The Idiocy Of Attacking Gillian Triggs
At this point in time, an appalling government that never had a good moment in the light of latter-day history-to-be-written, is attacking Gillian Triggs, the Human Rights Commissioner over the report tabled on Children in detention. Not only is the Abbott government incensed that Triggs appears to be very partisan in Tony Abbott's eyes with the timing of tabling the report, his government has managed an own-goal by letting loose that fact that they offered her an inducement to leave her post and thereby not tabling the report.
All of which is manifestly stupid. For one, the ALP were just as guilty of shoving kids into detention centres, so it can't be partisan when it is bipartisan policy to shove asylum seekers who arrive by boat onto Manus Island. If he's angry at the report for making his government look bad, the easy solution is to not do things that would make one look bad. A good start is to not do bad things.
If he's angry that the timing of the report is bad (which seems to be the real tenor of the complaint), again it can be pointed out that if would help not to make so many bad decisions to put one's own government into perpetual news cycle of bad news to begin with. As in, it helps to do a better job in government elsewhere and otherwise because when bad things genuinely do happen, you have some grace with the electorate. Being pathetic at your end of the bargain on a constant basis as this government has been, would put you in an awkward spot where more bad news would make things more difficult.
In any case, he's shooting the messenger and the electorate knows it and it looks bad all round. The intimation of bribery that has emerged from this so called inducement is even worse. It's as if they threw a truck leadoff shit at the wall and none of it stuck - which is yet another instance of mishandling and general incompetence.
Are we surprised? No. Every week brings more stupidity from this government.
Even Big Business Thinks He's Crap
Here's something to add to Atony Abbott's substantial list of woes. The big end of town are not happy with Tony Open-for-Business Abbott because he's ruining consumer sentiment. Earlier in the week it was reported that wage growth was at historic lows.
You have a government that's basically facilitated a collapse in an entire industries (automobile manufacturing and renewable energies), that keeps going on about productivity growth through cutting workers' conditions, and is heading for higher unemployment and probably the first recession 23years, and it wants to privatise even more debt by deregulating universities and compromising Medicare. Government services are being cut, as are government spending in many areas.
There's nothing in what the government is doing that is adding to consumer sentiment. If the government gets what it wants with its austerity measures, they will have less revenue, and thus end up increasing the portion of government debt to the GDP - which is the experience in the PIIGS nations.
So it is rather strange to see the spectre of the business community ragging on the Prime Minister, but there we have it. He's so bad, it is clear he's letting down his own constituency.
To the business leaders who complain, we say, "he's your mate."
Five Years A Miserable Citizen
I guess it beats slavery but the last five years have been in most part, pretty miserable in the policy stakes. Consider that the Rudd government came to power on a landslide with a clarion call for action on Climate Change. When that project ran aground at Copenhagen in late 2009, this turned into the cause that removed Malcolm Turnbull from Opposition Leader and installed Tony Abbott in his stead. The only reason Tony Abbott ran on that spill was because Barnaby Joyce - if ever there was an official diagnosis of dwarfism of intellect, he's the sine qua non - told him they needed an anti-ETS candidate. And stupidly enough, he won.
The anti-intellectual idiocy that has burst forth since then has been quite staggering. Tony Abbott spend the next 4 years essentially running on a campaign of climate change denials. Worse still, the ALP replaced Kevin Rudd with Julia Gillard who did not believe Climate Change was an important enough issue, and was willing to sell climate change policy down the river not once but twice. We all know what followed that one. Five years into this decade, we've managed to put in a Carbon Pricing mechanism and then voted in people to repeal it.
It's all wasted time in a race against time. Especially now that methane clathrates are exploding through the permafrost, It's as if Australia has completely lost its mind. And it's been going on for a good while now.
It is indeed government of misery, by misery, for misery.
A Gen-X View of the Universe.
"The Issue Isn't Pussy, It's Monkey" - from The Right Stuff
Film, Cinema, Movies, TV, Music, Rock
2015/02/28
Quick Shots - 28/Feb/2015
Labels:
Abbott Government,
Australia,
Stupidity,
Tony Abbott
2015/02/25
The Debt Limit In China
The Crash That's Taking A While
For the better part of this decade so far, there has been talk that China and its property bubble and ghost city would come to a crash-landing of sorts instead of a much mooted soft-landing. One of the things about these different landings as described by economists is that nobody really manages a 'soft-landing', and those that appear to be soft-landings usually involve kicking the can down the road through stimulus spending. Theses partly why we are beset with the feeling that ever since the GFC of 2008, we've seen this before and China hasn't exactly blown up and crashed on the tarmac so things likely are going to be okay. This is classic normalcy bias wherein we're inclined to think things are going as normal even when things are wildly spinning away from normalcy.
Just exactly how well or unwell China is doing is up for a lot of debate. The cracks started to show last year around May when companies started to default on their bonds, but "a Mysterious Mr. X" would altruistically save the day by buying out the debt position. Most would have read that Mr. X to have been an agent of the Chinese central bank, not wishing to start a credit crisis or a bank run, stuck a fingering the hole in the dyke. All the same, the Chinese government has been announcing that it has been growing at a pace of well over 7% for some years now, so we tend to get lulled into a sense of false security. After all, if China is growing at 7%p.a., it can surely pay off all its debts unlike the first world nations that can't seem to muster 1% growth.
And so, we come to this interesting video:
Anne Stevenson-Yang's presentation essentially kicks the rungs out of everybody's perception of the Chinese economy. It's much worse than one would think and it's in too much debt to do any heavy-lifting for the world. -2% on consumer spending? Zero growth? Saturation debt and no new credit as most of the credit issued is used to rollover old debt? I don't know about you, but she sure talks up a scary set of figures, and she may well be right. That Bob Davis isn't exactly doing a good job of refuting her well-researched points - he sounds more like he is trying to hose down the burst of bad news erupting from her research.
That is some badness she's painting there. It's certainly a far cry from the rosy, "China is growing at 7% p.a. rate" story the world has been swallowing hook-line-and-sinker for some years. As Ms Stevenson-Yang notes, that figure is what we might call "aspirational" in the sense that when the politburo announces the GDP growth, the industry uses it as a target benchmark. It most likely has no bearing to what is happening in reality at all.
For some time it's been postulated that China has been overly optimistic (we won't say lying, because they're aspirational figures, not measured ones), and so the real economy in China is not as large as people think it is based on the yearly announced figures. So China right now might just be a victim of its own PR success, with not enough of a developed economy to do the kinds of lifting through its consumer spending. This would explain the static non-growth in consumer spending figures Ms. Stevenson-Yang has been able to capture through her research.
And so property prices are sagging and commodity prices are falling and state-owned-enterprises are having a devil of a time paying of debts but they keep on making stuff because they need to keep making stuff, regardless of how little it returns. The ramification for Australia is frightening, for Australia has been riding a commodity boom on the back of China for better part of two decades, which explains how Australia hashed sustained economic growth for 22years.
That's all about to end.
The crazy thing is that what Australia and its people have done with the commodity bonanza is spent it and spent it big on housing. We earned this foreign currency and subsequently tried out-bidding one another for housing. Worse still, just as with the Dutch disease, the mining sector and its success, combined with the stampede toward real estate has hollowed out the economy. Manufacturing has totally been beaten out of Australia and handed over to Asia. We haven't grown a lot of industry to take the place of mining as an driver of the economy and have hitched our wagons to housing as the next engine for growth. Alarmingly, Australians have gorged upon debt so that private debt is at an alarming, historic high.
In short, we might have missed the full impact of the GFC, but that's only because China kicked the can down the road for us. When China undergoes its hard-landing, then of course there will be so many debt positions that will get unwound. As Ms Stevenson-Yang notes, at this point in time, the only question is whether it ends with a bang or a whimper. From the figures, it looks like it's going toe a bang and that would suggest the shock to the Australian economy is going to be substantial.
We can predict going back to the early 90's when the Australian dollar was US50cents, and unemployment sat closer to 10% than 5%. If the Coalition Government is still going to be banging on about surpluses then and trying their austerity measures, you can count on the RBA will be slashing interest rates right down to ZIRP. At that point, the GFC would have finally arrived on to our shores.
For the better part of this decade so far, there has been talk that China and its property bubble and ghost city would come to a crash-landing of sorts instead of a much mooted soft-landing. One of the things about these different landings as described by economists is that nobody really manages a 'soft-landing', and those that appear to be soft-landings usually involve kicking the can down the road through stimulus spending. Theses partly why we are beset with the feeling that ever since the GFC of 2008, we've seen this before and China hasn't exactly blown up and crashed on the tarmac so things likely are going to be okay. This is classic normalcy bias wherein we're inclined to think things are going as normal even when things are wildly spinning away from normalcy.
Just exactly how well or unwell China is doing is up for a lot of debate. The cracks started to show last year around May when companies started to default on their bonds, but "a Mysterious Mr. X" would altruistically save the day by buying out the debt position. Most would have read that Mr. X to have been an agent of the Chinese central bank, not wishing to start a credit crisis or a bank run, stuck a fingering the hole in the dyke. All the same, the Chinese government has been announcing that it has been growing at a pace of well over 7% for some years now, so we tend to get lulled into a sense of false security. After all, if China is growing at 7%p.a., it can surely pay off all its debts unlike the first world nations that can't seem to muster 1% growth.
And so, we come to this interesting video:
Anne Stevenson-Yang's presentation essentially kicks the rungs out of everybody's perception of the Chinese economy. It's much worse than one would think and it's in too much debt to do any heavy-lifting for the world. -2% on consumer spending? Zero growth? Saturation debt and no new credit as most of the credit issued is used to rollover old debt? I don't know about you, but she sure talks up a scary set of figures, and she may well be right. That Bob Davis isn't exactly doing a good job of refuting her well-researched points - he sounds more like he is trying to hose down the burst of bad news erupting from her research.
