How Did Australia Become a ‘Laughing Stock’?
Happy Brexit Day! It’s officially one year to the day since the UK said, ‘bye’ to the EU. Well actually the people voted to say ‘bye’. The reality is it’s still probably another two years until it happens.
Or according to our publisher Kris Sayce, Brexit will never happen. By the way Kris has been saying this for a year. George Soros is very late to the party…
With Brexit a year on what’s it like in the UK? How is the political landscape looking?
In short, utter mayhem.
While trying to build a ‘strong and stable government’ the Tory party tore their own house down.
They lost their majority. They thought they would be stronger, but they’re not. And the Labor party is having a field day with it all. You’d think the PM here was Corbyn, not May.
However, the Tories did still win more seats than Labor. And they quite easily won the election. But they lost seats.
And the end result is a hung parliament.
That was just over two weeks ago, now. And Theresa May is still Prime Minister. But she’s a dead woman walking.
There’s no coalition to form a majority yet. There’s no solidarity in her party. There’s no confidence in the government from the public. Instead, there’s mayhem and confusion.
Theresa May is unlikely to survive the year as PM. That would likely lead to another election in the UK. Imagine that, two elections within a year. And within two years of the Brexit vote!
To many people here in the UK, this is one crazy situation.
But then we tell them, ‘You think this is bad? This is normal for Australia.’
Australia: from epic stability to a laughing stock
In 2007 Kevin Rudd won the Australian election. He beat out the longstanding Prime Minister John Howard.
I’m sure you remember that time. The ‘Kevin ‘07’ slogans everywhere. How he ran an election on ‘change’. How ‘time to give someone else a go’ was actually his mandate.
Well, it worked. Howard was in power for just short of 12 years. The only person who served longer was Sir Robert Menzies, who did a stint just over 16 years from 1949 to 1966. But Howard would never get close, as the Labor Party took out the election.
And it was that change that sparked a decade of instability.
In just under 10 years since Howard left office, Australia has seen five new Prime Ministers. Well technically four, because old mate Kev’ came back for a second stint after knifing Gillard in 2013.
And even now it seems that former PM, Tony Abbott might pull the same trick and knife standing PM, Malcolm Turnbull.
It’s astonishing that a country that had political stability for over a decade has had nothing but instability in the decade since.
We’re not saying Howard was god’s gift to political tenure. There was plenty wrong with his stint. But you can’t deny that he at least had the country united.
Not so much today. And it shows. The instability and turmoil in the halls of Canberra reflect on Australia’s image around the world. The constant infighting, the lack of direction and policy, unpredictable moves to garner public support — it’s all one giant mess.
Take the bank levy for instance. Dislike the Aussie banks as you may, but there’s one thing they’re all good at being; strong and stable banks. And the good news is there are four really big ones, which means at least a modicum of competition in the market.
But thanks to instable, unpredictable government, the banks are seen as risky in overseas markets. As reported in the Australian Financial Review yesterday,
‘The Business Council of Australia has warned that Australia is rapidly becoming a “laughing stock” in global investment circles because of new taxes on banks as erratic decisions by both federal and state governments “carelessly undermine” the rules of doing business.’
They are of course referring to the ‘bank tax’. This is a nice little 0.06% levy on bank liabilities, on the big banks. It’s to try and net the government an extra $6.2 bln over four years. The money is needed to pay for the mistakes of government — the debts of government.
And just when you thought the crazy would stop there, South Australia decides to lump the banks again with an additional 0.015% levy too. Well, that came out of left field, didn’t it?
What happens when, Victoria, New South Wales, Western Australia, Queensland, and all the other states and territories decide to do the same? Who does it really hurt or help? It might help fund government balance sheets, but it does far more harm than good.
According to The New York Times,
‘However, [banking] analysts said there was still a risk that S&P would downgrade the major banks due to a sovereign ratings downgrade or a reduction in government support, which could lift long-term funding costs by around 10 basis points.’
Let’s be clear, government interference is going to make things more expensive to the banks. And the banks will pass those costs on to the consumer — you.
The perfect alternative system
In short when the government taxes the banks like this to save their own backsides, they’re really taxing you. And they wonder why people have such little faith in centralise authority anymore.
When you have unstable government, unpredictable and inequitable policy, taxes on industry, and an economy battling to keep its head above water, what hope does the average person have?
People have had enough of the inadequacy of central authorities like governments and central banks. They have had enough of the powerbrokers and financial elites gaming the system in their own favour. They’re sick of paying more tax, watching their wealth erode, and having little hope of a brighter future.
And, until recently, there was little way for people to effect change on their own situation or combat these problems.
But now there is a way for people to step outside the traditional, centralised financial system.
It’s through cryptocurrencies such as bitcoin. This gives people a real world option to transfer wealth and use as a store of value. And it still allows them to operate within the economy. Best of all, it’s decentralised from the influence and incompetency of governments and central banks. And it’s free from the conflict of banks that have to put shareholders first and actual customers second.
Cryptocurrencies like bitcoin are the perfect alternative financial instrument for the modern world. And if the world of cryptocurrency plays out the way we think it will over the next decade, you may never have to worry about government, central banks or even the ‘Big 4’ banks ever again.
For Money Morning