Fighting Bushfires
What should Australia do as the US collapses?
The $US is crashing and with it will fall American economic and political power. The reasons for this fall have been outlined in Big Island articles over the past decade. There is little we can do to help the US avoid this fate, and there is no sign, other than internet postings, that they are capable of recognising the problem, let alone helping themselves. The crucial question for Australia, the question our media and politicians have yet to ask, is "how can we avoid being dragged down with them?".
We are bound to the US (and the English-speaking world) through shared heritage. This tie is mere sentiment. Of greater real importance are the military pacts; armament purchase agreements and trade agreements we have entered, and the fact that through our acceptance of globalisation, our farming; mining and manufacturing industries are largely owned and controlled by outside interests and their local agents. Foreign ownership, or foreign investment to use a more palatable term, is something that we actively sought. Through the Australia-US Free Trade Agreement, we made extraordinary concessions to keep those investments coming. Now, however, we are seeing a flood of incoming US$ buying Australian mining stocks and commodities as investors seek refuge from the falling US$ and failing American industries. This drives up the prices of wheat and other foodstuffs and the Australian dollar. The same process drives up the international price of oil, and this is where we must expect the first deleterious effects on us.
Higher oil prices will impact on all industries. Food prices, construction and mining costs will be greater. Some transport operators and airlines will cease operations. Jobs will be lost.
So what do we do about it? We can look to those nations that have already faced the task of living outside the US$-dominated world. Those nations are Russia; China, Iran, Venezuela and others. Historically, we have accepted as part of our relationship with the US, imperatives which were political rather than economic. An example was a 2002 contract between BHP and Iran which called for the production and supply of steel pipe to be used to deliver Iranian natural gas to Pakistan and India. This contract was canned, not because we have or have ever had a quarrel with Iran or a distaste for their money, but because the Americans decided that they did.
Next week: How Russia has prospered, without making concessions to foreign capital.
Outside reading: a serious but amusing comparison by Dmitri Orlov of the fall of the USSR with the coming fall of the American empire. Quote:
Economic collapse is about the worst possible time for someone to suffer a nervous breakdown, yet this is what often happens. The people who are most at risk psychologically are successful middle-aged men. When their career is suddenly over, their savings are gone, and their property worthless, much of their sense of self-worth is gone as well. They tend to drink themselves to death and commit suicide in disproportionate numbers. Since they tend to be the most experienced and capable people, this is a staggering loss to society.