That is some badness she's painting there. It's certainly a far cry from the rosy, "China is growing at 7% p.a. rate" story the world has been swallowing hook-line-and-sinker for some years. As Ms Stevenson-Yang notes, that figure is what we might call "aspirational" in the sense that when the politburo announces the GDP growth, the industry uses it as a target benchmark. It most likely has no bearing to what is happening in reality at all.
For some time it's been postulated that China has been overly optimistic (we won't say lying, because they're aspirational figures, not measured ones), and so the real economy in China is not as large as people think it is based on the yearly announced figures. So China right now might just be a victim of its own PR success, with not enough of a developed economy to do the kinds of lifting through its consumer spending. This would explain the static non-growth in consumer spending figures Ms. Stevenson-Yang has been able to capture through her research.
And so property prices are sagging and commodity prices are falling and state-owned-enterprises are having a devil of a time paying of debts but they keep on making stuff because they need to keep making stuff, regardless of how little it returns. The ramification for Australia is frightening, for Australia has been riding a commodity boom on the back of China for better part of two decades, which explains how Australia hashed sustained economic growth for 22years.
That's all about to end.
The crazy thing is that what Australia and its people have done with the commodity bonanza is spent it and spent it big on housing. We earned this foreign currency and subsequently tried out-bidding one another for housing. Worse still, just as with the Dutch disease, the mining sector and its success, combined with the stampede toward real estate has hollowed out the economy. Manufacturing has totally been beaten out of Australia and handed over to Asia. We haven't grown a lot of industry to take the place of mining as an driver of the economy and have hitched our wagons to housing as the next engine for growth. Alarmingly, Australians have gorged upon debt so that private debt is at an alarming, historic high.
In short, we might have missed the full impact of the GFC, but that's only because China kicked the can down the road for us. When China undergoes its hard-landing, then of course there will be so many debt positions that will get unwound. As Ms Stevenson-Yang notes, at this point in time, the only question is whether it ends with a bang or a whimper. From the figures, it looks like it's going toe a bang and that would suggest the shock to the Australian economy is going to be substantial.
We can predict going back to the early 90's when the Australian dollar was US50cents, and unemployment sat closer to 10% than 5%. If the Coalition Government is still going to be banging on about surpluses then and trying their austerity measures, you can count on the RBA will be slashing interest rates right down to ZIRP. At that point, the GFC would have finally arrived on to our shores.
Labels:
Australia,
China,
Credit Crunch,
Debt,
GFC,
Private Sector Debt,
Property Bubble
2015/02/23
The Execution Draws Near (And It Really Sucks Arse)
Come A Long Way Since
One of the more gruesome news moments in the 1980s was when Malaysia hung Chambers and Barlow. There were calls for clemency which were not heard and perhaps with even a touch of glee Mohamad Mohair's government proceeded with the execution. Never one to miss a moment for sanctimony, Mahatir ran with the toughen drugs line and the men were hanged. it's amazing that it's been almost 30years since and here we are this time pleading with Indonesia for clemency for Andrew Chan and Myuran Sukumaran who are on death row on Bali.
Times have changed quite a bit in one sense that the drug trafficking criminals used to be white boys and now they're Asian Australians. The desperation of drug trafficking has clearly moved down a few rungs in the socio-economic ladder from the working class Aussie to the poor immigrant sons. Make of that what you will - there might even be a silver lining that we're so engrossed in the attempt to save their lives. It gives one a sense of hope that the Australian sense of justice and compassion are colour-blind.
The more those sorts of things change, the more remains the same that South East Asia lives with a collective chip on its shoulder. The mention of the aid given to Indonesian the wake of the 2004 Tsunami has given rise to a nationalistic anger over in Indonesia which, is understandable but perhaps wilfully missing the point in such a way as to evoke the word "ingrates". The point about aid is you need it essentially at the time you need it. And when you take it, you take it exactly because you need it. Returning the money in coins today is a cute gesture but it doesn't change the fact you needed it at the time. Returning it doesn't exactly erase the good will that came with the aid in 2004.
So just as Mahatir sneered some sort of post-colonial patter about justice - as if such a thing applied with the Chambers and Barlow case - Joko Widodo will presumably opt to execute Chan and Sukumaran and claim justice was served, while buying a dose of ill-will in Australia because we can't vote him out there. (Heck, we have trouble voting out Tony Abbott) The worst part is that Chan and Sukumaran are getting executed not for justice but for colonial payback, with a good deal of hypocrisy loaded on top of it. Listening the futile litany where deterrence saves lives is going to be extra-sickening. Also the bit about standing tall in the face of Australian diplomatic meddling. That'll be the good one - the irony of hanging asian immigrants when championing post-colonialism seems to escape Widodo completely.
As Charlie Brown and Snoopy would say, Bleah.
I've pondered why the Federal Government hasn't explored a prisoner swap. We could easily give up any number of Indonesian citizen drug smugglers in our prisons in exchange for the two (Heck, take all of them if it means not executing people - heck, take back Schapelle Corby, lord knows we don't really need her). Obviously this hasn't been a line reasoning that seems to have any working merit, which suggests that Indonesia values its citizens much less than we value our own, and this adds to the difficulty negotiating with the Indonesian government. It also reveals a lack maturity in the Indonesian polity in as much as they see the pleading as a political problem when in fact Australians are pleading a principle.
All that said, I think Australia's come a long way since.
One of the more gruesome news moments in the 1980s was when Malaysia hung Chambers and Barlow. There were calls for clemency which were not heard and perhaps with even a touch of glee Mohamad Mohair's government proceeded with the execution. Never one to miss a moment for sanctimony, Mahatir ran with the toughen drugs line and the men were hanged. it's amazing that it's been almost 30years since and here we are this time pleading with Indonesia for clemency for Andrew Chan and Myuran Sukumaran who are on death row on Bali.
Times have changed quite a bit in one sense that the drug trafficking criminals used to be white boys and now they're Asian Australians. The desperation of drug trafficking has clearly moved down a few rungs in the socio-economic ladder from the working class Aussie to the poor immigrant sons. Make of that what you will - there might even be a silver lining that we're so engrossed in the attempt to save their lives. It gives one a sense of hope that the Australian sense of justice and compassion are colour-blind.
The more those sorts of things change, the more remains the same that South East Asia lives with a collective chip on its shoulder. The mention of the aid given to Indonesian the wake of the 2004 Tsunami has given rise to a nationalistic anger over in Indonesia which, is understandable but perhaps wilfully missing the point in such a way as to evoke the word "ingrates". The point about aid is you need it essentially at the time you need it. And when you take it, you take it exactly because you need it. Returning the money in coins today is a cute gesture but it doesn't change the fact you needed it at the time. Returning it doesn't exactly erase the good will that came with the aid in 2004.
So just as Mahatir sneered some sort of post-colonial patter about justice - as if such a thing applied with the Chambers and Barlow case - Joko Widodo will presumably opt to execute Chan and Sukumaran and claim justice was served, while buying a dose of ill-will in Australia because we can't vote him out there. (Heck, we have trouble voting out Tony Abbott) The worst part is that Chan and Sukumaran are getting executed not for justice but for colonial payback, with a good deal of hypocrisy loaded on top of it. Listening the futile litany where deterrence saves lives is going to be extra-sickening. Also the bit about standing tall in the face of Australian diplomatic meddling. That'll be the good one - the irony of hanging asian immigrants when championing post-colonialism seems to escape Widodo completely.
As Charlie Brown and Snoopy would say, Bleah.
I've pondered why the Federal Government hasn't explored a prisoner swap. We could easily give up any number of Indonesian citizen drug smugglers in our prisons in exchange for the two (Heck, take all of them if it means not executing people - heck, take back Schapelle Corby, lord knows we don't really need her). Obviously this hasn't been a line reasoning that seems to have any working merit, which suggests that Indonesia values its citizens much less than we value our own, and this adds to the difficulty negotiating with the Indonesian government. It also reveals a lack maturity in the Indonesian polity in as much as they see the pleading as a political problem when in fact Australians are pleading a principle.
All that said, I think Australia's come a long way since.
2015/02/19
The Torture Never Stops - Part 1001
David Hicks, Fighting For His Name
Long time readers will know I can't stand David Hicks. It's the one sticking point that makes me part ways with my fellow progressives. The illegitimacy of the wars and the charges and the torture at Camp X-Ray in Guantanamo Bay, are all things I agree that are terrible things. But every time Mary Kostakidis or some other progressive talking head gets on the TV and starts championing David Hicks' cause and claiming that what happened to him was unjust, I get cold feet and beset with the desire to run the other way with those cold feet.
The wave of sanctimonious gobbledegook that flowed in defence of the man was intolerable, at the time and even to this day. The only person who was in Hicks' corner that I could get behind was Major Mori who was the counsel assigned to defend David Hicks at the military tribunal. For him, I have an undying respect. David Hicks himself just leaves me cold. Now that his conviction has been overturned, there is talk of a government apology. Yet, much as I reviled the Howard government in its day and dislike this Abbott government even more, I can't help but agree with them when they say there won't be an apology coming from their government.
Have a quick look at this section of the article:
Long time readers will know I can't stand David Hicks. It's the one sticking point that makes me part ways with my fellow progressives. The illegitimacy of the wars and the charges and the torture at Camp X-Ray in Guantanamo Bay, are all things I agree that are terrible things. But every time Mary Kostakidis or some other progressive talking head gets on the TV and starts championing David Hicks' cause and claiming that what happened to him was unjust, I get cold feet and beset with the desire to run the other way with those cold feet.
The wave of sanctimonious gobbledegook that flowed in defence of the man was intolerable, at the time and even to this day. The only person who was in Hicks' corner that I could get behind was Major Mori who was the counsel assigned to defend David Hicks at the military tribunal. For him, I have an undying respect. David Hicks himself just leaves me cold. Now that his conviction has been overturned, there is talk of a government apology. Yet, much as I reviled the Howard government in its day and dislike this Abbott government even more, I can't help but agree with them when they say there won't be an apology coming from their government.
