2011/08/31

Update Of Sorts - 30/Aug/2011

Who Is This Noda You Speak Of?

Japanese politics is stranger than fiction sometimes. There's always too much drama and never enough substance to chart a course out of the troubled waters it finds itself in. Still, the ruling DPJ has managed to change Prime Minsters for the second time in this Diet term and installed Yoshihiko Noda, a man better known for not being the front runner in this leadership challenge.
THERE is not a lot that instantly stands out about Yoshihiko Noda, who was chosen in an internal ruling-party election on August 29th to become Japan’s seventh prime minister in only five years. But at least two things can be said for him before he is dismissed as yet another here-today, gone-tomorrow face in some G8 summit's photo: he has a healthy sense of crisis, and a nicely self-deprecating sense of humour.

In mid-August, he wrote a blog post (sorry, Japanese only), referring extensively to our cover story of July 30th, “Turning Japanese”, which is about debt and politics in the West. As Japan’s finance minister, he could have focused on the debt issue alone, but instead he chose to translate—and echo—our lament about Japan’s long-standing political paralysis. “I feel very keenly the eyes of the foreign media on our country. And I think a lot of Japanese people feel that things are not working the way they should.” He added, “When the time comes, I will put myself forward.”

At the time, some people would have shuddered at the thought that such a little known politician—and one closely aligned with that bureaucratic powerhouse, the ministry of finance—might replace the woefully uncharismatic Naoto Kan. But there is at least one thing to be thankful for in today’s victory: Mr Noda sidelined one of the main forces of paralysis in the ruling Democratic Party of Japan (DPJ), Ichiro Ozawa, who continues to head the largest faction within the party though he has been indicted in a money scandal and his party membership is suspended.

Mr Ozawa backed Banri Kaieda, a trade minister who looked increasingly in danger of becoming a puppet for the backroom fixer. But though the first vote put Mr Kaieda in front, thanks to the support of Mr Ozawa’s cronies, it was not enough to win him an outright victory. In the run-off, Mr Noda’s supporters joined forces with those of Seiji Maehara, another anti-Ozawa candidate who lost in the first round (and whom we had thought would be the front-runner, because of his support among the electorate at large). Mr Noda won with 215 votes to Mr Kaieda’s 177. It is the second time this year—the first was a no-confidence vote against Mr Kan in June—that Mr Ozawa has failed to impose his will on the party, though that is not to say that he will stop making mischief for the new leader.

The long and short of it is that they couldn't go back to Maehara, and they didn't want the puppet of Ozawa, so they made the gutsy move of picking a guy who might actually have some stones. Mind you, stones wasn't the issue with Kan - it was more his inability to actually govern - while Hatoyama before him was essentially child-like in the wrong way. It will be interesting to see if Noda has any ability at all.

The more interesting aspect of his career to date is that he always wanted to be a politician so there's something of a motivated bastard in him; meanwhile he's not coming from a dynastic line of diet members like so many in the Japanese Diet so it is possible he might have a different perspective on what actually is the task for a member of the Diet. We shall see. The best thing about him so far as I can tell is that he reads the Economist magazine and so understands how the West view Japan today; and he is shocked. it shows that he understands the enormity of the problem and its urgencies. It might turn out he's the right man at the right time. That was most certainly not the case for Kan, Hatoyama, Aso, Fukuda, Abe and the latter part of the Koizumi years.

For once, they have a Prime Minister who understands the nature of the problem, and how far-reaching it is.

Those House Prices...

Don't look now but Steven Keen's actually been spot on about housing prices. In a nutshell, they're falling.
Although auction clearance rates have been relatively stable over the past few months, Australian Property Monitors data reveals Sydney's median house price fell from $646,806 over the April quarter this year to $639,484 over the July quarter, a decrease of 1.1 per cent.

The other capital cities also recorded declines in median house prices over the July quarter. Melbourne was the best performer with a fall of 0.9 per cent, and Perth and Brisbane the worst, with falls of 2.7 per cent and 2.1 per cent respectively.

Perth and Brisbane were the worst performing capitals over the July quarter with falls in median house prices of 2.7 percent and 2.1 percent.

Despite the decline over the July quarter, Sydney's median house price has remained steady over the past year - down just 0.6 per cent. This is good for stability and confidence, considering prices rose 20 per cent in the 18 months from January 2009 to June 2010.

Sydney has recorded the best outcome among capital cities through the market's recent corrective phase brought on by rising interest rates and house prices that put pressure on affordability in most centres.

So, Sydney isn't getting more affordable any time soon, but the asset bubble that is the property market is slowly deflating. You'd have to say the RBA is doing a bang up ob of managing the economy. Mind you, this slow decline and stagnation in property value is going to motivate the property-owning class to vote out the ALP at the next Federal election but really, even if the Libs were in power these prices were going to fall.

Building Approvals are also not recovering.
On an annual basis, approvals fell 15 per cent in the year to July, following a 15.5 per cent drop in the year to June. Analysts predicted a 12.4 per cent fall in the month.

"These were a little weaker than we expected," said Macquarie economist Ben Dinte. "It comes off a period of consistently falling building approvals so it's really just stabilisation at pretty soft levels rather than an indication of things picking up."

