Quick Shots - 07/Feb/2017

More On the Liberal Party Split Thing

As it turns out, there's more about Cory Bernardi that's worth knowing. We could have guessed it, but it bears pointing out:

Bernardi first sensed a problem in 2009, when during a heated and divisive partyroom debate on whether the Coalition should support Kevin Rudd's emissions trading scheme, one of his colleagues, the now deceased West Australian MP Don Randall, rose to his feet and said: "I don't give a stuff about the national interest, I want to get re-elected and this needs to go away." 

Bernardi went back to his Senate office and wrote down the quote. He never forgot it. It was the beginning of the end.

I don't know how else to put it but that right there is the mocking gun that these Liberal Party politicians are nothing but hacks sucking on the pubic teat. As if Bronwyn Bishop and Sussan Ley weren't enough proof, here in the segment above is the distilled essence of how these bastards think. 

The late WA MP Don Randall said he doesn't give a stuff about the national interest, he just wants to get re-elected. It begs the question why the hell we need to re-elect such a person; as it turned out, he died shortly before the recent election and truth be told, judging from the quote, it was probably a good thing too, because he certainly had no intention of serving the national interest. It's easily arguable that the most he served the national interest was when he died, thus depriving himself of more opportunities to suck at the public teat. 

That Cory Bernardi thought the quip was worth writing down as quote to which he is going to make his political credo, tells us well enough that he too doesn't think much about the national interest - he too is all about getting re-elected. It's strange that he thinks he has a better chance not as the Liberal Party's No. 2 on the SouthAustralian Senate ticket but as an independent. Maybe there's more money in being a leader of a party of one. It's hard to figure how the dollars an cents work out, but it would be remiss of the media if it didn't investigate this strictly pecuniary angle. After all, the man's motto amounts to, stuff the national interest, he's only in it for himself.

If I may offer a bit of gratuitous advice to Corgi BurntNazi, it is that the ALP have found "Disunity Is Death". Leaving a major party that would put you in as a senator is likely the dumbest move he's made in politics. 

Grexit Again?

If there's one thing that really puts the fear in the markets the world all over, it's the notion that Greece will default on its debts. That being said, the narrative to date has been, the Euro Zone won't let that happen, and the Greeks have to eat a lot of humiliation not to be allowed to default or leave the Euro. This has resulted in the ECB cycling through a lot of money that pays off the debt for Greece in exchange for Greece making immense cuts to its expenditure - some of which might have been reasonable but others that have resulted in terrible cuts to services. There doesn't even seem to be any coherent link between the cuts demanded by the Euro Troika and how the money is spent seeing that most of the money goes to paying off the bonds. And as the Greek economy shrinks and shrivels, it loses any chance paying off the debt.

With that in mind, here's something from Yanis Varoufakis, the ex-finance minister of Greece.

“This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long term,” Varoufakis wrote. 

In his article, Varoufakis suggested that Schaeuble’s strategy is to lead Greeks to the point of exhaustion so they ask to leave the euro themselves. 

Noting that the “parallel payment system was already designed in 2014”, Varoufakis stresses that Tsipras had “two delusions” that led the government to the current impasse:

• a. that on the night of the referendum, the dilemma was between Schaeuble’s Grexit Plan and the 3. bailout
• b. that the obedience to the 3.bailout could be political manageable through a parallel, society-friendly program.

Both of these “working assumptions” were based only on autosuggestion, the ex finance minister stresses adding that he tried to explained this to the Prime Minister on the night of the referendum 

“In reality there was never a basis for hope that the toxic 3 bailout would be gradually rationalized, in terms that the European Commission would support Athens so that the austerity and anti-social IMF measures would relax, the IMF would force Berlin to accept debt restructuring and lower primary surpluses, the ECB would include Greece in the bond purchase program (QE),” Varoufakis wrote 

He accused leading European negotiators of lying. 

“That Moscovici [EU Monetary Affairs Commissioner], Coerer [ECB] and Sapen [French finance minister] might have given such promises was not an excuse.
Since May 2015 we were fully aware that these gentlemen know how to lie and fail to deliver on their promises when they do not lie.”