Have a quick look at this section of the article:
In a tense exchange with reporters at the end of the press conference, Mr Hicks hit out at his critics.
"I think they're supporters of torture," Mr Hicks said.
"The only thing that matters is what the US government has said."
Asked what he was doing when he was picked up in Afghanistan, Mr Hicks replied:
"Having a holiday."
He said he wanted "to live a normal life and be a normal person".Good Grief.
I don't support torture, I'm against it. The "only thing that matters" to me is most definitely not what the US Government said or says. What he was doing in Afghanistan when he was picked up in the early days is contentious to this day. However we do know one thing. When the events of 9/11 were unfolding, we all went to work that day. We all went to school that day. We discharged our duties to society as was expected of us. Hicks chose to go fight with his mates in Afghanistan. That's how you get picked up by the US Marines. That's how you end up in Gitmo getting the iron sausage. I do think it was a travesty that kept him there, I think the military tribunal set up to try him was equally a travesty and I feel sorry for him he had to endure torture and the attendant legal circus.
But I just can't think of a way to couch what happened to him other than he had it coming. It's exactly as John Lennon quipped, "nobody ever gets what they deserve, they only get what's coming to them". He walked right into it - it was his choice - and landed in hell. And now he wants an apology for his trouble? Please count me out, and please, not in my name.
David Hicks should grow the fuck up and accept that what happened to him has to do with his own actions. Somebody was going to pay for 9/11. The fact that he put himself into that picture is his own stupid bloody fault, and it was no bloody accident.
Labels:
Abbott Government,
Afghanistan,
Afghanistan War,
Australia,
Camp X-Ray,
David Hicks,
Guantanamo Bay,
Howard Government,
John Howard,
National Apology,
Tony Abbott,
US Marines,
USA
View From The Couch - 19/Feb/2015
The Recession We're Going To Get
Back in the Hawke-Keating years, the RBA jacked up the interest rates to 17% temporarily, to cool down the financial markets that were going pretty apeshit. I promptly put some money into term deposit and it was the happiest 3month return I had for term deposits. The mergers and acquisitions craze of the late 1980s was something to behold. People like Alan Bond were borrowing gobs of money to buy out Kerry Packer from his TV network. Think about that. 10% rate and Bond is still willing to borrow the money to buy out Kerry Packer from something he spent his lifetime building. He bought the thing for 4 times what it was worth.
Packer of course later said that "you only get one Alan Bond in your life", and eventually bought the Nine Network back for the sum it was actually worth based on real earnings. And you look at the ZIRP world we know live in, and I can't help but wonder what an Alan Bond might have done with it. Except of course we're living in an era of record private debt. If there is an old 80s style M&A corporate raider out there, he or she is already too in debt to borrow more. The animal spirits are constrained by the considerable debt burdens that are out there.
I bring all this up because as the RBA edges ever lower with its interest rates, it is clear the Australian economy isn't traveling all that great. All these people have jumped in to the share market but the earnings just aren't there. Weirder still, we have a government that doesn't recognise just how badly things are going and is backing away from reforms. So much so that some economist is recommending a recession to focus their minds.
All of this is extraordinary because for the better part of the last 20years we've been told high interest rates are bad and low interest rates are good. Admittedly, it was a line peddled by the Howard government so it deserves a truck-load of salt, but truly, the fabricated political narrative has been that low interest rates are sign of good, stable governance when in fact it has been the mechanism through which we've built up a property bubble and record private debt. Basically, the RBA cutting rates correlates with bad management of the economy, low consumer confidence and low business confidence.
In other words, in the olden days governments would spend money and it would stimulate economic activity, and when this got too heated, the RBA would raise interest rates to slow things down. Now, we have a government that won't borrow money, won't invest and is cooling down the economy in the hopes of an austerity-led way back to budget surplus and so the RBA has to do the stimulatory work by cutting interest rates to historic lows.
So another way to look at the interest rates being at 2.25%, is that it's clear the RBA is telling us we're not exactly in the best way at all. Now that the mining boom is over there isn't exactly a sector that can push Australia's economic growth. Of course under the Gillard-Swan budgets, the plan was for housing construction to take over, but even that has its problems. If property prices are already out of line with historic norms and over-invested, it's unlikely that there's hidden room for growth in that sector. Builders and property developers are potentially building things that could turn into the Australian equivalent of China's ghost cities, or they could take a huge loss.
The Real Reason They Print Money
It's kind of strange how for the better part of the late 20th century, inflation was what had to be tamed. This was done by raising interest rates. Today, the great fear is deflation, and to this end interest rates have plummeted around the world. Not content with that, the US Federal Reserve printed money in the hopes that the printed money would be inflationary, and counter the fall inapt prices. The money that got printed didn't trickle down to the street as per the classic claim about 'trickle-down' effects. They went overseas in search of yield, and ended up causing asset bubbles in far-flung places like Turkey.
Now that they've stopped printing money, the money has repatriated back to the USA, bringing about an asset collapse - a sudden deflation, if you will - in these emerging markets. As the US dollar rises, the money still doesn't exactly find its way to the street level. There's no real growth, there's no real investment into businesses, there's no movement that printed money was supposed to buy.
So why do they print all this money? It's so banks don't take a loss. It's so the rich don't take a loss. It's so people with mortgages don't take a loss. Which is understandable but when it is on the scale that it is, you have to wonder how this is going to distort the economy. But people who bought assets on borrowed money? They just can't be allowed to take a loss.
That's it. All this time we'd been led to believe it was for the good of everybody but no matter how you dice it, it works out okay for the people on the street because they don't lose their jobs; but it works out better for the rich because basically they get to have their cake and eat it too. I think this is called a moral hazard, but really, it's too late now.
What Have We Done For You Lately?
I'll keep this brief, but Tony Abbott sure cuts to the jugular. He's reminded the Indonesians it's not just any neighbour, but a friend who forked over a lot of money in aid after the 2004 Tsunami. At first glance, it seems incredibly crass. But none of the other avenues of reasoning, cajoling, pleading, flattering, arguing for mercy, arguing the merits of mercy, and even talking behind closed doors for a long time, seem to have weakened the resolve of the Indonesian government or legal establishment. So I will have to admit that outright crassness might not be such a bad idea. After all, the message does not seem to be getting through. The Indonesian establishment perhaps need to be reminded that it's not any old neighbour or any old country asking; it's the country down south with a hefty load of diplomatic clout knocking on their door.
That being said, one imagines this makes things really hard for the Indonesian government to simultaneously save face and back down. Yet, that horrible problem was already exacerbated by the fact that so many claims were made that the reason the two Australians are getting executed is for justice. It's hard to back down from high ideals. In that sense perhaps Tony Abbott spelling out just what Australia means to Indonesia and how bloody-minded Australia can be about such things, just might help to focus the minds of the Indonesian establishment.
The question that should be running through their minds is "why is Australia and its people so dead set on stopping this execution which is so clearly just?" Yes, why would a nation go so far out on a limb for a pair of drug trafficking criminals? Is it their convict roots? Is it just another example of western arrogance and hypocrisy?
It's turning in to an interesting ideological joust between the human rights discourse and the zero-tolerance for drugs discourse. This could have interesting repercussions in years to come, even over in Australia. It might be the next piece to break down in our own anti-drugs position.
Back in the Hawke-Keating years, the RBA jacked up the interest rates to 17% temporarily, to cool down the financial markets that were going pretty apeshit. I promptly put some money into term deposit and it was the happiest 3month return I had for term deposits. The mergers and acquisitions craze of the late 1980s was something to behold. People like Alan Bond were borrowing gobs of money to buy out Kerry Packer from his TV network. Think about that. 10% rate and Bond is still willing to borrow the money to buy out Kerry Packer from something he spent his lifetime building. He bought the thing for 4 times what it was worth.
Packer of course later said that "you only get one Alan Bond in your life", and eventually bought the Nine Network back for the sum it was actually worth based on real earnings. And you look at the ZIRP world we know live in, and I can't help but wonder what an Alan Bond might have done with it. Except of course we're living in an era of record private debt. If there is an old 80s style M&A corporate raider out there, he or she is already too in debt to borrow more. The animal spirits are constrained by the considerable debt burdens that are out there.
I bring all this up because as the RBA edges ever lower with its interest rates, it is clear the Australian economy isn't traveling all that great. All these people have jumped in to the share market but the earnings just aren't there. Weirder still, we have a government that doesn't recognise just how badly things are going and is backing away from reforms. So much so that some economist is recommending a recession to focus their minds.
All of this is extraordinary because for the better part of the last 20years we've been told high interest rates are bad and low interest rates are good. Admittedly, it was a line peddled by the Howard government so it deserves a truck-load of salt, but truly, the fabricated political narrative has been that low interest rates are sign of good, stable governance when in fact it has been the mechanism through which we've built up a property bubble and record private debt. Basically, the RBA cutting rates correlates with bad management of the economy, low consumer confidence and low business confidence.
In other words, in the olden days governments would spend money and it would stimulate economic activity, and when this got too heated, the RBA would raise interest rates to slow things down. Now, we have a government that won't borrow money, won't invest and is cooling down the economy in the hopes of an austerity-led way back to budget surplus and so the RBA has to do the stimulatory work by cutting interest rates to historic lows.
So another way to look at the interest rates being at 2.25%, is that it's clear the RBA is telling us we're not exactly in the best way at all. Now that the mining boom is over there isn't exactly a sector that can push Australia's economic growth. Of course under the Gillard-Swan budgets, the plan was for housing construction to take over, but even that has its problems. If property prices are already out of line with historic norms and over-invested, it's unlikely that there's hidden room for growth in that sector. Builders and property developers are potentially building things that could turn into the Australian equivalent of China's ghost cities, or they could take a huge loss.
