Spring cleaning precedes the big bang Spring Festival that is starting today. For many traditional families, the days prior to this great event are consumed with spring cleaning the homes and decking them with festive decor. During this time, the old and useless artifacts are discarded during the deep cleansing of the homes. It is a good exercise to take stock and rid the home of useless junks, while setting a new resolution into the coming year. If necessary, it is a moment to implement drastic changes if things done in the past had gone wrong. Just as in Greece, the election into power of a new political power Syzira offers a window of opportunity to set things right. That was one rare moment for the leader of Greece to recognise that Greece is bankrupt and not to fool themselves into getting into more debt. Australia’s treasurer Joe Hockey made a politically-taboo, but sane warning today – “Spiralling debt is not a legacy we can leave for the next generation.”
The Keynesian thinkers in Washington worshiped debt as the panacea for economic revival. Hence, they print money out of thin air to “stimulate” the economy. Instead, the smell of newly printed money attracted Wall street sharks as they went on an unrestrained spree on financial speculation using all forms of newly created “sophisticated” instruments called derivatives. There was no economic stimulation. Instead money went into unproductive gambling. Watching how easy money is being made in these reckless gambling, incentive to work hard waned. The get rich mania steam-rolled its way into Main street.
Other governments are not foolish not to follow the great guru in the form of the Federal Reserve chairman whose words the god of money feared. Everyone followed with earnest. Abe ignited Abenomics in Japan. ECB’s Draghi up the stakes with even more quantitative easing in EU. In fact, all central bankers toed the line believing the god-like words of the Fed chairman, and his cronies. The world is watching the last leg of the 7-year currency war racing towards the finishing line. Who will finish first to trip the finishing tape that will decimate the whole world’s financial system? That limping outsider Greek horse is doing the last spurt and closing in. Greeks are exuberant and the thunderous cheers are all that is needed to see the Greek horse take the first prize – a win by a nose!
So why is Joe Hockey so pessimistic about debt? This is what he said, according to the Sydney Morning Herald:
Australians will “fall of their chairs” when the inter-generational report is released, Treasurer Joe Hockey says, because for all the government’s efforts “we still don’t get anywhere near being able to reduce spending over the medium-term to the same level that exists today”.
In a blunt warning ahead of the release of the report in the coming weeks, Mr Hockey said Australia faced a downward spiral of rising debt levels and ballooning interest repayments that would break the “compact between generations” of Australians.
In a speech to the NSW business chamber, Mr Hockey promised a “genuine community conversation” about the demographic challenges facing Australia’s ageing population and the threat of lower economic growth without reform.
“There is a huge task that is ahead of us. If we want to remove the shackles, if we want to give people an incentive to work harder, to earn more money, to be more innovative, if we want to do that, we’ve got to start living within our means,” he said.
Maybe Hockey is a political neophyte and doesn’t understand that truth hurts and must never be spoken in public. Telling your electorate that things are getting bad and it is time to tighten the belt and work harder is foolhardy. He should have made politically wise statements that the Reserve Bank of Australia will emulate what other central bankers are doing and print more money so that Australians will continue to enjoy another century of blessed prosperity while lying by the beach and partying with crates of beer. Joe Hockey did not. In all honesty, he is right, but probably will lose his job.
Do they not err that devise evil? but mercy and truth shall be to them that devise good.