WHY PUT UP A 2.6 METRE FENCE NOW?
“Under new anti-terror measures, a 2.6-metre barrier could soon block public access to the much-loved grassy space” around Parliament House.(1) Note that plans for the new Parliament House have been withheld from public over “national security fears”.(2) Now I ask you, is this fence really planned to protect the Australian Parliament from terrorists? Really Blind Freddy can see it will be constructed to stop large numbers of ordinary citizens from disrupting the activities of our politicians.
Is this what the new Parliament fence might look like?(3)
We know the LNP government is unpopular with its massive cuts to pensions, health care, education, aborigines, and people are not impressed with the idea of giving $50 billion in tax cuts to large corporations.(4) Will this lead to thousands of Australians to protest outside of Parliament? There seems to be little chance of this so far. However there is something in the wings that might produce so much anger and frustration that the “sanctity” of Parliament would be threatened.
UP NEXT: THE BIGGEST FINANCIAL MELTDOWN IN HISTORY?
In October this year the International Monetary Fund reported that global public and private debt has increased to an all-time high of $US 152 trillion, and more than I/3 of it is owed by the US. Virtually all respectable economists and commentators in the mainstream press will tell you this is not a problem. However this figure is more than twice the amount of global income!(5) So how can this debt ever be repaid? The simple answer is that it can't, and it won't. Nobody will ever say anything that might spook investors, but this cannot go on forever.
I have no doubt that all governments know the debt bubble will burst but they are owned by the giant banks who benefit from this debt. After all people in debt must pay interest, and who collects this interest? So governments will not stop the growth of debt but they will prepare for what they know will happen when the debt bubble bursts. Business will fail, investments will lose some or all of their value, people will lose their jobs and their houses. It all happened before in the Great Depression which began in 1929, and it will happen again. And when it does, people will turn to their governments for help. What kind of help are they going to get from the likes of Scott Morrison, Malcolm Turnbull or Tony Abbott? They might need more than just a big fucking fence to protect themselves!
OUR ECONOMY AND THE FINANCIAL SYSTEM ARE BASED ON DEBT/CREDIT
In 1929, long before most of us were born, the US and the world experienced a serious financial meltdown called the Great Depression. Millions were put out of work. Only after millions more people died in WW II did the world's economy recover. The Glass–Steagall Act of 1933 was enacted in the US to separate retail banking from speculative investment activity of banks which contributed to the 1929 crash. However it was repealed in 1999 by Bill Clinton. Notice in the graph below, the amount of credit = debt rose from $24,000 billion in 1999 to $57,000 billion in 2014, just 15 years later. In the 20 years before 1999, it rose another $20,000 billion.
US$ pegged to gold from 1945 to 1971.
These amazing levels of debt have never occurred before in history. The US and the world economy have been running on debt since the early 70's. One perhaps oversimplified explanation for this astounding development is the little known fact that in 1971 the US took the US dollar off the gold standard. For centuries world trade had rested on the British pound being fixed to a definite quantity of gold. In 1945 the US agreed to take over this policy by fixing the dollar to gold at the rate of $36 per ounce of gold. After 1971, when the US$ was no longer convertible to gold, the US dollar became what is called a fiat currency, and all major currencies today are the same. A fiat currency is one in which its worth is not fixed to anything. It has "worth" only because a government has made it (by fiat) the only legal currency within its territory. Do you know what gold is worth now? About $1,142.00 per ounce, and some claim that it has been deliberately kept low by the banks manipulating the gold market.
IS THIS IMMENSE LEVEL OF DEBT A PROBLEM?
In the years immediately after WW II bankers were careful people who knew that they could only loan or give credit for the amount of money deposited in their vaults. Once paper money was no longer equivalent to any standard item like gold to determine its “real” worth, bankers began to extend loans for a total which was much greater than their assets.
Over time this method of banking became the “new normal”. Banks began to change from being stuffy negative institutions to your best friend who made loans easier and easier to get. How can a financial system run with this huge amount of debt? The simple answer is that everybody involved in the system, bankers, finance writers, academics, economists, politicians, government regulators, financial advisors, etc. all benefit from this system. Their pay and bonuses come from a system of increasing debt. So they all say the same thing: “Don't worry. The market just keeps going up and up. In the long term you can't lose.”
Of course this is not quite true. If a lot of people suddenly began to suspect that the system was going to collapse like it did in 1929 they would pull their money out of the system and put it elsewhere, in property, gold etc. However all of the people who benefit from this system know that their livelihood and the system itself depends on projecting an air of optimism. They insist that the power of the market will keep driving the value of these financial assets higher.
Some problems were encountered around 2007 and 2008 during the sub-prime mortgage crisis. A sub-prime loan is a loan to a customer who has almost no chance to repay the loan. Why give loans to people who could not repay them? This happened because the banks rewarded people for the number of loans they made with no regard to their quality. Then the banks created investment products from these loans and sold them to unsuspecting investors. Eventually investors realized that these “investments” were a fraud. A crisis followed in which many of the big banks faced bankruptcy. They were saved by government = taxpayer funded bailouts which have now crippled the finances of countries like the US and the UK. Still no “reputable” banker, economist, financial adviser or politician will admit publicly that the system is a bubble, a casino or a house of cards, even though there have been no changes in the financial system itself because of the crisis in 2007-8.
THE WARNINGS OF A CRASH ARE OUT THERE
If you look at the “alternative” financial press, like ZeroHedge or The Daily Reckoning in Australia, you will see an open discussion of the problem created by such giant levels of debt. Still more “respectable” journals do occasionally discuss this possibility. A recent article in the Wall Street Journal entitled “Hooked on QE: Hedge Funds See Dangerous Addiction” discussed the comments of several big hedge fund managers about the possibility of a financial collapse.(6) According to these managers, the final collapse may be a sudden unexpected major bankruptcy or perhaps a countrywide default.
Another article in Business Insider entitled “These 3 things could trigger another financial crisis” explained that some market observers predict a global financial crisis in 2016–’17 — one just as serious, if not more so, than that of 2008–’09.(7) The three events discussed are a massive depreciation of the yuan, an unexpected inflationary shock or the default of an emerging-markets nation or outsize corporation.
So have the LNP wasted our money on a secret fence around Parliament, or do our fearless leaders realize that the world economy and our financial system is like the Titanic looking for an iceberg?