Greece remains the thin end of the wedge. If Greece goes, then, the dominoes are in play for the rest of the PIIGS, and will lead to the destruction of the Euro. While it stays in the Euro Zone, the world can live with the fiction that everything is okay, except there is the glaring issue of Brexit, whereby cozy assumptions about the health of the Euro Zone can't be ignored. If the UK can leave, then it offers a practical blueprint for Greece to leave.

The weird thing is that the UK need not ought to have voted to leave, while Greece needs to leave if it wants any semblance of control over its finances. The horror show of bluff and intimidation made by the Troika to keep Greece in the fold and to keep taking the austerity medicine in a sense informed the UK public as to the failings of not having control. Even more ironic may be the case that the UK already had kept its pound sterling as opposed to adopting the Euro, so in a sense it was the state with the least problems of losing control to the Euro Zone. thus if the UK still seems it fit to leave the Euro Zone, then it follows that perhaps Greece needs to reconsider its desire to stay.

If all things are equal, the next time the Grexit show hits the road and world markets panic over the possibility of Greece leaving the Euro Zone, it might be better to put your money on the likelihood that it does leave, and that it's a good thing.

Quick Shots - 02/Jun/2016

What Yanis Said About Australia

Walk-Off HBP sent in this one a little while ago. Former Greek Minister For Financial Crises Yanis Varoufakis recently was in Australia and was asked a few questions about our economy. This bit sort of popped out so I'm quoting it here:

“The first thing that has to happen in this country is to recognise two truths that are escaping this electorate, and especially the elites. 

“Firstly, Australia does not have a debt problem. The idea that Australia is on the verge of becoming a new Greece would be touchingly funny if it were not so catastrophic in its ineptitude. Australia does not have a public debt problem, it has a private debt problem. 

“Truth number two: the Australian social economy is not sustainable as it is. At the moment, if you look at the current account deficit, Australia lives beyond its means – and when I say Australia, I mean upper-middle-class people. The luxurious lifestyle is not supported by the Australian economy. It’s supported by a bubble, and it is never a good idea to rely on the proposition that a bubble will always be there to support you.

“So private debt is the problem. And secondly, because of this private debt, you have a bubble, which is constantly inflated through money coming into this country for speculative purposes.” 

Varoufakis is unequivocal in his conviction that current growth – which he likens to a Ponzi scheme – needs to be replaced with growth that comes from producing goods. 

“Australia is switching away from producing stuff. Even good companies like Cochlear, who have been very innovative in the past, have been financialised. They’re moving away from doing stuff to shuffling paper around. That would be my first priority [if I were Australian treasurer]: how to go back to actually doing things.”

I jokingly asked him who this read like and he answered yours truly so... just saying, it's not like the views expressed here are off the planet. At least the former Finance Minister of Greece is espousing them as well. 

Varoufakis is pretty unequivocal about the idiocy of allowing the auto manufacturing industry to leave Australia. It's worth noting that the flip-side of Varoufakis' concern for manufacturing is that the more FIRE - finance, insurance and real estate- sectors grow in proportion to the rest of the economy, the less the economy seems to be able to grow. That is to say, the more 'financialised' an economy becomes a great part of the economy is taken up with the activity of shuffling paper wealth around. This is typically soon the USA here Manufacturing went from 30% of GDP to about 11%, and the FIRE sector went from 13% to about 24%. If the economy is producing things at around 10% and yet the paper shuffling wealth is 25%, it's not surprising you get low growth as well as lo wages growth and gross inequality.

This Damned Election In Australia

The one forgivable aspect of elections in Australia is that under the Westminster system these campaigns tend to go for weeks and not 18months like over in the USA. Even so, Malcolm Turnbull has opted to go for one of the longest campaigns leading up to the polls and well, there's still a good month to go before we show up at the voting booths.

Even so, things are running so tepid and boring, people are conjecturing whether Bill Shorten is - how do you put this? - trying as hard as he can to win this election. That maybe he's secretly going for a two-election strategy instead of trying to seize the day.

Electorally, in the wake of the Rudd-Gillard years, Shorten's approach prioritises the reconnection of the ALP with its disillusioned base over attracting the extra middle-ground voters needed to win an election. And that in turn explains why insiders in both camps report Labor is doing better in its heartland - i.e. safe seats it already holds - than it is in the marginals where swinging voters will decide the election. 

