Australia's Economic model ignored.
Yesterday we had our prime minister address the nation with promises that he and his cabinet are doing everything they can to stave off recession.
He's using a $42billion dollar stimulus package, which consists of:
* $950.0 hand outs to those earning less than $90 000.00 a year.
* Schools project; He's put a great deal of money in to maintenance and new construction works within the nation's schools to encourage jobs.
* Roads and public sector projects, He's also put money into our roads and railways.
Now this all sounds well and good but unfortunately it will put our nation in a $20 billion budget deficit for the next financial year. (Thank god we have a Triple A credit rating internationally)
Now Kevin Rudd said alot of mean things about the previous government (who held office for 11 years), He said the previous government was to blame for why this economic crisis is hitting us so hard.
To counter this argument, Our former treasurer Peter Costello, One of the most privy economic minds of our time pointed out that the reason the economic crisis happened at all is because the American lending system was state based unlike Australia which has a federal regulatory body which controls the lending power of banks (peter Costello’s brain child).
During his time as treasurer American banks began sub prime lending, this smart cookie called all of the CEO’s, all of the executives and all of the major investors into a room and told them, basically “ None for you”.
He said this is one major reason why, compared to the American economic climate we are sitting pretty.
He said that in Apec meetings our government always held this model up for review by the Americans but it was ignored.
Peter said the reason the whole thing started was because the American regulatory bodies (or the lack thereof) had no power to prevent sub prime lending in the states whose banks were doing it.
So, Left to the individual state the outlook is too selfish, there is no wider consequences considered other than what will happen within that state.
What I’d like to know is why Australia’s economic model was ignored?
Why there wasn’t a federal body created in America with powers across the board to monitor what type of lending was going on where? (Doesn’t it just seem logical?)
Discuss.