Trust Me. This Won't Hurt A Bit

About Latest Posts Bruce JacksonBruce co-founded The Motley Fool UK in 1997. Now back in his native Australia, Bruce is …

a woman

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The stock market is stuck. Year to date, the S&P/ASX 200 index is down 3%. The same index is down over 7% since April.

It's tough to make money in such markets.

Heck, even that one-way bet that was the Aussie dollar has suddenly become very boring, stuck in a narrow trading pattern between $1.05 and $1.07.

One can only pity the poor and bored new breed of forex speculators, jumping in at the top of the AUD market, only to see the mighty Aussie drift lower and sideways.

The only winners in forex trading are brokers, investment bankers, and peddlers of forex trading seminars.

Just to be clear, in case there was any doubt, I'm no currency trader. That said, I do have an opinion, and I'm surprised to see the AUD trading as high as $1.07.

As I've said here in the past, we think the next move for local interest rates might well be down. Given that, and that U.S. interest rates can only go up, and the AUD is still trading way above historical levels, it seems to me like the Aussie is living on borrowed time.

Perhaps the charts are telling currency traders something different. I don't do charts. To me Bollinger is a left armed Australian fast bowler and a candlestick is a holder for candles.

In the suburbs

At least the Reserve Bank of Australia is also finally coming round to our way of thinking on interest rates.

Perhaps Glenn Stevens has been spending some time in the suburbs, talking to tradies, traipsing the aisles of the local Woolworths (ASX: WOW), and simply finding out how hard it is to get by in Australia today.

Judged by my visits to the supermarket, we must have the highest costs of living on the planet, and that's before the carbon tax.

Speaking of which, I just can't help but think the whole debate over the carbon tax is a political storm in a teacup.

Sure, I get that some businesses, like BlueScope Steel (ASX: BSL) and Qantas (ASX: QAN) will feel some pain, and that uncertainty will prevail in regions like the Latrobe Valley in Victoria, but putting a price on carbon is not likely to single-handedly destroy the living standards of millions of Australians.

I mean to say, there are so many exemptions, concessions, income tax breaks, ups and downs that for most people, their financial situation will hardly be effected at all.

Carbon politics

Other countries can't understand the huge fuss being made in Australia about putting a price on carbon. Blame it on the current toxic political and media climate.

What happened to the good old days, when Kevin Rudd swept to victory in 2007 on the back of scrapping Work Choices, saying sorry, and taking action on climate change?

Blame most of it on the GFC.

When the economy was booming, the stock market was flying, house prices were soaring, and credit was free and easy, many people seemed comfortable with the thought of doing their bit to reduce greenhouse gasses.

But the GFC changed all that. In the blink of an eye, it wiped thousands from the personal balance sheets of many Australians, most notably through sharply lower superannuation balances.

Good causes, like reducing carbon emissions, were suddenly out the window. Instead, our focus turned to the here and now.

Putting off to tomorrow…

Today, climate change is having little impact on our standard of living. But taxes, and cost of living increases are hurting us. For many people, the choice is simple.

People are procrastinators. We're always putting things off, especially things than can be done tomorrow. Who ever finished their homework a week before it was due, or submitted their tax return in the first week of July?

Climate change falls into the same category. We want to put it off until tomorrow…

But the government's not letting us. It's forcing us to take action, now. And the opposition is yelling blue murder, scaring us into thinking a carbon tax will be the death of us.

You won't feel a thing

Trust me. You'll hardly feel the difference of a carbon tax. And if you really have to give up the daily cappuccino and odd meal out to make ends meet, big deal. (You won't do it, anyway.)

But your children's grandchildren will feel the difference. Giving up the odd treat today is a tiny price to pay for them to have an opportunity to live as comfortably and well as we do today.

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