News That's Fit To Punt - 01/Aug/2016

The Rudd Rejection

It's already a fiasco, but this business of the Coalition Government not nominating Kevin Rudd to run for Ban-Ki Moon's office of Secretary General of the UN is already spinning wayward.

Kevin Rudd says he was told he had Malcolm Turnbull's strong support for his bid for the top job at the United Nations before the Prime Minister suddenly reneged on that commitment, according to private letters from Mr Rudd to Mr Turnbull, obtained by Fairfax Media.

In an explosive new development in the aftermath of the Turnbull government's official rejection of Mr Rudd's request for endorsement to run for the post of secretary-general of the United Nations, Mr Rudd has released letters, which, while only showing one side, suggest that agreements had been reached to support the Rudd bid, but that this support was suddenly withdrawn on May 1, just days before the election was called.

This is quite awkward.
Over the weekend, Peter Garrett was heard this first concert since returning to being a vocalist, that the world dodged a bullet when Malcolm Turnbull refused to back Kevin Rudd as a candidate. It's a bit cruel but I guess there's no love lost between Rudd and Garrett*.

It's not exactly a great move by Turnbull. Now he'll have a vindictive Rudd on his case and god only knows how that will play out. After all Kevin Rudd can be a spectacular media tart and if he signs up for something like Sunrise again to prefer his political opinions on a regular basis, it mightn't be long before he will actively say things to sway public opinion against the government. Rudd was always going to be better for everybody concerned, outside of Australia.

Anyway, Pleiades tells me this won't be the end of it because Rudd doesn't know how to quit. Not only that he has significant recourse with his international friends. Dr. Geoff Raby has an article in the AFR today that illustrates possible path back for Kevin Rudd. If the election/selection for the UN Secretary General does not conclude before the US election and if Hillary Clinton should win,therein every chance that a President Hillary Clinton might back Kevin Rudd for the job. At which point it's going to be an uneasy phone call for Malcolm Turnbull.

In a matrix of fifty-fifty coil flips, there's a 25% chance Turnbull doesn't have to revisit this issue, 50% chance that the issue remains irrelevant, but a 25% chance that he's going to have to eat crow.   That 25% however is looming larger when you think through the fact that the next Secretary General is being selected in sync with the next US President. The US will moe than likely delay the selection until after the election, and that Donald Trump is (for al his blather) unelectable. That means there is a great probability Malcolm Turnbull will be asked to revise this topic.


* - As a side note, I've been pondering for long time why as a fellow leftist Peter Garrett's stance on things have bothered me over the years. My old working theory was that he was a prat, but that seemed too simplistic. The most accurate representation of his position might be that he is a regressive leftist. Once you understand that about Peter Garrett, the rest of it is rather easy to decode. 

One Seat Majority

The last seat in the Lower House fell to the ALP, which means the Coalition have only a seat majority. One would surmise then that Malcolm Turnbull has no margin for error.

No Coalition MP will be able to cross the floor. Even an abstention would force the Speaker to cast a tie-break vote, creating the appearance of party weakness. Coalition discipline will need to be watertight. 

2212`1`12Coalition figures have been fond of saying that a narrow majority will enforce its own discipline. That's true in the sense that it forces the party to stick together like glue. But on whose terms will it stick together? 

Mr Turnbull's challenge of managing his right flank becomes that bit harder because the handful of lower house MPs who might actually take the rare step of defying party discipline at the point of voting in Parliament will need to be placated down to the last man or woman. 

Those passionate outliers within the party will be empowered by knowing Mr Turnbull cannot afford to lose a single vote.

Well... one would imagine that's a two way street. If the fringy-crazy want to threaten to cross the floor, it would be over a policy that the ALP may actually want, and would a fringy-crazy rightwing nut job MP want to cross the floor just to spite their moderate PM? There can't be that many bills that satisfy both the ALP and the Greens and the fringy-crazy right wing of the Coalition. Not even Bob Katter would cross the floor to do that. It's hard to image that fringy-crazy rightwing MP of the Coalition would be going that far as well, no matter how unhappy they are with Malcolm Turnbull.  

Of course Bob Katter's not happy Malcolm Turnbull hobbled Katter's friend Kevin Rudd's aspirations so maybe therein a scenario where Bob Katter crosses the floor (Katter's already signalled he's not going with the ABCC legislation).

Didn't Last The Week

In the last post I pointed out how untenable the Royal Commission that was announced was, having Brian Martin heading up the Royal Commission, and surely enough he's resigned.

Former Supreme Court judge Brian Martin has resigned as the head of the royal commission into the NT juvenile detention just days after being appointed. 

His replacements have been announced as former Queensland Supreme Court judge Margaret White and, following calls for an Indigenous co-commissioner, Aboriginal and Torres Strait Islander Social Justice Commissioner Mick Gooda.

