Mad Men - Final 7 Episodes of Season 7

It Took A While To Get To Netflix Australia

...but it got there in the end. And it's worth savouring as one of the most elegant things shot for television slowly heads to its denouement.

I've written about 'Mad Men' here, so I'm only going to add on here with additional thoughts I've had about the series.
Here's the obligatory spoiler warning.

It's Grown On Me Even More

Of all these TV series I've been binge-wtching lately, the most emotionally compelling has turned out to be 'Mad Men'. Considering how long I avoided it, it strikes me as odd just how much the show has crawled under my skin and nested itself there. There are many reasons for this, but principle amongst those is that it covers the period in history that gave rise to Gen-X. The character that I find I relate to the most is in fact Sally, mainly because her experiences of that era are the closest to mine, and from there I can navigate the tableau of angst-ridden behaviour and existential malaise that is central to that show. It contrasts greatly with something like 'Orange Is The New Black' where Piper is most definitely a Gen-X figure who emerges from the absentee fathers of that era and lands herself in prison, blaming everybody but herself. This is not surprising because right now, the most active creatives working in film & TV are Gen-X.

The curse of being Gen-X of course is that we grew up soaked in consumerism. Demographically speaking - that is, with the broadest of generalisation brushes - we're very brand-sensitive and status-sensitive in a way that locks us in to civilisation, more or less. In the absence of the kind of materialism presented by Karl Marx and Marxist criticism, we were activated by the kind materialism that was manufactured by the image-makers - the Don Drapers of this world - and so we grew up cynical. Indeed, the cynicism prevalent in the 1980s stemmed from the fact that the big Leftist push lost steam, and instead market capitalism exploded across the globe. The poor kids in Eastern Europe were envious of our Nikes and Nintendos, our Walkmans and whatever else that came branded, packaged, marketed and distributed through convenient retail outlets. And knowing it filled us with a kind of self-loathing; at least I know it filled me with self-loathing.

This is not to rag on East Europe under the communist regimes (that would be too easy). I was thinking that on a more personal level, our minds have been beset by value judgment, and these value judgments remake of others as well as those inflicted upon us are reflective of the hierarchy of prestige that emerges from branding. That, in some subtle way, all of our perceptions have been infected with the kind of hierarchical ordering of branding, and that even the individuation we think we possess ("we're all individuals!" as per Monty Python's 'Life of Brian'), we are in fact the product of a world made of marketing.

Yearning For The Lost World Of The Sixties

'Mad Men' would ultimately make no sense to us if we did not yearn for the Sixties. As much as it tries to tell salacious stories and demonstrate the horrible sexism and racism that once stood in the middle ground like some ugly monument to a fallen dictator, the show really goes in hard for the passive beauty and the elegant mood in this imagined Sixties. It gets so close and yet it is ironic in its manifestly being a construct, a product of the 21st Century.

The most ironic stance is taken when Don Draper goes in search of meaning as his yearning takes him away. He is in search of himself in the way America went looking for itself in the Sixties, but by now we understand why. Having been nothing more than an attractive pitchman for the burgeoning consumerist society, Don Draper asks what the future holds. He asks for something more than the material wealth extant, even though he is entirely of the kind of historic materialism that even Karl Marx would acknowledge and understand.

The funny thing is that Don's realisation of his yearning for a future vision comes in line with our yearning for his world. There is a cycle of people - us the audience yearning for his world, and he in his world yearning right back at us, the future. Our nostalgia crests as the decade closes out, while Don's realisation peaks at the sublime moment it all comes to an end. Whereas he starts off as the face of the monolithic White-Male dominance in culture at the beginning of the series, Don evolves into the face of plurality and eventually opens the door to diversity. He gives up being Don Draper the alpha male and finds something else.

The nostalgia tells us that the classical world was interesting but it came with the baggage we would not want to have back. There's a certain irony that the US Presidential candidate trying to "Make America Great Again" is called Donald. What he's really asking for is a world of white-male privilege like the one enjoyed by Don Draper. history has moved on sufficiently that it would place "the Donald" at the table of contention but it won't be enough on its own to be elected president.

Dick Whitman, Dharma Bum

The final three episodes of the entire show feels rushed. This story hurtles along to its destination without assembling the cast. It ends as frayed strands of a tapestry that cannot hold together. Don's journey out west is born of spontaneous rejection of his life at McCann Ericsson. He cannot articulate the why and wherefore of that rejection, but he ventures out west on the road, divesting himself of the trappings of being Don Draper, Creative Director. He gradually comes back to being Dick Whitman - and then he arrives at a 'spiritual retreat' in California.

It is as if he is walking in the footsteps of Jack Kerouac, hoping to find something in Big Sur. It is quite a classic bit of image making. As Don Draper sheds his suit and becomes in appearance like the Americans in the midwest and then the west coast, we see Dick Whitman in his stead. Dick Whitman, it turns out is somebody on a spiritual quest. It is harder to understand this development without the help of Kerouac's writing. It is no coincidence Dick arrives at a retreat in Big Sur. If we are to understand the images, then we should have known Dick, inside the skin of Don Draper, was destined to reach this place.

There at the retreat, Dick experiences an anxiety attack. He then encounters Leonard, a man who articulates his exact anxiety about love and loneliness. We understand that inside Don Draper was the repressed Dick Whitman, and when Dick finally surfaces he is racked with guilt and shame for what he has done in the name of Don Draper. It's interesting how once out of his grey suits, Dick resembles photos of Jack Kerouac more as he stands by the Big Sur with the rocks and waves in the back ground. In a matter of three episodes, Don becomes Dick and Dick becomes a Dharma Bum. It is the last piece of the puzzle that fills in the picture of yearning; a shorthand cipher in to understanding Dick's wayward wanderlust, and the unquenchable thirst of his libido.

Dick Whitman at Big Sur

Jack Kerouac

The Meaning Of 1970

It is no coincidence that the show arrives at the year 1970 and the particular brand of the nostalgia and epoch-making ends. You can mark 1970 as the year onwards from which Post-Modernism takes hold. The 1960s represents the very last grasp of classical history coming to an end. After 1970, there is an explosion of images, sounds, text, meaning and life.

In 1970, the German education board determined that the classical syllabus could no longer be taught in full. As of 1970, there have been more hours lived by the sum total of humanity than before. The Big Now starts in 1970. That is not to say as of 1970 there was more racism or sexism or gender discrimination; but what happened as of 1970 was that the old constraints on society that existed because of history got washed away in the flood of consumerism. Things didn't necessarily get better immediately. The politics surrounding race and gender became more pronounced an as a consequence the old order of mannered aesthetics had to be destroyed. In retrospect Avant-garde,  Pop Art, Rock music and the Counterculture followed by Punk, all came and stomped all over the niceties of the old order so that we could see ourselves more freely.

The changes that followed 1970 are in fact drastic. If you look peasant life in say, 1460 and 1480 it wouldn't have been that different. If you took life even in 1860 and 1880, it wasn't all that different. The Twentieth Century was characterised by the acceleration of the rate of social change and at 1970 it reached a tipping point from which onwards everything was possible, everybody was capable of inventing themselves and creating their own narrative.

Recovering One's Humanity

Betty suffers greatly in this entire show, season after season. She suffers from ennui, and then a catastrophic divorce. Her self-belief is shaken more than once, while she slowly evolves to a better understanding of herself. It is then very revealing that she crosses path with Glen Bishop one last time. It harks back to the episode in season 1 where she found the only soul she could confide in was the young boy living in the neighbourhood.

Glen Bishop offers Betty insight into a love the is neither romantic nor filial or an extension of friendship. It is a kinship in an existential loneliness that both recognise in one another. It is symbolic then that the person with the greatest sympathy for guns in the series takes away the toy gun from her own son in the wake of finding out Glen is enlisting to fight in Vietnam. Her acknowledgement that her care for Glen is deep and unbinding shows us something about Betty that runs very deep into her humanity. It is one of the most beautiful moments in the entire series.

The stoicism she displays in trying to keep up appearances even in the face of her death is at once admirable and tragic. It is more than mere symbolism that Betty dies with the 1960s closing at the end of the show. She perishes as a memory of the bygone age and with her die the values, prejudices and culture that formed the age. Considering Betty Draper was a late addition to the group characters in Season 1, she has turned out to offer the most poignant counterpoint to the 1960s. I do wonder if January Jones will ever find a role as profound as Betty Draper ever again.

