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19 September 2018

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An excellent point Phil. PNGians are perhaps better prepared to whether a storm of sudden wealth loss since on average they have a lot less to lose.

In tough times, people with backyards or a plot of land can try to grow some food but how will those millions without any land and living in high rise little boxes fare? Similarly, those who have never had to grow their own food and make do will suddenly turn on those who have.

Anyone who has seen how quickly a riot can start and how it can easily escalate should now think about the future. Even that which we have can be taken away.

Perhaps PNG will be better off than the majority of Australia come the possible collapse of our civilization?

Yet come the day, I wonder where those who are currently ruining the place will go? Idi Amin fled to Arabia it's said. The Rumanian dictator tried to flee and was caught and killed. Likewise the Italian dictator Mussolini.

Those who turn their back on history are doomed to repeat it.

Interestingly, we are now seeing some of the conditions prior to the 2008 GFC re-emerging.

In 2008 Australian banks had not indulged in sub-prime lending but, as the Royal Commission into Banking is showing they have been doing it for a while now, not just for housing but for other loans too. Personal debt in Australia is at an all-time high. Lots of those debtors do not have the capacity to pay back their loans.

Australia was smart enough to engage in a massive financial stimulus exercise in 2008 and guaranteed bank deposits. I doubt whether it will be able to do this sort of thing now. Not only haven't it got the money but the current lot in Canberra is in disarray.

At least ordinary people in PNG and much of the Pacific will be able to go back to subsistence living.

The post Global Financial Crisis era of virtually free money is drawing to a close.

After years of quantitative easing (money printing) the world's central banks are slowly but surely beginning the tricky process of pulling excessive liquidity out of the world economy.

The aim is to carefully defuse the world's enormous debt bomb without causing an explosion.

Also, thanks in part to Donald Trump's massive tax cut for America's corporations and wealthy individuals, interest rates on US Treasury Bonds are heading towards 3% pa and beyond.

This is widely regarded in the world of high finance as a tipping point, where capital in search of a combination of a reasonable return and a safe haven will begin to flow. This is, in fact, exactly what is happening.

This leaves penurious states like PNG bidding for finance from a rapidly diminishing pool of money. Because PNG's bonds are correctly rated as "junk", the interest charged will be much higher than that charged by, say, the IMF or the World Bank.

PNG cannot borrow from these sources because the conditions of the loan will require the government to actually manage its financial affairs in an accountable, open and transparent way.

Of course, there is always Chinese money but that too comes with strings attached. These strings will be more subtle but arguably far more onerous in the long run.

Eventually, a lot of economic chickens are going to come home to roost in PNG and elsewhere besides. Australia will not be exempt.

What is certain is that this will not be a happy process for ordinary citizens.

Taxpayers have already bailed out the world's financial system once and there is a very real prospect that we will all be doing so again in the not so distant future.

Sadly, while I do share his evident anger, I cannot share Phil's hope that regime change can rescue PNG.

It is all far too late now: we have collectively made ourselves hostages to fortune and consequently must endure the inevitable suffering to come with stoic fortitude.

This latter quality exists in considerable abundance in PNG, but I fear rather less so in Australia.

Let's hope this bond issue fails. It may cause some short term pain, but at least the next generations won't be burdened by a debt with the equivalent of "international loan sharks" which has 10 times the interest rate of a concessional loan from a reputable multi-national organization like the IMF, WB, or IADB.

There are still many questions without a clear answer. Why do banks even consider issuing these junk bonds? Who gets to receive the commissions? Who is bound to loose when #PNG can not repay? Why did the government not use APEC meeting to create some positive spin around this bond issue? Truly food for thought.

The greater many people of PNG aren't exactly awash in "subsistence affluence" (John Conroy, 2012) but are somewhat insulated from the thieving manipulated by gatekeepers and leeches for which PNG society has yet to 'go forward', 'round up', 'double down' and effectively bagaroff.

Food availability is perhaps the prime reason the crookedness of the phew has not been bagardoff.

This corrupt PNC government has no bargaining power to negotiate a good deal, in this case selling bonds.

People disadvantaged themselves by not voting them out in 2017 election so now we have to brace for the worst economic storm. Sad.

Papua New Guinea is in a great big mess.

It has spiralled down the plughole and is sitting in the u-bend among such smelly companions as Ethopia Angola, Sudan and Outer Woop Woop ready to be flushed away into oblivion.

Its intention to issue bonds to pay off its enormous debt have been greeted by raucous laughter in the financial capitals of the world.

China is gearing up to buy it, lock stock and barrel, probably as a launching pad for its expansion into the Asia-Pacific and as a convenient stick to shove up Donald Trump’s nose.

Its great mate down south is no help. It is running around like a chook with its head cut off trying to work out why it keeps tripping over.

What to do?

Well, as Paul Oates keeps pointing out, the first step is to identify the cause.

I think Paul is as aware of the cause as the rest of us.

It is the politicians and the public servants.

They’ve got to go if there’s any chance of saving what’s wedged in that u-bend before it gets flushed away.

They are the people who hive off the money coming in from the desperate aid donors trying to prop the place up. They are the people who love to trip over the workers some of these donors send in to do the job themselves.

They are a pox with no morals, empathy or humanity. They are basically criminals aboard a gravy train to nowhere too stupid to realise it is going to crash.

Can you run a country without politicians or public servants?

Probably not but you can certainly try. It’s been done before.

Get the United Nations or Darth Vader or whoever is in charge of the planet at the moment to send in an administrator, just like what has been done in some of the provinces before.

Get them to shake out all the nasty people and identify the good ones. Set up new standards for politicians and public servants. Bring in a law to ban wantokism. Set mandatory education levels for high office.

Jail as many of the crooks as possible. Find a handy island, build a big fence around it and throw away the key.

Somewhere in the Carterets might be a good spot.

Enough is enough.

It’s time to take action.

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