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The great recession swindle: the power grab by governments.

April 2nd, 2009 · Greg Atkinson · 9 Comments

Apparently we are at the moment facing the greatest economic crisis the world has seen since the Great Depression, and therefore the G20 leaders who are gathered in London not only have to dodge protesters but also come up with some solutions to this mess. The only problem with what I have just written is that we are not facing the greatest economic crisis since the Great Depression and the people gathered in London are part of the problem: they may come up with some solutions, but you and I will be paying for them.

The Great Depression as bad as it was, did not threaten the global economy anywhere near as much as World War 2, and World War 2 had just as much to do with economics and the grab for resources as it did with any grand military strategies. Not only did the war itself literally destroy entire countries and economies, the aftermath of the war left the world facing far more challenges than this global economic crisis will ever throw up.

Yes we have had some big banks go under, General Motors is looking like a dead duck and companies are in trouble, but all this pales into insignificance if you compare it with almost the entire industrial sector of entire countries being wiped out and whole cities destroyed, not to mention the millions of people who died.

We are not faced today with the challenge of rebuilding entire economies, we are simply going through the pain that comes when an economic bubble bursts…this is no comfort for investors of course or people losing their jobs, but let’s just keep things in perspective. It is a mess to be sure, but hardly the end of the civilised world, although that view does get more attention in the mainstream media.

What we are also witnessing at the moment is a once in a lifetime opportunity for governments to grab power on a scale not seen in many years, especially in western democracies. Take Australia for example; where the Government has been able to rush through a massive spending package with very little debate either in the media or in parliament, simply because the Government insists that the nation faces a “national and international economic crisis”.

This package will give the Government (and and State Governments) significant power simply because they have a large bag of money and to get your hands on it, you will need to play by their rules. The Government is now deciding which sectors of the economy will get assistance without any real debate or cost benefit analysis; the car industry for example gets a few billion whereas the tourism industry seems to go begging, homes will get pink bats but where is the boost for the high tech sector?

I suspect if we were to follow the trail of political donations and then look at polling numbers we would see the logic behind where the money is going.

In the U.S. the Obama Administration has effectively sacked the head of General Motors and is now dictating how the company will be restructured. This sounds a little like Soviet era State-run enterprise to me and also makes a bit of a mockery out of the notion of free trade.

I can appreciate the need to protect the jobs of thousands of auto workers but can you see the power-shift happening here? Governments are using tax payers money to wield power in the U.S, U.K, Australia and other countries and it is the taxpayers that are funding these little power grabs. Every time a government bails out an industry or hands out money then someone is either directly or indirectly indebted to them. These debts will not be forgotten by the people in power.

Of course it would help in Australia if we had a strong Federal Opposition but it appears that the people have had a good look at Malcolm Turnbull and they are not warming to him. He would probably make a great Federal Treasurer one day but I doubt he will ever make it to the Lodge unless he stages a coup (or is a guest).

Then we have the man who should be taking the Government to task on economic issues being none other than Joe “I need another T.V gig” Hockey. Oh my…is that the best person that can be found amongst the Liberal and National Party ranks for such a critical role? If so, then they deserve to remain in the political wilderness.

The only chance we have for an Opposition that has legs is for Peter Costello to stop massaging his ego on the backbenches and make a move for Malcolm’s job…or resign and stop being a nuisance like a naughty school boy at the back of the class making fart noises.

Now I am not suggesting there is any coordinated conspiracy by the leaders of the G-20 economies to jointly rule the world; they really do not like each other enough for that. But what I am suggesting is that each leader will, as all politicians do of any flavour, try and use the current economic crisis to increase their political clout and support base.

Of course this happens all the time; politicians will be politicians after all, the problem I have with the current situation is they are using vast amounts of public money to do so. (as opposed to the smaller amounts they normally use)

However it could be argued that governments across the world are just trying to sort out the destruction wrought upon us all by greedy (extreme capitalist) bankers and that the public purse is being used wisely to avoid the collapse of the global economy. I am not suggesting for a second that governments should not have intervened and tried to sort out some of the economic mess we are in, but I do suggest that this intervention will come at a price; will probably go too far and we will emerge from this crisis with a hefty bill to paid and with governments in place that are a little too entrenched for our liking.

Now I am not great fan of big government so I am writing from a biased position. Perhaps I have got it all wrong and the way of the future is for governments to wield more power?

But just remember, we would probably not be in this major economic crisis if successive U.S. Administrations did not lean on banks to extend (sub-prime) loans to get people into houses they could not really maybe we would have been better off with just better regulation and less government intervention in the first place? (Just like the neo-Liberals were running things in Australia a few years ago!)

9 responses so far ↓

  • 1 Senator13 // Apr 3, 2009 at 8:05 am

    Well Kevin does like the grand gestures. I just hope he does not commit us to something at the G20 where Australia has to foot the bill…

  • 2 Greg Atkinson // Apr 3, 2009 at 8:30 am

    I know it might hurt our national ego’s, but frankly if Australia did not turn up at the G20 the world would continue to spin, and the same outcome would have been achieved. For Rudd (aka Ruddwell) the G20 meetings give him:

    – Some time to fly around in his fossil fuel burning VIP jet.
    – Great photo opportunities. “Look Australia, they are talking to me”.
    – Time to abuse some cabin crew on the VIP jet for not having his milk warmed correctly. (he gets a sore tummy if he has cold milk)
    – An opportunity to be surrounded by journalists from Australia who would not know a hard question even if someone wrote it for them and marked it as “hard”.
    – The chance to run around and tell everyone how good the Australian banking system is without mentioning that the neo-liberalist Costello set up APRA, which is one of the main reasons our banking system is in good shape.