Expressions Of Love

One of the most unlikely - and maybe politically incorrect - notions to emerge from 'Mad Men' is that love itself is very polymorphous and takes many shapes. The funniest expression of this is in Season 6 when Sally catches Don having an affair with Sylvia. Sally asks "what were you doing?" and Don replies testily and embarrassed, "I was comforting her." It is bizarre and hilarious an exchange as you are ever likely to see. Yet Sally loves her father, and finds a strange acceptance of Don as this philandering father. In this season Sally expresses a disgust with both Don and Betty saying they are just too good-looking and so they ooze their sexuality to glide through life. Don for his part says Sally too is beautiful but must do more than to simply rest on her inherited beauty. It too is a curious but revealing exchange.

The love that exists between the many characters in the agency that become apparent when the agency is absorbed is just as telling as Betty's stoic acceptance other fate, and her love for her children, her husband and even Don. Peggy and Stan reach a point where they recognise they are "in love". Roger marries Megan's mother Marie not out of any deep-seated romance but actually because of a deep-seated sense of responsibility to another human being. He also sets up to bequeath his estate to his bastard son by Joan. Joan discovers that her love is actually for work, and that no man bound by the culture the late 60s or early 70s can accommodate her vision. Pete discovers he truly does love Trudy and wants to give his marriage another shot. In a rush to tie up the series, the show moves through these stories in rapid succession.

Yet what is most compelling is the positive regard these characters possess for the casual encounters in their lives. Don does not want to destroy lives when he enters into relationships. He's simply looking for a life affirming connection. Others around him have been showering him with positive regard and love for so many years he has become blind to it. Betty points out that he has always done as he liked and Sally tells him that she will make decisions for the family in his absence. They make these statements not out of disrespect but out of love for Don. Stephanie takes Dick up to the retreat in the Big Sur because she can see what he needs is some kind of explanation for his waywardness and wanderlust. Peggy tells Dick all he needs to do is 'come home' - come home to being Don. The love and acceptance for the man is all around him, if only he cared to look.

Thus Dick's own acceptance that comes at the end is quite ambivalent partly because perhaps Dick returns to being Don and continues as a successful ad executive. Or perhaps he stays out in California and the world continues on without him, ever banal and consumed in its own consumerism. It's actually an ambiguous ending.

In years to come I think 'Mad Men' will be understood as the moment we formally bid the Sixties a proper and fitting farewell. Whatever the Sixties are to people, it is now firmly history cut off from the present and no longer the immediate precursor-to-the-present.

We Live In A Banana Republic

Yes That Moment Has Arrived

Memorably, Paul Keating once said we were headed towards being a Banana Republic if parliament wouldn'btput through his reforms - whatever they were at the time. I can't even remember which reforms he was talking about because my politics radar wasn't exactly tuned in at the time. I think I caught the phrase Banana Republic because I was a Woody Allen fan even back then and one of his early funny ones was 'Bananas', about  Banana Republic. If you asked me what the hallmarks of a Banana Republic might be, I'd have say it was the rampant abuse of power carried out by the party in power, in order to stay in power.

That might ring strange or lame, but when you think of all of those Banana Republic dictators and juntas in Latin America during the 50s, 60s and 70s, it is clear that those regimes were not shy about getting the police to do they regime's dirty work.

And so we have tonight's breaking news:

The Australian Federal Police are raiding Labor Party offices in Melbourne over the alleged leak of documents from the National Broadband Network.

In an explosive development in the middle of a federal election campaign, the Treasury Place office of former communications minister Stephen Conroy was searched.

Two staffers for Labor's communications spokesman Jason Clare, one of whom is a former staffer to Senator Conroy, are believed to also be targeted by the raids. One of the staffers is a key operative in Labor Party campaign headquarters. 

Labor confirmed the raids on Thursday, shadow finance spokesman Tony Burke saying they were in relation to allegations about documents which revealed that the NBN roll-out was slower and more expensive under the Coalition than under Labor.

Mr Burke said the revelations about the NBN had caused "immense damage" to Prime Minister Malcolm Turnbull as former communications minister and questioned the timing of the raids. 

It's also understood that up to 20 NBN Co employees have been interviewed by the AFP over the leak.

So there we have it. In order not to lose the election, the Coalition go and sic the AFP on to the ALP staffers to screw up their election campaign. Irrefutable proof that our government is behaving very much like some Latin American Banana Republic. It's a highly powered Nixon-ian act of rat fucking but that's what's going on here. I guess we're beginning to see the true colours of the much-admired Malcolm Turnbull now. He's a cornered rat given the tight polls so naturally it's time for some rat fucking. 

From The Pleiades Mailbag - 16/May/2016

Home Ownership Is A Class Thing Now

Here's something from Pleaides. It turns out homeownership as a percentage is declining in Australia, and it's not even a gentle decline.

Worryingly, the relatively modest declines recorded in successive censuses mask a much larger decline among significant segments of the Australian population over the past two decades. In particular, as Chart 2 shows, the home ownership rate among households headed by people aged twenty-five to thirty-four dropped by 9 percentage points (from 56 per cent to 47 per cent) between 1991 and 2011; among households headed by people aged thirty-five to forty-four it dropped by 11 points (from 75 per cent to 64 per cent); and among households headed by people aged forty-five to fifty-four it dropped by 8 points (from 81 per cent to 73 per cent). 

The impact of these quite sharp declines among young adult and middle-aged households on the overall home ownership rate has been largely offset by households headed by people aged fifty-five and over, which now make up a larger proportion of the population. In that age group, home ownership rates are much higher, and have fallen by much less since the 1991 census.

The decline among households headed by young and middle-aged adults since the early 1990s is particularly striking given that mortgage interest rates during this period have been roughly half what they were over the previous fifteen or so years – and also given that federal and state governments have spent billions of dollars during this period on programs ostensibly directed towards promoting home ownership, such as first home owner grants and stamp duty concessions.

The ramification of this decline is listed in great detail, and it doesn't make for encouraging reading. It paints the picture whereby the decline in home ownership eats into future economic growth in more ways than one, and together, will amount to a significant reduction in the health of the economy in the years to come.

Of course, the thing about both the LNP Coalition and the ALP is that they're both wedded to policies that try and sustain asset prices so whatever they might say or do isn't exactly going to impact on the affordability for some time until it becomes the most pressing social problem. There are signs that the environment might be in the front seat, relegating the housing issue to the backseat for some time. 

The World Thinks We're Stupid

It's because we've cut into our science research so significantly, and on ideological grounds. 

ALMOST 3000 SCIENTISTS from more than 60 countries have condemned Australia’s key government science agency over plans that would “decimate” its climate change research capabilities.

The open letter, delivered to Prime Minister Malcolm Turnbull and his ministers on Thursday evening, warns the cuts would leave the Southern Hemisphere

Since news of the cuts at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) emerged last week, leading scientists and institutions from across the world have attacked the plans. 

CSIRO chief executive Larry Marshall told staff in an email, that the agency wanted to shift the focus of its Oceans and Atmosphere division away from climate change monitoring and modelling because the science of climate change was now 'proved'.

His claimed justification for the cuts have been roundly criticised by current and former CSIRO staff members.

If ideology gets you flying square in the face of facts only to get pulverised, then maybe one shouldn't be sticking to ideology so hard. Still, you get the feeling that with this government, this adherence to climate change denialism and retaining negative gearing and babbling on with trickle-down economics of the Thatcherite variety are the threadbare positions that substitute for actual thinking about where we are in history and what problems actually beset our nation.

There's really not much else to be said about all this except we need to vote out this government.

Helen Razer Thinks The Greens Are Suspect Too

It's not that I'm contrarian, more so that the algorithm that describes me in Vote Compass is somehow tone-deaf to my nuanced distrust of the Greens that it amuses me when it tells me my best political match is with the Greens. I guess, you would think that it might be true if you ignored  recent history.

Anyway, Pleiades sent me an email with one of Helen Razer's Cirkey columns, and she too goes through why Vote Compass is ridiculous in suggesting she should vote for the Greens given her position on things.

Vote Compass gets me. I should not simply be a Greens voter but a lifetime Greens member with a Samoan-inspired tattoo of Bob Brown etched on her arse. 

But I’m not. And this is not entirely due to the current possibility that the Greens will trade preferences with the Libs or that they may have done so in state elections of the past. This is not entirely due to the Greens support for their deal with the government on pensions, their stubbornness and myopia on the ETS and the fact that Larissa Waters is a cultural totalitarian who will not rest until all evidence of gender is purged from the shelves of our toy stores. It’s not my revulsion for fashionably named children or the tastefully rustic surrounds in which their Green-voting parents raise them. It’s not even the reclaimed ladder bookshelf; it’s more the Piketty that rests upon it, whether read or unread.

