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Cruising

By Bruce Haigh - posted Monday, 20 February 2012


There is an air of unreality in the Australian political discourse.

We are cruising, locked in a time bubble, with captain, crew and many of the stateroom passengers, purposefully pursuing pleasure, wilfully oblivious to land based realities. Incessant loudspeaker announcements assure us that all is OK, China will sustain our cruising and should pirates appear on the horizon the US will see them off.

European leaders appear as clones of Neville Chamberlain, waving bits of useless paper ,known as government bonds, saying 'Peace in our time'. There will not be. Feel sorry for the Greeks, their problem is not monetary it is political and social; a phenomenal lack of leadership and a fostered culture of corruption. Take note fellow Australians your leadership is little better.

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Pacing the bridge Captain Gillard, with senior officers, Swan, Abbott and Hockey are uneasy. They can't read charts and they can't understand the radar readings. They bluster and trust that officers in Treasury and the Reserve Bank know what they are doing.

But not all on the cruise are happy, the First Australians and Refugees do not like cruising and the bulk of the rest of the passengers have stopped spending. They are sending their spare cash home to pay off the cruise, other debts and the mortgage. They do not believe a word coming from the bridge, they want out, but they are trapped and uneasy on a cruise that they feel might end badly.

From 1996 – 2007, the household debt as a percentage of disposable income went from 65% to 148%. Australians have amongst the highest debt to income ratio in the world. They feel exposed and vulnerable, they feel they have been conned by banks and government which encouraged the spending spree. Over the twelve months to July 2011, savings increased by 8.5% or $39 billion. They are looking at the world through different eyes to their political leaders.

The talk at dinner is that Greece has had it. It is a fiction to maintain that it is not bankrupt, that further EU loans will somehow stave off what has already happened. All that is being saved is EU face and unity and the latter is only months away from collapsing. And when reality dawns, will the officially recognised collapse of Greece trigger the Great Economic War?

Most likely, because our cruising has been done on borrowed money; the banks are worried having grown fat on greed, fed by easy credit.

Extraordinary bank profits have been made with great cheek at the expense of customers. Bank CEO's and senior staff are payed obscene salaries that do not reflect talent and ability. Shareholders collect significant dividends when greater prudence might dictate that the banks repatriate some of their shaky overseas debt from earnings. But that would mean being straight with

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shareholders and customers concerning the conduct of bank business.

The major banks have defied the Reserve Bank's attempts to regulate the cash flow, through its 'pin the tail on the donkey' mechanism of adjusting what it says is the official interest rate, but which the banks have now hijacked. The major banks operate on the basis of squeeze the customer first, leave the shareholder alone, which when you are a senior bank official is no doubt sound if you have a shareholding in the bank.

Bank greed is pushing the pace for eventual regulation of the Australian financial system through a banking act. Self interest and greed cannot be relied to act in the public interest.

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About the Author

Bruce Haigh is a political commentator and retired diplomat who served in Pakistan and Afghanistan in 1972-73 and 1986-88, and in South Africa from 1976-1979

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