“Senator Joyce said the chances of a US debt default were distant but real and politicians were not doing the electorate a favour by refusing to acknowledge the risk.
“'That is the first
scenario, which is extremely bad for Australia. The worse scenario is where the
US doesn't repay its debt - the $ 2 trillion in debt it owes to the Chinese,
the $ 1 trillion in debt it has to the Japanese and the $ 1 trillion in debt to
others - and then we are really nailed.
''The outcome is a
shift away from the US dollar as the international trading currency and a shift
to the Chinese yuan, and China becomes an immensely powerful player overnight.’”
- Australian
Senator Barnaby Joyce, quoted in The Sydney Morning Herald.
In
the ‘Looking Glass’ world in which we are now trapped, we have had to get used
to dealing with six, or more, impossible things before breakfast. But few
things reveal the rising risk in supposedly safe markets than the marked extent
to which the UK economy is in thrall, not just to its bankers, but to its
politicians. The banking supertax is one example of a cravenly populist
administration desperately lobbing out distractions to placate the mob, and its
bluntness and lack of sophistication as a policy instrument are becoming
increasingly clear (bankers are an easy
target but financial
advisers per se have a more convincing claim upon clemency). But a cynical
pre-Budget report (one that Vince Cable called “a good budget for bingo and
boilers”) gives an even more breathtaking sense of a government in utter denial
about the hard choices ahead – by tweaking up selective benefits, such as Child
Benefit, ahead of a wholesale and inevitable post-election slashing of benefits
largesse irrespective of which party wins. In response to the pre-Budget
report, bookmaker Paddy Power cut the odds of the UK retaining its ‘AAA’ credit
rating from 3/1 to 6/4.
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