The Current Economic Crisis in Australia Essay Example | Topics and Well Written Essays - 1000 words

The Current Economic Crisis in Australia - Essay Example Banks may be unable to reconstruct for the huge losses which have rooted or incurred by borrowers, default on interest as well as principle repayments. Another impact if investors and banks will not be able to make for the losses would be the increase credit card rates as well as other bank charges to make consumers compensate for the irresponsibility of the financial institutions and other banks. ABC News (2009) reported that, the economic meltdown will result to political instability. The impact of rigorously declined economic activity will spectacularly impact on Australia due to the fact that, narrow economic base, latent as it does on mining as well as agriculture, the former reliant on sales to China while the latter on the wheat sales, wool and meat. The Australian Business (2009) reported that, National Australia Bank warned regarding bad debts which were on the rise; the global economic catastrophe was hurting all its businesses. The economic crisis that Australia is now suffering may be the outcome of the credit expansion. This present crisis is the unavoidable development to a boom that necessarily follows each boom spawned by the effort to decline the "natural rate of interest" by escalating the fiduciary media. The unprofitability of numerous branches of production as well as the unemployment of a substantial portion of the workers can apparently not be owed to the deceleration in business single-handedly. Both the unprofitability and the being without a job are quite intensified by the general depression. Nonetheless, the populations are confronted with a new problem which is not yet fully answered by principles of cyclical changes alone (Ludwig Von Misses Institute,... This essay highlights the key reasons for the current economic crisis in Australia and discusses the likely effects to the country. The road to crisis in today’s economic crisis can be linked to the drastic privatization in Australia, to name some include: airports, port facilities, railways power, water, telecommunications. The economic crisis may also be the outcome of the credit expansion. This present crisis is the unavoidable development to a boom that necessarily follows each boom spawned by the effort to decline the â€Å"natural rate of interest† by escalating the fiduciary media. The unprofitability of numerous branches of production as well as the unemployment of a substantial portion of the workers can apparently not be owed to the deceleration in business single-handedly. Both the unprofitability and the being without a job are quite intensified by the general depression. The populations are confronted with a problem which is not yet answered by principles of cyclical changes alone The severity of the growth turn down will depend upon what happens to China. The Australian federal government has been alleged of being a government in no power to control the big banks as well as corporations. The huge institutions have apprehensive words of the Federal Treasurer. It seems that the banks are no longer ready to be restrained by the Reserve Bank or federal government . Australian federal government should restore some control over the economic direction since it is more essential than any further privatization.