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Hockey boosts debt ceiling by $200 billion and announces inquiry into everything

The government’s Commission of Audit will look at extending “user pays” and encouraging individuals to provide for themselves…

Joe Hockey and Mattias Cormann have announced a higher debt ceiling. AAP/Alan Porritt

The government’s Commission of Audit will look at extending “user pays” and encouraging individuals to provide for themselves, in an inquiry directed to achieving a sustainable surplus within a decade.

The five member commission is chaired by Business Council of Australia president Tony Shepherd and includes former Howard government minister Amanda Vanstone, former Treasury secretary Tony Cole, former Finance department secretary Peter Boxall and former director-general of the Western Australian department of Industrial and Regional Development Robert Fisher.

It will examine every area of federal government and the “architecture” of federal state relations.

Apart from ticking off on the commission, cabinet today also approved increasing Australia’s debt ceiling from $300 billion, which will soon be hit, to a large $500 billion. Legislation for the rise will be brought in when Parliament commences next month.

Announcing the new ceiling, Treasurer Joe Hockey said: “We need to move quickly to deal with this, particularly in the wake of what’s been revealed in the United States in recent times.

“We need to put it beyond any doubt and we do not want to have to revisit this issue again.”

The commission, the first since that set up by the Howard government in 1996, is on a breakneck timetable. It is to provide an initial report in late January and a second by end March. Some of its recommendations will be considered for the May budget.

“Every area of government will be examined. There are no restrictions,” Hockey said.

It is charged with identifying waste, unnecessary federal-state duplication, and areas where the Commonwealth should not be involved, as well as recommending how to improve the efficiency and effectiveness of delivering services and policy advice.

Its aim is for savings that would deliver a surplus of 1% of GDP before 2023-24.

The first phase will look at federal-state roles and overlap, and areas from which the Commonwealth might retreat. The commission’s proposals will feed into the coming White Paper on the Reform of the Federation.

Searching for greater efficiency in spending. the commission will look at the scope for further privatisation. Only Medicare Private has been identified for sale by the government so far.

Among issues the commission is asked to review are “savings and appropriate price signals – such as the use of co-payments, user-charging or incentive payments – where such signals will help to ensure optimal targeting”.

As well, the commission will report on the long term sustainability of the budget position, identifying ways to address the risks “including by introducing appropriate incentives to encourage self-provision of services by individuals”.

Phase two of the inquiry will examine the condition and adequacy of Commonwealth infrastructure. It will also look at how to improve the assessment of programs and agencies and to strengthen Commonwealth budgeting arrangements.

Vanstone was a minister from 1996 to early 2007 when she left for a diplomatic appointment. She served in a range of portfolios, including employment and education, and immigration.

Early this year the Business Council produced a sweeping blueprint for budgetary and other reforms. In the run up to that plan Shepherd said: “The plan we’re putting forward for Australia requires political leaders who are prepared to lose their jobs to get things done.”

In a downgrading of bureaucratic influence, the BCA’s chief economist Peter Crone is to head up the secretariat for the commission. The secretariat will be based in the Finance Department.

The commission may hold public and private hearings, receive submissions from stake holders and the public and directly liaise with government departments.

Finance Minister Mathias Cormann said “Labor left a budget in very bad shape”.

The two ministers answered questions on the announcements for only about six minutes, with Hockey appearing anxious to get away.

Shadow finance minister Tony Burke said the government was taking the debt ceiling to half a trillion dollars and asking parliament to vote on it before it saw the mid year budget update.

He said Hockey’s plans on cuts and debt ceiling were a million miles away from what was put in the election.

BCA CEO Jennifer Westacott said: “The Australian community expects government to deliver value for money and to ensure that we are living within our means as a country. We expect them to keep our economy resilient against global volatility, and to plan and provision for the future.

“These are the perspectives people in business bring to their roles every day, and the appointment of Tony Shepherd to head up the Commission of Audit will ensure they are brought to bear on this important national endeavour.”

She called on the opposition to give the commission bipartisan support.

Join the conversation

120 Comments sorted by

Comments on this article are now closed.

  1. Michael Sheehan

    Geographer at Analyst

    Let's hope that Hockey is not such a vulgar buffoon as to invite Cate Blanchett!

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    1. John Q Citizen, Aussie

      Administrator

      In reply to Michael Sheehan

      invited mandy vanstone, more bang for your buck and we know have a more literate ex minister and ambassador with her comment in the 4th estate... Rome anyone??

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    2. Trevor S

      Jack of all Trades

      In reply to John Q Citizen, Aussie

      "invited mandy vanstone"

      My partners a fan after listening to her as host of ABC Radio National's "Counterpoint". I bite my tongue

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    3. Michael Sheehan

      Geographer at Analyst

      In reply to Trevor S

      I'm with your wife. I like blousy broads.

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  2. James Hill

    Industrial Designer

    The conservatives need to be a million miles from what they said in the run up to the election otherwise it will the Abbott recession we didn't need to have.
    And can the business community please spare us their self-interested pious dogma.
    The finance sector can start putting it's house in order for a start, before they start whining to the federal government for special treatment.
    Let them try doing something about the $1.75 trillion dollar investment in the purely speculative mortgage market…

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  3. Dale Bloom

    Analyst

    This is interesting.

    “Its aim is for savings that would deliver a surplus of 1% of GDP before 2023-24.”

    In the US there was a “Penny Plan” proposed.

    “The Mack Penny Plan would balance the federal budget in eight years by cutting one penny out of every federal dollar spent for six years and capping spending at 18% of GDP beginning in the seventh year.”

    http://www.conniemack.com/issues/penny-plan/

    However, the Penny Plan was rejected by the Democrats, who wanted to raise the debt ceiling, so they could spend more money and create more debt.

