The signs of recovery being seen around the world are due to huge stimulus packages, which will only prop up economies for another 12 to 18 months before they collapse again, he says.
Crippling debt, high unemployment and the retirement of baby boomers means people’s ability to spend will diminish.
“Stimulus (packages) around the world are a mistake, because if government could create jobs we wouldn’t need private enterprise,” he said.
“I mean, if all you had to do was go and spend a trillion dollars as a government we’d never have recessions, depressions, and the greatest socialist countries in the world would be the richest, but just the opposite is true.
“What they’re really doing is applying trillion-dollar bandaids.”
Talbott thinks China may have cooked its books about the scale of its recovery.
“The strength of the Australian economy now is directly related to China,” he said.
“The question is whether the Chinese growth is even accurately reported – which I don’t think it is – and whether it’s real – and it’s not real.
“It’s being generated by a huge half-trillion-dollar stimulus plan of which 95 per cent went to their state-owned enterprises.
“These are worst people on earth you want spending your money.”
Where Australia’s geographic position was once an impediment, it is now an asset in surmounting the financial crisis thanks to the rise of China and India, the author said.
“You did all the right things and you did them well, and now the world’s come your way,” he said of the government’s handling of the crisis,” he said.
“You are the geographic outpost of the biggest economic explosion in history – 1.4 billion Chinese and one billion Indians have decided to be capitalists, and you’re sitting here with the rule book on how to play capitalism.
“You’re beautifully positioned.”
via The Age
Talbott is speaking sense at the Brisbane Writer’s Festival. I wish him all the best and many packed lecture theatres. Must confess I had not heard of his name till now… However, having read this piece, I would definitely make an effort to hear him speak if I was lucky enough to be on the Gold Coast right about now!!