It's almost impossible for someone like me to avoid economics at the present time. in fact, I couldn't, so this week's Armidale Express column is in fact on the current position. It will come up on the New England Australia blog next week.
The key points that I'm making will not surprise regular readers here. They centre on the disconnect between current reporting and what I see as the real underlying economic realities.
Chatting around, and this is something I didn't mention in the column, one of the biggest problems Australia may experience is simply the freezing of global financial markets. This happened during the global financial crisis, making it hard for even very credit worthy borrowers such as the Australian banks to raise cash internationally.
There are some signs that this is happening now.
Most of the key players in current troubles whether in the markets themselves or in Government are very bright people, far brighter than me. Yet they do some very silly things: part of it is simply the herd instinct, part that they get caught in an alternative reality that progressively diverges from the real world.
The usual answer to this is more regulation and control to try to knock-off the excesses. But who can actually regulate the US Congress? I don't really care about the domestic arguments, but the damage done by that internal US political fight has really been global.
Now if the game is against you, one option is to change the game, to opt out. Let me illustrate with a purely hypothetical example.
Postulate a hypothetical country with a strong economy and a triple A credit rating. It hits a global credit crunch that requires it to guarantee local bank borrowings. It charges a fee for this and makes a profit, yet it leaves the game unchanged, while local borrowers still suffer credit constraints.
Now that country is in a similar position with a very large range of investment needs to be met. This time that Government issues a very large international loan denominated in its currency with a range of maturities. Postulate another country with lots of surplus funds that it needs to invest, but with few options. It is likely to see the new issues as an attractive options, allowing a very good interest rate.
The borrowing Government or its entity then makes the funds available to local banks and the credit market more broadly, making a making on the loan. Local banks and borrowers are able to proceed. The country makes a profit. Its capital market moves from the periphery towards the centre of the global financial scene, creating more profits.
Sounds dumb, I'm sure. It breaks many current nostrums. Yet, properly managed, it would yield a national profit.
Sometimes in the face of very bright people acting stupidly, simple dumb answers can make sense.