It's a good summation of the things that vex me about the Greens as well. Why in the hell did they behave in the their-way-or-the-highway during the discussions about the ETS? What good did that position do for the environment?

The problem is that the left splinters off into many hues of differences. This might include trenchant marxists through to regressive left social justice warriors (*ugh* vomit) and somewhere in there are the people trying to protect the environment through available policy channels (and let's not forget the regressive types who go with Sea Shepherd - vomit once more). The reason why the Greens are highly suspect is because as Razer points out:

The Greens say “inequality is really, really bad” and speak urgently of change. But they provide no real prescription for the big shift they say, and I agree, is needed. The optimistic leftist might choose to believe that this is because they are cleverly concealing their red flesh. This pessimist believes they are honeydew melons: a mild shade of green right through. Even those who came to the party by way of classical Marxism seem to have paled, believing only the most convenient and optimistic bits about an innovative new era of production. 

It’s true that the Greens provide, for some of us, a refreshing enticement. On the issue of offshore processing, for example, it’s tempting for some of us to throw a protest vote their way. But so long as they choose not to disturb our social and economic organisation, there will always be a group as maligned as asylum seekers. Inequality is really, really bad. It’s also inevitable if you don’t take a hammer to its foundation.
And they don’t. The Greens’ focus is not on constituting our base differently. It’s about reflecting it more favourably. It’s about taking “gendered” toys off shelves, lighting compassionate candles and generally moralising about those who won’t publicly agree that inequality is really, really bad. 

It’s communism. But without the caffeine, or the communism.

I did a quick survey of my friends who want to vote Greens and it turns out they're disgusted with the policy position of the ALP; would never vote for the Liberals let alone Nationals, and ultimately want to land somewhere on the left that is not-the-ALP. And thus the hue of compromise is given to a vote for the Greens. I'm inclined to agree with Helen Razer and say to hell with that.

One could do worse than voting for the Australian Sex Party.

More On Interns In Australia

There didn't used to be this Intern thing in Australia except the medical profession. After doing your 5 or 6 years course in medicine, you would've gone to do a year as an intern at some hospital of their choosing. The relative desirability of hospital assignment depended on your grades as a medical student but in any case, once you finished your last exam at med school, you were sent off to do your internship where 48 hour shifts awaited you.

I imagine this practice still continues because occasionally I read articles about young doctors and their terrible, long shifts. The baseline assumption about young graduates was that they knew enough to be dangerous so they needed seasoning. How being borderline dangerous mixes well with insanely long shifts is anybody's guess but that was the custom and probably still is. I have friends who are nurses who swear and tell me that the intern at the end of one of those crazy shifts is far too dangerous to let near any patients. I've even asked a doctor friend what he remembers of his intern year and he said not much.

But that's how interns are treated by the medical profession. They do however get paid something.
I know I've said this before but the paying bit is important. In my previous job as a Line Producer at the events lighting company, I would get enquiries from people who anted to intern at the firm. I would tell them to come in and have a chat about a real job instead, and if they were willing, I'd sign them up as crew. Many of these young people who simply wanted a foot in the door and thought working for nothing would do the trick. Given our labour laws, I didn't see the bit where it was defensible to hire such people and throw them out there with the crew for no money. It would've been unconscionable.

When I briefly taught at a video production course I was asked about internships. I told the Australian students that if they worked, they should get paid and there was no place for anything so grey and unaccountable as internships in Australia. The point is, I feel strongly about this, as I do about the work-for-the-dole being an exploitative crackpot policy.

If it's real work, then the person doing that work should be paid properly. If they are doing work experience, then they should value the experience they are getting for when they go back to their courses. And intern is worst of both worlds.

Movie Doubles - 'Spotlight' & 'The Big Short'

American Tragedies

It's cool when stars get together and appear in a morally righteous movie. The omnibus casting in both of these films is something to behold. The All-Star lineup in 'Spotlight' makes for an interesting ensemble while the split narrative of 'The Big Short' demands a distribution of war power across three narrative threads.

Both these films deal with a tragedy that came about because nobody thought to question a big institution. People had way too much faith in the Catholic Church, and they had too much trust in banks. Both the Catholic Church and the banks ended up making a lot of people look very foolish for their faith and trust; and delivered devastating consequences for that misplaced faith and trust.

We live in amazing times when you think about it. The revelation that the Catholic Church was covering up for paedophile priests was an apocryphal joke for a long time. The fact that we got any proper investigation that has led to global uncovering of such activities would have been unthinkable not so long ago. Similarly, the notion that banks through their greed and stupidity could manufacture the condition for the greatest financial crisis since the Great Depression was unthinkable right up until it happened. Both topics deserve some kind of narrative reconstruction to get a sense of how these things came about. These stories are at their core, remarkably alike.

And so... here's the usual spoiler alert. Don't read on if you hate spoilers.



The Tradition Of Investigation

Both these films have long roots that reach out from beyond the screen. 'Spotlight' actually has many echoes of the other great newspaper movie, 'All The President's Men' where Robert Redford and Dustin Hoffman playing Woodford and Bernstein went in hard against the authoritarian Nixon Administration which was trying to cover up its criminal tracks. Similarly, 'Spotlight' shows four news reporters going after the Catholic Church that indulges in systematic coverup of paedophile priests. If you are into even more interesting connections between these two films, the editor at The Washington Post who backed Woodford and Bernstein during the Watergate investigations was Ben Bradlee. The editor at The Boston Globe presiding over the Spotlight investigations into the Catholic Church was his son Ben Bradlee Jr. Rachel McAdam follows her performance from 'State of Play', another film that tried to capture the newspaper news room dynamic.

'The Big Short' is actually based on the book of the same title by Michael Lewis. Lewis was able to navigate the complex world of Wall Street banking because he himself was once a Wall Street banker and penned the great tome 'Liar's Poker' which explained the invention of mortgage bonds. We are enlightened of the strangeness and incongruous opacity of banking terminology thanks to Lewis' abilities as an investigative writer and part-insider to the world of Wall Street investment banking. The pedigree of this film carries previous Michael Lewis adaptations which include 'The Blind Side' and 'Moneyball', and we even have Brad Pitt playing a role in one of the narratives.

Both these films are thus built on accounts and testimonies from the very frontline of fact-collecting.  Because both these films go to great lengths to explain the problems of exposing or capitalising on the issue at hand, we are given tremendous insight into America as an immensely complicated society.

Too Big To Scrutinise

In the wake of the Global Financial Crisis, we were made to understand the term "too big to fail". It was a terrible thing that we had to suffer the GFC because of these big institutions. Once the crisis as underway, we discovered that they had racked such astronomical sums of money in debt, had we let them fail it would have taken the world economy with them. And so we let these bastards continue to just be these very same bastards. As it turns out in the telling of 'The Big Short', an alarming few people scrutinised the situation where there was a combination of subprime mortgage bonds, a property bubble, credit-rating agencies that simply rubber-stamped credit ratings, and very greedy and stupid people throwing money around.

The Catholic Church too is a monolithic entity. The closer one's faith resides with the Catholic Church, the more moral authority the church takes on to the point here it has absolute control over the discourse. This allows conditions of absolute unilateral power to be exercised against the faithful when needed - something that dates back to medieval thinking on authority - but also silence issues. Again, investigations revealed that the church had known it had a problem with paedophile priests as early as 1962, but opted to suppress the information and with it the scrutiny.

In both instances the lack of third party scrutiny allowed the problem to snowball. The lack of scrutiny came from the fact that the institutions - the Church and Financial institutions - were deemed too big to tackle. In most instances that would be factually correct, but also place these institutions in a space of utter moral hazard because of it. The fraudulence of the church covering up paedophile priests is in fact the same fraudulence of selling subprime outage bonds rubber-stamped as AAA. They're doing it because they can pull the wool over the average punter's eyes, and comes from a space of contempt so deep it's hard to contemplate the depth of that evil.

The Pompous Appeal To Normalcy

It's also interesting that in both films, the institutions resepctively resort to what can only be called the 'pompous defence'. When the Catholic Church is challenged and the defenders of the Church try to convince the investigators to drop the story, they mount a particularly pompous defence trying to categorise the victim's accusations as somehow a minor irritant or a minority crank position. At every turn, the people who want it not to be true put on the air that because the Catholic Church is too important an institution, the allegations can't possibly be credible.