The Real Reason They Print Money
It's kind of strange how for the better part of the late 20th century, inflation was what had to be tamed. This was done by raising interest rates. Today, the great fear is deflation, and to this end interest rates have plummeted around the world. Not content with that, the US Federal Reserve printed money in the hopes that the printed money would be inflationary, and counter the fall inapt prices. The money that got printed didn't trickle down to the street as per the classic claim about 'trickle-down' effects. They went overseas in search of yield, and ended up causing asset bubbles in far-flung places like Turkey.
Now that they've stopped printing money, the money has repatriated back to the USA, bringing about an asset collapse - a sudden deflation, if you will - in these emerging markets. As the US dollar rises, the money still doesn't exactly find its way to the street level. There's no real growth, there's no real investment into businesses, there's no movement that printed money was supposed to buy.
So why do they print all this money? It's so banks don't take a loss. It's so the rich don't take a loss. It's so people with mortgages don't take a loss. Which is understandable but when it is on the scale that it is, you have to wonder how this is going to distort the economy. But people who bought assets on borrowed money? They just can't be allowed to take a loss.
That's it. All this time we'd been led to believe it was for the good of everybody but no matter how you dice it, it works out okay for the people on the street because they don't lose their jobs; but it works out better for the rich because basically they get to have their cake and eat it too. I think this is called a moral hazard, but really, it's too late now.
What Have We Done For You Lately?
I'll keep this brief, but Tony Abbott sure cuts to the jugular. He's reminded the Indonesians it's not just any neighbour, but a friend who forked over a lot of money in aid after the 2004 Tsunami. At first glance, it seems incredibly crass. But none of the other avenues of reasoning, cajoling, pleading, flattering, arguing for mercy, arguing the merits of mercy, and even talking behind closed doors for a long time, seem to have weakened the resolve of the Indonesian government or legal establishment. So I will have to admit that outright crassness might not be such a bad idea. After all, the message does not seem to be getting through. The Indonesian establishment perhaps need to be reminded that it's not any old neighbour or any old country asking; it's the country down south with a hefty load of diplomatic clout knocking on their door.
That being said, one imagines this makes things really hard for the Indonesian government to simultaneously save face and back down. Yet, that horrible problem was already exacerbated by the fact that so many claims were made that the reason the two Australians are getting executed is for justice. It's hard to back down from high ideals. In that sense perhaps Tony Abbott spelling out just what Australia means to Indonesia and how bloody-minded Australia can be about such things, just might help to focus the minds of the Indonesian establishment.
The question that should be running through their minds is "why is Australia and its people so dead set on stopping this execution which is so clearly just?" Yes, why would a nation go so far out on a limb for a pair of drug trafficking criminals? Is it their convict roots? Is it just another example of western arrogance and hypocrisy?
It's turning in to an interesting ideological joust between the human rights discourse and the zero-tolerance for drugs discourse. This could have interesting repercussions in years to come, even over in Australia. It might be the next piece to break down in our own anti-drugs position.
2015/02/16
Quick Shot - 16/Feb/2015
Celebrating Freedom Of Expression
No, I'm not going to write about the poor person shot dead in Denmark. Instead I'm just going to point at the abject idiocy of finding in an audit that Sarah Ferguson was not respectful enough in her questioning the treasurer. It strains credulity but somehow, we have these things:
No, I'm not going to write about the poor person shot dead in Denmark. Instead I'm just going to point at the abject idiocy of finding in an audit that Sarah Ferguson was not respectful enough in her questioning the treasurer. It strains credulity but somehow, we have these things:
While acknowledging the Ferguson-Hockey interview was "compelling television", Ms Ryan finds: "I felt that the 'tone' of the questioning in this particular interview could have been interpreted by some viewers to be a potential breach of the ABC's impartiality guidelines."
Ms Ryan singles out three points of the interview for criticism, starting with Ms Ferguson's first question to Mr Hockey.
"Now, you've just delivered that budget," Ms Ferguson said. "It's a budget with a new tax, with levies, with co-payments. Is it liberating for a politician to decide election promises don't matter?
Ms Ryan found the question was factually correct but said its tone made the Treasurer seem "under attack".
"In my view, the language in Ferguson's first question was emotive," she found. "I also believe that the average viewer would consider that the Treasurer was not treated with sufficient respect by the interviewer."
Ms Ferguson later told Mr Hockey that she had asked a "yes or no question". She then said: "I don't need to teach you, Treasurer, what a tax is. You know that a co-payment, a levy and a tax are all taxes by any other name."
I mean, really? Naturally the finding has been rejected by the ABC. Well, of course it would it's so clearly stupid. Ms. Ryan felt the tone could be interpreted by some viewers to be a potential breach of the ABC's impartiality guidelines? I mean really? She feels (not thinks, perhaps vaguely or even strongly, show won't say which) that maybe some minority in the audience-land watching might be doing some interpreting in such a way that it's not impartial? And that makes it a breach? Just how stupid is this auditor?
If I said I was impartial and made a statement 'X' (fill it in any way you like, It's hypothetical), of course I can expect somebody out there in the readership to maybe interpret that statement to be not as impartial as I say it is; but the onus is on that person to argue that case. Sarah Ferguson is right to ask the Treasurer whether election promises don't matter, after he delivers a budget that completely flies in the face of the election promises. It's a legitimate question that at least 50% of the population would like to know.
It's not the ABC's or Sarah Ferguson's or Emma Alberici's fault or problem that the government finds itself trying to squeeze a budget through which contravenes their own election promises. If the folks in government can't handle the questions that come from such budget, let alone consequences of their actions, maybe they're in the wrong profession. It is most certainly not the job of the press to let this kind of thing go by to the keeper. We all know this; we all know how this works; anybody watching the interview would be watching on the basis that they understand this as a fundamental tenet of the position the press holds in our democracy. So Colleen Ryan has invented a straw man, not to beat down, but to wave around and say, "this straw man right here might have missed the context! The ABC is biased".
I mean, "hullo".
Drawing the kind of conclusion that this Colleen Ryan has drawn is so stupid it blows my mind that she was one the editor of a newspaper. But of course she was the editor of a Murdoch rag. Surprise! Ms Ryan, try this advice for size: one might feel that the act of the ABC audit itself could be interpreted by some observers to be an abject failure at reasoning. But of course there is a lot of stupidity going around at the moment.
The government wants to muzzle the ABC because it asks blunt questions. Yet it says Freedom of Expression is an important thing in a democracy when a terrorist shoots a cartoonist or film maker. If they hold both positions, there's a lottos cognitive dissonance going on in this government and it's not helping the electorate at all.
The Death Penalty Thing Over In Indonesia
As the execution looms for Andrew Chan and Myuran Sukumuran, you get the feeling that Australia is inexorably being dragged into a weird orbit of Indonesian legalism. Indonesia for its part is arguing the death penalty as good deterrence and that the law is the law and if the punishment is not meted out, it discredits the whole legal system. Australia is trotting out all the emotional arguments about the death penalty and amazingly seems to have forgotten the reasoning behind its own end to capital punishment in Australia.
Personally, I am against the death penalty so it goes without saying that I do not wish to see the two men executed. But it does embarrass me greatly when I watch the arguments put forward as reasons why mercy should be shown to these two men. Surely there is a deeper point of jurisprudence that is universal and appropriate to appeal to the Indonesian government. It strikes me as very odd that we only seem to have our own personal moral objections as something that should apply to Indonesia. It's a really bad argument, and is hardly likely to succeed.
There's got to be a better argument to be mounted.
Also, it seems rather ironic that the former lawyer who fronted for big tobacco and James Hardie in the asbestos trials is now the foreign minister trying to stop the execution.
Labels:
7:30 Report,
ABC,
ABC audit,
Andrew Chan,
Capital Punishment,
Colleen Ryan,
Emma Alberici,
Freedom of Expression,
Indonesia,
Joe Hockey,
Journalism,
Kate Tomey,
Lateline,
Myuran Sukumaran,
Sarah Ferguson,
Stupidity
2015/02/12
Hostages To Their Own Bullshit
Chasing Unicorns
There's something fundamentally unhinged about the conservative agenda in this country. First off is the obsession with returning the budget to surplus, which is one of those notions that sound great but don't stand up to scrutiny. If a government returns to surplus, it essentially shifts debt to the private sector off the government's own books.
A very simple explanation can be found here.
So the call to cut the government deficit is in effect a call to increase private sector debt. At a time when private sector debt combined is at a record high, it seems incredibly abstruse for the Coalition Government to be putting so much emphasis on getting back to a surplus. Yet any time a Coalition member talks about the deficit, they don't say anything much more cogent than "Deficits = Bad".
The reason they say this is because they don't have the ability to communicate the may aspects of a deficit and so they decided long ago to treat the electorate with contempt and instead go with slogans. And the slogans seem to get dumber each election, so at some point we were going to have the kind of problem where we have to ask if the Prime Minister has any core competencies.
Worse still, the electorate eats up this simplified, un-intelligent patter and vote with their prejudices intact. It is then, entirely without surprise that this current government has foundered on the rocks of its own devising, as it tries to somehow put into place its self-destructive policies and wondering why the economy is failing to grow. The self-proclaimed proficiency with managing the economy is mere propaganda, a line of bullshit that they themselves believe. Now that they are hostages to their own bullshit, they are in effect doing a marvellous job of vandalising the economy.
Is it any wonder Tony Abbott is considered the least competent head of government in the western world?
There's something fundamentally unhinged about the conservative agenda in this country. First off is the obsession with returning the budget to surplus, which is one of those notions that sound great but don't stand up to scrutiny. If a government returns to surplus, it essentially shifts debt to the private sector off the government's own books.
A very simple explanation can be found here.
