up the pieces; but virtually none of the parties and institutions remained or had a committed following, except the Catholic Church.

Similarly today, after the global financial meltdown, capitalist systems run by people acting solely out of greed and covetousness have been devastated. They are never going to be the same again.

There has been much talk of this being like the 1987 crash. I don't think it is, and I think what's happening far dwarfs anything that happened 20 years ago.

But there is another period which is interesting to compare it to, if it's analogies in which you are interested, and that is Germany in 1922. Everyone was economically devastated in the aftermath of World War I, with severe unemployment, and the middle-classes having virtually lost much of their savings along with their status.

As a way out of this, and in order to try and pay for reparations, the German government began printing money. This process got out of hand until there were runs on banks, and the currency collapsed.

There was hyperinflation. The old middle-class was virtually wiped out. At this time, the Nazi party was founded, and the Communist Party leapt into prominence. The situation was only saved in Germany, and in some other countries, by a massive injection of American money, for America was then booming.

Germany prospered as a result, until 1929, which was when America, now in trouble at home, called in its loans and refused to roll over any which were expiring. The German economy collapsed, as did many others, in a kind of domino effect. The whole thing had been based on credit.

The current manoeuvrings of the big countries seem to me certain to stoke inflation in Australia and elsewhere. In Australia, we have been told inflation is running at 5 per cent, although it would be much higher since that announcement, because the price of everything has been going up.

The crash of our dollar will force up the cost of imports, some drastically. Having de-industrialised, we will either pay more for imports, which has an inflationary effect, or we go without, which leads to a loss of jobs.

Then there is the wages breakout underway, spurred, as usual, by the teachers and health workers. Their wage rises will run through the whole public sector and beyond.

So it is strange indeed to hear the Reserve Bank declaring that inflation is no longer a serious problem. I saw some po-faced spokesman on telly just a few days ago saying that we may expect the inflation rate to rise to 5 per cent, after which time it would soon fall back. It was over 5 per cent quite some time ago, and as to dropping back, why? They are saying anything.

Melbourne and most Western cities appear overrun with thousands of self-important young men with black suits, white shirts, briefcases and laptops, thrusting and strutting around the streets of the central business districts, and in the pubs and the expensive restaurants, where they have been spending much money, making much noise, and drinking a great deal. Their female equivalents are no different.

This was the new finance and banking world, and these clowns were featured in all the conspicuous consumption-lifestyle magazines, replete with their expensive gear, their infantile opinions, and selfish, narcissistic lives. These high rollers have just lost all their glamour, all their smell of success, and in many cases, their jobs as well. Hence that fear on the face of the stock exchange actors - that's what the fear's about. From roosters to feather-dusters.

But the cost to the ordinary person worldwide could be momentous.

Just about everything I have recounted can be found by way of imitation in the administrative class of the public sector, including the municipalities, except that it is public money that has been consumed and squandered rather than the private wealth of shareholders and ordinary people.

To put this whole situation rather differently, it is assumed that many superannuation and managed funds have lost 20 per cent of their value so far in this long slump. If our inflation rate were to rise above the present rate of 5 per cent, to say 8-10 per cent, and to stay at that level for some time, the real value and spending potentialities of superannuation and managed funds, and all fixed deposits, will run down.

These various financial instruments could soon finish up with a realistic value of 50 per cent of what they were before. If this situation becomes at all likely, I would expect the official public line to underestimate the true rate of inflation, rather along the same lines as we've had on unemployment for many years.

Our friends

I picked up an interesting survey from one of our newspapers. Support for the US alliance has risen substantially here, with some 78 per cent supporting the alliance. This has occurred in the face of heavy American setbacks, if not defeats, the involvement of our forces in these activities, and the incensed gibberish of hate-mail from the media.

Interesting. Britain and the British are held in the highest regard. Fat chance for the republic. New Zealand and France are next to the Anglos. All Western cultures.

China is regarded as one with whom we should link, provided nothing is done which is derogatory to our sovereignty. The sale of chunks of our resources is considered undesirable.

Labor politicians should beware of ignoring these core sentiments, given that Australians are demonstrating considerable wariness with respect to China's future intentions.

- Max Teichmann

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