Similarly, at the climactic moment of the Bears Sterns collapse during the GFC, a banker gets up at a conference and says everything is fine and any attempt to categorise the critical situation as exactly that, is somehow misguided and a crank. Of course in one of the great ironies, Bears Sterns bank collapsed that very day as he was speaking. In both instances the pompous appeal is made to the public to present and pretend that everything going on is normal.

Perhaps these responses are natural. It's a bit like being confronted by bad news and you go into the grief cycle. Given the horrible evidence presented, some go straight to the denial stage - and when doing so, do look stupid and pompous defending the indefensible in public. For the Church the allegations turned out to be all too real with repercussions around the world, and for banking too the repercussions became the Global Financial Crisis. Maybe when the scale of the problem is so huge, people have to pretend the threat is nothing and thus the pomposity comes to the fore.

Institutional Evil Is Institutional Stupidity

In each instance the films reveal something very interesting about institutional malfeasance, and it is that it relies greatly on the stupidity others not to notice what is going on. The people who uncover the great mass of subprime mortgages that are fed into high end mortgage bonds were the people who actually undertook proper due diligence. In a sense, the great fraud of the mortgage bonds based subprime loans relied on the stupidity of people not to admit they did not know what was going on and to go looking for facts. It seems simple enough, yet so many bankers and lawyers let these mortgage bonds written in complicated language, make them stupid and not do due diligence.

Equally, the Roman Catholic Church had insiders warning the Church for decades and instead of heeding the warnings, opted to go for the cover up. Once again, the coverup relied on people opting to be stupid by not noticing a pattern that was carried out in the roster of priests. The evidence was right there on public record if people could put the pieces together. Equally, the press failed to follow up when given evidence earlier because they too opted to be stupid and not look into the evidence being presented. The deep regret from the press in 'Spotlight' is the acknowledgment that it too forms part of the circle of institutional stupid that allowed the institutional evil to flourish.

The pairing of institutional stupidity with institutional evil is right around us. Take Australia's stance on asylum seekers. It relies entirely on making sure that people cannot carry out due diligence to make sure human rights are not violated. In the face of many allegations Peter Dutton pompously pretends that nothing untoward is going in places like Manus Island and Nauru. The middle part of the electorate is now opting to go with stupid silence and back both major parties because it cannot exercise the due diligence an discover the problems going on. Thus we're setting up the scenes for The Great Embarrassment that will surely follow the events on Manus Island and Nauru.

With Great Power Comes Great Corruption

At the end of the day both major institutions were avaricious to the point of disaster. The Roman Catholic Church sought to limit the financial damages as much as possible. The pattern we see in 'Spotlight' where they paid off people who alleged these crimes and sent them away with tens of thousands instead of incurring millions in damages was repeated elsewhere around the globe. We know this from the recent Royal Commission that Cardinal Pell himself was part of the institutional evil by playing the institutional stupid card very hard to secure his own promotion. In the mean time they sewed up the mouths of victims and lawyers with confidentiality clauses in these private settlements. Those in the public who sought public redress received a great amount of harassment and vitriol - another pattern that was repeated around the globe.

Banking, equally brought itself to the knees through excessive greed. Yet, the most telling part in 'The Big Short' is when Mark Baum realises that the banks knew fun well they would be bailed out because they were too big to fail, And so the moral hazard had always been there right form the beginning. The collusive nature of those who investigate banks and those who work for banks also made it very hard to stop the endemic fraudulence. And the scale of the fraudulence being so endemic was such that it looked like this situation was normal to many onlookers. This is the genuinely crazy part of the story. People like the Federal Reserve Bank Chairman Ben Bernanke couldn't see the GFC coming. US Treasurer - and former Goldman Sachs banker - Hank Paulson couldn't understand what was unfolding and why. It gave rise to the massive effort known as Quantitative Easing to shore up asset prices, just to save the bacon of so many ordinary investors.

Worse still, in the wake of the GFC, none of the remedial actions had taken place and so it is clear we have set ourselves up for yet another GFC if only we could sell these subprime-pimped mortgage loans to a greater fool, for it is the greater fool who gives rise to the great power to corrupt so greatly.

As for the Vatican, things seem to have moved towards reforming their practices under Pope Francis; yet, if celibacy gives rise to 6% paedophile priests and only 50% who actually manage to practice the celibacy, then the biggest reform they could carry out might be to acknowledge celibacy is bullshit.

View From The Couch - 12/May/2016

What Is It With This Interns Thing?

The worst of American ideas has somehow crept into the Australian labour landscape, audit's perniciously worked its way up to Canberra to the point where they've turned the utterly useless 'Work-for-the-Dole' scheme in to an 'PaTH Internship' programme. This lousy idea is in fact the centrepiece of Malcolm Turnbull's re-election campaign.

It really is a nutty programme because it pays employers $1000 to have an intern around, and then pays the same employe $10,000 when they hire that sam intern. As part of an incentive for the long term unemployed who will become the said intern, their $263 per week money will rise to a mere $364 a week in exchange for 25hours a week of work. This is why you're seeing the figure $4 an hour.

Now it turns out the legal advice is that this can't actually be legal given our laws.

The $840 million program forms a central plank of the Turnbull government's jobs and growth package.It features generous $1000 incentive payments to employers in the intern phase and $10,000 employer payments in the hire phase, raising concerns of a perverse incentive for employers to churn through interns. 

But if the legal advice is correct, the program is not legally sound in its current form and would necessitate changes to the Fair Work Act, or have its subsidies increased to meet minimum wage rates, adding hundreds of millions to its cost.

Illustration: Ron Tandberg

While concerns of exploitation and systemic abuse have been raised by unions and the group Interns Australia, the advice from the firm Maurice Blackburn is the first authoritative argument that it is technically illegal. 

The ACTU argues it "would require new legislation to legalise a second-class category of $4-per-hour workers and remove those employees' basic rights under the Fair Work Act". 

It says fixing the problem to bring interns's pay up to the legal minimum would "blow out" the cost of the PaTH program by $478 million.

It's interesting how the Federal government can't seem to do basic maths in figuring out how the incentives line up. 

• If you're an unethical company, you employ the intern for the required X weeks of free labour and cash in the $1000. 
• The free labour at 25hours is let's say worth the minimum $20.00/hr to round it off = 500/week x12weeks = $6000.
• Then you employ the intern and collect the $10,000.
• If you then sack the person within the first 6months of employment, preferably the first month, there's no recourse for unfair dismissal by the employee so at worst you're going to pay a month of low wages so subtract $2500 from the $17000= $15000 free money from the government.

In exchange for gifting companies $15000, the unemployed person who goes through the 12week internship and then 1month of employment then gets the $2500+12 weeks of 100 dollars =$3700 (minus PAYG on the $2500). If you consider how much more employable the unemployed person is at the end of the cycle - not much - then it's eminently clear that the system favours the unethical employer 4times more than the intern/worker ... Unless of course this is exactly what the Coalition government wants to do - gift free money to companies under the guise of trying to help the unemployed in which case I don't think we've ever seen a conservative government so cynical. 

If there really is $12200 cash to throw around for every unemployed person, there must be a better way of spending it than that. For a start they could hire the same person for 3months directly and give them a government job with real government job experience. 

The Dishonesty Of Governments About Employment

I just want to go over that last bit again. The Liberals and Nationals always say they want smaller government, less taxation. They say this because it appeals to the notion that governments don't do anything well and so any money given to them would be less inefficient in the economy. This construction masks a greater greed motive whereby if a government business or venture actually is any good, they're the same people who want that same service privatised - and of course that means ripping off form the government the bits that actually work and then leaving behind the bits that are less efficient and then blaming the leftover bits for being inefficient. This construction only serves those who construct the argument - a true hallmark of an ideologically loads argument. 

The government can - and probably should - employ more people to do more things. Especially in the context where aggregate demand is flagging so badly and the RBA is reaching near the Zero-bound, which means the private sector can't seem to generate the jobs or profits to power aggregate demand. Governments of both ALP and LNP hues have overseen growing globalisation which has resulted in an overall growth at the expense of giving up secondary industry. You won't hear it from the ALP but basically globalisation has worked its magic in reducing unionised jobs in this country, so it's not like they aren't party to the problem of structural unemployment. 

