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Politicians are weakening us

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As Australia’s relationship with China plumbs new lows, the economic consequences are going to be dire, and the blame lies not with China, but with the incompetent politicians who have failed to act in our best long-term interests.

Our manufacturing base and over a million full-time jobs have been steadily destroyed, as we traded jobs for cheap ‘‘stuff’’, largely from China.  Bloomberg

For the past 25 years, our leaders, both Liberal and Labor, have pursued three key policies that have left the country weak and vulnerable.
One, our manufacturing base and over a million full-time jobs have been steadily destroyed, as we traded jobs for cheap ‘‘stuff’’, largely from China.
Two, we became reliant on selling our finite natural resources, again largely to China.
Three, steps were taken (low interest rates, tax incentives, subsidies) to engineer fake prosperity by inflating home prices, leaving households massively indebted, cutting into disposable incomes, and threatening the retirement prospects of many young people unlikely to ever own a home mortgage free. So here we are, up to our eyeballs in debt with all our eggs in the China basket, our biggest customer and biggest supplier.
A country that does not do mutually beneficial deals, but mostly of benefit to itself, and one that will soon be able to source much of its iron ore from outside Australia. Yet we still embrace globalisation and free trade deals with countries that benefit much more from these agreements than we do.
We still rely on resources that create relatively few jobs, and we continue to drive interest rates lower, thinking we can borrow and spend our way to prosperity instead of earning it.
Scott Morrison expects China to apologise for the Twitter posts made by its officials. Don’t hold your breath, Prime Minister, but reflect on the role you and your party have played in making Australia vulnerable, dependent on debt and trade with a country that is not our friend, that needs us far less than we need it.

Mark Engelbrecht, Floreat, WA

When nations act without honour

China, I feel sorry for you. There is no honour in a nation resorting to the publication of images depicting false and repugnant acts which are intended to do harm.
Perhaps a challenged, somewhat rapacious schoolboy or a moronic troll but not an honourable nation.
In supporting that act, China and its leaders have lost respect or ‘‘face’’ in the eyes of the world and I dare say in the eyes of every right-thinking Chinese citizen. A truly sad day for Chinese honour.
But perhaps we are not looking at China in the correct way? Perhaps we assume a maturity based on thousands of years of culture where honour was king when in reality certain actions preclude that conclusion.

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Actions such as holding people in detention camps, freaking out at being asked to help identify the source of the virus which is infecting millions, dreadful industrial pollution, vast unoccupied apartment towers built for no reason, ignoring an agreement over Hong Kong, building islands in international waters for military purposes, destroying trade agreements through lies and now tweeting a childish fake image intending to harm.
These are not the actions of adults in a global community where respect is assumed and is a must.

Jon Langevad, St Kilda, Vic

‘Carrot for Asia and stick for Australia’

The article by Dirk van der Kley (‘‘China is fighting for the minds of Asia, not Australia’’, December 3) makes it clear why Australia cannot afford to be a pariah state on climate change.
Asian states know Beijing’s end game is a buffer of economically dependent vassal states to help protect its shipping lanes from blockade – its Achilles’ heel in the event of military conflict. Beijing’s ‘‘carrot for Asia, stick for Australia’’ strategy aims to both entice and scare its neighbours into submission.What Australia needs now is a united global response to dilute Beijing’s carrot-and-stick coercion. But our difficulty in asking others is that in their most important crisis – climate change – Australia remains an outlier, emitting the most greenhouse gas per head on the planet, and bizarrely making the expansion of fossil fuel production, gas, the centrepiece of our climate change response.

Dominic Grounds, Melbourne, Vic

Dollar-pumping only creates asset bubbles

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Oliver Hartwich (‘‘Fix housing crisis on supply side", December 2) rightly identifies the problems associated with increasing house prices – incentives and subsidies that push up the price of housing, without any solution to the issue of supply.
Housing supply is limited in the big Australian cities where most people choose to work and live. There is no strategic decentralisation plan to change this.
The other related problem is quantitative easing and artificially low interest rates. Economies are flush with money and central banks want to pump out even more as they seek to promote inflation. The problem here is that pumping the economy with money has created major asset bubbles in both housing and the stock market – completely at odds with real value. Put simply, Wall Street accelerates while Main Street hangs on by the skin of its teeth, if at all.
Despite pumping the world with trillions of dollars since the GFC in 2008 and recently in response to COVID-19, inflation remains low. Why is that? The reason is that the money has largely gone into housing and shares, and has not trickled down to the wider economy.
In the real economy of Main Street, especially in the United States and Europe, economic growth has collapsed and unemployment has rocketed. Increasing consumer demand under these conditions is impossible.
Although Modern Monetary Theory has grown in acceptance by central banks, the outcome is massive indebtedness and huge asset bubbles. Moreover, central banks are yet to face the danger of a time when interest rates will have to rise.
Given the sensitivity such interest rate increases will have on highly indebted businesses and households, central banks will delay, leading to an even greater debt debacle.
One thing is certain: artificial stimulants for housing demand will do little to make housing affordable for people wanting to live in their own home.

Brad Hinton, Garran, ACT

Will the ‘intransigent’ come to the party?

Interesting that some writers used the term “intransigent” to categorise those who should embrace home ownership. If they are referring to who I think they are, it might be more appropriate to say “the recalcitrant should embrace home ownership”.

Paul Everingham, Hamilton, Qld

Joye predictions were correct on home prices
Congratulations and thanks to your columnist Christopher Joye for his continued insights.
In March this year, when the big four banks were forecasting declines in house and apartment prices of between 10 per cent and 30 per cent, causing great consternation, he suggested 5 per cent would be the maximum and most likely zero. Perhaps the banks would be better off consulting him in future moments of doubt about the money and property markets?

Don Neil, Peregian Springs, Qld

Chanticleer has the Pierpont touch
Tony Boyd’s analysis of the Freedom Foods scandal brought back memories of the esteemed correspondent Pierpont (‘‘Accounts scandal to shock Pierpont’’, December 1). I met Trevor Sykes many years ago at his book launch. A very engaging and gracious person, with so many memories to share. Chanticleer gave the treatment of Freedom Foods accounting practices the Pierpont analysis. Well done and thank you for the memories.

C. Drummond, Kew East, Vic

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