Australia has had 15 years of economic growth. How come?

Was it:

  1. superb economic management by JH?
  2. hard work and greater productivity?
  3. free trade?
  4. China and the commodity boom?
  5. none of the above?

And of course the answer is (5). We have just been through the longest, uninterrupted period of debt-funded economic expansion of all time. The entire boom is built on a mountain of debt — the biggest ever.


There is a non-zero possibility that, within the next 3-12 months, the international credit crunch will hit Australia. If so, the consequences could be:

For banks and other lenders:

  1. They are unable to roll over their debt facilities, or the terms are much worse.
  2. Some fail or are bailed out, and the entire sector becomes a disaster area.
  3. Survivors cut their dividends, and share prices dive.
  4. They sharply revise their lending criteria, demanding higher security and better borrowers.
  5. They discount housing valuations, lending smaller amounts than previously.

The consequences for real estate would be:

  1. Purchasers would need to be highly creditworthy. Many would be refused.
  2. Purchasers would have to put up a minimum of 20% cash deposit, with no second mortgages or mortgage insurance.
  3. In combination with discounted valuations, purchasers would find difficulty in borrowing more than 60-70% at current valuations.

And the final result:

  1. A sharp correction in the housing market, of at least 20%.
  2. A lot of foreclosures and bankruptcies.
  3. A lot of wealth evaporated into thin air.

Anyone affected by that scenario?

For a long time the US constitution was interpreted to ensure a right to ingest whatever you like. Nixon was the first to be explicit about banning drugs: the “War on Drugs”.

Interestingly, many US states actually sell tax stamps with specific tax rates for all kinds of illegal drugs. If you sell drugs on which you haven’t paid the tax, you may get a criminal charge but on top of that you get done for tax evasion. They lock you up and they take all your money.

More info here:

If you try to buy the stamps, you have a different kind of problem…

Just to emphasise the point that much of the world is undernourished, I ran
across this article.

There are lots of factors, but capitalism, unsustainable agriculture, droughts,
energy shortages and ethanol production are all contributors. Global warming
is probably not an important factor so far.

This is one of the reasons I worry less about climate change in 50 years, when
half the world could be starving in less than 20.

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