Q. Is it more important for Australia to have a close relationship with Japan or China?

62% think it is equally important to have close relationships with China and Japan. 15% think the relationship with China is more important and 5% think the relationship with Japan is more important.

21% of respondents aged under 35 and 20% of those with university education think the relationship with China is more important.

Q. How important is it for Australia to have a close relationship with the following nations?

More than half the respondents think it is very important to have close relationships with the New Zealand (54%) and the United States (55%) and just under half think it is very important to have a close relationship with the China (45%) and the United Kingdom (47%).

A close relationship with the United States is considered very important by 60% of Liberal/National voters, 60% of Labor voters and 43% of Greens voters.

Since this question was asked last November, there have been decreases in the rating of the importance of relations with New Zealand (-7%) and an increase in the rating of the importance of relations with Indonesia (+6%).

Q. Would you like to see Australia’s relationship with these countries get closer, stay the same or become less close?

29% favour closer relations with China, 26% with New Zealand, 25% with Indonesia and 24% with India.

Liberal/National voters are more likely to favour closer relationships with United States (25%).

Greens voters are more likely to favour closer relationships with Indonesia (34%), Japan (34%) and India (44%),

Since this question was asked last year, the percentages wanting a closer relationship with the China (-7%) and the New Zealand (-6%) have declined.

It’s one thing for the bond market vigilantes to try to skin the people of Spain. But, uh oh, Germany is another issue — and you should care about this little new twist because it will reverberate around the world.

I’m not a fan of Moody’s, largely because it sat around rating as AAA all those bad mortgages that ended up creating the Global Financial Crisis. But, the ratings agency still has sway so, shudder hard at this report:

The ratings firm Moody’s Investors Service late Monday dimmed its outlook on Germany, the euro zone’s dominant economic power and political force, further exposing the currency bloc’s fragility on a day that also saw markets drop around the world on fears about Europe.

Moody’s cited the huge potential cost of a euro breakup and, alternatively, the steep bill that would be paid to hold it together.

The warning to Germany followed a dramatic flight by investors from Spanish bonds Monday, leaving the euro zone’s fourth-largest economy at grave risk of needing a bailout and sparking a selloff on global markets.

Remember the recent story. China is slowing. The mining boom will not last forever. If you add to that Germany — Germany!!! — at risk…cover your eyes from the unfolding disaster.

Hate to say, “we told you so” because that won’t pay the bills. But, remember, when we pointed out that China was slowing down and it was downright foolish to let the American Disease infect the thinking in Oz? Well, the mining boom’s last act is coming faster than you think–and that’s a huge warning to take seriously.

It’s upon us:

AUSTRALIA’S budget surplus has evaporated and its mining investment boom has only two years to run, according to Deloitte Access Economics.

The forecast marks a watershed in assessments of Australia’s prospects, implying in the words of this morning’s Access publication: ”The strong bit of Australia’s two-speed economy won’t stay strong for more than another two years or so”.

The sad thing is that it doesn’t have to be a rocky road. If the mining barons, and their political patron– the man in The Empty Suit, leader of the Coalition– would stop resisting, blocking or whittling back serious taxes on the staggering riches a few people are pocketing from every Australian’s birthright, there would be plenty of money to invest in economic strategically smart efforts that would help the country blossom even when the mining boom evaporates.

And if people would stop wringing their hands over a non-existent deficit problem, we could even be plowing money into projects now.

The head aches.

— Jonathan Tasini
@jonathantasini

Fridays are a great time to dig deep into the truth— you know, just before you make plans to pray this weekend at your favorite…watering hole. Not to let the air out of the fun-and-games on tap, but, let’s talk, indeed, about deflation. This isn’t about ego, or size, or anything other than: how the elites have totally screwed up the economy–here and in every corner of the globe.

It’s a teensy bit wonky here but don’t run and hide because this is going to be real easy— and it will give you an insight into the dangers facing workers everywhere, and why we should not stop demanding that the captains of the entire “free market” ideology (whose main man in Oz is The Empty Suit, Leader of the Coalition) be fired for gross negligence.

Let’s start with the wonky part. Across the ocean in Washington, D.C. sit the offices of the International Monetary Fund. Be clear: the IMF has done some really, really bad things over the years– as in demanding, in return for money for loans needed by really poor countries, that those countries open up their people to marauding corporations looking for cheap labor and new markets to suck dry.

But, a broken clock is right twice a day— and the IMF is ringing the alarm about a big deal: DEFLATION!

Looking at the deep crisis in Europe, the IMF is warning:

Inflation is set to decline significantly and could even become negative. Headline inflation is expected to fall well below 2 percent in 2013 and remain there through 2014. Although survey-based inflation expectations are still broadly anchored, market-based indicators are clearly pointing downward and core inflation (stripping out the most volatile components, such as energy and food prices) signals very low underlying inflation pressures (see Figure 2). Moreover, given the subdued growth outlook, there is a sizable risk that inflation could even turn negative in the medium run. Specifically, the IMF’s GPM projections indicate about a 25 percent probability of below-zero inflation by early 2014.