The result could be a repeat of 1998 - a sizeable swing to Labor for only a modest return of new seats. Yet for Shorten personally, that would bring an upwelling of affection from the Labor faithful, casting him as a defeated leader who had fought the good fight for "Labor" values - very useful if your challenger is the darling of the rank-and-file, the Left's Anthony Albanese.

All of this suggests Shorten may well be already thinking about his own survival as leader beyond the horizon. Don't expect him to use the term or even to accept the logic, but the inescapable conclusion is that he has a two-election strategy having concluded months ago that gaining the 19 Coalition seats needed to win on July 2 is unachievable.

In other words, he's really not putting the hard yards into winning the middle. It's a bummer because of the thought of Turnbull getting a full term and then continuing with these Abbott-esque policy positions is going to be a real drag. You kind of wish Shorten would go hard for the Lodge this time around, if only to make up for the ridiculous loss in 2013.

The more interesting news to do with the elections coming from fringier areas. Like ABC friends who want to target Coalition seats. 

News That's Fit To Punt - 12/Jul/2015

Are They Petty? Or Are They Just Bog Stupid?
It turns out all that weird attacking of wind farms calling them ugly, was covering fire to cut investment into wind power in this country.

Treasurer Joe Hockey and Finance Minister Mathias Cormann​ have issued the so-called green bank with a directive to change its investment mandate, prohibiting new wind funding. It's understood the directive was issued without the approval or knowledge of Environment Minister Greg Hunt, angering the minister.  

The decision is another blow for the multibillion-dollar wind industry, which has just started to recover from the uncertainty created by the government's Renewable Energy Target review. Analysts say $8.7 billion is expected to be invested in wind power in the next five years, while the corporation has invested about $300 million in wind projects to date.

And international investors are warning the government's move sends a bad message about how safe it is to do business in Australia.
The directive is just the latest salvo in the government's attacks on the wind industry.

Good grief. So much for "Open for Business". We know they're fighting a rearguard action against the eventual move from fossil fuel to renewables that must inevitably take place so it's not that difficult to see that the top level of this government is deliberately mismanaging an issue to suit their crony-capitalist friends. But then there seems to be a belief in this government that Tony Abbott's own unpopularity gives him carte-blanche to just do what his cronies want because he's never going to be popular for ever doing the right things. If the electorate is not going to reward you for doing the right things, then it seems they're willing to damn the electorate and do their corporate masters' bidding and secure themselves a lucrative after-political-life. 

Which is to say, under Tony Abbott, Australia's polity has become no better than Indonesia. At this point in time, we're Indonesia-without-the executions. This place only looks respectable to people because it's white middle-aged men in suits running these crappy policies up the flagpole. You'd think this was the 1950s - which is exactly what Tony Abbott wants. Tony Abbott only needs look to his own faith to see how far off base he is on the issue, in this day and age when the Pope issues encyclicals about protecting the environment and curbing carbon emissions, slamming corporate greed as the Devil's own Droppings. You sort of wonder how he can sustain his opposition to things like Renewable Energy and kinder treatment of asylum seekers on the basis of his religion and not listen to his Pope. Evidently, it has nothing to do with his faith, it's all to to do with uncompromising cultural prejudices.

Using Federal Money To Tar The Opposition

This lousy circus that is the Royal Commission into union corruption keeps rolling like an unwanted circus caravan, waiting to find its miserable end. Earlier in the piece it was Julia Gillard who fronted the commission to explain her time at Slater and Gordon working as an IR lawyer, wherein she might have been a little irregular with some paperwork. Now it is Bill Shorten in the dock, being asked whether he short-changed his union members to cut a deal with the business sector. It's kind of weird that the Abbott government is asking these questions, seemingly-suddenly-amazingly interested in the welfare of the rank and file union members. We'll put that bizarre irony aside for a moment and ask the simple rhetorical question, what does this look like?

It looks like one of those show trials seen in military juntas and theocratic councils when they put the opposition on trial for being the Opposition. The Kim Dynasty did this a lot (now they just shoot them). Malaysia keeps doing it to Anwar. The Gang of Four in Communist China did this sort of thing to purge the enemies of Maoism and ended up in their own show trial. It goes on in Iran to this day and heck, even South Korea does this to presidents who leave office at the end of term. What all those countries have in common is that they don't have democratically functioning states. Even the ones that purport to be democratic and have elections can't be said to be functioning properly if they're doing show trials of the opposition. 

