Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Unbroken , Australia''s Voters “Fix” Her Anyway By Electing Kevin Rudd

Economics / Austrailia Dec 04, 2007 - 03:23 PM GMT

By: Chip_Hanlon

Economics Political challengers, you just saw a great example of how to run against an incumbent when things in your country are perfect, a seemingly impossible task: convince voters there is essentially no difference between your ideas and those of the incumbent. This strategy was just worked to perfection in Australia , where a week ago the liberal Labour Party's Kevin Rudd was elected as the country's new prime minister, unseating the long-ruling conservative, John Howard.

Despite the stark contrasts between the two men, the same mantra was repeated over and over by the campaign and in the press: there really is little difference between the two men's positions.


The folly of that assertion was made plain yesterday when the new prime minister signed Australia onto the Kyoto Protocol in his first political act the same day as his swearing in. Regardless of whether one believes this to be good policy, it can't be argued that it will impose heavy new burdens on the nation's economy—particularly the resource-based economy of Western Australia—as well as additional costs that will fall onto businesses and consumers alike. John Howard refused to ratify Kyoto .

Here are a few other “non”-differences:

•  Mr. Rudd has vowed to pull Australian troops from Iraq

•  He is a close friend of unions, one who will almost certainly roll back labor reforms made over the past few years and his appointees are already issuing stern warnings to employers

•  Despite campaigning as a fiscal conservative (aren't they all when they're running?!), Rudd will certainly be a bigger spender than his predecessor

•  Kevin Rudd has decried Australia 's interest rate increases and made that “issue” a central point of his campaign

See, no difference between the two men at all!

That last point about interest rates, however, is particularly noteworthy because the country's big interest rate differential with other countries has underpinned its strong currency in recent years while likely minimizing the effects of global inflation on everyday Australians, which are being felt more here as our currency falls.

Should the new government work to pressure the central bank to lower interest rates in the face of evidence they should act to the contrary, it could help weaken the Aussie dollar; indeed, the Rudd's economic team is already loudly beating the drum against rising mortgage rates, which probably marks just the beginning of its push for lower rates overall.

And all of this leads to a larger point: despite the ongoing litany against the U.S. dollar—and there are many reasons to worry about its direction and health—currencies are a much more complex story than many commentators would make it seem. Other central banks, most notably that of the U.K., are already starting to clearly tilt toward lowering interest rates; should that trend take hold across the board, it could make currency trading much less clear in the intermediate term and might explain why the U.S. dollar actually strengthened last week despite the confirmation from some Fed board members that a December rate cut was a certainty.

A global trend of falling interest rates would be beneficial to the ongoing commodity bull market but it is a matter of ongoing analysis to determine which currencies will rise and fall, anti-U.S. rhetoric aside.

Back to Australia, for which economic conditions had been literally perfect in recent years and which had also been managed admirably by Mr. Howard: the country will now most definitely proceed along a different course, one which will likely change which of its industries will be most attractive for investment purposes and perhaps take some of the luster off of its currency.

The age-old adage of, “if it ain't broke, don't fix it,” was roundly ignored by Australian voters. We will soon find out at what cost.

*Note: you can listen to a further discussion of currencies, interest rates and the Fed's upcoming meeting on this week's edition of my podcast, “ Market Neutral .”

Chip Hanlon
Delta Global Advisors
Phone: 800-485-1220

Chip Hanlon focuses on foreign equities, currencies and commodities. He is currently the president of Delta Global Advisors, an SEC-registered investment advisor with more than $1BB in assets under management. Previously, he was the C.O.O. and chief U.S. strategist for Euro Pacific Capital, president of Unfunds, Inc. and vice president of investments and syndicate director for Sutro & Co. He is also a contributing writer to Green Faucet and to Real Money, the subscription service of

Chip Hanlon Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


04 Dec 07, 19:16
Austrailia Ain't broke indeed

("if it ain't broke, don't fix it,” was roundly ignored by Australian voters)

Thankfully Australian voters were just a touch less myopic than their American cousins in considering issues beyond the economy.

Thankfully most Aussie voters ended up seeing Howard for what he was. A relic of the 60's, whipping up racial issues to stimulate Australia "patriotism" for his own political ends.

A man not afraid to have his government lie and cheat on issues such as Iraq, dodgy wheat deals and interest rates, but not man enough to admit to them when caught out.

He was lucky enough to be at the helm while Australia surfed a generational boom, but not nearly clever enough to convince Australians he could be trusted.

Good riddance

Post Comment

Only logged in users are allowed to post comments. Register/ Log in