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  4. karen griffiths

    retired teacher

    "If debt is the problem, more debt is not the answer," Joe Hockey before September 7th!

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  5. David Stein

    Businessman

    Credit where it is due - putting the debt ceiling up a full 40% to a level that will not be breached in the foreseeable future is a smart move for the economy and the country.
    Labor will also be smart not to play politics with the debt ceiling - a sign of maturity in opposition that the coalition should remember and not repeat. Hockey's terrible behavior in threatening Tea Party type tactics should be expunged from the body politic.
    As far as the audit commission goes - I'm really not seeing anyone with much innovation, and Amanda Vanstone - really? They really have missed an opportunity to give thought leaders like Qld economist John Quiggin a chance to add something important to the debate. Unfortunately it seems all the Abbott government wants is political cover for extremely predictable recommendations as I have said before - cut spending and sell off the family silver pronto.

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  6. John Q Citizen, Aussie

    Administrator

    Oh dear Joe Hockey, now realised that being in opposition is at times very easy. Sling off and make lots of sound bites then, once in power thats POWER, get the flip flops or thongs out and start back flipping.

    Am disappointed in sweaty joe he promised so much, stood his ground, looked genuinely nervous at his first PR gig and now he's basically printing more money, and got the razor gang out. That amanda vanstone is in on this hatchet job brings back memories of 1998 and proof positive that outsourcing does not work for those it is allegedly servicing.

    Hang on to you hats people things are going to change rapidly and you voted for them, even though you didn't insist on knowing what we are in for...thank you, so much!

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  7. Stephen Ralph

    carer at n/a

    Deary me, another $200 billion on the tick............weren't they clucking from Feb to Sept about how mired in dirty debt we were.

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    1. John Q Citizen, Aussie

      Administrator

      In reply to Stephen Ralph

      But Stephen, they are in POWER and power corrupts, I agree they are now trying to spin their way out....along several lines actually.

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  8. Shane Beck

    Railways

    Hmmm, let's see, on the revenue side, the mining tax and carbon tax will be eliminated. The obscene PPL levy on business will be balanced by the 1.5% tax cut so the bulk of that scheme will fall onto the PAYE taxpayer. An increase of the GST has been ruled out. So not much you can do to increase revenue but do what the Liberals have always done- flog off stuff. How much tax have Macquarie Airports paid upon their profits of Sydney Airport lately? Hint- 10 years of not paying any tax.

    On the expenditure side, I don't see any sign of the Abbott government cutting down on waste. PPL- 5 billion dollar hole. Direct Action- 4 Billion dollars to meet international obligations, the usual middle to upper class family welfare etc.

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    1. Trevor S

      Jack of all Trades

      In reply to Shane Beck

      "Hmmm, let's see, on the revenue side, the mining tax and carbon tax will be eliminated."

      Revenue ? That's a long bow.

      "PPL- 5 billion dollar hole. Direct Action- 4 Billion dollars to meet international obligations, the usual middle to upper class family welfare etc."

      Has to get into power somehow, that's the entire raison d'etre. Telling the truth never gets Politicians elected because voters don't want the truth. The Australian Loony Party and the Loony National Party indeed.

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    2. Meg Thornton

      Dilletante

      In reply to Shane Beck

      How many assets does the federal government have left to flog off after the big selling off sprees of the Hawke and Howard Years? I mean, we've gotten rid of all the obvious ones (Telstra, Commonwealth Bank, Australia Post, the ports, the airports, the railways). About the only thing left that's actually bringing money IN for the government these days is possibly the ATO... and I almost expect that to be sold off (oh, sorry, privatised) any day now. They're planning to sell off the HECS debts (so I'm sure I'm going to be hassled by Dunn and Bradstreet on behalf of whichever bank buys up my HECS liabilities any day now) to the finance industry, because that worked SO well in the USA, after all.

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    3. Michael Sheehan

      Geographer at Analyst

      In reply to Meg Thornton

      Meg, you won't be hassled if you pay your debts. That's kind of the whole idea of taking out a loan. You know, you pay it back, and stuff.

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    4. Phil Martin

      Construction worker

      In reply to Shane Beck

      Shane the fire sale has started with the proposal to sell medibank health insurance more than likely to their corporate mates.
      The only part of Michelle's piece that suggests any real consideration of stopping waste is ridding the country of state and federal duplication.
      As far as user pays you already know what that means, the likes of you and me will carry the can

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    5. Stephen Ralph

      carer at n/a

      In reply to Phil Martin

      That "duplication" sounds good in theory -
      but WHO will relinquish WHAT.

      It'll be another tall tail.

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  9. Lee Emmett

    Guest House Manager

    Joe Hockey used a lot of energy bad-mouthing Labor' on 'debt' and 'deficit' issues.

    Now in power as Treasurer suddenly he makes a brief media appearance to announce an increase in the debt ceiling by 5/3 or a massive167%.

    The 'surplus' date has disappeared into Never-never-land.

    Joe Hockey also wants 'user pays', which means a whole host of services which governments collected taxes to provide will no longer happen.

    Instead we are likely to get more two-tier service provision, where…

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    1. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Lee Emmett

      "The LNP has lied to, and defrauded the electorate."

      Could you explain what this "lie" is ????

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    2. Shirley Birney

      logged in via email @tpg.com.au

      In reply to Mike Farrell

      The mad monk has already fessed up to telling lies and admits he doesn’t always tell the “gospel truth.” Obviously, the Abbott thinks it's okay to lie for Jesus.