What is really galling about all this is that unemployment isn't a uniform 5.7% across the country. There are pockets where plenty of people are unemployed, and int those places the government runs these work-for-the-dole schemes far less whole-heartedly than they do in major cities and their suburbs. The administration of Centrelink in such places is effectively a work-for-the-dole scheme; that is to say, working as a Centrelink officer in those regions is an elaborate work-for-the-dole scheme given that there isn work outside of that job. 

At the  centre of all this is the grand delusion that everybody has to be working in a way that maximises productivity and profitability all the time.  Yet the physical reality of space and materials and capital and people demonstrate this is patently impossible. 

I know. It's a weird thing to say but it needs to be said that how we conceive of work in the industrial world was driven by the development of capitalism. The history of labour movements and unions and such come out of the need to humanise this demand and many countries on the planet have found different balancing points to do with what work is in our waking hours. All this stuff of commuting and schlepping and touring and driving and desk-jockeying and lifting and filing and doing stuff for your pay cheque, came about out of industrialisation. And as we head increasingly into a post-industrialised world, it's well worth asking if this schema of 'work', and the 'work ethic' that bolsters the entire culture of it, is sustainable or frankly, meaningful. 

And if the employed people situation looks somewhat untenable, then the ranks of the unemployed look even less tenable. 

We can't distribute work evenly now. 

We can't grow work readily now without significantly high education and training - which costs money. Money which the Coalition Government doesn't exactly want to spend. 

We can't encourage employers to hire people they don't need without gifting them money - which is in fact simply less effective than giving that money to the people that need it. 

Not to mention the obvious fact that we can't just shoot/exterminate unemployed people. 

The thing is, it's the government's job to think about this stuff and figure out what to do. The fact that our election is mired in the same kinds of conversations we've had since at least 2004 suggests we've not advanced in the least bit while the world has moved in to a more precarious period, and we do need to start thinking about all these things. Both our major parties really need to reassess what the hell we're talking about when we say 'work' and how that 'work' is being rewarded. 

News That's Fit To Punt - 11/May/2016

Global Warming Rolls On

I hate the term Climate Change when I think about the simple fact that the climate is going to change towards the warmer and more volatile. It feels like an attempt to sugar coat the unpalatable, a bit like Milo Minderbinder's attempt to sell chocolate coated cotton in 'Catch-22'. For heaven's sake it's Global freaking Warming and pretending that the climate is merely going change like the timetable for the public transport system is part of the idiotic nonsense that allows a certain breed of conservative politician to flat out deny it's even going on, or that it's man made.

But you've heard that from me well enough so I'm just here to plonk this bit of further evidence on to the immense pile.

Within the next couple of weeks, a remote part of north-western Tasmania is likely to grab headlines around the world as a major climate change marker is passed. 

The aptly named Cape Grim monitoring site jointly run by CSIRO and the Bureau of Meteorology will witness the first baseline reading of 400 parts per million (ppm) of carbon dioxide in the atmosphere, researchers predict.


"Once it's over [400 ppm], it won't go back," said Paul Fraser, dubbed by CSIRO as the Air Man of Cape Grim, and now a retired CSIRO fellow. "It could be within 10 days." 

The most recent reading on May 6 was 399.9 ppm, according to readings compiled by the CSIRO team led by Paul Krummel that strip out influences from land, including cities such as Melbourne to the north. (See chart below, with the red line showing the baseline CO2.)

I mean, just look at that line going up. So for all this talk of emissions control and Kyoto protocol and what have you, we just keep adding on to the carbon dioxide in the atmosphere. Even the deal in Paris was non-binding so there's really no evidence we're going to help one another or even ourselves. We wasted a valuable 20 years under the Kyoto protocols not doing enough, and Paris will promise not much more. 

What's genuinely frightening is that we've managed to do absolutely sweet fuck all to halt this calamitous progression. Extraordinary things are going as we speak:

Fish are dying because oxygen in the sea is eaten up by the algae blooms fed by the rise in CO2. 

The Ocean itself is acidifying at an increasing rate because of the CO2. 

The Coral is bleaching. 90% of the Great Barrier Reef is suffering.

2016 is already showing record temperatures around the world.

And that's just the beginning. Google says there are another 235,000 news items to do with Global Warming. 

Sydney's had a mild autumn really. It should be winter at this point in the year but the forecast for this week tells me its sunny and 22-24degrees right down to Sunday. Sydney weather's always been nice, but not this nice this late into May. It's downright creepy.

...but what do you do? It would certainly help to vote out these clowns.

The Crappiest Election In Memory

Here's a piece from David Marr who thinks we don't have much going in terms of choice. He's probably right. 

Australians want action. Polls year after year have shown we believe climate change is real. We know Australia isn’t doing enough. We are more uneasy than ever that it’s Australian coal destroying the atmosphere.

But the political system can’t deliver a solution.

So we head into yet another election campaign – and this the longest anyone can remember – arguing over familiar problems with little hope that the next election will be any more use than the last in solving them.

Education standards sag; life grows steadily worse in remote Indigenous communities; marriage remains beyond the reach of the LGBTI; multinational corporations operate largely untaxed; and budget deficits deepen year after year. 

We do executions better than solutions. Turnbull is Australia’s fourth prime minister in five years. Australians want this leadership churn to end. They crave continuity. But victory no longer guarantees survival.

It's enough to make you want to cry. Australia doesn't have to be so captive to this kind of politics. I don't know how it happened but the electorate is far more progressive than the politics of the place seems capable of being. It's as if the whole electorate has to wait for the stupid kids to catch up to the notion that this Global Warming thing might be a bad thing for them and them in particular. Instead we keep missing the moment, distracted by issues that are equally 'worthy' but on the whole far less significant in terms of how are lives are materially lived. 

The bleeding irony is that Malcolm Turnbull once stood for doing something about Climate Change. You'd look at him now and you know he's totally captive to the stupid Right Wing denialists. Bill Shorten isn't exactly the scintillating alternative given his history surrounding the climate change policy wrangling in the ALP government. Even with a 5% swing, an ALP government isn't going to do anything too radical. The problem is, of course, that the situation is demanding something radical be done. 

What do you do? I say we start by voting out these bastards.

Just Who Are The Aussie Tax Dodgers?

The Panama Papers point to a coterie of Australians. Some are companies, some are individuals, but they clearly weave a complicated web of money intrigue. It's interesting the SMH focuses on this bit first before going into the companies.

Australia's fifth-richest man, chairman of Hong Kong-listed Shimao Property Holdings Hui Wing Mau, who boasts a wealth of $6.9 billion, is on the list. He's among a number of Chinese billionaires listed. 

The company is listed as an officer for Mossack Fonseca client Vicking International, which in turn is a subsidiary of Shimao Property Holdings, according to the company's annual report.

Shimao Property Holdings is also listed as a client of Mossack Fonseca. Shimao purchased a Sydney office tower in late 2014 and last year launched its Ashmore apartment development in the Sydney suburb of Erskenville.

Mr Hui, whose current fortune trails behind Gina Rinehart, Anthony Pratt, Harry Triguboff and Franky Lowy, debuted on the BRW Rich 200 list in 2013.
He went to university in South Australia in the 1990s and was described by BRW as being "private and elusive about his business dealings".
Shimao and Mr Hui did not respond to inquiries. 

All up, the ICIJ's database links to people and companies in more than 200 countries and territories.

Is it just me that detects nascent racism in going for the Asian Australians first before going for the big boys? Because the more famous names are just as intriguing, and probably a bit more vexing: 

Australia's biggest company BHP Billiton, shopping centre behemoth Westfield, Rio Tinto subsidiary Alcan Corporation and ANZ Bank and National Australia Bank have all had either the head company or subsidiaries named in the Panama Papers and Offshore Leaks. 

Many of the subsidiaries severed their relationship with Mossack Fonseca years ago, according to the database.

BHP Billiton, which has been named previously in reports on the Panama Papers, declined to comment. 

Alcan's relationship with Mossack Fonseca ended in the mid 1990s. A spokesman for Rio Tinto said: "The period in question pre-dates Rio Tinto's ownership of Alcan, and as a result we are unable to comment." 

NAB, which is listed as an intermediary, did have a branch in Labuan in Malaysia, which was closed in 2005. 

A NAB spokeswoman told Fairfax Media: "NAB can confirm it does not have any current controlled entities registered in Labuan in Malaysia." 

Another intermediary named is accounting firm Grant Thornton, which acted for Canyon Commercial SA, listed in the jurisdiction of the British Virgin Islands.
PwC in Australia is listed in connection with officer Roman Wolfgang Berg in the United States. 