Citing the need for public and stakeholder confidence in the joint Commonwealth-NT inquiry, Mr Martin said that criticisms of him had been "disingenuous" and ill-informed.
"However, notwithstanding the nature of the commentary, it has become apparent that, rightly or wrongly, in this role I would not have the full confidence of sections of the Indigenous community which has a vital interest in this inquiry," he told media in Canberra.

As teens like to say, "sure, whatevs". You have to love people putting up defences of their positions that fly in the face of reality. If it were exactly as he said it was, he wouldn't be quoting, would he? Both things cannot stand and one thing we know for sure is he's not doing this Royal Commission any more. You can't put a man in charge to investigate himself.

The Downside Of Identity Politics

Here's something about a statue going up in Ashfield.

It's the peace statue that is dividing Korean and Japanese community groups, with legal threats issued to a church minister and complaints escalated as high as the Minister for Multicultural Affairs. 

At the centre of the dispute is a statue commemorating the "comfort women" of World War II - the women and girls who were forced into sexual servitude for Japanese troops - which has been imported from Korea by a local Korean community group.

The group - called the Peace Statue Establishing Committee - plans to unveil the statue, which they describe as a "peace monument", at a traditional welcoming ceremony to be held at the Korean Community Hall in Croydon Park on Saturday. 

The statue, which cost $35,000 and was donated by a Korean benefactor, is about 1.5 metres high and depicts a Korean comfort woman sitting beside an empty chair, as a symbol of the victims who have since died.

And so it is that we come to the Comfort Women issue, exploding on the streets of Sydney. Really, we ought to ask, should this issue be played out in Australia? Should it be played out in Sydney?

Now, this statue was meant for Strathfield but was soundly beaten back by a presentation by the Japanese community. The main plank of the rebuttal, so to speak, was that there actually is no mythical girl who was forcibly taken away by the Japanese Army to be a sex slave prostitute. Except this is accepted as fact thanks to the Yoshida Testimony of 1982, as published in Asahi Shimbun. Since then there has been much research on this area to corroborate the Yoshida Testimony, and nobody has been able to corroborate any of it. There has even been a US Senate enquiry into it and the the US Senate recognised that there was no truth to the Yoshida Testimony. Seiji Yoshida himself made statements before his death to the effect that he had made it all up.

Last August Asahi Shimbun finally retracted the Testimony as false, which has led to a class action against Asahi Shimbun for insisting on its provenance for 34 years, providing ammunition for the claims that the comfort women were forcibly taken away by the Japanese government orders. It's been such effective bullshit that people in the west are refusing to give up that talking point, now that Asahi Shimbun has retracted the claim. The new of its retraction and what it means has been very slow in getting around the globe.

So yes, the statue is inflammatory. That's the whole point. It's primarily being put there to offend while proclaiming peace and remembrance or whatever. The people who want to put it up want to do so to stick it to Japan over stuff that happened in World War II. The people who don't want it put up are fed up with South Korea trying to stick it to Japan for an apology and an extra pay out.

Except as of 28th December 2015, there has been a new apology and an agreement to pay the claimants. The terms of the agreement stipulate several things including, this is the last discussion to be had on the topic of comfort women, their recompense, their status and as a bargaining point between South Korea and Japan. Part of the agreement was for the government of South Korea to work with the activist group to remove the original statue placed in front of the Japanese Embassy in Seoul.

Now, it should be noted that it is against international convention to stick a protest statue in front of another country's embassy, regardless of the cause. We don't do it, the Americans don't do it, nobody in Europe or Africa or the Subcontinent does it, Japan certainly does not do it in retaliation, not even Israel does it to the German embassy.

If the agreement of 28th December 2015 is to stand, the South Korean government has to remove the original of the statue. That's what they agreed and signed upon, and eight months later they're yet to do it. It is therefore in incredibly bad faith (and bad taste) to be sticking a replica of that very same statue in the streets of Sydney proclaiming it to be an act of peace. It's extremely disingenuous of this Reverend Bill Crews to be talking about apologies an peace.

Be that as it may, it should be asked of the Korean community if an equivalent statue ought to be erected in tribute to the Vietnamese comfort women the South Korean Army procured for itself during the Vietnam War.

During the Vietnam War (late 1960’s – early 1970’s) South Korea sent troops to Vietnam in an attempt to keep South Vietnam free from communism. It was reported later that many South Korean troops raped Vietnamese women and committed atrocities such as massacring farmers and aged people, and many others were forced into working as prostitutes for the South Korean soldiers. Many of these women would then later become pregnant and after these mixed Korean-Vietnamese children were born they were shunned by Vietnamese society and their soldier fathers returned to South Korea never to be seen or heard from again. The plight of these women was lost to history and not discussed until the late 1990’s when many of the victims began to speak out against the Vietnam and South Korean governments and demand recognition and compensation. To date the South Korean government has done little to acknowledge the issue but has continued to pursue further financial compensation from Japan for their own comfort women survivors and some say that their actions have become hypocritical and they are using the issue as their own political tool. In fact, South Korea orchestrated with Korean-American’s politically-driven campaign in the U.S. continent against Japan.