There are only so many Australian dollars. If the government taxes more than it spends (a surplus), it is taking more dollars out of the private sector than it is putting in. Assuming exports equal imports those dollars can come from only one place – private domestic savings. Everyone’s surplus is somebody else’s deficit.
--------
The arithmetic is very simple. Total net financial assets in Australian dollars is the sum of government assets, plus net private domestic assets (individuals and businesses), plus net foreign assets. If the federal government runs a surplus then the money has to come from one of the other two. Given the government has virtually no control over the foreign component, a surplus will usually be accompanied by a reduction in savings in the domestic private sector (households and businesses) as they pay more in tax than the government is spending into the private economy.
When the federal government runs a surplus, private debt almost always increases. In other words, the banks create the money to fill the hole left by the government surplus. The much heralded surpluses of the Howard/Costello government were precisely matched by non-government deficits. These budget surpluses were partly supported by trade surpluses (foreign sector deficits) but even so, private debt increased dramatically.
So the call to cut the government deficit is in effect a call to increase private sector debt. At a time when private sector debt combined is at a record high, it seems incredibly abstruse for the Coalition Government to be putting so much emphasis on getting back to a surplus. Yet any time a Coalition member talks about the deficit, they don't say anything much more cogent than "Deficits = Bad".
The reason they say this is because they don't have the ability to communicate the may aspects of a deficit and so they decided long ago to treat the electorate with contempt and instead go with slogans. And the slogans seem to get dumber each election, so at some point we were going to have the kind of problem where we have to ask if the Prime Minister has any core competencies.
Worse still, the electorate eats up this simplified, un-intelligent patter and vote with their prejudices intact. It is then, entirely without surprise that this current government has foundered on the rocks of its own devising, as it tries to somehow put into place its self-destructive policies and wondering why the economy is failing to grow. The self-proclaimed proficiency with managing the economy is mere propaganda, a line of bullshit that they themselves believe. Now that they are hostages to their own bullshit, they are in effect doing a marvellous job of vandalising the economy.
Is it any wonder Tony Abbott is considered the least competent head of government in the western world?
Labels:
Australia,
Capitalism,
Coalition Government,
Conservatism,
Economics,
Joe Hockey,
Liberal Party,
Stupidity,
Tony Abbott
2015/02/09
Abbott's Stay Of Execution
How Crap Was That?
Pretty crap. Although it seems I was right on some level that the Libs don't have it in themselves to swap out a PM. Like all things this is both good and bad. The good thing is that Tony Abbott is still an electoral liability even if his own party show support for him. The bad news is that the same engine driver who ran Australia off the rails is going to continue driving the train. As Paul Keating opined long ago, "God help us all, God help us all".
Indeed. The fact that things didn't change means Australia will remain, in Tony Abbott's vernacular, complete crap. Oh the huge manatee. "Will nobody think of the children?" and all that mess.
Anyway, the score line was 61-39 with one abstention. It's amazing how that looks like a good win-loss record of a team, yet straight up, that win percentage looks better than the way things really stands. Especially when you consider his front bench had to vote against the spill which means the back bench count was 20-39. From this we can tell we're talking about a potential loss of those 39 seats to the ALP. Those 39 MPs are feeling the heat from their electorate or are reading the numbers to see if their Senate seat will still be there after an election, and thinking that it likely won't.
Which sounds about right because if the ALP keeps its poll advantage at 54-46 after preferences across the board, it would b a landslide. The SMH was reporting today that this is exactly the result Bill Shorten wanted. A flip back to Turnbull would - allegedly - have been hell for the ALP. It's interesting they say this now because not long ago, the commentators were saying the same thing about the possible Rudd return during the Gillard years, and that didn't exactly shake out that well for the ALP. There's no guarantee that a flip to Malcolm Turnbull today would have changed fortunes enough for the Coalition.
The amusing bit was how Senator Cory Bernardi got up and said Malcolm Turnbull now had to be sacked. The man is a gift to comedy. The spill was defeated, and that should have been the end of story, at least for today. Why make things worse for your party? Why would you rob yourself of the credibility of having Malcolm Turnbull when your own government is sorely lacking in said credibility? Laughable as ever, always on cue with the stupid remark. That's our Cory.
And so Tony Abbott remains our PM, a kind of 19 month lame duck PM.
God help us all, God help us all, amen.
Pretty crap. Although it seems I was right on some level that the Libs don't have it in themselves to swap out a PM. Like all things this is both good and bad. The good thing is that Tony Abbott is still an electoral liability even if his own party show support for him. The bad news is that the same engine driver who ran Australia off the rails is going to continue driving the train. As Paul Keating opined long ago, "God help us all, God help us all".
Indeed. The fact that things didn't change means Australia will remain, in Tony Abbott's vernacular, complete crap. Oh the huge manatee. "Will nobody think of the children?" and all that mess.
Anyway, the score line was 61-39 with one abstention. It's amazing how that looks like a good win-loss record of a team, yet straight up, that win percentage looks better than the way things really stands. Especially when you consider his front bench had to vote against the spill which means the back bench count was 20-39. From this we can tell we're talking about a potential loss of those 39 seats to the ALP. Those 39 MPs are feeling the heat from their electorate or are reading the numbers to see if their Senate seat will still be there after an election, and thinking that it likely won't.
Which sounds about right because if the ALP keeps its poll advantage at 54-46 after preferences across the board, it would b a landslide. The SMH was reporting today that this is exactly the result Bill Shorten wanted. A flip back to Turnbull would - allegedly - have been hell for the ALP. It's interesting they say this now because not long ago, the commentators were saying the same thing about the possible Rudd return during the Gillard years, and that didn't exactly shake out that well for the ALP. There's no guarantee that a flip to Malcolm Turnbull today would have changed fortunes enough for the Coalition.
The amusing bit was how Senator Cory Bernardi got up and said Malcolm Turnbull now had to be sacked. The man is a gift to comedy. The spill was defeated, and that should have been the end of story, at least for today. Why make things worse for your party? Why would you rob yourself of the credibility of having Malcolm Turnbull when your own government is sorely lacking in said credibility? Laughable as ever, always on cue with the stupid remark. That's our Cory.
And so Tony Abbott remains our PM, a kind of 19 month lame duck PM.
God help us all, God help us all, amen.
Labels:
Abbott Government,
Coalition Government,
Liberal Party,
Paul Keating,
Stupidity,
Tony Abbott
2015/02/08
The Post Capitalist World
Without The Growth, It's A Zero-Sum World
I cam across an article written by a Japanese economy professor who ran a historic analysis of what it means to be running Zero Interest Rate Policy (ZIRP for short in certain circles). It's a pretty straight forward article that even an economics novice can understand, and it centres round what it means to have ZIRP and why this signals a problem.
Japan is running interest rates lower than 2.0% for a couple of decades now. Germany has been doing the same for some time. The level of low interest has not both seen since the days of the Reformation and by that we mean the days of Genoa during the wars that saw the rise of Protestantism in Europe, thus splitting away the fiefdoms controlled by the Catholic Church, effectively stunting the growth of lending to the Catholic Church by the bankers in Genoa.
The point is, that the extraordinary length of ZIRP in our time is pointing to something extraordinary in the history of capitalism itself, and it essentially comes down to this: Capitalism has ceased to self-replicate at the rate it has done for most of modern history that extends back as far as the Reformation. Economic Growth and Modernity were interchangeable for a very long time, but we've arrived at a point where there is no scope for growth in some of our advanced economies. The growth won't come because in most part we've hit a saturation point for where capital can be applied.
The article goes into some quick schema to paint a picture which can be reduced to a simple formula. If an economic unit produces more, then the quantity of production the increase in production and subsequent sales can be understood to be on this axis which we can call 'X'. Another axis's the rate at which we produce and sell these goods and services, whites essentially the productivity. We can call this Axis 'Y'. Combined, the 'X' and 'Y' axes provide a field which is the GDP of the economic unit. When taken at the national level, what we find in advance economies is that we can't seem to grow quantitatively and we can't seem to grow qualitatively. So our GDP stagnates.
The only other axis is actually growth in the virtual and cyberspace. And this is why there has been growth in the financial sector and growth in the internet and technology businesses. This is the 'Z' axis which has exploded comparison to the stagnant growth which befell the 'X' and 'Y' axes growth in the first world.
Up until 1980, there was consistent growth in modernity because there was space to grow into. Since 1980, we've pushed for globalisation so that there was more economic space to grow. As of 2008, the first world economies have hit the limit. This also dovetails with the drives for productivity sought by business and governments since 1980 where we've seen offshoring of manufacturing and attendant mass lay offs in the first world. In its place we've seen the greatest growth in the space created by technology, whether it is in advanced financial instruments and high frequency trading or simply high-tech industries that are off-the-charts in valuations as soon as they list.
It's not as if the 'Z' axis opened up because of the limits to growth on the 'X' an 'Y' axes, although there is a partial relationship between the need for growth and the massive rationalisation that high tech brings. Most of the gains in the 'Y' axis have come from the dividends of the 'Z' axis. The 'X'and 'Y' axes can't grow because the world is just about saturated with the economic activity of the first world.
What The RBA's Drop To 2.25% Tells Us
The whole world is experiencing the limits of growth along the 'X' and'Y' axis. The Central Banks in Europe are also running historically outlier low interest rates and even ZIRP in some countries. It's no coincidence then that the RBA has been running the lowest interest rates in its history, and this week set a record low 2.25%. The shenanigans of Federal politics aside, it's interesting to note that it comes at a time when the forecast for growth in Australia keeps dropping.
Combine this with the fact that the automotive industry is pulling out of Australia and myriad manufacturers have had to close their doors in the short time the Coalition Government has been in, and you get the picture of an economy that is quickly running out of ways and places to grow. It's one thing for Joe Hockey to tell the world leaders that what we need is growth. We sure do, Joe; but if there is no room for it in the physical world relative to the G-20, then it's a bit like fish in a crowded fishtanks saying what they need more of is water.