And former Reserve Bank board member Robert Gerard is listed as the sole shareholder of Mayfair Land Management, a BVI company he acquired from Gerard Corporation in May 2010.

BHP Billiton, Westfield, Rio Tinto and NAB aren't just any old companies - they're some of the top 10 firms Senator Sam Dastrayi charged as running Australian policy formation, some months ago.  It stands to reason that these companies would be behind lobby attempts to defund and disempower ASIC and the ATO. It certainly passes the cui bono test, because nobody else could possibly benefit from those Coalition moves but these tax dodging companies. 

It's kind of sickening that the same companies would have been directly influential in forming the recent Coalition policy of cutting company tax - especially because they've already been minimising their tax through tax havens, all the while letting revenues for the Government shrink, and pushing for cuts to health, education and welfare. Can there be any less stench of corruption to the links between the big end of town and the Liberal and National parties? How is this materially different to the links between the unions and the ALP, that they have to go and put in the ABCC but not a Federal ICAC? If anything, the Panama Papers pertaining to Australia reveal the depth of corruption inherent in the relationship between the Liberal and National Parties, big business and organs like the IPA who keep coming up with Thatcherite Trickle-down agendas to suit these big companies the most and damn the rest of Australia. 

Frankly I'm surprised there isn't more general outrage in the wider community. It's like we're all Stockholm Syndrome sufferers when it comes to how the big end of town and the conservatives gang up and beat us around.  I guess there's plenty of outrage already with Kelly O'Dwyer sticking her foot in her mouth on Q&A, but still it never seems enough and the pundits still talk about this government like they're somehow sensible people when they're clearly no such animal. 

but... 

What do you do? Vote out these fuckers.

View From The Couch - 10/May/2016

This Low Growth Thing

It's been accepted for a long time that as economies mature, you hit lower growth. The explanation even for this phenomenon is that as economies mature, the scope for growth diminishes. It makes sense mathematically that a jump from 1 to 2 is 100% but 2 to 3 is 50% and 3 to 4 is 33.3% and 4 to 5 is 20%. If you expand this out to the entire economy and include everybody within it, then GDP growth is naturally diminishing in returns. Conversely if you start with little, there is greater scope for growth so we find the later starting developing economies grow at higher rates.

That being said, the first world has been a good 30years where growth has been low single digits and the funding for this growth has been done through credit. We know this because countless data shows wages growth has been relatively stagnant in the same time span. As economies grow to the vanguard of development, they become increasingly like zero-sum games. If there was away of pocketing the growth, you win - and so we've seen in the stagnant wages growth, 30years of the wealthier 1% pocketing the growth.

Not surprisingly we find flagging aggregate demand, which then creates deflation. This is the very thing the governments of the first world are trying to avoid. At this point in history, we have governments that meet at things like APEC and G20, and they try to spur more growth around the globe without necessarily understanding what that would mean. And to date corporate Australia has called for an increase in productivity - which involves things like abolishing overtime penalty rates and so on.

So here's the thing. Productivity gains are strictly to do with supply-side. I'm no economics expert but I can tell you there's nothing in productivity gains that would be applicable to the grand problem of aggregate demand. In the near-zero-sum game of postindustrial economics, the 1% have played hard to win as much of the growth for themselves without actually growing the economic pie at all. It never seems to occur to them the fact that they've cut so much from people's wages has led to the sagging aggregate demand.

Over the thirty-odd years commerce and the corporate lobby has beaten out labour interests 40-0. The rise of inequality is no accident - it is directly attributable to the trickle-down economics that have cut taxes for the wealthy and apportioned more and more of the cost of government on to the poor. In fact corporations are arguably winning so much they're beating up on governments - but that is another topic. The main point here is that the corporate lobby has already won a lot without giving up much. But in so doing, it has forced out the power of the consumer it so need to sustain itself.

One of the strange outcomes of Abenomics in Japan is that a conservative Prime Minister is running around telling the major corporations to raise wages. This is because the reductio ad absurdum of seeking maximum profits by cutting back on labour costs has gotten to the point where the working poor cannot afford to be the consumers the businesses demand. For the economy to grow again, it needs to "relate"; and to "reflate", the consumer has spend a lot more to power growth. In other words, Abe's government has admitted that chasing productivity is a fool's errand when you're trying to shore up aggregate demand. You have to shore up the spending power of the consumer in a sustained manner.

So here's the thing back in Australia... under this Coalition Government we've heard noises and seen signs that they wanted to raise the GST as well as give states to rights to chart their own income taxes. They've cut back on the welfare spending because that is what all conservative governments do, while tried to figure out a way to cut penalty and overtime awards. None of these things are actually putting confidence in the consumer. None of these things are adding to the spending power of the average Joe; it's not going to help with aggregate demand. Thus it follows that for all the talk about the Coalition being good economic managers, they're really not addressing the real problem of our economy to get it growing again.

Vote Compass

The election is near and so it was time to go and do the Vote Compass test.  As little indicators go, it's a nice little toy for those who want to put a grid to one's own political inclinations and where they might stand. As usual, I landed a bit left of even the Greens, and halfway progressive between the Greens and the ALP, which is much more left and much more progressive than where the Coalition are pitching their policies. Not surprisingly they thought I should vote Greens but of course I'm wary of the ideological bent of the Greens when it comes to their policies outside of the environment. I'm also not happy about the way things played out with the Rudd Government ETS discussions and the Greens' role in that debacle which in effect brought about the terrible sequence of events whereby we now have Direct (in)Action as our carbon emission abatement policy.

The disturbing part of the vote compass survey is that it puts me so far to the left as it does when in fact I don't feel that far to the left. I maybe witnessing the great shift to the right by all parties which has left me stranded to the left of all conversation being had by the political parties in Australia. I'm not terribly radical, I don't even go protesting or marching anymore. I just write this blog here and point at how stupid the major parties are but you couldn't put me so far to the left beyond the Greens. Frankly I'm a little mortified. Where have all the hardcore left people all gone? Those irritating leftwing ideologues back on campus in the 80s? Where the hell are they now?
Probably paying off a mortgage some place.

Maybe we're all kidding ourselves in thinking that we have divergent views. Maybe the tragedy of our contemporary political state is that the views are so convergent there isn't any scope to be different or radical or interesting. Maybe the Coalition and the ALP and The Greens are a lot closer in their positioning than we normally think  all of them bunched around the same old tired bad ideas that leads to this sad stagnation. The illusion is that voting one way or the other is going to make a big difference. I'm beginning to think that might be one of the big lies in our society.

For the record, Antony Green's election calculator says there needs to be a uniform swing of 4.0% to oust the Coalition. I don't know what the historic precedent for that would be for a first term government. But then, this has been a pretty awful government most of its three year term.
Hope springs eternal.

The Budget Comes Home To Roost

This really was a sucky budget so you wonder how the government is hoping to win an election.
First off, whatever consumer sentiment boost that was handed out by the RBA's interest rate cut during the day was blown out of the water by the budget.

ANZ Banking head of Australian economics Felicity Emmett said the budget appeared to have neutralised any sentiment lift from the interest rate cut. 

"While the RBA's cut to the official cash rate last week is likely to have been well received, any positive impact looks to have been somewhat offset by consumers' reaction to the commonwealth budget," she said. 

"According to the polls, the reaction has been largely one of moderate 'disapproval'."
A Fairfax/Ipsos post-budget poll showed that 46 per cent of households disapproved of the budget while only 39 per cent approved. Although not loathed like former treasurer Joe Hockey's ill-fated first budget in 2014, the coalition's latest effort did little to buoy spirits at a difficult time for the Australian economy. 

"While this is a better reaction than the one to the 2014 budget, the lack of traction from [this] budget would be disappointing given the government is now in election mode," Ms Emmett said. 

"With the coalition and Labor running head-to-head in the polls, the government has its work cut out for it to win over the electorate by the 2 July election."

Way to go ScoMo!

If that's not bad enough this government's finding all kinds of problems putting its budget across as good. Take this Q&A thing that happened:

"I've got a disability and a low education, that means I've spent my whole life working for minimum wage. You're gonna lift the tax-free threshold for rich people," he said, addressing federal minister O'Dwyer. 

"If you lift my tax-free threshold, that changes my life," he went on. "That means that I get to say to my little girls, 'Daddy's not broke this weekend. We can go to the pictures'. Rich people don't even notice their tax-free threshold lift. Why don't I get it? Why do they get it?" 

