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A position of strength please

Posted by: Michael Smith | 3 April, 2009 - 12:06 PM

It's not a good time to be vulnerable right now.

There's never been a better time to be strong.

Bush and Cheney thought that financial strength didn't matter. Forget, for a moment, the parlous state of the banking system in the US under their watch and have a think about the country's overall economic strength and the security implications. Bush ran huge deficit budgets to fund a monstrous military adventure in Iraq (and to give tax cuts to the rich amongst other things). The Iraq adventure alone has so far cost the US trillions of dollars - and the contingent future liability for the US (in veteran’s benefits and opportunity costs) is possibly incalculable. And it was all funded by debt.

China decided to invest its vast surpluses in United States Treasury bonds. Bush handed out tax cuts and his Federal Reserve Chairman Alan Greenspan took advantage of the surplus of capital (courtesy of China) to keep interest rates ridiculously low. US citizens had plenty of money to spend and lots of it went China's way - China was thus indirectly funding US purchases of its manufactured goods which kept increasing the Chinese surpluses. China holds the balance of economic power.

Now that the worm has turned, the US and the UK are printing money to pay their public servants and (and their armies). As this oversupply of money flows through the system inflation and misery will follow - and with that will potentially come the sort of civil unrest we saw in Germany in the 1930s.

Today the London the UN Secretary-General Ban Ki-Moon has written for the UK’s Guardian newspaper. He said,

"I fear the worst is yet to come: a full-blown political crisis defined by growing social unrest, weakened governments and an angry public.

In good times, economic and social development comes slowly. In bad times things fall apart alarmingly fast.Many of the unemployed will be young and angry. Many work in foreign lands, sending money home for food, medicine and school fees. Their remittances make up a large percentage of some nations’ GDP.

Their collapse lights a dangerous social fuse."

Abdurrahman Wahid (President of Indonesia from 1999 to 2001), himself an Islamic cleric, has just written a book 'The Illusion of an Islamic State'. He warns that hardline Islamic extremists have infiltrated deep into Indonesia’s government, businesses and schools. He says hardliners are transforming Indonesia’s brand of Islam into a version that is 'aggressive, furious, intolerant and full of hate.'

Read the story here

Wahid says the hardliners are systematically infiltrating Indonesian institutions to remake society "in their own harsh and rigid likeness." They follow the brand of Islam that is based in Saudi Arabia - Wahhabism. 250 million people, the largest Islamic nation on earth, on our doorstep and likely to descend into civil unrest.

8 months ago Australia was in a position of budget surplus. We had financial strength. Now we are borrowing to pay the bills.According to our Defence Minister Joel Fitzgibbon, our defence capabilities are hollowed out. Surely to God now is a time to be hardening up our defence capabilities, not blowing the surplus on pink batts, plasmas and painting school halls.

Hardly a day passes without comment of Chinese posturing. Now we have the spectre of nation states adjacent to us falling into civil unrest.

These signs will be familiar to many of our older and wiser citizens who lived through the build-up to the Second World War. To them, the signs of a financial depression, massive inflation and civil unrest will be very, very familiar. To me, the warning signs are clear.

Mr Rudd, stop the spending spree on rubbish and start putting our nation’s security first.

Blog comments

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Sarah Wednesday 15 April, 2009 - 12:14 PM