Towards ceding Australian sovereignty?

The comment below resulted from a dialogue around Ellen Bown’s excellent book Web of Debt.

Disclosure: I am not trained in economics or economic theory so my analysis may appear a little puerile to some. I am in fact an Arts graduate with honours, with about 10 years experience in government and lately in a private sector IT consulting firm.

Whatever, the situation in Australia, I think it is obvious that we are not “de-coupled” from the US economy, nor the US Federal Reserve System, as our banking and financial sector was “de-regulated” in 1987 or so, when the $Aussie was floated, allowing private international banks greater access to our credit markets, and putting us at the mercy of the market makers.

So far, our politicians have been lying to us about the imminent serious impact we face in relation to the US sub-prime fiasco, but it is becoming clearer every week that we are facing a severe credit crisis because some of our major private banks are “leveraged” beyond their ability to write down the amount of bad debt they are holding. This may in fact be a manoeuvre by the “shadow world government” to bring Australia’s reserve system into private hands – hence both sides of politics (that is the supposed “left” and “right”) in the last 12 months have been at great pains to point out to the public the “independence of the Reserve Bank”, who they say, is solely responsible for monetary policy, whilst the government looks after fiscal policy. Perhaps the Reserve’s independence would be unequivocally established if it were controlled by a board consisting of private bankers.

Even though the government has been able to pay down its debt, due to high tax receipts, the boom we have experienced is only partly due to our massive resources sector (where we are digging up the country and selling it to China). What also precipitated the boom and the unsustainable growth in the real-estate market was extremely lax fiscal policy (similar to what you in the US call “stimulus checks”, in our case it was “baby bonuses”, “family payments” and the doubling of the first home buyers grant. All of this was in the wake of the last bubble/crash in 2000).

Further, we have seen “credit on demand” resulting in a massive increase in credit card debt, confusion in the roles between the Australian Stock Exchange regulator and operator (the same body, “ASIC”), leading to some very dubious pratices, and a huge promotional campaign by the banking and finance sector to leverage home equity (ie, “apparent equity” based on inflated prices) to invest in the stock market. People were able to buy a house with no money down, and having paid very little back, they could still within a year have $30,000 or $40,000 or more in “equity” for leveraging in a stocks portfolio.

It appears to me that when the financial tsunami hits, Australia will have no choice but to dance to the tune of the international bankers, cede our sovereignty, and join in a regional (or perhaps global, but I think that will be a later step) privately controlled financial system and currency.

Thanks for the link to the Economic Reform Australia Network, and I’ll be watching the UK and Canada with some interest.

Keep fighting the good fight.

Kind regards,
Dean Britton
Western Australia.


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