      You’d have to be liquored up; blind drunk; blotto to believe Abbott's stupefying swill on the Randall scandal.

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  10. Loudon Cleary

    logged in via email @hotmail.com

    Amanda Vanstone? Every word she utters as host of Counterpoint demonstrates her ignorance and intellectual limitations. But she's a reliable right wing ideologue / attack dog. So we know what this 'commission' is about: sticking it to the powerless.

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    1. Stephen Ralph

      carer at n/a

      In reply to Loudon Cleary

      Surely there must be some diplomatic post in Outer Mongolia or Iceland to which she might be extradited.

      Another (ex) poltician that gets the instant mute button.

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  11. Ronald Ostrowski

    logged in via Facebook

    According to Hockey, during his press conference yesterday, it is all Labor's fault. Hypocrisy knows no bounds with this current iteration of the LNP movement. Whether it's jumping up and down about Slipper's spending of taxpayer's $900, which Brandis (the great taxpayer funded dancer at a private wedding of one of the LNP propaganda scream radio hate jocks) allegedly referred to the AFP, or daily criticising Labor for its more modest debt ceiling. This mob are breaking promises at a pace which would even make John Winston Howard (the non core promise man) feel very alarmed. Like many others (but not enough of us) I saw this coming, and that is why I voted Labor. Watch this space as we slide into becoming the region's caravan trash, giving away stuff in the ground as the countries around us prosper and increasingly invest in education. At least I can proudly say that I was not gullible in voting for this mob.

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  12. Peter Evans

    Retired

    Until we see MYEFO we won't know why the Budget outlook is deteriorating since the post Budget update. It can't be that Labor is spending more. They are not in Government. Is it revenue? If so then perhaps business needs to remember that constant cutting to match constantly falling revenue is a zero sum game. And where are we to find savings? Not Health, Education Defence. The total spend there has been quarantined (Hockey's response on 7.30 last night). So to make significant cuts will have to be big in other areas.

    And of course the BCA want a tax cut.

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    1. Greg Young

      Program Director

      In reply to Peter Evans

      Costello gave the game away on TV last night. The cuts will come from the education (student allowances and Gonski) and the NDIS, for a start. That's right, we will savage children, the disabled and asylum seekers to fund tax cuts to our business mates, welfare for rich mothers, an expanded role for the military and indefinite detention for people who have committed no crime.

      And all in pursuit of an utterly discredited obsession with having a surplus at any cost, based on a fundamental ignorance of the proper role of government in society. Government is not a profit-making concern, and every surplus dollar is a dollar taken away from the private economy these clowns claim to be in favour of.

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    2. karen griffiths

      retired teacher

      In reply to Greg Young

      Totally agree Greg. Saw the interview and the pieces began to fall into place, courtesy of Costello's comments. Children and disabled!!

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    3. Michael Hay

      retired

      In reply to Peter Evans

      We think we need all sorts of necessary expenditure - and this may well be the case. If so, we need more revenue so that we can pay for our 'necessary expenditure. Logic says w should raise our taxes in order to feed our need.
      Politics is a log-jam.

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    4. karen griffiths

      retired teacher

      In reply to Michael Hay

      "Feed our need' is the clincher, aka priorities. Unfortunately, the interpretation of 'necessary expenditure' by LNP seems to be growing increasingly remote and ideologically driven by the abbott gov. I still believe children and the disabled are a 'necessary expenditure!' They are an investment not a burden [waste].

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    5. Michael Hay

      retired

      In reply to karen griffiths

      Isn't it a wonderful theory, Karen, that we can increase our needs in an ever-increasing spiral of expenditure (Government paid, of course) and yet our political expertise indicates that we should reduce the governmental income with which we pay for these needs. The pollies reduce taxes to gain votes to retain power to whinge more and reduce expenditure to the minimum.
      I must be one those dreaded Socialists; I promote humane treatment of every-person - no race, no creed, no colour-bar, no nationality and I also promote a Flat Tax with the schedule made up of about half and A4 sheet, and therefore, no tax dodges: you earn income, you pay tax at a set rate. Everybody !

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  13. Phil Dolan

    Viticulturist

    “including by introducing appropriate incentives to encourage self-provision of services by individuals”.

    Would this include politicians paying for themselves to go to weddings and sporting events?

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    1. John Q Citizen, Aussie

      Administrator

      In reply to Phil Dolan

      One would sincerely hope so, however this is currently before a Review Committee on MP renumeration (sic) and a report yet to be finalised should see that this highly contentious issue be forgotten as it will like the weekly DIAC boat / shipping reports.

      Thank you for your e/inquiry, please call again!!.
      <Cynicism intended/implied>

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  14. Peter Ormonde
    Peter Ormonde is a Friend of The Conversation.

    Farmer

    Gee like I'm so shocked ... who knew? who could have even guessed?

    Thank goodness we have a pool of talented wise men (and Amanda Vanstone) to rescue us from whatever it is they're rescuing us from. I hope they're wearing hi-viz jackets like the RFS.

    No wonder they couldn't give us any idea of their policies before the election ... they will be put together by the panel over coming months.

    We must all repent!

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  15. Jim KABLE

    teacher

    Liars and rorters, this lot! And Amanda VANSTONE - isn't she the one who used her "entitlements" to have herself taught Italian so she could take up a cushy position there. Will she be paying those many thousands back before she assumes to tell the rest of us what we may have to pay for. Hockey as economic expert? How? Trying to turn this place into an impoverished "user-pays" place like the US?!! How about we simply cancel all our defence contracts with that selfish country (did you see the ABC Foreign Correspondent report on the social inequity there - last night) - then we'd have enough to end fees for university studies, to look after all the medical and dental needs of our population and certainly ensure the education systems were once again the best. And the uniform-wearing self-seeker pm - biggest rorter of them all - the best he could do is resign. And all the others who have taken money from the public purse!

