You are speculating and you have no more proof of your opinions than anyone else in this thread. Your main fear seems to be this speculation over going "broke", but it's a false fear.
If you were to take a broader view on this argument (which you seem determined NOT to do) you would see that Australia, like every other major economy that you feel a victim of, is essentially already broke. Yes, the system you're talking about operates on borrowing and EVERY major economy (probably apart from China?) is deeply, deeply in debt. Billion and trillions of "dollars" are on balance sheets somewhere all over the world and the fact is that is doesn't even have a fixed value at any one point in time. It's a fluid concept, an idea in people's heads - an opinion. And this is what you want to measure our futures against?
But the air we breathe is real. So, long term *and even short term*, what do you, me, my kid, your dad or anyone else REALLY gain from avoiding climate change? I'll tell you - a worse outlook. Unlike you and I, people who actually know what they're talking about (i.e. Stephen Hawking) are already talking about humans seriously needing to consider space colonisation to survive.
It's seriously time to put your calculator down mate.
don't make too many assumptions.
here's an excerpt from my very-in-draft-stages (i.e totally informal) thesis. i like to write things as a giant rant before i edit them due to getting in frames of mind where i just want to pour words out onto the keyboard. so don't get all judgmental/ad hominem thinking this is what i'll be handing in.
As a side note, Australia almost went the way of the U.S. In October of 2008 the Australian government extended its AAA rating (basically, a guarantee that you won't lose your money, if the firm goes broke the tax reserves will compensate the account holders/investors) to include both all bank deposits (and here's the scary part) all wholesale bank debt. This falls under the umbrella of contingent liabilities - a potential expense, one that may or may not eventuate, depending how events turn out, but which should be provided for in properly kept accounts or budgets, which I mentioned earlier.
To put this in perspective, the US has 60 trillion dollars worth of contingent liabilities. The Australian government has 1 trillion . But that's not the scary part. The scary part is that the biggest budget surplus we've ever had was 20 billion dollars, which we had at the end of the Howard era . In other words, our cash assets were outnumbered 50:1. Now we have no surplus. at all. in fact we're running 100 million a day into debt thanks to the labor government.(needs reference cited) Before all we needed was for 2% of the government assured liabilities, to go bad, and we were in serious trouble. Which, one could assume is unlikely if the government hasn't been reckless with its assurances right? Now, after Rudd's "economic stimulus plan" we'd have to pay it off in USD's, GOLD, or whatever else we have in reserves. At worst, we'd need to call in foreign debt and perhaps borrow some cash off the Chinese ourselves. The difference is that we're not running a trade deficit, so are actually able to pay it back.
The thing is this is what happened with the US government and the housing loans, more went bad than the government had the money to pay for. That in turn lead to the US government taking on all those bonds from China...
Thankfully however, that the Australian and then New Zealand government learnt from this. This policy was cancelled as of 31 march 2010 for Australia and 30th april for New Zealand . The NZ government obviously how much of a colossal error it made when its banks recklessly loaned out $10.3 billion NZ dollars to businesses and inevitably, many of those businesses defaulted. The result was the banks leaving the NZ government in under with a $290 million dollar bill to foot that they’d accumulated in less than 12 months. In a country of 4 million people, that’s a lot, and god only knows how many more of those loans are going to be defaulted on in future. The governments logic was to provide business with capital (money) that it otherwise wouldn’t have gotten. Their argument basically boils down to stating that “these loans have prododuced more than $290 million more output”. However if that was the case then the banks didn’t need the guarantee in the first place!! The only reason for the guarantee is a safety net if you miscalculate your risk. If these loans had of made more output than they cost then the banks would have loaned the money to these businesses regardless! If they wouldn’t have then it’s a business that should have (and eventually did, albeit after giving the government a $290 million bill to foot) failed earlier on. Additionally, this was a country of 4 million people that was borrowing $250 million dollars a WEEK (13 billion over just under a year) to stay afloat. $62.50 per person per week for nearly a year.