Taken with weak home loan data, building approvals will probably remain flat over the rest of 2011, said Mr Dinte.
The real estate market has shown signs of strain this year, posing risks for employment growth in construction and as well as bank earnings in the months ahead.

Data yesterday showed that new home sales have fallen to a 10-year low in July, according to the Housing Industry Association, dropping 8 per cent in July, following an 8.7 per cent fall in June.
Home prices, on a seasonally adjusted basis, have sunk 2.7 per cent in 2011 so far, according to RP-Data-Rismark, after rapid run-ups since 2008, making the purchase of property less attractive.

That's got to be joy too. Given the volatility of the share markets lately, and the stagnation in property prices, Gold has soared because there's not that many other places that are safe to put your money. The truth might be that there is actually nowhere you can put your money that is 'safe'. Think about just how much bad debts there were in 2008. It dwarfed the GDP of the  world.

Rickenbacker Restoration

Sorry I've not written for a little while I've been mightily distracted by things around me and haven't been the most inspired when it comes to writing stuff down.

My current project of sorts is an attempt to restore a vintage Rickenbacker 4001 bass dating from about 1980. I was originally going to work on assembling a new bass this half year leading up to Christmas but one thing led to another and I decided upon restoring a Ricky instead. Part of it is that I've always wanted a Rickenbacker 4001 bass because all my bass-playing heroes played one - Chris Squire, Paul McCartney, John Entiwstle each spent significant parts of their careers with one - so as long as I can remember I've just wanted one.

Of course in Australia this is a lot more difficult. They not only cost more, and for better parts f the last 3 decades the Australian dollar was at a significant disadvantage to the US dollar, but also the suppliers in Australia have had a devil of a time getting a supply of product from America. This has led to an absolute scarceness of Rickenbacker basses in Australia and fueled resale prices.It was simply rare to see anybody playing with one at all. And they all had collector-bound price tags. If ever there was a hall mark of Australian rock, you could say it was the utter absence of the Rickenbacker bass sound.

It's a nice thing that you can now buy Rickenbackers on-line. Of course being a little idiosyncratic, I picked a second hand 4001 that's been painted silver grey and discovered that most of the parts need replacing. So I've been spending my free time sanding back the paint and trying to get my head around the Rickenbacker circuit diagram. It's been quite a voyage of discovery as I've learnt things about something for which I only had a distant appreciation. In the process I feel like I'm exorcising ghosts and cutting away Karma from the instrument.

I expect this project to take a little while yet so I might be sporadic in my posts here.

2011/08/22

History Is Now

The Sum Total of Human Experience For 2000 Years


A little while ago the Economist put up this chart in their Daily Chart section. I've been meaning to blog it but life has a way of getting in the way of blogging. It's a chart of summing up the years lived and the economic output of humanity for the last 2000 years.
SOME people recite history from above, recording the grand deeds of great men. Others tell history from below, arguing that one person's life is just as much a part of mankind's story as another's. If people do make history, as this democratic view suggests, then two people make twice as much history as one. Since there are almost 7 billion people alive today, it follows that they are making seven times as much history as the 1 billion alive in 1811. The chart below shows a population-weighted history of the past two millennia. By this reckoning, over 28% of all the history made since the birth of Christ was made in the 20th century. Measured in years lived, the present century, which is only ten years old, is already "longer" than the whole of the 17th century. This century has made an even bigger contribution to economic history. Over 23% of all the goods and services made since 1AD were produced from 2001 to 2010, according to an updated version of Angus Maddison's figures.

For a moment, I want people to consider what this means. That 28% of human history and experience was lived in the 20th Century tells us that whatever was important leading up to the 20th Century, things that were just as important happened in the 20th century. Add in the 23% from the last 11 years of the 21st Century and basically, the last 111 years account for 51% of the sum total of human experience for the last 2000 years.

If you look at that gentle slope to the left of the 20th century, that includes the Empire phase of the of the Roman Empire minus the first 49 years which fell before 1AD, the various empires in the Middle East and Persia, the multitude of Chinese Dynasties since the latter Han Dynasty, and so on. The cultural output probably correlates with economic output as a proxy, so what this all suggests is that everybody from (just randomly, no relative importance implied) Tacitus and Suetonius and Zhuge Liang and St Thomas Aquinas and Renee Descartes and Johann Sebastian Bach, and Constantine and Napoleon, all fall into 49% to the left of the 20th Century.

In turn, if you had a detailed understanding of the 20th Century and the 11years of this century, you'd actually be on top of 51% (and growing in proportion) of human history since 1AD. This doesn't immediately relegate the classics of any field to the dust bin, but it puts it all into a different perspective.

There was a study done in Germany that pointed to 1970 as the year classical education ended. That is to say, it was the year in which the teaching of classics was no longer the mainstay of education, that increasingly vocational education pushed aside the classical education. If you look at this chart, you can see why. The push of modernity was directly the push of the massive demographic that arose in the 20th century. It is possible more people were lost to war and violence than any other time in history in the 20th Century, and even then it managed to produce so many life-hours and economic output and by extension, cultural output.

