Australia is about to be hit hard by a second global economic crisis and unlike the last time, recovery will be far from short and sweet, a global finance expert says.
Canadian finance and energy analyst Nicole Foss said a combination of energy shortages, climate change, population growth, food insecurity and political unrest were brewing a ''perfect storm'' that would ruin society as we know it.
At a speech at the Mulloon Institute in Bungendore yesterday, she told local farmers the world was fast running out of cash as it realised it had borrowed more money than was actually in existence.
She said this little credit bubble was about to burst, leaving the rest of the world to grapple for what little money was left.
And Australia was not immune to its effects. ''Australia is very exposed to China, which is also in a very large credit bubble,'' she said.
''Over the last few years China has been exporting from countries like Australia and Canada, which shielded them from the effects of the 2009 financial crisis.
''This time China is poised to have its credit bubble burst, so Chinese commodity demand will be much lower … and this will have big knock-on effects in Australia.''
Ms Foss said the Australian manufacturing sector had already been hit, with the increased value of the Australian dollar making exports more competitive and forcing manufacturing jobs off-shore.
But she predicted a series of more seemingly disconnected factors would also take its toll on the nation's ability to bounce back.
She said peak oil supplies were drying up, forcing Australia to rely more heavily on local gas and coal supplies, which were expensive and time-consuming to turn into liquid fuel needed for transport.
This would have a flow-on effect on the nation's ability to cater for rapid population growth.
''Our carrying capacity – or the number of people who can survive in one place at any given time – has increased over the past 100 years because we have been able to transport food and water,'' she said. ''But if we lose fuel we will no longer be able to distribute food so widely.
''Meanwhile, agriculture has been extremely damaging to our soil fertility and we can only farm subsoil with the use of artificial fertilisers.
''Forty per cent of the nitrogen in our food supply comes from artificial fixation of nitrogen in natural gas.
''Without fossil fuels, we will not be able to fix nitrogen artificially and our crop yields will fail.''
Despite the seemingly bleak picture, Ms Foss insisted there was action society could take to protect itself.
Yesterday, she met a panel of local biofarming representatives including the Greenbox Food Co-operative's Chris Presland, Regional Development Australia's Colin McLean and 2010 National Farmer of the Year finalist Martin Royds to discuss how local communities could better distribute their resources.
With the panel, she discussed a need for residents to ''decentralise'' by focusing on grassroots initiatives such as community gardens and local water regeneration.
''All we need to do is simplify our society from the bottom up,'' she said. ''We need to get our expectations back in line, reduce our demand and attempt to supply what we need at a local level.''
Ms Foss is a former research fellow at the Oxford Institute for Energy Studies and current contributor to the Automatic Earth blog.
She will address a public forum at the CSIRO Discovery Centre tonight from 7-9pm on the topic ''Preparing the nation, your community and family for peak oil and deflation in the coming economic environment''.
by Breanna Tucker – Canberra Times, February 13 LINK