So is Australia safe yet?
In short, no. Not by a long shot. Unfortunately, the very ideas, the legislation, policies and ideas that democracy (indirectly through politicians) puts into place is ultimately what makes a country poorer and eventually sends it broke. The biggest of which, is the central banking system. I will now explain why it, and many other core government policies in place are doing nothing but harm to the economy and may ultimately send us broke.
Central banking and low interest rates:
Artificially low interest rates (due to banks being able to take on debt larger than their deposits due to the Reserve supplying it, in doing so devaluing the currency) only results in businesses getting a false impression that their consumerbase has more money to spend than it really does. If levels of loans are increased (proportionate to savings levels) then consumers will have more cash on hand than they should. This cash will then be spent, and quickly (after all, the reason for getting a loan is that you don’t have a demand time horizon equivalent to the time it takes you to save the necessary money). This fast, dramatic influx of unearnt money increases demand for whatever it is spent on. Businesses both assume that these increases will continue or at least remain at their increases levels (because they assume that this money has been earnt by their customers), and are keen to take advantage of this increase in monetary supply. This leads to them investing (whether it be their own saved money or even more loans) in capital which allows them to produce more.
The result of this is two things:
Firstly, once consumers have spent these loans, they must pay interest on them. This interest is the reduction in what would have been their savings to spend on the businesses goods in the future, and so is the reduction in the businesses future revenue/profits. This receives a double hit, as if the consumer is saving their money is EARNING interest, so the difference is in fact double the interest rate. Not to mention that savings interest compounds on itself as well!
Secondly, the business has invested money in capital to be used to keep up with the levels of demand introduced with the lines of credit given to consumers, which increases the fixed costs of running the business.
Businesses are then left with both the net decrease in earnings that consumers are now burdened with (their interest) but the additional running costs of all their new capital investments. Once the fast (loaned) money has dried up, demand levels will shrink back to their original levels minus the interest, and the business is left with the increased running costs of their investments.
The long term result is of course, a double reduction in the businesses overall profits.
The first thing the business will do then, is liquidate the excess capital it has and if it is lucky, won’t have to pay back the remainder of its investment loan with the reduced revenue it now earns thanks to the banks taking that in the form of loan interest on the consumers loans. Alternatively, it may have simply lost both the decrease in demand that the loan interest causes, and the difference between the purchase and sale prices of its newly purchased capital.
The really scary part about all this is that consumers are taking out loans not for investment (which would imply that they’re still able to save money even after paying the bank its share) but rather, for consumption.
Ironically, even for those that take out loans to invest, the inflation for that year caused by those very loans is often greater than or at very least offsets the net earnings that they actually make.
Is Australia’s banking system safe?
Not by a long shot.
50% of Australia’s mortgage market is held by CBA and Westpac, 25% by ANZ and NAB.
December 2009: 60% of CBA’s lending books are mortgage. 50% of Westpac’s are, and both are increasing.
CBA 2009 annual report - their leverage ratio is almost 20. total assets of 620 billion vs 31 billion dollars of equity. Of that 620 billion, 43 billion are home loans. That means that if approximately 6.6% of its loans go bad, 100% of its shareholder equity is wiped out. This problem parses in comparison to the contingent liabilities, calculated to be over $13 TRILLION by the Reserve Bank.
What the really scary part about this is, as The Australian noted in 2008;
“The Reserve Bank has a dark worry about our banks: the get 90% of their cash from each other. If one bank gets into trouble, the Australian financial system could be snap-frozen overnight.”
what i think you're failing to see is that even if we take action, it's likely to be pointless. i don't know how else i can explain this.
what we can gain by avoiding action? well we can be filthy rich in the meantime, and then reap all the benefits of all the sacrifices that everyone else make.
that's the temptation, and that's why it's impossible for effective action to be taken.