In turn, what has happened since 1970 sheds a lot of light on this shift. The move from modernism to post-modernist philosophy was probably an attempt to accommodate this giant shift where overnight the classical teachings that formed the cultural framework became obsolete. Indeed, more humans have read the classics, listened to classical music alone in the last 111years, while things like cinema as a form of expression grew into maturity and needed to be discussed. Pop music of various shades supplanted the 'importance' of classical music and contemporary art keeps on rewriting the frontiers of expression at an ever more frantic pace.

The best book that in fact offers an insight into this might be 'Future Shock' by Alvin Toffler, because what is described in that book is precisely what this chart has shown, and the implications keep reaching out. I don't mean to praise the book, but rereading it today would offer confirmation that indeed the future is not only now, so is history.

One of the important take away messages from the chart is that what we are doing right now, is just as important as what happened before. Your poem, your short story, your film, your song is no less important than anything that preceded it. It's just that nobody has had the time to find your work unless you have become a celebrity. Not being famous and best-selling does not preclude you from being a valued contributor to the human experience. Be encouraged in knowing that what you are doing is meaningful. Go forth and create, secure in the knowledge that what you are doing is just as important as what came before. It's counter-intuitive, but history is in the making, right now as we speak, and you are doing it.

2011/08/16

CPI And Cost Of Living Discrepancy

What To Make Of This

Just what good is the CPI - the 'Consumer Price Index - as a measure of inflation when the cost of living surges ahead of the CPI? This is the question in this article here.
Soaring food and rent costs have seen the cost of living outpace inflation over the past year, adding to evidence that households are being squeezed, new figures show.

"Employee" households saw their cost of living shoot up 4.5 per cent in the year to June, driven by soaring increases in the cost for food, alcohol and rent, the Australian Bureau of Statistics said.

The ABS said those rises were "due to increases in mortgage interest charges, fruit, automotive fuel, tobacco, electricity and rents".

The increase surpassed the 3.7 per cent rise in headline inflation over the year to June and comes as rising costs - combined with high debt levels for housing - have been blamed for Australia's slowing economy. The Reserve Bank uses its own underlying gauges of inflation based on data supplied by the ABS when deciding interest rates.

Food costs for employee households increased 5.8 per cent over the year, the ABS said, while alcohol and tobacco prices rose 5.6 per cent in that time. Housing costs, which exclude real estate purchases, increased 5.8 per cent for employee households in the year.

Now, that actually does fall in line with my own experiences of late. That is to say, the day to day things the form the inelastic end of my needs have been creeping up in price, while the things I have a fair bit of elasticity in have been falling in price. So if the CPI is measuring a wider spectrum of goods and it is coming in lower than the cost of living figures, then that indicates there's a bit of deflation going on at the bigger ticket end of the spectrum.

It's hard to say just how much we should be encouraged by the prices of computers today compared to even 5 years ago, but there does seem to be a trend for the bigger ticket items to be sitting cheaper than they did before. It is taking some stupidly obstinate pricing practices in the retail sector to keep the pricing at the same level as before we hit 95cents and above against the US Dollar. Most of anything imported has come down in price.

One imagines it benefits the government coffers greatly for things to be indexed to CPI rather than cost of living; especially things like pension and welfare payments, but that's basically the government making savings in a way that doesn't show up as a cut in the budget. Similarly, the mortgagees benefit greatly because it tempers the degree by which the RBA raises the interest rates. So it's a kind of passive transfer of wealth from the poor to the middle. Though saying that too loudly will get you labelled a crazy Marxist - or a gloating fascist.

 

 

2011/08/15

Our Consumerist Ways - Part 2

More On Price Tags

In the market place for anything we have a sticker price and time and occasion willing we haggle and negotiate these things lower. What people don't seem to think too deeply about is what goes into that sticker price. The question that comes up about the retail sector in Australia for example is "why are their prices so expensive?"

The short answer is that they are 'uncompetitive' but this phrase dismisses quite a lot of factors that contribute to it. For instance, retailers in Australian capital cities pay the highest rent for their spaces in any city in the world except maybe New York City. the ones that are situated away from the cities have the tyranny of distance to pay for as well as the cost of having to pay for smaller orders which are more expensive than larger orders.

Indeed, there are so many little things that contribute to the price tag that are not immediately obvious but explains quite a bit. For a business to be around it has to have insurances in place, and all the people involved have to be covered by Work Cover. Everything and everybody that moves in our economy is covered by these insurances - and believe me they can be expensive - but it guarantees that goods are handled safely. We also have standards for certain things like fresh foods such as HACCP which is there to guarantee food safety but also adds cost to ensure this safety. All over our economy there are equivalent measures put in place to protect people and consumers; and it all adds up.

Part of the reason why parts of South East Asia are so inexpensive to do business is because they have none of these kinds of things in place. You can find all sorts of people willing to take extraordinary risks to earn a quid, which is the polar opposite of what we have here. There are captains of industry who think this is a great thing, and that our workers in Australia are less 'competitive' because we are too well protected. I don't necessarily agree with that, but you can see that part of living in a mature-economy part of the world is that risks and costs are spread across everything making everything more expensive.