However, "a loyal opposition" is a difficult concept for a lot of countries that simply don't understand the adversarial system of law that developed in the English speaking world. Its underpinnings are culturally alien to them and so they concoct these kinds of show trials. It's a dead giveaway that they don't get democracy. 

Imagine my grievance and dismay then to see the Opposition Leader of this land, sitting in the dock over this stupid political show trial in Australia; Australia, the once most progressive nation in the English speaking world, reduced to the spectacle of a political show trial. You'd think we were Indonesia-without-the-executions; but no, we're even worse than that because they've stopped doing these for now in a sign that they've begun to get democracy. Clearly, our own political leadership has lost the plot. The exasperation in that photo says it all. 

What Yanis Varoufakis Has To Say About The Debt Deal For Greece

Pleiades sent in this nugget. Yanis Varoufakis has a piece in the Guardian. 

In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent. 

Official Europe chose the second option, putting the bailing out of French and German banks exposed to Greek public debt above Greece’s socioeconomic viability. A debt restructure would have implied losses for the bankers on their Greek debt holdings.Keen to avoid confessing to parliaments that taxpayers would have to pay again for the banks by means of unsustainable new loans, EU officials presented the Greek state’s insolvency as a problem of illiquidity, and justified the “bailout” as a case of “solidarity” with the Greeks. 

To frame the cynical transfer of irretrievable private losses on to the shoulders of taxpayers as an exercise in “tough love”, record austerity was imposed on Greece, whose national income, in turn – from which new and old debts had to be repaid – diminished by more than a quarter. It takes the mathematical expertise of a smart eight-year-old to know that this process could not end well. 

Once the sordid operation was complete, Europe had automatically acquired another reason for refusing to discuss debt restructuring: it would now hit the pockets of European citizens! And so increasing doses of austerity were administered while the debt grew larger, forcing creditors to extend more loans in exchange for even more austerity.

And that's about as succinct as it can be put. In the 9 years since the GFC broke, I've had to think a fair bit about what the bail outs and Quantitative Easing meant. The best explanationI can give you is that it is an attempt to freeze the clock so that the participants in the world's greatest casinos have time to take their chips of the table and walk away without cashing in the losses, while the bill is sent to Joe Q Public. In the aftermath governments ran out of money do their normal government-y things, and so they committed to 'austerity' which further shrunk the economy and made things worse. Iceland, which refused to give the bankers a pass, has recovered nicely, which tells you something about all this glorious QE I II and 4Eva we've seen. 

David Cameron of course did have one standup moment where he declared he would not balance the books of the United Kingdom on the backs of the poor and needy. It's a great line, whether he actually followed through on it or not. It perfectly describes what Germany is doing- balancing its own books on the backs of the poor and needy in Greece. Whether 'Grexit' happens or not, the world's sympathies are with the Greeks on this fact alone. If Grexit should happen, the Greeks at least would have a fighting chance. As for Deutsche Bank that has trillions in derivatives tied to Greek bonds, I don't think we'll give them much sympathy when it all blows up, and Angela Merkel has to clean up that mess. 

Varoufakis Resigns

Notes From The Eye Of The Storm

A bit of a curious gesture from the Greek government upon finding validation at the ballot box, is that Finance Minister Yanis Varoufakis has resigned. Heck, I may as well quote most of it here:

The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage. 

Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms. 

Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today. 

I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum. 

And I shall wear the creditors’ loathing with pride.

It's pretty self-explanatory. In exchange for making some kind of deal to stick, he took himself out of the picture. It's an extraordinary turn of events, but then again, so is the whole situation where by a European nation has defaulted and its citizens have voted 'no' to more austerity.

I would hazard a guess and say that Mr. Varoufakis saw things through to their logical conclusion. It's now up to the European Central Bank to come to the table, and recognise that debt reduction is going to be there as a legitimate bargaining point. Watching things from the great distance here in Australia, it strikes one as being an important moment in the aftermath of the GFC where perhaps bankers in Europe have to face the music for their failures instead of being bailed out and collecting their bonuses while enforcing austerity on a whole nation. 

There was this interesting little panel doing the rounds today on Facebook:

Oddly enough, Deutsche Bank has already been bailed out for about the same amount of money it would take to bail out Greece. I know they're sitting on trillions of derivatives that could blow up as a result of a Grexit, but surely they don't want to blow themselves up that badly.