Business Spectator

The problem with Keynesians like Krugman and Stiglitz is that they are theoretically committed to balanced budgets, but only in the long run. But as no other than Keynes taught us, in the long run we are all dead. In the meantime, his disciples will never tire to explain why the right time to cut spending is never.

For months, the French republic has been shaken by growing resistance to president Nicolas Sarkozy and his plan to increase the retirement age from 60 to 62 years. Whether the new pension system is eventually implemented or not, the tumultuous scenes in the streets of Paris, Marseille and other big cities leave only one conclusion: France is an unreformable country.

In the beginning of the financial crisis, with all its G8, IMF and G20 meetings, there was a glimmer of hope that it would not lead to a replay of the distortions of the Great Depression. In hindsight, this was too optimistic.

As one of the very few rich countries that still has a young and growing population, Australia should embrace this opportunity and continue to grow. Other countries may well abolish themselves but Australia should not.

Despite positive economic data recently reported from Germany, the country’s financial crisis is far from over. On the contrary, it could re-emerge any minute. For the rest of the world, the German public banking disaster at least holds one lesson: politicians are no better at running banks than traditional bankers.

Voters are becoming disillusioned with mainstream political parties unable or unwilling to deal with voters’ real concerns. A quick look at other countries should be a warning where this may lead.

It may be nerve-wrecking for the Australian public to watch the negotiations between the parties and the independents in the wake of the federal election. However, there is no reason to believe that the election result poses a fundamental challenge to Australia’s political system. Other countries have managed and are managing with far more complicated political situations.

The stronger the fears about a double-dip recession in the US grow, the better it looks for the euro. Only a few months ago, experts were discussing the possibility of a quick break-up of Europe’s monetary union. The same experts have now shifted their attention to the US dollar. However, this does not mean that the euro is off the hook. Far from it.