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    1. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Jim KABLE

      There's a fella down the road here who's selling piglets. I'm gonna get me a few - get the floosies from the CWA Quilting Collective to whip them up a few hi-viz vests and I'm gunna take up hog calling.. Soooo-ee!

      Got the names already... Joe, Barnaby, Scottie and TA Tony. And in a couple of years I'll be handing out free bacon and ham all over town.

      http://www.youtube.com/watch?v=uVcVSEa_Ooo

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    2. Stephen Ralph

      carer at n/a

      In reply to Peter Ormonde

      Too late Peter, the LNP have that market cornered.

      BJ has a purveyor of ham for yonks.

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    3. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Jim KABLE

      I think the US is a great example for showing how democratic socialism works. A $17 trillion debt, bankrupt US Postal Service and the cruncher - Obamacare. He's pinched $0.5 trillion from Medicare and Medicaid to fund Obamacare, you know, from the poor. I went onto the DC Health Link website to see how much Hussein Obimbo would charge me. On $25,000, I'd pay $391/mth or $4,692. That wouldn't buy too Cheerios !!!!!

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    4. Shirley Birney

      logged in via email @tpg.com.au

      In reply to Peter Ormonde

      Mr O, please could you name a hog after Don Porkabelle Randall? After all he's had his snout in the trough too - oink oink.

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    5. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Shirley Birney

      Heck Ms Shirley I don't have enough space (or swill) to run a herd matching the snoutery that is Federal Politics ...

      But I must admit that putting in a claim for a family holiday and real estate shopping trip as far as one can get from one's electorate without needing a passport takes a certain degree of chutzpah and utter contempt for the punters. Well worthy of a porky prize.

      I could run a few small porkers destined to end up as suckling pigs I guess. Might be a race between the pig and Mr Randall when it comes to sticky untimely ends.

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    6. Stephen Ralph

      carer at n/a

      In reply to Shirley Birney

      Not according to TA......it was just COINCIDENCE that he bought a house in Cairns. That pig is flying.

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    7. Shirley Birney

      logged in via email @tpg.com.au

      In reply to Stephen Ralph

      Indeed Stephen, seven days after Randall’s busted, Alpha Boar comes to the rescue with the “unvarnished truth.” This is after Randall refused on seven separate occasions to answer questions posed by Fairfax Media.

      Heh – this mob would steal paper from a public restroom.

      In a nation ruled by swine, all pigs are upward mobile (humble apologies to the porcine species).

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  16. Jack Ruffin
    Jack Ruffin is a Friend of The Conversation.

    logged in via email @hotmail.com

    How can you ask for bi-partisan support when there is no bi- partisan membership?
    Where are the members who can provide expertise on social inclusion issues?
    It smells like a stacked, orchestrated, predetermined event.

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    1. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Jack Ruffin

      I don't think being bisexual would have an effect on economic discussion.

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    2. Jack Ruffin
      Jack Ruffin is a Friend of The Conversation.

      logged in via email @hotmail.com

      In reply to Mike Farrell

      Mike, did you take " social inclusion" as being exclusively about bisexuality? I meant the need for representation for those groups that are marginalised by our society. Equality of opportunity and support for those adversely affected by our social/ political/ economic structures is a worthwhile target.

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    3. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Jack Ruffin

      I fail to see how a blind, one-armed lesbian, who is a single mother to 15 kids in Mt Druitt, and who is 1/128th Aboriginal, can contribute to the proposed Commission - just sayin'. Is that was you mean by "social inclusion" ???

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  17. Dao Nguyen

    logged in via Facebook

    I hope they are going to revert to the APS of the pre-Howarđ-Costello-Reith time when policies were based on solid research results and Budget estimates are founded on solid models, not just on some fanciful but wobbly spreadshêets based on Treasurý's unrealistic or outdated economic parameters.

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  18. Henry Verberne

    Once in the fossil fuel industry but now free to speak up

    The Coalition hysterically shouted about debt, budget emergency, stop the boats and the supposedly severe impact of the carbon levy.

    And voters bought it (not that Labor's leadership wrangles exactly endeared them to vosters) but the new government's hypocrisy on debt etc is breath-taking.

    But they will likely get away with it due to our compliant media.

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    1. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Henry Verberne

      I suppose you didn't read PEFO. Go to page 17 where it shows what government borrowings will be (based on ALP policies):

      2014-15 $350 billion
      2015-16 $370 billion

      From memory, the LNP have forecasted they will reduce debt over forward estimates by $5 or $6 billion.

      And just remember they forecast unemployment of 6.25% next year. And Treasury has been proven wrong again today with inflation at 1.2%. They need a new model, like climate alarmists.

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    2. Greg Young

      Program Director

      In reply to Mike Farrell

      Oh gosh! That means the Liberals will reduce our crippling debt by a whole 1% over the forward estimates, IF they deliver on that promise.

      Golly, they must be super-superior economic managers, and it is lucky we have them all over this crippling debt problem and drastically reducing it quick smart. Praise be!

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    3. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Greg Young

      I see that Joe Hockey has had to bail out the Reserve Bank by $8.8 billion after Wayne Swan has stripped it by way of excess dividends.

