Australia’s stock market is in a deep crisis.
But it’s not because the market is collapsing.
The real culprit is the Government’s austerity policy.
A crisis of epic proportions is brewing.
A financial crisis is brewing and it will be far more severe than the crisis of 2008.
Australia’s debt problem is a systemic problem.
The debt is too big to be managed by the private sector and too big for the economy to absorb.
It is a national crisis.
The current debt-to-GDP ratio is unsustainable.
It was unsustainable even before the recession.
It needs to be addressed immediately.
In short, the problem is not just Australia’s debt.
It’s the Government policies that are responsible for this crisis.
As the chart below shows, the Government policy that caused the crisis in 2008 is still working to its detriment.
For a start, the debt to GDP ratio is now higher than it was before the downturn.
The ratio peaked in the fourth quarter of 2008 and was at its highest level since the Great Depression.
Second, the deficit, the difference between government revenue and spending, is still higher than when the recession hit.
And finally, the Treasury has been trying to get the Government to cut its deficit so that it can repay its debt.
The Government has cut its debt by around $US10 billion per week, or by more than half its previous borrowing.
But the Treasury is not prepared to cut a debt-financed program, because the Government has been unable to deliver.
It is now the responsibility of the Australian Government to address this crisis by addressing the structural causes that are driving the current debt problem.
The problem is, it’s too late to do this.
I’m not saying that the Government needs to abandon austerity measures.
But as long as the Government refuses to take action to address the structural issues that are creating the crisis, the country’s future is in serious jeopardy.
The following are three ways the Government can avoid a recurrence of the 2008 crisis.
First, the Reserve Bank needs to take bold and radical action to reverse the trend of higher debt levels, including by raising interest rates.
Second, the Federal Government needs more flexibility to fund public services while managing the debt.
Third, the Treasurer needs to make the case for the fiscal consolidation needed to tackle the debt problem effectively.
The Reserve Bank’s current balance sheet shows that it is not going to be able to take on these extraordinary levels of debt in a hurry.
The Reserve Bank is facing an urgent situation because the economy is slowing and there is a shortage of funding.
It can take steps to boost the economy and stimulate growth without resorting to austerity measures that will further weaken the economy.
But that won’t be enough to solve the problem.
There is no time to waste.
If the Reserve Board’s balance sheet does not change, the current problem will grow worse and the country will need to take a very tough decision: to reduce or cut public services.
Let’s look at the Reserve’s balance sheets to understand why.
A recap of the Reserve Banks balance sheets from 2008 to 2019The Reserve Banks annual balance sheet reflects the Governments fiscal balance sheet.
This balance sheet is made up of Treasury debt, the Commonwealth’s public debt, and the Australian Taxation Office’s interest on the Treasury.
There is also an excess of Commonwealth funds that are held by the Reserve, which has to be repaid.
At the end of each financial year, the balance sheet provides an estimate of the total debt outstanding.
Since 2008, the annual Reserve balance sheet has increased by around 10 per cent.
Now that the Reserve is sitting on more than $US1.3 trillion in debt, it is going to have to use that money to pay back its debt in the medium term.
If it does not, there will be a crisis in the economy, not just in Australia but throughout the world.
Why does the Reserve need more money?
The Reserve is facing a structural problem that is forcing it to increase its borrowing.
The country’s debt is growing faster than the economy so that the amount of money the Government is borrowing will also increase.
This means that the Treasury must pay back some of its debt to pay for new spending.
While the amount paid back is not the main driver of the current crisis, it does have a significant impact.
What are the structural problems?
If you are in the financial markets, you know that debt is a huge drag on the economy by sucking up a huge share of the economy’s economic activity.
So, the longer the debt is held, the greater the drag it has on the growth of the overall economy.
This creates the conditions for further financial crises and, ultimately, the global financial system to implode.
Over the past three decades, the growth rate of the debt has risen dramatically.
It reached its peak of about 70 per cent of GDP in the early 1990s. It