What's become even more stark and obvious with the retreat of commodity prices to their historic norms, is that absent the income from mining, we suddenly are back to being that economy thetas bloated in the service sector. And while this can be roughly divided into to categories like most things - good and bad - the glaring truth is that the manufacturing we lost is never coming back and even if it did, it would have no economic space in which to grow.
In this context, it would have been (and still very much is) imperative to to grow along the 'Z' axis which would entail growing the tech sector, growing businesses that operate in the virtual space, and look to becoming a force in 'Z' space. Odd then, that we have a government fixated on miners, bricks and mortar retail businesses and a degraded numpty version of an NBN. The complete array of policies concerning business and the economy is fundamentally backward looking and fails to take in the evolving problem.
We're not investing in tech or education or for that matter paying for students to learn things that would help them survive the evolving economy. Our government is trying to off-load those costs back on to the people and wipe its handoff the responsibility, exactly at time when a strategic view needs to be taken as to what kind of industries can be imagined and nurtured along the remaining 'Z' axis of growth. Instead the investment money has flooded into real estate - mostly because those investors get to borrow money so cheaply, this forming a positive feedback loop, but also because they have so few alternative options to invest but on bricks and mortar.
The popping of the Australian property bubble may never come - after all the guys at Zero Hedge have been saying China's economy is doomed and somehow the thing keeps going, and if China keeps going there's no reason why Australia's property bubble should collapse. If the GFC didn't pop it, then god only knows what it would take. But the distortions created by the property bubble are here to stay, putting a gigantic brake on growth. Eventually the RBA may well cut interest rates down to the ZIRP. In which case we will have arrived at the end point of capitalism without having made any investments into surviving what comes after traditional capitalism completely matures.
The Problem With The Stimulus Packages
The greatest irony of Tony Abbott's tenure as Prime Minister is that having promised to be a Infrastructure Prime Minister, he hasn't really done much of any of it, and the infrastructure he did want to build was roads because let's face it, it's about the political donations coming in from general construction companies. You can't accuse them of corruption, but you can sure charge them with crony capitalism as Bernard Keane has done.
Again, we've seen this development in other countries but basically big government contracts are sold as good for jobs, and investors in General Construction companies make out like bandits on these projects. Australia has a peculiar development called Private Public Partnerships whereby the government refuses to go into debt and sucker investors are given the exploding doll sold to them as a good deal. You'll notice that once built, those roads really don't create more jobs or economic activity in of themselves. It's amazing that they get classified under Capital Expenditure. But these tollways Tony Abbott's backers want to build, are simply unlike factories that actually produce things or for that matter a digital workspaces that churns out apps. They don't contribute to the 'X' axis of production and they're only marginal contributors to the 'Y' axis of productivity, not to mention having no impact on the'Z' axis.
Equally stupid then, is the belief that we can have a building-led recovery. I know it flies in the face of the way our economy gets reported, as well as the housing sector making up 25% of our GDP, but a house that's once built does not contribute to any of the 3 axes. The worst use of capital going around is all the debt piling up on the private sector's ledger as mortgages. It's good for the banks but it has much, much much less of a future than the NBN. In fact we're seeing this very problem unfolding China because they keep building the ghost cities in order to pump up the GDP figures but those ghost cities, once built, are contributing absolutely nothing to the 3 axes of economic space while the fastest expanding and most successful Chinese venture is probably Ali Baba, an internet market.
It's the same in Japan where fro 20years the government has unleashed stimulus package one after the other and still growth and the 2-3% inflation everybody so desires eludes the government of Japan. All those stimulus packages were one-off spends that contributed very little to the'X' and 'Y' axes over the same time span. The most healthy growth in Japan has been the IT sector. This pattern is repeated in the UK, the USA, and other members of the G8 ...except Russia where frankly, nothing makes sense except digging up more oil.
This is why I was banging on about the NBN prior to the September 2013 election. It really is our only hope for a future with a growing economy. Instead we voted in a government that is on the whole insensitive to that reality and hastily knobbled it to help out some backward looking cronies. Unless that gets rectified, in the years ahead, we'll come to see that this Coalition government was responsible for screwing up the future of this country.
I cam across an article written by a Japanese economy professor who ran a historic analysis of what it means to be running Zero Interest Rate Policy (ZIRP for short in certain circles). It's a pretty straight forward article that even an economics novice can understand, and it centres round what it means to have ZIRP and why this signals a problem.
Japan is running interest rates lower than 2.0% for a couple of decades now. Germany has been doing the same for some time. The level of low interest has not both seen since the days of the Reformation and by that we mean the days of Genoa during the wars that saw the rise of Protestantism in Europe, thus splitting away the fiefdoms controlled by the Catholic Church, effectively stunting the growth of lending to the Catholic Church by the bankers in Genoa.
The point is, that the extraordinary length of ZIRP in our time is pointing to something extraordinary in the history of capitalism itself, and it essentially comes down to this: Capitalism has ceased to self-replicate at the rate it has done for most of modern history that extends back as far as the Reformation. Economic Growth and Modernity were interchangeable for a very long time, but we've arrived at a point where there is no scope for growth in some of our advanced economies. The growth won't come because in most part we've hit a saturation point for where capital can be applied.
The article goes into some quick schema to paint a picture which can be reduced to a simple formula. If an economic unit produces more, then the quantity of production the increase in production and subsequent sales can be understood to be on this axis which we can call 'X'. Another axis's the rate at which we produce and sell these goods and services, whites essentially the productivity. We can call this Axis 'Y'. Combined, the 'X' and 'Y' axes provide a field which is the GDP of the economic unit. When taken at the national level, what we find in advance economies is that we can't seem to grow quantitatively and we can't seem to grow qualitatively. So our GDP stagnates.
The only other axis is actually growth in the virtual and cyberspace. And this is why there has been growth in the financial sector and growth in the internet and technology businesses. This is the 'Z' axis which has exploded comparison to the stagnant growth which befell the 'X' and 'Y' axes growth in the first world.
Up until 1980, there was consistent growth in modernity because there was space to grow into. Since 1980, we've pushed for globalisation so that there was more economic space to grow. As of 2008, the first world economies have hit the limit. This also dovetails with the drives for productivity sought by business and governments since 1980 where we've seen offshoring of manufacturing and attendant mass lay offs in the first world. In its place we've seen the greatest growth in the space created by technology, whether it is in advanced financial instruments and high frequency trading or simply high-tech industries that are off-the-charts in valuations as soon as they list.
It's not as if the 'Z' axis opened up because of the limits to growth on the 'X' an 'Y' axes, although there is a partial relationship between the need for growth and the massive rationalisation that high tech brings. Most of the gains in the 'Y' axis have come from the dividends of the 'Z' axis. The 'X'and 'Y' axes can't grow because the world is just about saturated with the economic activity of the first world.
What The RBA's Drop To 2.25% Tells Us
The whole world is experiencing the limits of growth along the 'X' and'Y' axis. The Central Banks in Europe are also running historically outlier low interest rates and even ZIRP in some countries. It's no coincidence then that the RBA has been running the lowest interest rates in its history, and this week set a record low 2.25%. The shenanigans of Federal politics aside, it's interesting to note that it comes at a time when the forecast for growth in Australia keeps dropping.
Combine this with the fact that the automotive industry is pulling out of Australia and myriad manufacturers have had to close their doors in the short time the Coalition Government has been in, and you get the picture of an economy that is quickly running out of ways and places to grow. It's one thing for Joe Hockey to tell the world leaders that what we need is growth. We sure do, Joe; but if there is no room for it in the physical world relative to the G-20, then it's a bit like fish in a crowded fishtanks saying what they need more of is water.
What's become even more stark and obvious with the retreat of commodity prices to their historic norms, is that absent the income from mining, we suddenly are back to being that economy thetas bloated in the service sector. And while this can be roughly divided into to categories like most things - good and bad - the glaring truth is that the manufacturing we lost is never coming back and even if it did, it would have no economic space in which to grow.
In this context, it would have been (and still very much is) imperative to to grow along the 'Z' axis which would entail growing the tech sector, growing businesses that operate in the virtual space, and look to becoming a force in 'Z' space. Odd then, that we have a government fixated on miners, bricks and mortar retail businesses and a degraded numpty version of an NBN. The complete array of policies concerning business and the economy is fundamentally backward looking and fails to take in the evolving problem.
We're not investing in tech or education or for that matter paying for students to learn things that would help them survive the evolving economy. Our government is trying to off-load those costs back on to the people and wipe its handoff the responsibility, exactly at time when a strategic view needs to be taken as to what kind of industries can be imagined and nurtured along the remaining 'Z' axis of growth. Instead the investment money has flooded into real estate - mostly because those investors get to borrow money so cheaply, this forming a positive feedback loop, but also because they have so few alternative options to invest but on bricks and mortar.
The popping of the Australian property bubble may never come - after all the guys at Zero Hedge have been saying China's economy is doomed and somehow the thing keeps going, and if China keeps going there's no reason why Australia's property bubble should collapse. If the GFC didn't pop it, then god only knows what it would take. But the distortions created by the property bubble are here to stay, putting a gigantic brake on growth. Eventually the RBA may well cut interest rates down to the ZIRP. In which case we will have arrived at the end point of capitalism without having made any investments into surviving what comes after traditional capitalism completely matures.
The Problem With The Stimulus Packages
The greatest irony of Tony Abbott's tenure as Prime Minister is that having promised to be a Infrastructure Prime Minister, he hasn't really done much of any of it, and the infrastructure he did want to build was roads because let's face it, it's about the political donations coming in from general construction companies. You can't accuse them of corruption, but you can sure charge them with crony capitalism as Bernard Keane has done.