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    4. Greg Young

      Program Director

      In reply to Mike Farrell

      Whataboutery. Doesn't change the fact that the LNP timetable for paying down the debt is virtually indistinguishable from the ALP's plan, even though they made a huge song and dance about it for years.

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  19. Dianna Arthur

    Environmentalist

    I cannot begin to describe the relief I felt when I heard Hockey announce "increasing Australia’s debt ceiling from $300 billion, which will soon be hit, to a large $500 billion" because raising the debt ceiling worked so well for the USA - at least I think that's what Hockey meant.

    Anyway, if Labor had increased the debt ceiling it would have been wrong, incompetent, irresponsible, wasteful, typical, woeful, fiscal ignorance, lamentable and very, very bad.

    Phew, glad it was Hockey then, which means raising the debt ceiling is right, competent, responsible, brilliant, strategic, crafty, astute, discerning, shrewd and very, very good.

    Right?

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  20. Geoff Anderson

    Brain Surgeon

    Debt will always be higher under a Liberal Government

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    1. Stephen Ralph

      carer at n/a

      In reply to Geoff Anderson

      That's not the impression they gave...........surely not another quasi-promise down the tube.

      Did anyone keep the tapes.

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    2. John Q Citizen, Aussie

      Administrator

      In reply to Stephen Ralph

      A non core promise am afraid, and there may well be an increase as 'more right wing facts/spin come to light'.

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  21. Michael Burrows

    Mr

    Howard and Costello had us 'whistling Dixie' with the US, down the GFC path; with misaligned relationships.
    Now there is smack of desperation to the tune of $200b; robbing Peter to pay Paul: this will not work.
    If the last couple of months are any indicator of Liberal governance and government, raising the debt ceiling will allow rorting of our public purse on a scale never seen before in this country.
    Kleptocracy...oh no...here we go again!

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  22. Ben Marshall
    Ben Marshall is a Friend of The Conversation.

    Writer

    The Coalition are on the way to fulfilling their agenda, and those of the vested interests that helped them get there - business, specifically the top end of town. To get a sense of the Coalition's agenda, one can look to the IPA wishlist, and to the general sentiments, if not all the specifics, of the US Tea Party end of the GOP spectrum.

    The Coalition efforts will increase inequality and will penalise the poor. We'll see basic health care costs rise, it and education will become more privatised…

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    1. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Ben Marshall

      It's a crying shame that some people have a view different to you. No doubt under your policy, we'd all be in a gulag. I'm hoping that Minister for the (f)Arts takes a wrecking ball to the inane subsidies (grants, prizes etc) given out to educated artisans. More money to cricket, footie and pool is the way to go.

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  23. Robert McDougall

    Small Business Owner

    "and encouraging individuals to provide for themselves" Shame we cant encourage politicians to provide for themselves.

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    1. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Robert McDougall

      Have faith Robert ... I'm sure Joe Hockey will stop the debt, stop the rorts, stop the waste and end the age of entitlement ... or at least he will stop news of same - deeming all such matters 'operational' and moving to a war footing along with Scott Morrison and his toy soldiers. Every minister will want a set of their own now - just watch.

      I envisage pollies kicking in to cover the cost of their five course lunches and a couple of very decent Hunter Shiraz ... I hope they've still got some of that Tyrrell's 1968 left over ... maybe just restricting the TA claims for electorate or parliamentary business rather than hols and real estate fact finding missions at the farthest end of the country from their constituents.

      Ah yes ... the end of the age of entitlement I can see it all now.

      Must be off - I've gotta put a new windsock on the runway for my four new pigs. They look a treat in their little hi viz jackets circling about up there.

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    2. John Q Citizen, Aussie

      Administrator

      In reply to Robert McDougall

      That would need a referendum and they have a poor track record of even getting across the line or to a ballot paper of late

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    3. Ella Miller

      retired

      In reply to Robert McDougall

      Robert how right you are. I heard that the government (don't know state or federal) changed the eligibility requirements for aid for the people in NSW who had their homes damaged in the fire.

      HOW LOW can they get?
      A sign of things to come.
      Mr. Abbott was in Tasmania today...the positive Mr. Abbott....
      who positively could not keep his negative side under control. Same old Same old...whilst he had a go at Labor about the carbon tax I note that he did not explain how he was going to compensate Tasmania for the Carbon credits... if the tax is repealed. I also noted that I can blame my high electricity account on the carbon tax.
      Same old lies .

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    4. Phil Dolan

      Viticulturist

      In reply to Ella Miller

      The country cannot afford helping people who have been affected by bush fires.

      We can afford to send politicians all over the country to weddings and bike rides and to purchase investment homes though.

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    5. Robert Attila

      Business Analyst

      In reply to Phil Dolan

      We cant afford either. Even if we could we shouldn't be rewarding people for not taking out home insurance. Otherwise i'll just do the same & expect the govt to bail me out while i spend my $ on luxuries instead.

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  24. John Rutherford

    Worker

    If Gilligan Hockey wants all services to be on a user pay basis then we should be paying a lot less taxes.But wait how do we fund all the borrowings.

    Leave it for the kids

    Meanwhile we owe a few favours to those who helped put us here.And that`s not the voters either

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  25. John Q Citizen, Aussie

    Administrator

    As has already been stated in another article a quick read of those peons of liberal thought the ipa institute of public affairs, does indeed show us some direction as to t abutt's thought processes even though he's keeping mum!

    http://www.ipa.org.au/sectors/governance-service-provision/news/2782/the-50-000-staff-draining-our-economy

    There are more abut gems but why not check them out for yourselves and spoil the fun!

    Rough ride all round even the blue tie set will find things a somewhat harder to do, heavens no ice, where's the gin, omg the tonic water!