After a sympathetic hearing from Goldie, the question came to O'Dwyer, whose answer eventually wound its way through to missing the point of the inquiry almost entirely - with Mr Storrar's eyes all but popping out of his head at the minister's assurance that when it came to budgetary tax measures: "It's all about balance."
On the contrary, minister. 

"To rich people it is a Coke and a milkshake or whatever," Mr Storrar said of tax breaks for higher income earners. 

"To me it changes my children's life … People who make $80,000 a year … well, they don't even notice it, love. We notice that sort of stuff." 

And it was pretty much all downhill from there. 

O'Dwyer helpfully launched into a cheerful monologue about pies - growing the pie, rather than carving it up as the Greens were inclined to do - but the look on Mr Storrar's face suggested the only thing he could smell was waffle. But the minister soldiered on with her pastry metaphors. It was a bit like watching Mary Poppins trill "Supercalifragilisticexpialidocious" - the thing you say when you have nothing to say; then before you knew it, she'd taken wayward flight to offer a description of her plans as Small Business Minister.

These people damn themselves. One can easily imagine the ire of Malcolm Turnbull as he watched one of his ministers pretty much immolate his cause. Of course, then there was the $6000 toaster write off that Kelly O'Dwyer mentioned. It's a corker! When the SMH is making fun of you at the top of their website you know you've laid a giant turd in public.

UPDATE:
Oh, And Look, More On ZIRP

The race to Zero Interest Rates They Say.

Quick Shots - 05/May/2016

ZIRP Is Coming

I bet you've been thinking I've been crazy talking about Zero Interest Rate Policy as inevitable in Australia. Well, here's something for you to cogitate upon.

The idea that the official cash rate will eventually hit zero in this cycle is far from a consensus opinion in Australia. Economists are more likely to laugh than seriously entertain the idea. But last week's shock deflation data for the March quarter, which sparked an immediate reaction by the Reserve Bank on Tuesday, adds weight to the concept that Australia is simply coming in late to the inexorable downdraft of lower inflation and rates. 

"There is going to be a very long environment of low, near zero or negative rates, and clearly Australia is converging to that environment," Mr Gallo said from London. 

Source: Algebris 

He pointed to the "extreme overinvestment" in mining and energy sectors that would need to be unwound, weighing on growth. Over the past 25 years, Australia's exports to China had grown from 3 per cent of the total to about 30 per cent, Mr Gallo said, while in more recent years, the housing market had become increasingly dependent on foreign investors, particularly Chinese. 

"If you think about the last 20 to 30 years pre-crisis, Australia was a poster child of the credit boom and the China boom," he said.

There it is. And while that's not conclusive, it's nice to know other people can spot it coming.

There's A New Central Banker

After years of guiding the RBA through the GFC and post-GFC years, Glenn Stevens' term is up. He is being replaced by his deputy Dr. Philip Lowe.

Fifty-five year old Dr Lowe has worked at the bank since 1980 while still a student at the University of New South Wales. He has served as its head of economics, head financial stability, head of domestic markets and assistant governor responsible for the financial system. 

He also served as head of the financial institutions and infrastructure division at the Bank for International Settlements in Switzerland where he authored important research on role of central banks in low-inflation environments. 

Governor Stevens described the appointment as "superb".
"There could be no one better qualified than Phil Lowe to lead the bank through the next seven years," he said. 

"The bank will be in the best hands." 

"Dr Lowe brings a wealth of knowledge and experience to the role of governor, having served as the RBA deputy governor since early 2012, heading up many of the RBA's analytical departments, and publishing on a wide range of issues relevant to the operation of monetary policy over his three decade career with the RBA," Treasurer Scott Morrison said in a statement. 

Shadow treasurer Chris Bowen who worked with him while treasurer in the Gillard government described Dr Lowe as "one of the finest Australian economists of his generation".

I'm sure he'll be the one to take us to ZIRP and if necessary NIRP. 

More On Negative Gearing

Negative Gearing is a problem because it distorts the market. Just how much this happens is always debated with the argumentative finesse of people who regularly compare apples and oranges and some how discover theirs taste better. 

The Guardian had this article which is worth a read. 

In reality it is changes to capital gains tax in 1999 that really set the fire under the housing market by turning negative gearing from a niche activity to one which the treasurer would suggest is a favourite of nurses and teaches and police officers – the archetypal “mum and dad investors”. 

Prior to 1999 capital gains were taxed at a real rate – the nominal return less the inflation rate over the period you owned the investment. The Howard government then changed it to taxing the nominal rate, but only for half the amount. 

At the time there was actually debate over whether or not this would lead to people paying more tax.

Mark Latham – then on the opposition backbench – argued the change was “an open invitation for the tax minimisers, the tax avoiders and the capital speculators to do their worst in the Australian economy”. 

And whatever you might think about Latham’s more recent contributions to public debate, he sure as heck was on the money on this issue.

That's the thing about the old Howard Government and its mantra of small government was that is never saw a tax cut it didn't like. And so with a blind eye to how this would send the wrong incentive, they proceeded to rewrite the Capital Gains Tax.

When I reflect on it, it was around the turn of the century when one of my friends who was an IT boss started looking for an investment property. He'd been advised by his accountant that he was better off selling up his place in Glebe, buying a big house as an investment while renting a small flat. The logic wasn't obvious to me at all, but it was then explained to me that negative gearing would let this arrangement be very profitable. You could well imagine how this was going to lead to a rapid growth in people arranging their lives in a counter intuitive way so as to get this Negative Gearing to deliver profit.

But really the issue is of a tax policy that drastically changed people’s habits towards minimising tax and had the side effect of setting fire to the housing market and leading to a massive spike in the level of housing debt:

Over and above whether negative gearing or the capital gains tax benefit the wealthy (which they do) the issue is whether the tax policy has distorted Australia economy.

It clearly has and as a result at the very least, the discount to capital gains tax needs to be reduced.

And there you have it. It's going to be a big point of contention in the coming years. There are plenty of people who benefit from it and their lobby is strong. The whole finance, insurance and real estate industrial complex will fight tooth an nail to keep the gravy train running.

The truly sad thing about our government is that it's taken this long for the problem to even be a discussion point, well and truly after things have gotten well out of hand. It really doesn't bode well at all. 

May The Fourth Be With You 2016 Edition

Fighting Deflation In Japan

Here's something from Zero Hedge.

Interestingly, the BoJ’s attempts to achieve its price inflation target continue to end in failure with unwavering regularity. While the central bank’s astonishing ineptness in this respect is a blessing for Japan’s citizens (at least for the moment, their cost of living doesn’t increase further), it harbors the danger that even crazier monetary experiments will eventually be tried. 

While threatening additional easing measures at his press conference (such as driving negative deposit rates further into negative territory) Mr. Kuroda seems to have explicitly ruled out the adoption of “helicopter money” by the BoJ. This is quite funny, since it seems extremely unlikely that the BoJ will ever be able to extricate itself from its balance sheet expansion (which de facto amounts to an “unannounced” case of helicopter money provision)

Of course BOJ boss Haruhiko Kuroda ruled out 'helicopter money' provisions for the way to go about funding the government directly because it would be illegal. Thus it follows that they'll have to think up something else other than the Negative Interest Rates Policy to do in order to reach this 2% inflation goal. 

It's sort of interesting how the Bank of Japan went looking for this 2% inflation rate and did so by massively expanding the monetary base - which inlay man's terms is "printed lots of money" - and somehow still managed to have the Yen go up. From our old high school texts we learned that the Weimar Republic era Germany printed money to pay reparations and this resulted in astronomical inflation. It is therefore interesting that the emir scenario hasn't kicked in at all.

One of the reasons the expanded monetary base hasn't done the trick is because the printed money has gone to the banks who do not lend the money out as planned, and so the money sits there in the banks unspent. The banks for their part complain that there is nothing in which to invest. Thus the great printing press experiment remains stuck in the vaults of the banks. 

The problem is that the inflation would only go up if that money went around the economy chasing assets. To do that, they need consumers to spend, but consumers have all sort of reasons not to spend. Shinzo Abe for his part has been imploring the major corporations to raise their wages. Yet even pay has stayed largely stagnant. 

What this indicates is that the printed money went to the wrong place, pretty much as TARP and QE money went to the wrong places. As objectionable helicopter money is, the BOJ need to figure out how to shove that money into the pockets of the ordinary citizens so they feel they can spend that money. Otherwise all the prince money is going sit in the vaults of banks.

Reserve Bank Of Australia Cuts Rates

So much for the prognostication that the RBA might cut rates around June.
Instead, they were decisive.

