How about some reader mail? One reader has put a lot of thought into the possible similarities between Kevin Rudd and James Scullin, Australia’s Prime Minister in 1929
“For well over two years, on my website, I was suggesting that John Howard may suffer the same fate as Stanley Bruce in 1929 when he lost his seat over his industrial relations laws – cp. 1926 and 2006
“Not only is the Scullin Labor Party win reminiscent for Rudd so is Whitlam’s. Below is an extract from my website in this regard:
“The Hawke boom is the primary rhyme for viewing the Howard boom, but the Labor bust associated with the world recession of 1990-91, becomes the tertiary rhyme behind the primary Labor bust associated with the world recession of 1974-75 and the close secondary Labor bust associated with the 1929-33 world depression for viewing the coming Labor bust associated with a world depression…
“Kevin Rudd’s election win in 2007 may have ominous “rhymes” with Gough Whitlam’s election win in 1972 and James Scullin’s election in 1929.
“The Labor party defeated Conservative parties and came to power just as the American post-war booms – 1921-1929 and 1949-1973 – were about to go bust. The Great Depression of the 1930s and the Great Stagflation of the 1970s were arguably the primary reason for Labor being in office for just over 2 years and just under three years respectfully.
“The nominal high in the American blue-chip sharemarket index the Dow Jones Industrial Average peaked six weeks before the Labor took office in 1929 and the Dow peaked four weeks after Labor took office in 1972.
“The fortunes of the Rudd government may therefore depend on the American financial sector. The nominal high of the Dow is likely to occur over the next two years, if it has not occurred already. If “Wall Street” is able to weather the 2007 crises as did in 1927 and 1998 and the Dow nominal peaks in another sharemarket boom then this may be favourable for the longevity of the Rudd Labor government.
“Kevin Rudd is inheriting an economy supercharge by a commodities and stockmarket bubble. This is similar to George Bush inheriting an economy supercharged by the dotcom boom. Clinton and Howard enjoined the bubble years but did not experience, in office, the fall-out from the bust. Rudd to follow Bush?…
“NB. The Scullin (1929) and Whitlam (1972) Labor victories occurred at the end of American booms while the Hawke (1983) victory occurred at the beginning of an American boom.
“NB. The end of the Gold Standard was sealed by the Great Depression; the end of the Bretton Woods quasi-gold standard was sealed by the Great Stagflation and the end of the American Dollar Standard – dubbed Bretton Woods II – will be sealed by the coming Great Depression.
“The Rudd victory, at the end (?) of the post-Cold War boom is similar to the Scullin and the Whitlam victories, at the ends of the post-WW1 boom and the post-Cold War boom respectively.
The above three wars are turning point wars in the Future Watch “Anglo-American Hegemonic Cycle”, with 1787 as its chosen starting point…
“WW2 begins at an upwave of the cycle while WW1 and the Cold War end at the end of the first stage of the upwave. 1815 and 1865 also marks the end of the first stage upwaves.
“The post WW1 and post Cold War booms will end in deflation, as opposed to the end of the post-WW2 boom of hyper-inflation.
“The end of the post-WW2 boom was not, as mentioned above, at the end of the first stage of the upwave in the Anglo-American Hegemonic Cycle. The second stage – the asset price inflation stage – results in the debt-saturation point being reached in the cycle – which then contributes to deflation. The American Total Credit Market Debt as a Percentage of GDP in 1973 doesn’t rate compared to today and 1929. This along with the inflationary imprint of the Cold War, were arguably, two main reasons why the boom post WW2 boom ended with inflation.
“This implies that the ‘rhyme’ for the severity of the post Rudd election downturn is the 1930s and not the 1970s. In an interview in October on the ABC Dr Steve Keen from the University of Western Sydney pointed out “the levels of personal debt, as a proportion of the economy are now twice what they were during the 1930s”.
The Australian banking sector in the 1920s was also conservative due in part to the memory of the 1890s bust. The debt levels of today spell big trouble. Taking the 1890s and 1930s into account the Next Great Depression is going to combine the worst features of the last two Australian Great Depressions.
Markets and Money