"The very serious and frightening prognostication from William White, Bank for International Settlements, should bring into clear focus the issues which confront the Australian economy and its people. Those who are over-exposed with debt, especially in the debt belts of the Australian capitals, have to realise that the economic dynamics of Europe and America mean that the global economy may be not at a minute to midnight but an economic disastrous turn of events could possibly be within the hour.
"The availability of credit in the US and Europe over an extended period has over inflated the economic balloon to breaking point and any remedial pin to relieve the pressure may take the problem far beyond what it solves. Oil prices can bring the global economy to a tipping point where its capacity to service its current debt will not be apparent and, as such, we will have a form of international insolvency.
"The precursors to this event have been apparent in the previous financial year and are also evident in Australia. What is imperative now is how Australia will manage this. It is no good using how we could affect the global economy because we cannot. What we have to work out is, if the global economy hits the deck, how we are going to make sure we protect Australians from the ramifications of a depression-like economic outlook. If the nose of the plane starts heading towards the ground, the tail will follow so what you are really managing for are the mitigants of the crash.
"In June last year I started suggesting to some of my colleagues, and purchasing for my friends, a book called 'The Keynes Mutiny' suggesting that John Maynard Keynes would be in a better position than most to clearly extol the consequences of an overheated capital bubble. I have also suggested in Senate Estimates that close attention be paid to the analogies of Dr Paul Woolley about capital market dysfunctionality and the writings of Eric Janszen entitled 'The Next Bubble'.
"This is not a harbinger of a doomsday cult but a warning of an economic consequence which has happened a number of times in the last century and a half. The economic cyclone is about to hit the coast where all you need to really concern yourself with is how prepared you are for it and the worst position you can take is holding a belief that economic cyclones no longer exist.
"If the Bank for International Settlements' analysis is correct, and I believe it is, then we need the best people in a constructive and informed debate participating in the process as a very genuine form of national security. Part of the political negotiating of this issue means it is essential that Peter Costello not remain on the backbench, regardless of people's opinion of him. Where he needs to be now, for our nation, is in the frontline of this debate. Peter may not be the cure but his competencies in his experience as Treasurer of our nation bring about a far greater understanding of the disease."
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