On the 5th June this year I reported:
Henry Thornton is the non-de-plume of a highly reputable Australian economist. This week he writes: "Australia is no longer the miracle economy, and seems to be heading almost heedless into very difficult times". He goes on: "The current government has steered Australia into a situation of great economic disequilibrium whose main manifestation is a loss of competitiveness of Australian business". "Spending tax payers money has provided no preparation for the sacrifices that will be necessary to reform Australia's international competitiveness". "The budget has fallen apart and has been shown to be in far worse shape than the Treasury and the Government ....believed until recently".
Last week, the government unveiled a massive deficit with no realistic prospect of improvement. And their mea culpa is probably not even accurate.
If anyone doubts Thorntons' view, or mine in these blogs, look no further than Henry Thornton and Alan Kohlers' articles in the Australian of the 6th August (today).
Thornton writes: " Leaders in denial as we head for a recession we don't have to have". "The nations leaders are walking unknowingly into a new economic crisis, ironically just as other developed nations are showing signs of recovery" (Please read my Ping Pong Pang Series: all coming true). "The only excuse for the steady tramp into recession is the insularity and self congratulatory hubris of successive ministers and officials..." Listening to lightweight politicians and their syncophant commentators on the TV current affairs shows makes me cringe. Australians are Lions being led by Donkeys. So much misplaced trust.
Alan Kohler, another well respected economist writes today on the same page: "The men and women in federal cabinet over the next three years are the ones who will finally have to confront this challenge, more than 11 years after it was identified. It can be put off no longer".
In short, the China boom ended two years ago and Australia and the world is adjusting to new economic realities while China reforms and transitions its economy and the United States undergoes a rebirth based on cheap energy, cheap labour (by Australian standards), technical innovation and the availability of venture capital.
Well may the Australian Reserve Bank reduce the cost of money. That will not save the Australian economy from recession. A nasty period of price deflation in assets, products, and services costs is the inevitable result. But it will cleanse the profligacy which so defiles the opportunities for the Australian people today. Most people know others who have lost their jobs or are on reduced hours.
If you haven't already got assets denominated in US$, Euros, or Sterling, then its probably not too late, although it would have been better to act a year ago.
David Millhouse is an international entrepreneur with over 30 years in venture capital and private equity internationally. Based in Brisbane, Australia he is a specialist in venture financing and capitalisation, as well as the management of high growth companies, many of which proceed to IPO. He has conducted business in the UK, Germany, Switzerland, USA, Canada, Singapore, Hong Kong, Australia and New Zealand. A scientist by original profession, with an MBA and LLM from Bond University in Australia. He is a trustee of Bond University, Australia’s premier private University, and was formerly a trustee of the Queensland Art Gallery/Gallery of Modern Art. There are 30 years of publications and media on his professional activities and he has had a stellar career at CEO level since 1983.
For personalised solutions to the issues raised in the blog, please contact CORPbuilders TM at www.corpbuilders.com.au or call 0413 748 844
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