Again, we've seen this development in other countries but basically big government contracts are sold as good for jobs, and investors in General Construction companies make out like bandits on these projects. Australia has a peculiar development called Private Public Partnerships whereby the government refuses to go into debt and sucker investors are given the exploding doll sold to them as a good deal. You'll notice that once built, those roads really don't create more jobs or economic activity in of themselves. It's amazing that they get classified under Capital Expenditure. But these tollways Tony Abbott's backers want to build, are simply unlike factories that actually produce things or for that matter a digital workspaces that churns out apps. They don't contribute to the 'X' axis of production and they're only marginal contributors to the 'Y' axis of productivity, not to mention having no impact on the'Z' axis.
Equally stupid then, is the belief that we can have a building-led recovery. I know it flies in the face of the way our economy gets reported, as well as the housing sector making up 25% of our GDP, but a house that's once built does not contribute to any of the 3 axes. The worst use of capital going around is all the debt piling up on the private sector's ledger as mortgages. It's good for the banks but it has much, much much less of a future than the NBN. In fact we're seeing this very problem unfolding China because they keep building the ghost cities in order to pump up the GDP figures but those ghost cities, once built, are contributing absolutely nothing to the 3 axes of economic space while the fastest expanding and most successful Chinese venture is probably Ali Baba, an internet market.
It's the same in Japan where fro 20years the government has unleashed stimulus package one after the other and still growth and the 2-3% inflation everybody so desires eludes the government of Japan. All those stimulus packages were one-off spends that contributed very little to the'X' and 'Y' axes over the same time span. The most healthy growth in Japan has been the IT sector. This pattern is repeated in the UK, the USA, and other members of the G8 ...except Russia where frankly, nothing makes sense except digging up more oil.
This is why I was banging on about the NBN prior to the September 2013 election. It really is our only hope for a future with a growing economy. Instead we voted in a government that is on the whole insensitive to that reality and hastily knobbled it to help out some backward looking cronies. Unless that gets rectified, in the years ahead, we'll come to see that this Coalition government was responsible for screwing up the future of this country.
2015/02/07
Sign Of The Times
I Didn't Know They Had It In Them
The last thing I expected was for the Coalition to head for a spill. I honestly thought that it wasn't in their culture to spill on an actual Prime Minister, as opposed to merely an opposition leader. I guess you learn something new every day and these Liberals really are no different to the ALP they so despise - or claim to at any rate - when it comes to reading polls and trying to keep a job.
So, yes, I was wrong. These guys really are generic as the ALP politicians.
This has got me to thinking that the news cycle is so fast and furious it has become impossible to have a Prime Minister go for long. Japan hit that point early in the 2000s and kept changing Prime Ministers every year. Italy had been that way since the 1970s until Silvio Berlusconi came along, but essentially he controlled the media. Politics has become so fractious it has made the voting public volatile. The instant gratification offered by polling and sending a message has resulted in a kind of feedback loop that enforces an anxiety about poll figures over actual policy.
And so in the last decade we went from the tired old John Howard to the immensely popular Kevin Rudd to the immensely divisive Julia Gillard and back to Kevin Rudd, only to end up with the immensely unpopular Tony Abbott who having dislodged the ALP has managed to dislodge himself. As Julie Bishop is reported have said, he is indeed his own worst enemy and thank goodness we might be rid of him within the week.
What it says about the electorate is much worse.
Blaming It On Peta Credlin
The enforced myopia of the media makes us overly familiar with the Prime Minister whose mug is on TV or newspapers or everywhere on the interwebs 24/7/365 so we forget how lofty an office it really is. A backbencher really has to prove their worth before having any real concrete input into policy and maybe if they're lucky they might see time as a fringe minister. It's almost understandable that their access to the PM's office is limited and narrow and that chief of staff of the PM's office is a great obstacle.
Which highlights the problem of having Peta Credlin as this figurehead of the Prime Minister's office who controls the flow of meetings and is known Australia wide as wielding this kind of centralised power. The un-democratic nature of her power was bound to be an issue in a Parliament that is operating under the Westminster system. An unelected figure who wields such power has more in common with the Secretary General of the old USSR (read: Stalin) or North Korea (read: Kim Dynasty) than a democratic state. Although nominal communist,those regimes were (and are) essentially totalitarian nightmares. All the same it is kind of interesting that the right side party fell into that Totalitarian trap.
The irony may be that it was the Liberal Party that succumbed to this bit of micro-fascism infestation, but then again it's not surprising given how Tony Abbott has never shied away from his own fascist impulses. When he made his speech on Monday and made the case for him to continue, he was essentially quoting Hitler and the Nazi's fuhrerprinzip. No joke. Paraphrased, he was saying "I'm the leader. We all have to unite behind the leader. Only the leader can decide. We must not become a rabble."
The only thing missing were the "Zieg Heil" chorus. I have to say at least the unelected skullduggery of Paul Howes in his time as Union boss didn't succumb to this kind of rhetoric. He might have thought it but he didn't quite say that.
The backbench unrest is entirely understandable (but not necessarily admirable). It's their meal tickets being threatened by an uncaring Prime Minister. If you threaten enough meal tickets, they'll come at you like a mob. This is why most things end badly in politics.
So Now It's Time To Think Of An Alternative
This is the hard bit because they're all a bunch of brain-damaged emotionally-stunted intellectually-crippled, mentally-deficient cunts. And then there's Malcolm Turnbull who is not any of that but mercurial and relatively environmentally-friendly-sounding which makes him the Left's favourite pick. But the Right hate him so much for the very fact that the Left likes him and he's environmentally-friendly-sounding. He might not be environmentally friendly at all, but he's suspected of the crime because he's the boss of the Australian Republican Movement.
It's ironic the knighting of Phil the Greek has brought this all out.
I always ping him on 'Utegate' and the Godwin Grech phoney email and the glaring absence of judgment in that entire episode, but it has to be said Australian politics is about comebacks and maybe Turnbull is due his own. Lazarus had a quadruple bypass, maybe you can flog a dead horse to life.
Scott Morrison on the other hand is a textbook example of the sort of brain-damaged emotionally-stunted intellectually-crippled, mentally-deficient cunt the Liberal Party breeds, so he might lead them the way they want, but over a cliff. Coming to think of it, that's exactly what Tony Abbott's done so why would they want to do that again? Oh I forget that they are brain-damaged emotionally-stunted intellectually-crippled, mentally-deficient cunts.
Which means that the time might have finally arrived for Julie Bishop, star of 'Seven Years A Deputy'. I could write a nasty sentence or two about her career in law and the kinds of bastards and shills she defended but no. It would smack of misogyny to do so. "Pass".
The other wonderful news is that the Budget is due in 3 months. And they don't really have a candidate for Treasurer to replace The Worst Treasurer Ever Joe Hockey, mostly for fear that they might uncover somebody who is actually - to fudge a word - "Worst-er".
We sure live in interesting times.
The last thing I expected was for the Coalition to head for a spill. I honestly thought that it wasn't in their culture to spill on an actual Prime Minister, as opposed to merely an opposition leader. I guess you learn something new every day and these Liberals really are no different to the ALP they so despise - or claim to at any rate - when it comes to reading polls and trying to keep a job.
So, yes, I was wrong. These guys really are generic as the ALP politicians.
This has got me to thinking that the news cycle is so fast and furious it has become impossible to have a Prime Minister go for long. Japan hit that point early in the 2000s and kept changing Prime Ministers every year. Italy had been that way since the 1970s until Silvio Berlusconi came along, but essentially he controlled the media. Politics has become so fractious it has made the voting public volatile. The instant gratification offered by polling and sending a message has resulted in a kind of feedback loop that enforces an anxiety about poll figures over actual policy.
And so in the last decade we went from the tired old John Howard to the immensely popular Kevin Rudd to the immensely divisive Julia Gillard and back to Kevin Rudd, only to end up with the immensely unpopular Tony Abbott who having dislodged the ALP has managed to dislodge himself. As Julie Bishop is reported have said, he is indeed his own worst enemy and thank goodness we might be rid of him within the week.
What it says about the electorate is much worse.
Blaming It On Peta Credlin
The enforced myopia of the media makes us overly familiar with the Prime Minister whose mug is on TV or newspapers or everywhere on the interwebs 24/7/365 so we forget how lofty an office it really is. A backbencher really has to prove their worth before having any real concrete input into policy and maybe if they're lucky they might see time as a fringe minister. It's almost understandable that their access to the PM's office is limited and narrow and that chief of staff of the PM's office is a great obstacle.
Which highlights the problem of having Peta Credlin as this figurehead of the Prime Minister's office who controls the flow of meetings and is known Australia wide as wielding this kind of centralised power. The un-democratic nature of her power was bound to be an issue in a Parliament that is operating under the Westminster system. An unelected figure who wields such power has more in common with the Secretary General of the old USSR (read: Stalin) or North Korea (read: Kim Dynasty) than a democratic state. Although nominal communist,those regimes were (and are) essentially totalitarian nightmares. All the same it is kind of interesting that the right side party fell into that Totalitarian trap.
The irony may be that it was the Liberal Party that succumbed to this bit of micro-fascism infestation, but then again it's not surprising given how Tony Abbott has never shied away from his own fascist impulses. When he made his speech on Monday and made the case for him to continue, he was essentially quoting Hitler and the Nazi's fuhrerprinzip. No joke. Paraphrased, he was saying "I'm the leader. We all have to unite behind the leader. Only the leader can decide. We must not become a rabble."
The only thing missing were the "Zieg Heil" chorus. I have to say at least the unelected skullduggery of Paul Howes in his time as Union boss didn't succumb to this kind of rhetoric. He might have thought it but he didn't quite say that.
The backbench unrest is entirely understandable (but not necessarily admirable). It's their meal tickets being threatened by an uncaring Prime Minister. If you threaten enough meal tickets, they'll come at you like a mob. This is why most things end badly in politics.