Yes, that's right.

I'd be okay with the statue going up in Ashfield if the Korean Community acknowledge what their troops did in Vietnam and build a plaque next to it, mentioning it. I doubt they would - it's all about bullshit nationalist fervour. So unfortunately for the Reverend Bill Crews, there's not much moral high ground going around there.

It's kind of pathetic people are still fighting over this terrain, seventy-one years after the conclusion of World War II, but that's what happens when identity politics is given full rein. 

View From The Couch - 31/Jul/2016

Frontier Gaol For Juvies Goes Guantanamo (And People Wonder Why)

I finally caught up with the Four Corners program about the juvenile detention in Northern Territory. It was as bad as the media has been carrying on about. The footage of youths in 'restraining chairs' looked like something straight out of Abu Ghraib. The images that have been leaked clearly show the full effects of Dr. Phil Zimbardo's experiment prison guards in real life. The Scottish born lawyer in the Four Corners presentation likens the handling to Guantanamo Bay - a kind of torturer's wonderland without much legal oversight. It certainly looks that way from the images we're shown.

What's really surprising is that people think that it would have gone any other way. Even after everything we know in this day and age, you have from our Prime Minister down, human rights people and children's welfare people, all holding public office wondering how on earth this could be happening in our very own 'civilised' country. Yet, lately I've been wondering if the kind prison system we have is anything remotely civilised. Let's not forget this nation was founded as a penal colony. The whole premise of this civilisation was founded on incarceration.

This must be the year for this discussion because I keep watching programs about incarceration one way or another. There's 'Orange Is The New Black' which anatomises the experience of US inmates in minimum security correctional; there's The Stanford Prison Experiment' which shows how guards come to behave the way they do because it is what they imagine the job means; 'Suits' Season 6 where Mike is in a white collar criminal prison and he is still vulnerable to corruption of guards; 'The Boss' where Melissa McCarthy's titular character goes to prison; all of them feature the prison experience well enough. In all of them, it is clear that guards behave badly but have the full backing of the state to do so, and so in a positive feedback of compounding moral hazard, they continue to find ways of behaving badly. And while that is all American content, there is nothing fundamentally different in the working structure of those prisons to ours. Our prisons are mostly doing the same stuff. Ours are equally brutal and overly focused on punishment.

Now, I'm not going to go and become some advocate for prison reform, but it has to be said there's something deeply wrong about the structure of the prison system whereby juvenile detention ends up looking like the Abu Ghraib - and we all know there was nothing right about what went on at Abu Ghraib. It was beyond the pail that Abu Ghraib happened in Iraq under our watch. For the exact same thing to be going on in peacetime Australia, directed at indigenous youths? We're rightfully scandalised, but where is the rational analysis? Why can't our politicians put two and two together?

The Royal Commission that has been announced appears to have very limited terms of reference. It is getting soundly rebuked by the Aboriginal community for its choice of commissioner, and it looks like it won't really do much that might be politically damaging. This suggests that Malcolm Turnbull knows that this isn't an isolated problem - after all, why would he limit the scope to the degree that he has, if he didn't want other things dug up. The obvious answer to that rhetorical question is that the Federal Government itself has children in custody, incarcerated in Nauru and Manus. And anybody with half a brain and education would be well familiar with the ramification of Dr. Philip Zimbardo's findings that more likely than not, the Federal Government has rogue 'prison guards' fully possessed by the jobs they have, bullying and torturing people in the name of the Australian people.

Yet our political ranks fear no hypocrisy when it comes to wagging its fingers at other nations on the planet when it comes to how they run their prisons, whether be Indonesia or Lebanon.
We're the civilised people, we love to claim. You can just tell the Royal Commission is going to do sweet fuck-all to curtail the institutional racism that layers itself over the Northern Territory prison system, nor will it have single suggestion on how to abate the 'prison guard' effect that turns otherwise normal people into institutional sadists. It's not like this is rocket science - it's just practical psychology - but because the Coalition government is socially conservative to the core it won't countenance any notion as to rethink the entire prison system from the top down. What will happen is that there will be a lot of crying testimonies and media carry-on but in a quarter of a century's time be all forgotten.

Brace yourselves for malarkey is coming.

The Bubble That Won't Pop

A couple items popped up this week about the property bubble. The first was over at the ABC where they interviewed Prof. Steve Keen.

"We have borrowed ourselves so much to the hilt that we are now dependent on that continuing to rise over time and it simply won't," he told the ABC's The Business. 