    As much as I would be happy for him to stay away from Australian longer this is negated by the fact that while he is away Gillard is holding the fort… and that is truly scary.

  • 3 millie // Apr 3, 2009 at 5:28 pm

    Terrific opportunity for government to increase their power base, all in the name of economic stability. We will truly become a great socialist world.
    The illogical spending of our hard earned tax money is breath taking.
    What has happened to a vision for Australia?
    Kevin Rudd is “cringe material”, what an embarrassing ambassador for Australia!!
    I think we are all to blame for not forming a powerful opposition.
    We should be clamoring to join and oppose this government, our democracy has gone out the window and nothing will change if we sit and watch the footie (and whatever crap is on TV), awaiting our free gifts from our mate Kev.

  • 4 Pete // Apr 5, 2009 at 11:26 am

    Guys, you’re starting to worry me how much you hate Rudd. Whilst I agree with some parts, I don’t see too much need for a personal attack on him. I think it makes everyone look silly when the main arguments are quite powerful.

    However I agree that big government is a real problem. All those lovely sci-fi movies set in a future where everything is communist and there is really tight, often militaristic, control over the populace – it really scares me that we have started down that path.

    A global (fiat) currency is also very very scary.

    I wonder, why do we need a ‘global’ approach to the GFC anyway? Basically, the US and most of Europe, and us and NZ (and others) stuffed up really badly. When we stuffed up, we didn’t all join hands and come up with brilliant plans to stuff up. We just copied whatever everyone else was doing, because it looked like they were making lots of money.

    I think this global bailout crap is just another way for Gov’s to shift blame from their own country to the rest of the world. “Oh it wasn’t our fault, how could we see this coming, it happened to everyone at the same time”. Sadly, I think that line will work on the masses…

    Millie: Our Opposition is crap, i agree. As for what can be done about it…well, I think there is a way (i’ll explain below). But the mess we are in now is our own doing. We became so complacent during ‘boom’ times that we not only re-elected Howard, but we allowed the pathetic Labor and Liberal parties to dictate the terms on which they would debate and be elected. We are a very spineless masses indeed.

    The way to fix it all? Well, our Opposition is woeful, our Gov is worse, and all the other minor parties are just lackies for the bigger parties. At the moment, don’t think any major changes can be made. What could cause major changes?

    1) very hard economic times, eg Depression, hyperinflation.
    Think: Rise of Hitler in WWII. All Germany wanted was a leader that could make things better, and they decided to go for someone that could make changes. Ultimately it turned out pretty badly for them and everyone else.

    2) world war.
    This changes the dynamic of a country, and therefore requires new leadership. People will vote out of fear and might take on a new leader who makes the best promises, not one that has the most eloquent public service speak. Depending on who we get, this could make a large difference in other areas of policy. Perhaps they will also be pro-republican.

    3) a Gov. General on a mission.
    Hey, maybe if the GG wasn’t always best buddies with the PM they could potentially make some changes. Spending of “stimulus” money could be arguably terms to depose Kevin.

    There are probably more things to add, like a MAJOR oil price spike ($300 a barrel?) which would be economically crippling, major energy issues, major climate change issues, protectionist strategies by gov’s., publicised major gov. corruption…the list is probably endless.

  • 5 Greg Atkinson // Apr 6, 2009 at 8:25 am

    Pete I think we will get out of the current mess via governments around the world throwing tax payers money at vote buying projects/measures. What worries me is what will happen next..surely we are going to run into a nasty inflation problem?

    As for Rudd he receives plenty of sickening praise from the mainstream press, so I figure he can handle our jibes 🙂

  • 6 Pete // Apr 6, 2009 at 9:50 am

    What I wonder is – where is this money coming from?

    Our taxpayers money in Australia isn’t enough to pay for stimulus packages…we need to either borrow it from someone (will they keep lending?) or print it.

    – borrowing = Australia having to claw its way out of masses of debt over the next 10years or so. This will greatly stifle our economic recovery.

    – printing = massive inflation. Hyperinflation is extreme, and I doubt it would come to that. But stimulus packages are also stupid, and we’re getting 3 of those. So don’t completely write off the hyperinflationary scenario just yet.

  • 7 Greg Atkinson // Apr 18, 2009 at 9:11 pm

    Pete as far as I can gather the Government will borrow the money. This is a big part of the problem because we as a nation are going to end up in massive debt. People just do not seem to understand that it sounds good to be throwing money at the economy but at some point it will have to be paid back…and so we better hope we are getting value for money. Personally I would prefer not to borrow money so people can put in home insulation!

    I am with you on hyperinflation and reckon Wayne Swan might find that not only has the inflation genie got out of the bottle, but that she is pretty angry this time and will be damn hard to catch 🙂

  • 8 had enough // Sep 15, 2009 at 9:51 pm

    Greg , you say we might not be in this mess if goverment never leaned on banks to lend money on sub prime loans. there is a little word called NO.BUT ILL BET,there was, mighty, big bonouses to be made,by just being aYES MAN.GREED ALWAYS RULES THE GREDY.

  • 9 Greg Atkinson // Sep 16, 2009 at 1:50 pm

    had enough – sure greed was an big problem. But what were the regulators & politicians doing while all this was happening? They seem to have sat back while the bubble was forming and now suddenly they are running around talking about evil bankers. I wonder how many political parties will be handing back the donations they received from greedy bankers?

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