So Now It's Time To Think Of An Alternative
This is the hard bit because they're all a bunch of brain-damaged emotionally-stunted intellectually-crippled, mentally-deficient cunts. And then there's Malcolm Turnbull who is not any of that but mercurial and relatively environmentally-friendly-sounding which makes him the Left's favourite pick. But the Right hate him so much for the very fact that the Left likes him and he's environmentally-friendly-sounding. He might not be environmentally friendly at all, but he's suspected of the crime because he's the boss of the Australian Republican Movement.
It's ironic the knighting of Phil the Greek has brought this all out.
I always ping him on 'Utegate' and the Godwin Grech phoney email and the glaring absence of judgment in that entire episode, but it has to be said Australian politics is about comebacks and maybe Turnbull is due his own. Lazarus had a quadruple bypass, maybe you can flog a dead horse to life.
Scott Morrison on the other hand is a textbook example of the sort of brain-damaged emotionally-stunted intellectually-crippled, mentally-deficient cunt the Liberal Party breeds, so he might lead them the way they want, but over a cliff. Coming to think of it, that's exactly what Tony Abbott's done so why would they want to do that again? Oh I forget that they are brain-damaged emotionally-stunted intellectually-crippled, mentally-deficient cunts.
Which means that the time might have finally arrived for Julie Bishop, star of 'Seven Years A Deputy'. I could write a nasty sentence or two about her career in law and the kinds of bastards and shills she defended but no. It would smack of misogyny to do so. "Pass".
The other wonderful news is that the Budget is due in 3 months. And they don't really have a candidate for Treasurer to replace The Worst Treasurer Ever Joe Hockey, mostly for fear that they might uncover somebody who is actually - to fudge a word - "Worst-er".
We sure live in interesting times.
2015/02/03
News That's Fit to Punt - 03/Feb/2015
Just How Bad Is It For Tony Abbott?
Pleiades sent in a couple of Crikey articles, one by Alan Austin and another by Guy Rundle.
The Coalition that promised in 2012 to reduce Australia’s debt by $30 billion delivered in 2014 an increase of more than $60 billion. Clearly Prime Minister Tony Abbott and
Treasurer Joe Hockey have failed spectacularly to reduce Labor’s “skyrocketing debt”.
Outcomes for the full calendar year 2014 are now online at the Finance Department’s website. Commonwealth monthly financial statements show year-to-date net debt and the projection for the full financial year. Hence it is simple to calculate the debt incurred — or repaid — each month.
Australia’s net government debt — that is, money borrowed minus money loaned out — was $239.16 billion at the end of December. This was a hefty increase over the level a month earlier of $224.35 billion. In just one month, the debt rose almost $15 billion, or 6.6%. Compounded, that rate would double the debt in less than a year. Fortunately, the December rise was abnormal.
So what was the full-year increase through 2014?
At the end of 2013, the actual net debt was $177.74 billion. Hence the increase over the full year was $61.42 billion ($239.16 - $177.74). That’s a rise of 34.6%.
A timely reminder that not only does this government actively break promises, it also allows circumstance to passively break their promises. The likely outcome of an Abbott 'austerity' was credited by many (and has contributed greatly) to the current low interest rates. It's almost like a report card that the cuts are too hard when the RBA cuts interest rates to record lows. Governments usually like to take credit when interest rates are low, but in this instance it can be firmly placed upon the heads of this government as another example of how they are mismanaging the economy. Yes, in the olden days of the 90s, the Liberal Party could get away with painting the ALP as the party of high interest rates which hurt borrowers. If we are to hoist them by their own petard - because we can - this is a government that has allowed the economy to sink so low that everybody has been forced to speculate on borrowed money. They have not really contributed greatly to the economy which is drifting through a post-GFC global context.
All of which is to say, this is a woeful government that is under-performing the even lowered expectations given to a government led by a man who has a very tenuous grip on reality. Worse still, whoever takes over has got a major chore on their hands because Tony Abbott has already removed revenue generators such as the Mining Rents Resource Tax and the price on Carbon.
The Rundle article goes through the woes of Tony Abbott himself, and describes just how big the gap is, that exists between Tony Abbott and reality. It's a cool article and hidden behind a pay wall, but I want to quote this interesting bit here:
But the gold stamp goes to Nick Cater, Saul/Paul of Essex University, the lost sociology grad and BBC lifer, who found his purpose in the lucky culture, his wholly imaginary projection of a pious religious-imperial society onto contemporary Australia. Cater’s task is difficult. He wants to blame Abbott’s problems on the “Abbott-haters”, tweeting with their elite thumbs, for the bad press. Sadly, he has to deal with two lost elections, polls underwater, the collapse of Abbott’s personal approval rating, Coalition MPs moving motions against Abbott’s own laws. How does he do it? Psychology. It’s not Abbott who is so deranged as to be dysfunctional, it’s the public. They have fallen prey to, and I quote, “confirmation bias”, “the ostrich effect”, “reactive devaluation” and “availability cascade”. Jesus. Once a redbrick university sociology 2:2, always a redbrick university sociology 2:2. You have to be impressed by someone trying to prove that the entire voting public, the “kamikaze Right” — including the 2IC of the Howard government, apparently — and the Abbott-haters on the Left are all delusional because they disagree with a man who knighted Sir Prince Philip.
Well, this is a moment, ain’t it? The Right has abandoned the crappy faux-populism of “anti-elitism” and played to its strengths, which is a hatred of the demos. This is clearly connected with the fact that the demos is going Left, from Syriza to Spain’s Podemos to, however, fainter a splash, Victoria and Queensland
Indeed, it is a moment.
The indication today, as the turmoil keeps roiling the Coalition Government, is that Tony Abbott simply must go - which is not a surprising conclusion to arrive at if you've watched the man for any amount of time. Pleiades rang me up to tell me that even loyal Abbott supporters are saying on air that Abbott needs to go. My guess is that he doesn't have the month.
Infrastructure And Privatisation
One of the frustrating things about any discussion to do with privatisation in this country is that the government usually sells off an asset that then turns into a monopoly or a doubly which price fixes to maximise profits from something that used to be a government service. It's no wonder that the electorate no longer buys the narrative that privatisation is good. The track record on privatisation is very mixed, and if electricity prices are any gauge, it's like handing the keys to a bunch of greedy operators so they can gouge people senseless.
And so, we come to this debate that if the government doesn't sell assets, it can't raise money to build more infrastructure.
I would be in favour of privatisation if the money raised was going to be used to build actually useful infrastructure like a metro system or high speed rail. A bunch of tollways seems like eminently the wrong thing for which to be aiming. All the same, when Tony Abbott says he wants to be an Infrastructure PM, well, he means tollways and lots of them. And this is the same guy who is putting an axe to the original NBN. How screwed up can you get?
So I think the narrative that the voters are revolting against privatisation is probably faulty. They're revolting against the utter lack of consultation by governments that ram through more tollways with minimal community consultation. Quite simply, these are not the infrastructure projects we need. Ignoring that problem deservedly turns into voter revolt.
It can't be that hard to understand.
The indication today, as the turmoil keeps roiling the Coalition Government, is that Tony Abbott simply must go - which is not a surprising conclusion to arrive at if you've watched the man for any amount of time. Pleiades rang me up to tell me that even loyal Abbott supporters are saying on air that Abbott needs to go. My guess is that he doesn't have the month.
Infrastructure And Privatisation
One of the frustrating things about any discussion to do with privatisation in this country is that the government usually sells off an asset that then turns into a monopoly or a doubly which price fixes to maximise profits from something that used to be a government service. It's no wonder that the electorate no longer buys the narrative that privatisation is good. The track record on privatisation is very mixed, and if electricity prices are any gauge, it's like handing the keys to a bunch of greedy operators so they can gouge people senseless.
And so, we come to this debate that if the government doesn't sell assets, it can't raise money to build more infrastructure.
According to reports in The Age by state political reporter Josh Gordon, the Victorian Government has signalled that it is prepared to legislate to rub out the contract if a compromise on the break fee cannot be reached. Such a move would have profound ramifications for sovereign risk. As one industry executive said, "If they went down this path, they would need upper house approval, which is unlikely given the long-term impact and the reputation damage as Victoria would be seen as no better than an African country by the private sector for years to come."
The clock is ticking for Australia. With an infrastructure backlog and big budget deficits, we can build the infrastructure we need only by selling assets and attracting private capital.This is disconcerting. If the point of privatisation is to raise money to build the next bunch of infrastructure, we would want there to be a better debate than has existed for things like WestConnex. Those bits of infrastructure are implicitly tied up with general construction companies seeking rents at the expense of genuine alternatives.
I would be in favour of privatisation if the money raised was going to be used to build actually useful infrastructure like a metro system or high speed rail. A bunch of tollways seems like eminently the wrong thing for which to be aiming. All the same, when Tony Abbott says he wants to be an Infrastructure PM, well, he means tollways and lots of them. And this is the same guy who is putting an axe to the original NBN. How screwed up can you get?
So I think the narrative that the voters are revolting against privatisation is probably faulty. They're revolting against the utter lack of consultation by governments that ram through more tollways with minimal community consultation. Quite simply, these are not the infrastructure projects we need. Ignoring that problem deservedly turns into voter revolt.
It can't be that hard to understand.
Labels:
Australia,
Coalition Government,
Stupidity,
Tony Abbott
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2015
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- Quick Shots - 28/Feb/2015
- The Debt Limit In China
- The Execution Draws Near (And It Really Sucks Arse)
- The Torture Never Stops - Part 1001
- View From The Couch - 19/Feb/2015
- Quick Shot - 16/Feb/2015
- Hostages To Their Own Bullshit
- Abbott's Stay Of Execution
- The Post Capitalist World
- Sign Of The Times
- News That's Fit to Punt - 03/Feb/2015
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