None of that I would imagine makes it past the brain of the person who complains about the price of things in Australia, but there is one advantage of shopping from a retailer in Australia and that is the fact that when you make your exchange, you have the product in your hot little hand on the spot. The inherent risk of on-line shopping is always going to be the fact that you're sending your money to somebody you will never meet and then you have to wait for postal services to hand you your goods. Sometimes, that turns out to be a little more risky than you thought.

2011/08/14

Our Consumerist Ways

Deciphering The Value Of Anything

Years ago I started wondering about the market for anything as to whether prices of anything would be representative for what as really out there. For instance, we had some carp in this pond where I lived in Japan. The carp grew to be about 50 to 60 centimeters length. I told a guy at a pet shop that we had these carp and he said "oh that would be worth 20 to 30 thousand yen." As a kid I thought, wow, that means there was about 750 thousand yen swimming around in our pond. The problem of course was, who would pay such money for these carp? To that extent, you could say the carp at least had a replacement price tag established.

That is to say, if for some reason you needed 25 carp at 50 to 60 centimeter lengths for whatever reason, you could be assured that you would have to fork out that sum of money. It seemed to me as a kid that may be prices of things weren't as obvious as what people said they were, certainly where use value was very unclear. Which is essentially the way the antique markets work and to some extent classic cars or vintage electric guitars. To most people, a piece of antique or classic car or vintage guitar simply doesn't have a lot of use value but they all have exorbitant price tags; there's also a market the corroborates the price tags as well, but the general level of demand in the market place would be much lower.

Conversely, staple foods might carry different branding, but just how much difference is there between Bega cheese and whatever brand that's sitting next to it at the super market? It's literally a matter of taste as they position themselves with tiny price differentiation. Indeed ad men stake their careers on convincing you about brands as if there's a magical connection between a brand and its product's use value.

I write this not to berate ad men, but because lately I've been made to ponder just how much of this linkage is forced upon us in our understanding of our consumerist world. In fact, we're made to interpret the complex system of signs of branding as if it is interchangeable with the use value. Economists talk about the marginal value of things quite a bit but when you apply it to products, you quickly realise how vague and arbitrary our system of values happen to be. That is to say, if you chose to buy product A over B in spite of product A being more expensive, then you're probably going to justify to yourself the difference in priceis exactly the difference in use value.If we're back to talking about cheese, then the difference between cheese A and B is the difference in taste value.

Now, if we start talking about cars, most people justify their choices on alleged performances of vehicles based on printed specs. The specs might be number of cylinders in the engine or size of the engine or even the rated power output of the engine. The point is, people are picking categories and then comparing prices and picking the listed spec that suits their needs. Yet how many buyers really are experts on cars? As with the cheese example, at some point the extra pricing over the competitor can only be justified on a vague issue of taste. In fact, most people are buying cars on the level of "this is an imported German car, it must be better than the Australian made sedan."

Right up and down the market place, people are funneled into thinking like this, which then goes into the structure of prestige and hierarchical thinking in society. And it's not just cars - we do it with housing, education, medical care and insurance, clothing (Ah, fashion!), food, and just about everything we buy. And all the while we rarely get to ask if this marginal value we are spending our money upon is something that we need. Does our cheese need to taste just that little bit better to our palates? Does our car really need to have the better spec even though 99% of the time we will drive at around the speed limit or be stationary at lights?

A good friend of mine always said, if something is twice as much as its competitor, you need to consider if you will enjoy it twice as much as the other thing.

I guess if you can afford the things you want then there's no need to ponder any of these things. I'm not exactly advocating restraint or anything here; just making observations. However, consumerist society being what it is, we're all forced into making these choices every time we need to get something - anything - and in so doing, we do this invisible dance in our heads. Do we like this one, as opposed to that one? Does this say the right thing about me to the world? That's all brand-speak and ad-speak.

When one is honest with oneself, one would come to realise that there are so few things we know about well enough to dig deeper than the advertising guff or the spec sheet. I could tell you a great deal about electric guitars and bass guitars but I doubt I could tell you much about, say, violins. Cars? I'm working off spec sheets. I'm neither a mechanic nor engineer enough to know better. Refrigerators, washing machines and other white goods? I'm guessing based on price tags. I know quite a bit about cameras but how often do I go buy one of those? If you are honest with yourself, I think you would realise that you rely quite a bit on hearsay, opinion and whatever information that is thrust in front of you.

And the funny thing is that we kind of just accept the price tags of these things that inherently come with some ancillary, marginal value attached, and by extension, even if we were vigilant we will always be playing by the rules of the market-assigned value hierarchy. You would have to be a committed rebel or revolutionary to walk away from our social system built up on judgments and prejudices based on advertising and branding.

2011/08/13

Anarchy In The UK 2011 Redux

"Don't Know What I Want But I Know How To Get It"?

I'm still scratching my head over the riots in London this week. If ever there was something that made so little sense, well, these riots were it. It seems I'm not alone in thinking that the riots were pretty strange given that for all the ascribed motives the phenomenon of who turned out to be doing the looting and getting caught flew in its face of class prejudice in both directions.
Laura Johnson, a university student accused of looting during the London riots, could be thrown off her degree course.