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    1. Ella Miller

      retired

      In reply to John Q Citizen, Aussie

      " it will examine the 'architecture' of federal state relations"

      What the heck does this mean???

      OMG could it mean that they may examine how Liberal states ripped of the then Labor governments mining resource tax by increasing state royalties?
      Dream on!
      Hockey does not believe in what he is doing... his voice and body language says it all.
      That is why this madness which is to be visited upon us was announced by the finance minister and not the the treasure in the first instance.

      My God the age of entitlement is over !!!
      When has the entitlement of ordinary people been anything other than
      work if you can get a job
      pay tax
      struggle to survive
      all the while watching the carnivorous corporations rip off the government off taxes they should pay....WITH THE BLESSING OF THE LIBERAL PARTY !!!!!

      This proves MR.Abbott's claim that his government will govern for all Australians... LOL

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  26. Robert McDougall

    Small Business Owner

    Wow, seens like the start of the howard era all over again. The first time around resulted in a large section of gen x disempowered and impoverished in their 20's with Mandy Vandstone cracking the whip.

    Maybe thats why she's on the panel, experience with sinking the boot into people while they are down after having kneecapped them.

    The "them" will now shift from refugees, to the most disadvantaged domestically, i.e. children, disabled and the poor.

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    1. Stephen Ralph

      carer at n/a

      In reply to Peter Ormonde

      We should bring back the tableau as an artform....

      I can see a calendar or a coffee table book worth squillions.

      "The Mandy and Alex S & M Frolic"

      Stop me editor if I've gone too far , but I'm referring to Mandy & Alex who live around the corner.

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    2. Phil Martin

      Construction worker

      In reply to Peter Ormonde

      Get yourself and the flying pigs an agent right now.
      You have something there. The more I think about little flying pigs in hi-viz vests, the more I laugh
      I not too sure about Dolly Downer and Mistress Mandy although different strokes...

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  27. Robert Attila

    Business Analyst

    Obviously most if not all political parties have flaws, so lets not get sidetracked by which side is better. All sides pander to their 'chosen' ones, their favoured special interest groups/mates. The reserve banking system is just another flaw in the ointment..

    Below excerpt from an article says it all.....

    "The mentality of 'something for nothing' has become so entrenched in our culture we have lost sight of objectivity and reality.

    Politicians promise 'something' funded by money created…

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    1. Michael Burrows

      Mr

      In reply to Robert Attila

      Love this -" Rather than allow the GFC to purge three decades of excessive debt from the system "

      Hello, anyone listening?

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    2. Robert Attila

      Business Analyst

      In reply to Robert Attila

      Musical chairs anyone?

      "Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble - far worse than the Washington-based lender of last resort has previously acknowledged. "The U.S. fiscal gap is huge," the IMF asserted in a June report. "Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP…

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    3. Robert Attila

      Business Analyst

      In reply to Robert Attila

      If the average rate of interest on U.S. government debt rises to just 6 percent, the U.S. government will be paying out a trillion dollars a year just in interest on the national debt.

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    4. Robert Attila

      Business Analyst

      In reply to Robert Attila

      "Also, all of the above assumes that we will have a healthy financial system that does not need to be bailed out again.

      But if rapidly rising interest rates cause the 441 TRILLION dollar interest rate derivatives bubble to implode, the bailout that the "too big to fail" banks will need will likely be far, far larger than last time.

      In fact, once that bubble bursts there probably will not be enough money in the entire world to fix it.

      [edit: the US & EU banks are already bankrupt, fancy accounting…

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    5. Ella Miller

      retired

      In reply to Robert Attila

      Robert, as a mere mortal i found a lot you had to say hard to understand....but thank you because it has made me spend sometime reading about neo-liberalism, (Hayek,Freedman) and the faith neo-liberals hold in the markets self correcting capacity. Am I right in understanding that this brought about the GFC because the market does not self correct?
      Am I also right in understanding that the Abbott government does not accept the above view and hence they as America are creating the conditions for even a greater crash?
      Is this fear the reason behind Mr. Hockey increasing the debt ceiling ?

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    6. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Ella Miller

      OOOh heck no Ms Ella ... markets are always always right ... they work like angels - all on a divine mission from On High.

      The rabbity end of the US political spectrum knows what causes markets to fail - what causes anything to fail actually - it's guvvermint .... so they blame the Clinton guvvermint for encouraging low income folks to take up home loans that they couldn't afford.

      Nothing to do with greed, CDOs, debt flogged off as assets, huge over investment in housing or the economic…

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    7. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Peter Ormonde

      Oh so President Clinton and the then Sen. Obimbo didn't force banks to lend to low income earners (specifically minorities) who had no chance in hades of paying the debts off ??? I acknowledge these debts were then onsold which is quite common in financial markets though. It's been many years since I got 1st level Economics in the HSC and then passed Economics 1A & 1B at UNSW, but I think the market said back then, if you buy shit, it generally stays shit.

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    8. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Mike Farrell

      And Ella, if you go to PEFO (page 17), you'll see Treasury says we'll hit $370 peak debt in 2015/16. Now this is a Treasury figure. THey tell you you'll have a budget surplus and it becomes a $30 billion deficit. So these 2 next budgets that Swannie gave us, we can safely say will be over $60b out, meaning peak debt will reach at least $430 billion, thus the need to go to $500 billion.

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    9. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Mike Farrell

      And what did you learn about asset bubbles Mike?

      You knolw the things that happen in market based systems for hundreds of years - heck even before Bill and Barack.

