Nathan's Insights

I found out today that I will be receiving an award for innovation from my employer. I get to choose from a list of prizes worth $300 (including going towards a laptop). A bit of a surprise but it is always nice to be recognised for ones work and creative ideas. This might be timely as I just applied for a promotion. Despite this I’m still planning on a 4 week break October 2008 and a big world trip with my nephew at the end of 2009.

The arrogance of some of the just defeated Liberal party members!!!!! Workchoices was the major issue of the election; time and again it was listed as the major point of difference between Labour and the Liberals. In fact the Liberals complained that Labour was ‘me too’ on almost all their policies. So really if you believe the Liberal party this was the difference. The Australian public overwhelming rejected Workchoices, a policy that the Liberals didn’t even have the integrity to mention to the public at the last election. There is a small opportunity for the Liberals so restored faith in the system, I don’t expect them to vote for the removal of the legislation, just not to vote against it unless the Rudd Government tries to deliver something different than the policy he went to the voters on. The Senate system that doesn’t allow the new members to take their seats until 1 July 2008 shouldn’t be used as a way to stop what the public voted for.

Few people don’t think current Australian Prime Minister John Howard isn’t a master politician however that is very far from being a great leader which he is definitely not. John Howard in his first few years in power did show some integrity and courage (the gun reform laws) but it’s been downhill ever since and he let his 1960s view of the world (unions = bad, profits = great, environment = who cares, social justice = only solved by big business profits i.e. trickledown effect). I’m not going to go on in this post about how little truth we have in Australian politics over the last 11 years (children overboard, workplace relations reforms we never knew about, wharf dispute, core and non-core promises etc) I’ll probably talk about them when I’m calmer. I will talk about the interest rate issue and the 2004 election. The government tried (successfully) to link then opposition leader Mark Latham as an ‘L’ plate leader with no economic credibility (why Labour doesn’t stated there is more to life than a few dollars I don’t know) they stated very clearly the would keep interest rates at 30 year lows. When it was pointed out the Reserve Bank sets rates and we are in a world economy which only allows for some input (not control) by the Federal Government this message was mostly ignored (like the Children Overboard issue at the election before they didn’t want facts in the way of the message). The liberals won by a massive amount and gained control of both houses of parliament. This lead to the industrial relation ‘reforms’ they never told us about and the Student Union attacks. Fast forward to 2007 and it seems Australians have had enough. We have had 5 rate raises since the last election. Howard claims they only said they would keep rates at 30 year lows for 2 nights (the two night stand non-core promise??). However he got caught out in a tape of an interview just before the election. Was he shamed by getting caught out in a lie (claiming he never said this), no. While Howard was embarrassed to get caught out he won’t apologise, I’m not sure the guy can apologise (sorry Aboriginals you’ll never get it from this guy).

John Howard, a great politician, yes. John Howard, a truthful and a great leader, no. It’s time to go Mr Howard, enjoy the Sydney lifestyle taxpayers will fund (rightly), we know you hated Canberra. After 11 years your half truths have caught up with you and no amount of negative comments about the credible opposition will work this time. We live in a democracy and saying you have experience as they only reason to vote for you isn’t good enough (taken to its logical conclusion we should never change governments so why vote). Enjoy retirement and hopefully we will get a Senate with no majority for one party and a return to compromise and fair politics in Australia. I’m not scared at all Government’s (federal and state) being Labour, only a Federal Government with no brakes like you had for 3 years.   Goodbye.

In January 2006 I wrote about the US Dollar and the major impact it has on setting US policy around the world (linking it to the Iraq situation).   At the time I stated the US economy was way overvalued and the links in the blog include what might haven’t when people realise that they could trade in the euro. It’s interesting to see the Australian dollar among others making a very big move.   The Canadian dollar is now worth more than the US and there is a remote chance this could happen to the AUD in the next 6 months.   What does this mean?   If it continues foreign governments (if they dare) will start selling down this losing asset, this will lead to further falls (a difficult cycle to get out of).   As the US loses value so does its purchasing power, in the short term this means it costs more to buy overseas goods (but probably not from China since they link closely to the USD).

So the USA will be in the unusual situation of basic items costing more (i.e. inflation) at the same time as it economy is struggling (see sub-prime problem).   Possible high inflation with raising higher unemployment is a terrible situation for their people and government.   Normally you slash interest rates (which they have) to increase economic activity in bad economic times, but you don’t do it when you have raising inflation (as you overheat the economy).   The chickens are coming home to roast.   The Bush government, a so called conservative government, has run incredible deficits because he wanted to fund the ‘war on terror’ and at the same time offer tax cuts and also not cut services.   This is as crazy as it gets, everything in life costs you.   If the USA wants a war they need to fund it (leaving aside the obvious moral arguments) either by raising taxes, cutting services or both.   It’s hard to feel sorry for them when they voted for this plan and especially since the wider world will suffer as well in the short-medium term (short-medium term starts at 4 years in economics not that most people think pass next week). I for one however will be happy that it is cheaper to travel to places using the USD in late 2009.

I’m not a big supporter of the current Australian Liberal Federal Government however at least they had the sense to not totally blow their good fortune (the resources bloom and economic reforms starting in mid-1980s) by running deficits.   Australia’s major problem is in 4-5 years time paying for not investing in infrastructure for growth (especially human capital i.e. training/education) but the current government chose an option that is beyond their current term in office.   How Bush thought it was a good economic choice to hurt his country economically in the immediate future I have no idea other than that they have no idea of very basic (year 10) economic theory (yet alone accounting/maths).