In English, what becoming “negative” and “below-zero inflation” means is: deflation. As in, prices going down.

Now, you might think: Whoopee!!! Prices going down. Stuff is cheaper. Hit the stores. Shop til you drop.

Well, careful what you wish for. Deflation is what happened in the 1920s in the Great Depression. People don’t have jobs. No one buys anything. So, prices go down. Think of it like a bath full of water— you pull the plug and the vortex sucks the water down, down, down…nothing stops it–unless you plug the hole.

Now, the important question to ask is: how did we get here? A simple 5-step explanation will do:

1. The “free market” zealots ran around the world for decades flogging a system of lower wages, no unions, no regulations and the glory of competition.

2. Peoples’ paychecks got smaller, in real terms. They had no money. They used credit cards. Or, cash poor, everyone took money out of their over-valued homes, primarily in the United States.

3. Bankers, mainly led by the Wall Street financial elite, committed moral, if not actual, crimes. Driven by greed and stupidity, they obliterated, in a short few years, trillions of dollars of wealth and millions of jobs.

4. Thanks to #3, people had even less money.

5. The people were told, “you now have to pay the bill for the failure of the system”. “Austerity for all” was the cry. Don’t raise taxes on the rich. And don’t dare spend public money to create jobs. The opposite: even though people don’t have money to spend, take away their jobs, take away government jobs and suck out of the system even more spending money of real people.

Voila! Deflation is upon us. Of course, the above five-step explanation of reality is entirely NOT part of the language used by The Empty Suit, Leader of the Coalition, or his sidekicks around the world. They want to continue to lead the people down the path to disaster. And this is so dumb even a theatrical farce could not it justice.

And, trust us, if deflation starts spreading, and China continues to slow down, the decline of the resource sector will continue here and…well, you get the picture.

You won’t like it.

— Jonathan Tasini
@jonathantasini

If you want to know why we need a significant tax on the billions being pocket by Gina and the gang, look no further than China and the nervousness circling the globe on the stability of the economy. Eventually the party of the resource boom will be gone–and only Gina and her gang of robber barons will benefit.

The warning:

EXPECTATIONS that China will today release its weakest quarterly economic growth figures in three years have added to market pessimism on the mining sector.

Yesterday, Australia’s top mining stocks suffered another selloff as investment banks continued to trim forecasts for commodity prices and share prices, with Credit Suisse downgrading its target share price for both BHP Billiton and Rio Tinto.

And you have to connect this to the world economy:

Australian shares are set for a weak start after Wall Street slipped on earnings fears and European markets closed lower following another spike in Spanish bond yields.

This is not rocket science: everywhere in the world, austerity is the order of the day. People don’t have money to spend. People are afraid.

What we need to do here is see the mining boom as our seed corn: you sock it away for the harder times surely to follow. Not in Gina’s pocket. But, in the public’s pocket.

Before they shuffled off for the weekend, you kind of wonder weather the PM, or the Empty Suit (leader of the Opposition) orr Gina, the mining baron who is busy with her “I, Gina” show, had a chance to catch a story in the paper of record on the other side of the planet, which, if true, could mean a huge headache for the economy here at home. The upshot: China might be lying about its economic health. Uh-oh.

The New York Times weighed in with this nugget:

As the Chinese economy continues to sputter, prominent corporate executives in China and Western economists say there is evidence that local and provincial officials are falsifying economic statistics to disguise the true depth of the troubles.

Someone apparently is going around counting coal cars (talk about boring jobs–does that person get extra pay?):

Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas because power plants are burning less coal in the face of tumbling electricity demand. But local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown, power sector executives said.

Electricity production and consumption have been considered a telltale sign of a wide variety of economic activity. They are widely viewed by foreign investors and even some Chinese officials as the gold standard for measuring what is really happening in the country’s economy, because the gathering and reporting of data in China is not considered as reliable as it is in many countries.

Indeed, officials in some cities and provinces are also overstating economic output, corporate revenue, corporate profits and tax receipts, the corporate executives and economists said. The officials do so by urging businesses to keep separate sets of books, showing improving business results and tax payments that do not exist.

What might this mean…nothing good:

The executives and economists roughly estimated that the effect of the inaccurate statistics was to falsely inflate a variety of economic indicators by 1 or 2 percentage points. That may be enough to make very bad economic news look merely bad. [emphasis added]

If the point of the story isn’t obvious: If China’s economy is actually very bad, not just bad, then, it will get worse here. Or to put a more fashionable for the season spin, perhaps inspired by the cacophony of sneezing and hacking rumbling from office pod to office pod, if China is coming down with an economic flu, it’s going to spread fast across Western Australia and every corner of the mining boom.

So, maybe all those regular people who aren’t feeling as optimistic as the Reserve Bank keeps telling they should be feeling know a lot more than the people in charge of monetary policy.

— Jonathan Tasini
@jonathantasini