      Or if'n we wanna git inter the seerious details - why dinnit affect Orstraya like it did all them others what had reelaxed their prudential regulation of banks?

      Give it your best shot. Write on only one side of the paper.

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    10. Mike Farrell

      Former Penny Wong employee (DSP)

      In reply to Peter Ormonde

      I'm writing this in big letters too, so I use more pages !!!! I finished off my degree at CSU in 2002 (only took 26 years), but it was mainly accounting and law subjects, not economics. I did do Finance Law and I remember that the World's greatest Treasurer, Peter Costello, had placed remarkable constraints on APRA, RBA etc. It was solid economic and fiscal policies of the LNP that saved us from the GFC. We didn't really need to spend a cent. There was no requirement for bank guarantees.

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    11. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Mike Farrell

      Keating actually refused to yield to banks demands to follow their overseas counterparts but this is a minor issue ... Now I'll just stick to one question so you don't distract yourself:

      Why is the history of markets littered with asset bubbles for hundreds of years - long before Clinton, Obama or even the USof A. What causes them?

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    12. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Mike Farrell

      No it won't " do" Mike!

      In fact from memory Samuelson doesn't even mention asset bubbles so even he wouldn't "do" either... I'll check that while you're using the interweb to do a bit of research.

      You could do worse than start here: http://files.leirbubblecenter.org/downloads/cflnovember2012_304.pdf

      The point is Mike that asset bubbles - lending against assumed future increases in the market value of the asset - is as old as the hills. It happens when capitalists stop investing in…

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    13. Ella Miller

      retired

      In reply to Peter Ormonde

      Peter,
      From what I have read ;
      Hawk and Keating embraced parts of the market economy by;
      reducing tarrifs
      floating the $
      and embraced some 'market liberalisaion'

      But they did not forget that social justice was a government responsibility.

      What is frightening now and for the future is that
      we have a government that serves the interests of the wealthy
      and a market which naturally does the same,
      so who is going to protect what little social justice we have ?

      The IPA holds the Abbot Gov view.... or should I say that because vested interests own the Abbott Gov , they hold the view of IPA.
      Now you can compound that by the past head of the IPA heading the up coming review ,
      with no social justice balance !!!!
      Where does that leave us mere mortals?

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    14. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Ella Miller

      Where we usually are Ms Ella ... on the outside, looking in, from underneath.

      But we must not lose heart Ms Ella... remember this is Tony Abbott we're talking about here... lazy and none too sharp with it. The whole lot are very much the reserve grade of the conservative cause.

      If Labor is half smart - plays hard and uses its time to build a coherent and convincing alternative vision for the country - then it'll be a very short time in the Lodge for the Abbott family ... barely time to unpack.

      Abbott has a mandate for stopping things - but anything else he wants to do will cost him political capital and support... business as usual, no surprises Tony has put himself on a very short leash indeed.

      I'm quite optimistic medium term actually. So do not despair Ms Ella ... it's just a short interruption to normal service.

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    15. Robert Attila

      Business Analyst

      In reply to Ella Miller

      Ella, i believe its incumbant all us mere mortals to at least be familiar with the financial word & certainly be up with politics, although both can be very boring indeed. But if we dont we run the inevitable risk of these fields getting out of hand at our detriment.

      But to answer your question, just like nature is self correcting - sometime gently other times explosively, so are capital markets. However, no 'system' can withstand corruption or interference. Capitalism is no different. Communism…

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    16. Ella Miller

      retired

      In reply to Ella Miller

      Peter.. thank you for your words as always you make so much sense.
      Cheers.

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    17. Robert Attila

      Business Analyst

      In reply to Peter Ormonde

      Tis called corruption & cronyism. No system, no matter how good, can prevent that.
      As a US president once said centuries ago, the price of freedom is eternal vigilance.

      He was not only talking about foreign enemies, but also local & the GOVERNMENT.
      Democracies throughout history have failed because govts cannot resist the urge to pander to the masses as well as the elite. And the masses think they can get something for nothing from the govt coffers, & so vote for whomever promises plenty…

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    18. Robert Attila

      Business Analyst

      In reply to Ella Miller

      Briefly, GFC was not (nor will GFC II be) brought about by capitalism per se, but from fraud & interference in the markets. GFC 1 was triggered when one part of the derivative market imploded & a large financial entity going bust, as a result causing contagion. Problem or cause started much earlier when college graduates back late 90's with absolutely no business experience became head of the Fed Reserve (Greenspan, Bernankie, & soon Janet Yellen) - all of which subscribe to the Keynesian theories…

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    19. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Robert Attila

      Robert... I'm afraid I cannot agree with you about this divine right of markets business. Markets can and do get it wrong and have always done so - no help from government required.

      There have been a countless number of asset bubbles (and subsequent crashes) that have preceded any sort of government intervention - in fact a large slab of governent regulation (particularly in the financial sector) is designed to minimise the risks of such systemic failure.

      The Dutch Tulip frenzy of the mid…

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    20. Jack Ruffin
      Jack Ruffin is a Friend of The Conversation.

      logged in via email @hotmail.com

      In reply to Robert Attila

      Respectfully, suggest you might like to look at the work of Joseph E Stiglitz. He was the Chief Economist at the World Bank until 2000. His book The Price of Inequality shows how greed gets involved right from the start.
      I agree with Peter's comments. Markets get it wrong. Look at the views of George Soros on how markets are sure to get out of balance.

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    21. Ella Miller

      retired

      In reply to Peter Ormonde

      Peter and Robert,

      I have just read an article in The Monthly by Robert Mannes,
      It makes a lot of sense to me and the historical aspect of the article seems to back up Peter's views on the "divine right of of markets"
      So I guess my questions to both of you are;
      Was Brooksley Born correct when she argued for the regulation of the futures market?