The 19-year-old, who is studying English and Italian at Exeter University, appeared at Bexleyheath Magistrates' Court on Wednesday charged with theft after police stopped her car and found £5000 ($7860) of electrical items, allegedly looted from a branch of Currys in Charlton, south-east London.

Exeter University has warned Ms Johnson, whose parents are company directors, that she could be thrown off her course if she is convicted.

Which goes to show it was not all like the youths running riot in the last section of 'Harry Brown'.

Anyway, here's the Leviathan blog in The Economist trying to wrap its head around it.
Leviathan has begun collecting explanations for the turmoil across London and other British cities. On Newsnight, Ken Livingstone, once again a mayoral candidate, expressed the view that the riots were linked to young people’s “uncertainty about the future”. He had, the ex-mayor said, been to inner-city colleges where the pupils were worried about how to complete their courses, after proposed changes to the Education Maintenance Allowance.

That sounds suspect. The behaviour and targeting of the looters does not suggest undue concern about lost educational opportunities or public-spending cuts. However competent or otherwise the government has been in its deficit reduction, it has set out to protect students from low-earning families—and indeed, taxed the rich more highly.

The most intriguing explanation for misbehaviour so far was offered to Mark Stone, a Sky News reporter, who recorded looting in Clapham Junction on his phone. "Are you proud of what you're doing?" he asked one young woman who was stealing goods from a smashed-up store. "I’m just getting my taxes back," she replied. As appealing as this may be to Milton Friedman followers (in other circumstances), it is a pretty rubbish excuse for pillaging.

Mr Livingstone spoke amusingly of “clapped out politicians” denouncing criminality—and, in truth, the bromides against the rioters do have a certain ritual quality. One could predict that David Cameron would deploy the word “sickening”—and lo, he did.

Which goes some ways towards putting a circumference around the ball of confusion. Just as people marveled there wasn't any looting in Japan after natural disasters, we're left marveling at a section of England that want to go looting in the absence of any natural disaster.

I think this is going to provide more food for thought in the coming years, as it is clear nobody has understood anything as to how such a volatile crowd as (pardon the pun) critical mass, manifested itself like a perfect storm. Then again, judging from how the stock market has yoyo-ed this week, maybe we can put it down to the stupidity of the mob mind in stampede mode. After all, you would never guess the humble cow could amass the devastation of a stampede in numbers, but they can. Why not humans?

2011/08/11

The Rant Of The Day - 10/Aug/2011

Here's A Rant Worth Taking In

Pleiades gave me a heads up on this one tonight. It's Dylan Ratigan doing his nut about how bought Congress is.  It's quite passionate and furious. This is the bit you should at least have a read of when he is asked what Mr. Obama should do:
I would like him to go to the people of the United States of America and say, “People of the United States of America, your Congress is bought, your Congress is incapable of making legislation on healthcare, banking, trade, or taxes because if they do it, they will lose their political funding and they won’t do it. But I’m the President of the United States, and I won’t have a country that is run by a bought Congress. So I’m not going to work with a bought Congress and try to be Mr. Big Guy ... I’m going to abandon the bought Congress like Teddy Roosevelt did, and I’m going to go to the people of the United States get rid of the bought Congress." ... Until a President says that’s the problem and says he’s going to fix it, there is no policy that I can possibly see no matter how brilliant your idea may be or your idea or my idea or her idea or your idea at home, is that idea will not happen as long as there’s a capacity to basically fire a politician who disagrees with me by taking funding away from him. Is that a fair assessment?

Here's something from Huffington talking about the rant.

It's most probably true.

Ratigan has outlined his ideas that are editorialised upon here.

 

2011/08/06

News That's Fit To Punt - 06/Aug/2011

Turning Japanese As A Headline

Last week, the Economist ran with the headline 'Turning Japanese'. The gist of it is that the very model for the current behaviour of both the EU and US governments in propping up the economy with stimulus spending while racking up debt is essentially what Japan did after the property bubble.
In the early days of the economic crisis the West’s leaders did a reasonable job of clearing up a mess that was only partly of their making. Now the politicians have become the problem. In both America and Europe, they are exhibiting the sort of behaviour that could turn a downturn into stagnation. The West’s leaders are not willing to make tough choices; and everybody—the markets, the leaders of the emerging world, the banks, even the voters—knows it. It is a mark of how low expectations have sunk that the euro zone’s half-rescue of Greece on July 21st was greeted with relief. As The Economist went to press, it still was not clear on what terms America’s debt limit would be raised, and for how long. Even if the current crises abate or are averted, the real danger persists: that the West’s political system cannot take the difficult decisions needed to recover from a crisis and prosper in the years ahead.

The world has seen this before. Two decades ago, Japan’s economic bubble popped; since then its leaders have procrastinated and postured. The years of political paralysis have done Japan more harm than the economic excesses of the 1980s. Its economy has barely grown and its regional influence has withered. As a proportion of GDP, its gross public debt is the highest in the world, twice America’s and nearly twice Italy’s. If something similar were to happen to its fellow democracies in Europe and America, the consequences would be far larger. No wonder China’s autocrats, flush with cash and an (only partly deserved) reputation for getting things done, feel as if the future is on their side.

That just about sums up the observation and the rest of the article is a discursive chat about government debt and the inability of politicians to find a way to reduce debt.

