Last year Barnaby Joyce was demoted from the Shadow Finance position by an embarrassed opposition for daring to suggest that the US could find itself in the position of defaulting. The government and media went berserk, and most financial commentators agreed, that he was the sort of irresponsible prick who should never be trusted with a position of responsibility.
Over the last few months there have been numerous calls for an apology to him, which have been met with the sound of crickets chirping. Yesterday he had an article in the Australian, “To those who called me fool, who's laughing now?” on the issue of debt, and the paucity of action on it:
… Do not confuse tackling a problem with delaying when it comes to debt. If while out on the tiles on a Friday night you discover a septic gash on your leg, and in response down another five jagermeisters, pain gone, problem gone, keep dancing, that is delay. Going to hospital to avoid amputation is dealing with the problem.
Tim Flannery (government climate frantic) said that the impact of climate change policies won't be felt for at least a thousand years. The impact of a catastrophic default this time was avoided by a mere 10 hours. When prioritising threats I know which one I would be concentrating on.
Swan has given 25 speeches this year and mentioned climate change 24 times. Debt has only been mentioned 16 times, and eight of these in one speech made last month. A year and a half ago I implored the government to prepare contingency plans for the threat of a US default stating the prospect was "distant but real" but if it eventuated the fallout would be a financial Armageddon making the GFC look like a mere preamble. US President Barack Obama also used the term Armageddon in the past month, so if I'm mad, so is he.
When asked on ABC radio whether the government had prepared for a potential US default, our Treasurer could point to no specific actions taken. But we do have parts of Treasury modelling climate change. The Treasurer believes I have been captured by "Tea Partiers". Disagree with him on climate change you're a denier, disagree with him on economics you're a Tea Partier. …
… Rogoff wrote a paper a couple of months ago titled A Decade of Debt in which he measured the increase in public debt in different countries since 2007, when we voted in these current economic luminaries. No surprises, Iceland and Ireland, are one and two but Swan got the bronze, Australia is third, with a 150 per cent increase in our public debt since 2007. As I previously said we can't keep going on like this, but we are. We have just extended our debt ceiling to $250 billion.In 2008, before the GFC's nadir, Ireland's net public debt was 12.5% of GDP according to the OECD. The Treasurer boasts that our net public debt is low compared with others. The parliamentary library estimated last year our net public debt will be 12.3%of GDP in 2012-13, the same year Swan predicts surplus.
In the political sphere the person who drives via the rear vision mirror, with a wonderful recitation about everywhere you have been and why, but not a clue where you are going, is dangerous. When, with a coterie of bureaucrats, they cannot keep the car on the black stuff but seem to be targeting the trees, you are in for the economic ride of your life.
Things changed for Ireland after it guaranteed the debt of its banks during the GFC. We have done that, too. Three years ago the Treasurer introduced the financial claims scheme, which guarantees $730 billion in deposits. It's up for review in October but there is barely a discussion about how we might mitigate the risks of such taxpayer exposure. We are too busy trying to cool the planet from a room in Canberra.