Many believe the Reserve Bank has been a steady guiding hand to the Australian economy in the years since the GFC, but Professor Keen believes it has guided the economy "straight toward the shoals" by encouraging households to borrow with low rates which has led to asset bubbles. 

"They don't know what they're doing," he said. 

"Our debt level according to the Bank of International Settlements, private debt level, has gone from 150 per cent of GDP to 210 per cent of GDP." 

He argued that means a large part of the growth that Australia has enjoyed since the GFC, while many other countries plunged into recession, has been fuelled by a 60 per cent rise in household debt. 

"Ireland did the same thing when they called themselves the Celtic Tiger and they don't call themselves that anymore," he said. 

"Spain was doing the same thing during its housing bubble and we've replicated the same mistakes.

I like the bit where he flat out says the RBA doesn't know what it's doing. He may even be right. If the Private sector debt has blown out to the level as described, it could only have happened under the watch of the RBA which has bee cutting interest rates steadily. And because the RBA is doing so on a mistaken logical principle they will end up at ZIRP, just like other central banks have done in the developed world.

There's an interesting phenomenon about banking that we're seeing whereby in pursuit of yield banks have devised the casino capitalism we see today. In a sense the banks became casinos, betting on houses as it issued mortgage bonds. When the subprime crisis hit American banks, it effectively meant the "bank" was wiped out, in the same ways some people bust casinos. So the US government of the day bailed out the banks using tax payers' money but has pretended that the bank never went bust ever since. In order keep up this facade so thereon't be a run on the banks, the US Fed has printed money by buying up all the bad debt and putting them into a kind of moratorium limbo - an in so doing kit asset prices up.

And that is how Australia's property bubble never quite popped, even during the GFC. The kind of stimulus spending and quantitative easing has nickname in Japan where these methods have been tied for two decades: PKO as in 'Price-Keeping Operation'. The central purpose of a PKO is not to let asset prices drop because that leads to a market rout right across the economy and that way lies the great depression.

And so the RBA, like all the other central banks keeps lining out money for very little interest and most people can't think of anything better to do than to stick it into the real estate market, which brings us to the Crikey article about the property bubble.

The main driver of housing prices remains the taxpayer-backed big four banks, whose balance sheets are so overloaded with housing debt that they have no choice but to keep the charade going as long as possible. Bank executives are paid based on profitability and shareholder return — short-term profitability, that is. The fact that a chunk of the loans being made are based on prices that bear no real semblance to a discounted cash flow valuation is seemingly unimportant. Eventually the music will stop, but by then, bank CEOs will have been paid $50 million and the clueless directors who allowed it all will be frantically checking the terms of the indemnity insurance. 

House prices are no longer a function of value but rather of how much people are prepared to pay. That in turn is determined by how much banks are willing to lend. And that amount continues to rise. Before the current boom started in 1997, the ratio of household debt to GDP was around 40% — it’s now more than 100 percent (it’s the same story for household income to household debt). In short, the banks are lending Australians a whole load of cash, and we’re using that cash to bid up the price of an unproductive asset (established housing).

It's really strange how anybody who looks at the structure of our economy can spot this, but Domain's still printing stories about houses being bought at high prices.
Yet there are people still out there busily buying into the Australian property market as an investment. It's not even making sense as an investment according to the article:

CoreLogic found that Australian dwellings increased in price by 10 percent in the past year. In Sydney and Melbourne the price rises were even more significant, with Sydney increasing by 13% and Melbourne by 13.9%. If the market had any degree of rationality, given the market is already expensive, rentals would have needed to rise by around 20% during the year to justify those price increases. However, CoreLogic also reported that Sydney rents were up a mere 0.4% and Melbourne up by 1.7% (both well below the inflation rate). 

That means if the market was insane a year ago, it’s even worse now. Already overprice property is increasing, in Sydney’s case, 20 times as fast as underlying income.
The problem is no one seems to care what the banks do (least of all the government, even though taxpayers are on the hook if any of the big banks fall over, which if the history of banking is anything to go by is a virtual certainty at some point). Moreover, successive governments’ taxation policies (negative gearing, no capital gains tax, minimal land tax) serve to exacerbate the insanity.

In a way, this massive property bubble is the price of keeping our asset prices up in things like our Superannuation accounts which, by rights should have been wiped out into oblivion in 2008. We all have some assets of some worth, some more than others, all held by banks. The RBA is doing its best to make sure we get to keep our winnings, big and small in the casino of world banking. But it would be crazy to think that the current LIRP environment on the road to ZIRP is anything but kicking the can down the road. One of these days the reckoning is going to come, probably from China having its day of reckoning. We don't even know how the Australian property market would respond in light of a recession because we haven't had one in like 25years. One of these days we'll find out. As Warren Buffett says, when the tide goes out, you get to find out who is not wearing any garments.