Except right now might be the moment of truth for all these people who both hold debt and are indebted. To be honest it is a terrible time to be in debt or to be a lender because it all hinges on whether the mountain of debt can be repaid at all. If it can't, then all bets are off.

Here's yesterday's SMH:
Broadly there seem to be two options on the policy menu. One is the deflation option: let market forces take over, let the defaults begin and provide a social safety net.

The other is the inflation option: keep splashing the cash to reduce the debts to zero. This is clearly the favoured Wall Street option. Wall Street's proxies in Washington may duly deliver more stimulus: stimulus the public can ill afford - stimulus that could bring about another Weimar Republic - but stimulus that will diminish the size of the debt.

Which is of course what I've been seeing articles in  Japan about Japan's debt. Now, the politicians can't readily opt for the former option because this would mean everybody's houses will have to lose value and lots of people will be kicked out of their houses and mortgages. There's really no way either side of politics can bite the bullet and survive such an adjustment in the extreme. Neither side of politics could proscribe this as a solution and stay in office. But that might be the devil you know.

The politicians cannot openly opt for the latter because it means it's going to burn down everybody's retirement savings as well as term deposits and cash. People will rightfully leap toward gold and silver - and other precious metals but not commodities as a whole - in that post-apocalyptic kind of scenario where everybody would be running to the hills with their guns or joining the fascists or communists just to feel safety in numbers (which is what happened in the Weimar Republic. It would be like the fall of Rome if it happened across the USA and Europe. That's the devil you don't know; or maybe it's the Deep Blue Sea.

In the twenty years since the Bubble burst in Japan, no politician has come close to proposing a way out of this situation. In fact Heizo Takenaka who was an economics professor before becoming Koizumi's Finance Minister was looking to opt for the latter with the assumption that even if things get terrible in Japan, the people of Japan would still have a high governability. In other words he was willing to burn down savings in order to get out of debt through inflating the currency. I'm just trying to imagine Obama or Merkel or Gillard or Swan having that kind of gumption with their own people. Needless to say, he's not in office now.

Anyway, I think we're only beginning to see the unraveling of the highly distorted financial system that's been built up over a century and a half.

Inflation Figures Not Adding Up For You?


Long time readers here would know that for some time I've been a big sceptic of the CPI. It turns out that the CPI might have been biased upwards in the last few years.
In a post-mortem of the previous cycle of CPI data, which ran from 2000 to 2005, the bureau found that its methodology over time created an ''upward bias'' in the CPI figures. The methodology assumes that consumers keep buying the same basket of goods and services, regardless of their price. And over time, that increases the relative weighting of items whose prices are rising rapidly, and reduces the weighting of those whose prices are falling or relatively stable.

Over time, the basket of goods and services that comprises the CPI becomes increasingly unrepresentative of the real world of consumer purchasing, because it assumes that consumers pay no heed to price signals. Without correct weightings for each of the 90 categories in its basket, the CPI figures are inaccurate, and so are their derivatives, such as measures of underlying inflation.

This is serious. There is a flaw in the inflation data that we should have known about, but didn't. And it almost cost us dearly.

The bureau's post-mortem estimated that between 2000 and 2005, this upward bias had overstated the level of inflation by a cumulative 1.2 percentage points. In the year to June 2005 alone, inflation was overstated by 0.4 percentage points. That was the fifth and final year of the cycle. Inflation was reported as 2.5 per cent, but when the bureau surveyed what households were actually buying it found the true inflation rate was 2.1 per cent.

All f this is to say that one can't be certain about inflation based on one's own life circumstance. My own view is that regionally speaking, inflation has run higher in Sydney than elsewhere in NSW and if anything the raise in interest rates might be appropriate for Sydney but of course it can't be done like that. Even that is by the by. The important message seems to be that the interest rates are actually too high given the CPI the RBA has been using has had an upward bias, and so interest rates should be lower.

I would like to add into the mix that unemployment figures are not what they used to be. In the old days they'd simply count up the people on the dole. These days they work hard to push and nudge and coax and intimidate and irritate people off the dole queue so there are quite a number of people who are part-time employed with 1-4 hours of work a week but are not considered unemployed. Yet if unemployment figures are to be believed, we're close to maximum employment. So if the RBA is working off "garbage in" figures like that,  no wonder there are people who think the interest rates they are putting up are "garbage out".

It is quite reasonable to argue the interest rates are in fact already too high for the RBA's own stated purpose. Unless of course they want people to voluntarily de-leverage and are concocting an environment for that to happen.

 

2011/08/05

Space Battleship Yamato

In Live Action!

I watch a lot of bad films. I watch a lot of good films. So I'm comfortable in saying good and bad don't seem to be a yardstick by which I watch films. When I do little crits here, I'm often the least interested in what is good or bad about a film, but what's interesting about it. Sometimes it's hard to pin down what is interesting about any film, but clearly they are the worst films.This isn't in that category. It's a bad film, but there are quite a number of interesting things to talk about.