      Did Alan Greenspan make a mistake when he encouraged Congress to withdraw from CFTC which apparently was the the authority that regulated the derivatives…

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    22. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Ella Miller

      Like heck Ms Ella ... I am a recovering economist ... one day at a time.... but here goes:

      (1) My understanding of Born's concerns with the derivatives markets was far more to do with their use of debt financing to fund asset speculation. Wasn't so much what they did in the markets but how they organised the money ... margin lending amplified the consequences of minor fluctuations in asset values. She was right. The highly leveraged derivatives market tends to turn a sneeze into full-blown…

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    23. Robert Attila

      Business Analyst

      In reply to Peter Ormonde

      Pete, i'm not arguing that markets r un-corruptible or that they always get it 'right'. As i said in an earlier comment no system can withstand corruption. But thats not the problem, since no one can get it right all the time, less so govts. The market when run properly with sufficient laws punishes mistakes & self balances. I do not want govt thinking for the population (ie me) thus dumbing us down. i dont need to be told how to walk up/down stairs/ladders, etc. Thats my business not theirs. Problem…

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    24. Robert Attila

      Business Analyst

      In reply to Jack Ruffin

      Hi Jack, of course markets get it wrong, as does nature, but they self correct if not interfered with. ie recessions correct misallocated capital. I agree govts need to pass laws against corruption but they also have to enforce them. One problem is govts eventually go too far & start picking winners (ie large corporations who fund politicians at the expense of small businesses). US is prime example of insider trading at teh highest levels.

      Govts r typically incompetent & so i dont want them interfering…

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    25. Robert Attila

      Business Analyst

      In reply to Peter Ormonde

      lol, yep, i wouldnt trust anyone from GS etc.

      If they say invest here & do teh opposite because you know they treat their clients as muppets.

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    26. Robert Attila

      Business Analyst

      In reply to Peter Ormonde

      I agree with Pete on this. derivatives markets r barely monitored & no one knows exactly its size.

      Problem is that traditional business of making & selling stuff up to the 1970's has been usurped by teh financial industry which is very dangerous. regulation however is not enough since it is useless without enforcement. ATM, the US is not jailing anyone but are changing laws to make it legal to steal billions. see Jamie diamond & co....

      Banking used to be about lending for personal & business reasons at a calculated risk, usually low. This has changed & banks have become speculators due to the huge commissions their ceo's & execs receive. This has bankrupted most large banks world wide.

      the last resort to save or rather postpone the inevitable market correction has been to print ad infinitum, see Japan, US, EU, china, etc. Aus reserve bank has no chance of withstanding this with a mere $13billion in reserve. When teh wave comes expect the worst.

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    27. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Robert Attila

      If only markets were indeed 'democratic' ... trading amongst equals all making rational choices based on the same information. Doesn't quite work out like that in practice though.

      The finance sector in particular has a very ambivalent relationship with economic fundamentals ... it's just borrowing and lending - and 'left to themselves' banks will lend to anyone for anything provided their interests are protected with adequate collateral.

      So for bankers investing in factories or productive…

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    28. Robert Attila

      Business Analyst

      In reply to Peter Ormonde

      I completely agree.

      Banking used to be much smaller part of commerce than manufacturing till the last few decades when speculative practices became the norm & finance became a casino rather than an efficient mechanism for trade & commerce. Finance has become far too big & dangerous to this planet. I am preparing as fast & as best i can. I enjoy growing my own food which may come in handy & can build a house form scratch, not bad for an IT/commerce grad.

      My equities trading approach ( a sideline…

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    29. Robert Attila

      Business Analyst

      In reply to Ella Miller

      Hi Ella,

      lack of time (or talent) means these writers do a better job of explaining why the GFC etc occur. I can explain any aspect u remain unsure of. Cheers:

      The Fed Has Created Our Next Debt Crisis

      By engaging in QE, the Fed alters the very structure of risk in the financial system. Traders on Wall Street, knowing full well that the Fed would be soaking up Treasuries, rushed into new debt issuance with the intention of flipping over these assets to the Fed in the near future.

      This…

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  28. Robert Attila

    Business Analyst

    from: Sovereign Man

    March 18, 1996. It was the height of the dot-com boom years. And gracing the cover of Fortune magazine was a photo of a rather smug looking Alan Greenspan, then Chairman of the US Federal Reserve.

    The headline across the top-- "It's HIS economy, stupid". The inside story was entitled "In Greenspan We Trust".

    And the article went on to suggest that, no matter WHO won the presidential election that year between Bill Clinton and Bob Dole, Greenspan would still be running…

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  29. Robert Attila

    Business Analyst

    from : the sovereign man

    You know the old rule of thumb about laws--

    The more high-sounding the legislation, the more destructive its consequences.

    Case in point, HR 3293-- the recently introduced Debt Limit Reform Act. Sounds great, right? After all, reforming the debt seems like a terrific idea.

    Except that's not what the bill really does. They're not reforming anything. HR 3293's real purpose is to authorize the government to simply stop counting a massive portion of the US national…

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    1. Ella Miller

      retired

      In reply to Robert Attila

      Robert..wow
      I think I will have to read your posts over and aver again to fully understand. Thank you for taking the time and effort.
      Ella

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    2. Robert Attila

      Business Analyst

      In reply to Ella Miller

      Youre most welcome Ella.
      The read is worth it because you will understand much deeper than the headline rubbish out there, like labour vs liberal issues.

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