Tuesday's historic interest rate reduction coincides with the federal government's third budget, which is expected to be mildly stimulatory despite pressure to narrow the deficit.
Deflation in the headline consumer price index, due mainly to falling oil prices and aggressive retailer discounting, was the first such quarterly contraction in seven years. 

Moderate inflation, the result of demand for goods and services – including labour – just outstripping supply, is usually the mark of a healthy economy. 

However, when prices and wages continue to fall, consumers often hold off on buying and companies on investing. Deflation also pushes up the relative burden of debt.
The cash rate is now easily at its lowest level under the current system of monetary policy setting. 

The latest cut puts Australia into the club of developed economies with ever-falling interest rates and bond yields. Japan, the European Union and parts of Scandinavia now have zero or even negative nominal rates. New Zealand, too, looks likely to keeping cutting from an already-low 2.25 per cent official cash rate.

Let's not kid ourselves. If the economy were actually running well, the RBA wouldn't be cutting interest rates. As the vagaries of politics go, it happened on the same day the Budget was brought down and really gave no scope for the Federal Government to argue it was managing the economy well.

If there's one dumb thing that the Howard Government entrenched in the public consciousness, it was the asinine idea that lower interest rates were a sign of better government. Now that interest rates are at historic lows and set to go even lower, it puts a big lie to the position that the Governments doing any good management of the economy. If this is good management of the economy, for goodness sakes give us the other stuff.

And So The Budget Happened

This year's budget would underline just how ineffective this government is.

Labor has questioned why the government is cutting corporate taxes while the budget is in deficit and only handing income tax relief to Australians on over $80,000 a year even though 75 per cent of Australians earn under that amount. 

In his first interview since Tuesday night's speech by Treasurer Scott Morrison, Mr Turnbull said he believed his first budget - which delivered tax cuts for small and medium businesses, new measures to encourage young people into jobs and cutbacks to superannuation concessions for wealthy Australians - was an "exciting" one.

"A lot of newspapers are saying, 'this is a bit of a dull budget'," Sunrise host David Koch told Mr Turnbull. 

"We all thought you would bring the big excitement and changes."
Mr Turnbull responded: "Scott Morrison was delivering a plan for jobs and growth - I think that's exciting but everyone has their on views on that. 

"The BCA [Business Council of Australia] described the changes to business tax, the biggest changes to business tax in more than a decade. 

"These are substantial tax reforms but these are reforms that are designed not for the short term, not for an election. 

"They are designed for the long-term, to ensure that we continue to get that successful, economic transition from an economy that was fired up by a mining construction boom to one that enables us to live within our means, have a sustainable tax system but above all, drive that economic growth and jobs upon which our futures and those of our children and grandchildren depend." 

Despite the RBA's shock decision to cut the cash rate to a record low of 1.75 per cent on Tuesday, Mr Turnbull said the economy remains fundamentally strong.

I like the insistence that it is an exciting time and that the economy remains fundamentally strong when on the same day the RBA goes and cuts interest rates to historic lows. For reasons and factors totally out of their control, the Australian economy is heading into the ZIRP twilight in the next few years without a plan to get out. It's not even as if Australia has a really matured manufacturing sector or the population growth is stagnating (thanks to immigration it's not) so it can be sheeted home to the massive amounts of money tied up in the Property Bubble together with the world's largest private sector debt per capita. If you want us to get excited about that, you've got another thing coming Mr. Turnbull. 

None of those problems are solved. Negative Gearing stayed in place, which was something expected, but you have to wonder about the wisdom of tightening the Superannuation loopholes fr the rich while keeping Negative Gearing going because some people think the money is going to flood into the property market, furthering the Bubble. It strikes one that the Federal Government - regardless of which party is in power - refuses to acknowledge the elephant in the room and keeps trying to talk around it as if there's room to manoeuvre. 

A crackdown on superannuation tax concessions for the rich, coupled with a budget day cut to interest rates, could increase the flow of funds into negatively geared investment property.

Ahead of the 2016-2017 federal budget announcement, two of the country's leading actuaries, Rice Warner chief executive Michael Rice and Mercer senior actuarial partner David Knox, warned that any crackdown on super tax concessions for the rich without any changes to the negative gearing rules could have the unintended consequence of pushing more money into property. 

That is exactly the policy combination that we got on Tuesday night. And to add fuel to the fire, earlier in the day, the Reserve Bank of Australia dropped the benchmark interest rate by 0.25 per cent to a record low 1.75 per cent.

In other words, this Government just fed the elephant in the room while not acknowledging it's there. 

All that being said, it's not as if it's making outlandish forecast projections for growth like WTE Joe Hockey's last budget. There's some difference between a plain old crappy crap sandwich and a double poo sundae. 

Quick Shots - 02/May/2016

'The Lobster'

It's rare that I quit on a film but I just couldn't finish this critically acclaimed work. It's surreal and interesting as a premise but it has a few moments of genuinely gratuitous violence - which is utterly unlike the gratuitous violence of say, 'The Avengers: Age of Ultron' - which I'm sure is an attempt to recapture Luis Bunuel's work but I just wanted to groan. It's a funny film because it's odd, but at certain points it leaves you cold.

Anyway I just thought I'd mention it in passing. Lately I can't finish films if I'm not hooked into it. I've lost the discipline and gumption to go through to the end of a film I'm not enjoying.

Zero Hedge Exposed

The dudes who are the Tyler Durdens at Zero Hedge got revealed this week.

Working at Zero Hedge was also exhausting, Lokey said, and typically involved early morning starts and writing as many as 15 posts a day of as many as 1,500 words each. The work didn't stop on the weekends, either. Text messages exchanged between Lokey and Ivandjiiski, screen shots of which were provided by the latter, paint the picture of a work environment that ranged from exhilarating to exasperating. 

For instance, Lokey says he's "scared to even ask for an hour off," while Ivandjiiski replies that "if you ever need time off for whatever reason, never hesitate to just ask." In February, Lokey says, "I love this company and this website," and tells Ivandjiiski "you saved my life," expressing thanks for the job. 

By April 2 - the day Lokey left Zero Hedge-their relationship had deteriorated significantly, according to the messages provided by Ivandjiiski. 

"I can't be a 24-hour cheerleader for Hezbollah, Moscow, Tehran, Beijing, and Trump anymore. It' s wrong. Period. I know it gets you views now, but it will kill your brand over the long run," Lokey texted Ivandjiiski. "This isn't a revolution. It's a joke."

It would seem that way. Nobody can be a total stoic as the Tyler Durden from 'Fight Club' demands. That's why it's a movie. More interestingly, it's nice that the political bias of Zero Hedge got explained. While I enjoy the site, it's always made me wonder just where they're coming from to be so Pro-Putin even in the depths of the Ukraine crisis. Now I realise it's their editorial policy. That makes it easier to digest as flaks being flaks. 

Bitcoin Mastermind Outs Himself

This was news today. Satoshi Nakamoto does not exist - it's actually an Aussie by the name of Craig Wright. 

The BBC said Wright gave technical proof supporting his claim to using Bitcoins known to be owned by Bitcoin's creator. It said prominent members of the Bitcoin community had also confirmed Wright's claim and said Wright repeated the claim to The Economist and GQ. 

"I was the main part of it, but other people helped me," the BBC quoted Wright as saying. 

The Economist however said it was not entirely convinced.
"Our conclusion is that Mr Wright could well be Mr Nakamoto, but that important questions remain," it said. "Indeed, it may never be possible to establish beyond reasonable doubt who really created bitcoin." 

Despite its use initially being restricted to tech insiders, Bitcoin has steadily gained popularity, with mainstream banks and the Australian Stock Exchange considering adopting its "blockchain" public ledger model for managing transactions.

At this point in time, it's hard to know if finding the inventor is all that significant. The genie is clearly out of the bottle. 

"Obama, Out"

It's still a bit early for President Barack Obama to be signing off, but he did have his final White House Correspondent's dinner where he put on his stand up comedy routine. He's still got 6months until the election day in November. He's not quite the full lame duck just yet so you hope he's not signing off like he did at the end. 

It does make me think of the last year of Dubya's Presidency and it is quite the contrast. As much as Carl Icahn and Zero Hedge are talking up another GFC, the market seem to be calm. This time in 2008 was like a daily grind downwards in all the markets with teeth-gnashing angst in the papers everyday. I guess we'll know where we really are around July-August. 

In the mean time, I guess we're watching the final year of a fairly good Presidency. Jeez time flies.