'Space Battleship Yamato' was the big release last year in Japan. It stars Takuya Kimura as Susumu Kodai, one of the iconic characters from manga in the 1970s. It's a little like 36years after the event, Disney comes out with a live action 'Toy Story'. I've not been able to get a hold of this picture for a while but I finally procured one down in Chinatown - a pirate release that's been transferred at the wrong aspect ratio - and had a viewing. I have to say, I sat and watched uncomfortably for the duration.

What's Good About It

The best thing about it is that the Japanese film industry can make this kind of action movie with special effects with spaceships zooming around doing dogfights. It's 35years too late compared to 'Star Wars' but it finally got there. The computer generated Yamato looks a bit chintzy, but so did the Yamato in this movie. The fire fight looks fast and furious to the point of sensory overload and the explosions are big. It goes so fast it's hard to tell what's going on, but it goes.

What's Bad About It

Directing. Acting. Script. It's terrible. There's a side of me that says I'd be embarrassed to be associated with this material, but there's also a side that feels it would have liked to have directed it, just so it made some kind of sense, and had a bit more tension.

Also, it's like a bad Star Trek movie as opposed to a good one.

What's Interesting About It

Back in the summer of 1977, a film opened in Japan that changed the industry forever. It wasn't Star Wars, it was the anime movie 'Space Battleship Yamato' which later got turned into a  TV series and then exported to the US as 'Star Blazers'. The thing about that 1977 movie was that it ignited the anime market just as Star Wars ignited the cinema market and rewrote the rules of the respective cinema. Just as there would be no modern blockbuster movie without Star Wars, the Japanese anime movie would not exist without the massive success of the original 1977anime version.

What possessed the rights owners that a live action version would be a good idea, I will never know. This is a terrible rendition of the story.

All the same, it's worth pondering what the heck this thing is all about and it comes down to two things. One is the reconstruction of the World War II text, and the other is trying to overcome World War II as it stood. The most interesting thing about the Space Battleship Yamato text is how it mirrors 'Star Wars', both of which involve dogfights of spaceships. I always felt the kernel of the Death Star traces back to the US encounters with the battleships Musashi and Yamato which were the 2 largest battleships ever built. The awe-filled line "Look at the size of the thing." is an echo of that experience. And the method by which the US sunk the two ships, but pinpoint air raids is relfected in the demise of not one but two Death Stars across the first Star Wars series.

By the same token, the battleship Yamato is brought back to life as a space-faring battlestar to take on the ever-encroaching enemy who have bombed the crap out of Earth. Yamato's mission is the final mission, just as the last mission towards Okinawa for the real battleship Yamato was the final operation of the Imperial Japanese Navy Grand Fleet. The mythology of both stem from the titanic moment in World War II. It's not surprising that 'Star Wars' appeared two yars after the end of the socially damaging Vietnam War, and 'Space Battleship Yamato' appeared a generation after the end of World War II to rewrite the myth.

Which raises the question, what is the meaning of the live action movie appearing today?

One suspects that the long economic doldrums has weighed on the cultural psyche of Japan to the point that the legend of Yamato had to be summoned once more to give a mythic story about rebirth and hope. It's strange but at the same time also very understandable and sad. If the newer three films of 'Star Wars' indicate to us that fascism's return is part of an endless cycle, then this new installment of Yamato seems to tell us the people must endure the cycle of fascism over and over and over again. It's amazing how the two mythoologies dovetail. George Lucas needs to talk to Leiji Matsumoto.

Self Sacrifice And The Cycle of Violence

The suicide missions of Kamikaze and the final mission of the original Yamato are enshrined as founding myths for post-War Japan. There's always been this tenor of they died for their country - an the lesson is that you boys and girls have to behave. No wonder Gen-X in Japan grew up to be irresponsible and largely uninterested in history. If you had to take it seriously you'd probably want to go shoot yourself - for your country - and be done with it.

Leiji Matsumoto who created the series, is largely antipathic to such formulations. So it is a little disappointing to see the final part of the film involves Kodai and the ship going on a suicide run. Matsumoto's own work is filled with long discourses on the need to survive and live on through conflict. The self-sacrificial hero who does a kamikaze mission isn't exactly high on Matsumoto's own hero list; and I think this is very healthy. It's a shame this version had to go back to the Kamikaze myth.

Also, it's worth mentioning the bad guy in the series 'Dessler' is actually 'Death-ler' as in, 'Death' and 'Hitler' rolled into one. Matsumoto was clearly down on fascism, even though his work is fetishistic about military equipment. It's a weird contradiction, but I guess if you gaze into the abyss, the abyss gazes back at you.

Lord of The Fliers

One of the ur-texts in the developing the original Space Battleship Yamato series was 'Lord of the Flies', where children are left to their own devices and fall to bits. Why that might have been an inspiration for the original producer Nishizaki is a bit of a mystery but there's something of a world missing adults, running as a theme in the film.

In a sense the film is an allegory of post-war Japan that has had to find a way to be strong in spite of the old ways passing and dying out. The clearly patriarchal Captain Okita is dying and with him will go all the old traditions, reeking of the wet navy. The crew of the ship are all energetic and switched on but every single one of them seems like they are emotional retards. Which reminds me that Douglas MacArthur famously described the Japanese as having a mental age of seven. In this instance there is some emotional truth to the general's observation.

