Before we get into this article, consider this little snippet of news about the American Spring from the 5 Minute Forecast:
Andrew Wordes shed his mortal coil in a blaze of... well, it's hard to call it glory.
For the past seven years, he'd been fighting city fathers in Roswell, Ga., over his desire to keep chickens in his backyard. He hired lawyers. It got expensive. So expensive he couldn't keep up his mortgage payments.
Monday morning, shortly before police showed up to evict him, he called Atlanta's WSB-TV, where his saga had become a running storyline. A crew arrived.
"I appreciate everything you've done," he told reporter Mike Petchenik. Mr. Wordes then went inside... and blew his house to kingdom come. He'd doused the place with gasoline in advance; his body was so badly charred he wasn't officially ID'd till yesterday.
Having had chickens in our backyard, before an unknown member of the Queensland wildlife made them disappear, this little story struck close to home.
Self-immolation is running hot as a form of protest these days. The American patriot battled over his right to keep chickens and the Arab protester about his right to sell oranges. Makes you feel privileged to live in Australia, right?
Except, you might have noticed, that Andrew Wordes's story featured a mortgage he could no longer pay. And that's the crucial link to today's Daily Reckoning.
When Times Get Tough, the Tough Get Going
The famous Aussie battler is complaining about the cost of living. According to politicians and pollsters on the TV program Q and A, the cost of living is the number one election issue.
You'd think that would delight someone like us, who warns about the threat of inflation all the time. Finally, people are taking it seriously!
But the cost of living debate is actually incredibly cringe worthy and embarrassing. We'll tell you why in a moment. First, why should you care? Well, it's time to get your perceptions in order, or you won't handle the coming storm very well. When things get truly bad in Australia, it's your own sanity that is most important to protect, not just your wealth. Forewarned is only forearmed if you prepare yourself and your wealth.
So, let's take a look at what Australians are so worked up about and why it's measly compared to what's coming and what you should prepare for.
Our favourite complaint about how difficult it is to make ends meet is this one from the Age. It's all about the 'precariat' Australians are living in - where their lifestyle is precarious for financial reasons. In other words, they are having trouble finding jobs that suit their lifestyle. Kathy Carra was interviewed about her situation and she complained about having 40 jobs in the last 12 months. 40 jobs in 12 months! And Australians are struggling? Of course, the real reason Australians feel like they're struggling has to do with spending. Kathy bought a house. Another precariat resident bought a ticket to Europe. We'll get back to the spending later. What's amazing is that these people are struggling by the Australian definition. This is nowhere near struggling.
Here are some examples of true hardship that Australians would be justified to complain about, if they experienced them:
- Youth unemployment above 50% (as it is in Spain).
- Debt wakes, where younger family members say goodbye to Mum and Dad before emigrating to avoid their debt burden. They cannot return without fearing debtors prison. (This is happening in Ireland right now.)
- Elderly turning to crime in record numbers because of the cost of living (as they are in Japan).
- The federal government using debt collectors to chase up education debts. (In America, one victim of the government's chase has 'cut meat from his diet and stopped buying gas to drive his 82-year-old mother to doctor's visits for her Parkinson's Disease.'
- A mainstream and respected health news website reporting that the government raided public utility funds to pay of its debtors, leaving hospitals with bouncing cheques. (Greece.)
These are problems that Australians, as a nation, only fear in their nightmares.
But they are also whinging about the price of petrol. Zero Hedge reports that the Europeans are paying around $10 per gallon, which is around $2.50 per litre in Aussie dollars. Petrol prices are low in Australia. And they're not rising anywhere near as fast as in recession-struck Europe: 'Italy has been hit the hardest with Fiat Uno drivers paying 18% more this year than last for a litre of petrol'.
There is one problem that Australians can justifiably complain about. But nobody mentioned it during the Q and A TV debate that inspired today's Daily Reckoning. Apparently, inflation doesn't feature in the cost of living rising. Don't tell us you believe the government's 3.1% rate. Inflation can take place in all sorts of places outside the government's definition. Like house prices and equity prices.
But even if we do take the government's 3% rate of inflation, a dollar today will be worth about
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