The renewed space battleship Yamato heads off into deep space with a half-assed plan to go to where the message came from, with a crew of emotional retards, led by a dying captain. When they get there and find what they are looking for isn't what they expected, they begin to quibble. It's the moment you get the glimpse of the 'Lord of the Flies' ur-text. Sill, this being a Japanese text, it doesn't turn into boar's heads on sticks; everybody cooperates and the good die in self-sacrificing acts. They really need to stop doing that in Japanese movies.

The West As A Duality

When the Space Battleship Yamato arrives at the destination in the Large Magellanic cloud, they find that the enemy Gamilas are from the same world as the people who sent the capsule to help them. Clearly the destination Iskandar (or 'Alexander the Great in Hindi') is a metaphor for the West. Even the name of Magellan and the great age of sailing is invoked in the names and of course the bad guy 'Dessler/Death-Hitler' hails from the same place as where the cure will come.

It is true, the Japanese got both modern military methods and medicine from the Germans.

I often wonder how the Space Battleship Yamato thing plays out in Germany. They must be perplexed by the love and disappointment from Japan.

Radio Activity Remover

The most sad angle in the story might b the reason for the ultimate journey, the recovery of a radiation cleaning device. In the beginning they talk about 14 sieverts of radiation and it's poignant that at the time they made the film, such units were largely academic to the wider audience. Little would they know that the unit sieverts would become a daily word in the newspaper in the wake of the Fukushima plant melting down.

The radiation removal technology is a kind of wish-machine unique to science fiction so you take it with the grain of salt, and clearly the concern about radiation crept into the initial comic book out of the experiences of Hiroshima and Nagasaki. It is oddly ironic then that people might really want to make a trip out to Iskandar now that there is a major radiation problem in Fukushima. In that sense, the film achieves a kind of weird prescience about the problems that unfolded after the Tsunami of 11th March 2011. I guess it was also prescient about how government authority structures are prone to lying to its own populace.

They fluked a kind of relevance, but it is oddly more relevant today than when it was released summer last year.

2011/08/04

Yes Have A New Album Out

Fly From Here


Yes have a new album out for the first time in ten true summers. I spent the afternoon listening to it because it arrived from Amazon today and I have to report it's quite a number. Old habits die hard. Still, this may be the first time I'm blogging about a new Yes album.


What's Good About It

As usual with all Yes album, it's not short of good playing good arrangements and good production. The over all sound is more organic and natural compared with some of their more modernistic recordings. Gone are the angular reverbs and compressors, with dynamically enhanced imaging. The mix on the album sounds more in line with 'The Ladder' and the 1970s recordings in the sense that the effects take a back seat to the playing.

The same sounds are back, only, brought up to our digital context. The bass still dominates the bottom end, the guitars sound like Steve Howe's tones, the keyboards fill out the mix until they step forward for a lead, and the vocals are dense and lush.

What's Bad About It

I love Yes, but I have to be honest. The guys are getting old so the playing is lacking in attack and bite. It's prog rock but these guys sound pretty mellow. They were sounding pretty mellow on 'Magnification', but I put that down to playing with an orchestra. On this album, you feel the guys are that much older - wiser, yes - but generally less energetic.

It's a minor quibble, because the album offers plenty of pulse-quickening moments, but when compared to what this bunch did on 'Drama', you feel the distance of time.

What's interesting About It

As usual they've had a lineup change and for the second time they're going without Jon Anderson. Jon Anderson's not been well recently - not surprising for a man of his age - and so Yes have been touring with a stand-in Benoit David, who they have now made a permanent member. He sounds more like Trevor Horn than Jon Anderson in the lower register, and when he goes high, he sounds like David Surkamp from Pavlov's Dog.

Sonically, he's an interesting addition, and what he provides is a Yes that harks back to 'Drama'. 'Drama' of course was the other album without Jon Anderson, and probably not coincidentally, the Keyboard chair is filled with Geoff Downes from that album, while the producing chores went to Trevor Horn.

The overall sound of the album is surprisingly un-Horn-like. There are no angular stabs or disorienting sonic effects. There are moments that do hark back to the austere majesty of 'Drama' but this album is more lush. I'm surprised at the restraint by Trevor Horn but that too suggests he too has grown old. It's a little sad. The pic inside of the band is fearless and also a tad depressing.

Still, I love the playing. The playing is the thing - as always - on a Yes album, and there's plenty to take in. Chris Squire and Alan White are still rock solid. One of the best rhythm sections in rock lives on. Steve Howe is still the amazing Steve Howe of old, in good many sections. Geoff Downes is a fine keyboard player and Benoit David adds something different to Jon Anderson. So far, I like it more than 'Magnification'. It may even be as good as 'The Ladder'. I actually hope these guys have a couple more albums in them, but I might be being greedy there.

The Roger Dean artwork makes a welcome return. It's always nice to have a new addition to the growing narrative of what happened to the planet from Fragile. These days the landscape seems more green and inviting while the Yes logo itself has taken on snake scales like the scales on the serpent in 'Relayer'. the growing conceptual continuity of Roger Dean's images linked with Yes music is always fascinating. I wish I could get this album as a gate-fold LP. Alas, there hasn't been one of those since 'Yesshows'.

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