View From the Couch - 17/Jul/2015

Greek Drama Day 2,190

I've been on holidays for a couple of days so I didn't catch much news. That was sort of the point of the holidays: to get away from it all, and that sort of included this business of blogging stuff.

Anyway... Greece seems to have gone into a political meltdown. First, the Syriza PM Tsipras negotiated for Greece a worse settlement that was on offer for Greece before the 'Greferendum'. somewhere around 30-40 MPs of his side refused to back the deal, but with cross-bench support, Tsipras shepherd the changes Greece had to make, through its Parliament. The only way to understand this turn of events is that Grexit - to the consternation of many - was simply too hard to do and Greece would have plunged into being like an African nation where nobody lends them money and nobody goes there because everything has been looted.

And believe me, everybody will be looting everything the moment Grexit happens and there's not enough of food or medical supplies or oil or cash. There won't be a police force because they won't be able to pay them; and schools will shutdown, infrastructure will shut down. How is the complete and utter capitulation better than that? At least the banks will open again.

You have to understand that the oligarchical rich Greeks who brought about the conditions of Greece to be in the Euro and so much in debt still have lots of money in those banks. All the MPs on the conservative side of politics have that problem - they need the banks to reopen even if only briefly so they can take whatever cash they can and get it out. I know it's a terrible thing to ascribe such a terrible motive to these lawmakers but these are extraordinary times. And let's not forget, conservative lawmakers in any land are the rich, if not the proxies for the rich. They will take any amount of financial pain to their fellow citizen as long as they can keep their rents going; something that's true even in Australia, but that's another story.

All this hollows out the 'Greferndum' as well as underscores why Yanis Varoufakis might have resigned at the point he did. It simply didn't matter what the Greek people - the demos! - wanted. There was no real negotiation, it was simply terms being dictated to Greece by the ECB, EU and to a lesser extent, the IMF. Leading the assault (so to speak) was Angela Merkel who on behalf of Germany essentially gave nothing and got everything. Unfortunately Tsipras now looks like an asshat clown instead of the modern day Themistocles; but all of this might be part of a greater strategy to better engineer a good Grexit rather than a bad one.

Angela Merkel and the northern alliance of countries, banksters and technocrats - the modern day barbaroi - have essentially cited the rule of law as the cornerstone from which they are making their demands and refusing to give any debt relief. Hidden in there somewhere is still the trillions of dollars worth of Greek Bond derivatives that would blow up on a Grexit, so getting this deal done without the haircuts is a great boon for them. It means Germany won't be plunged into the kind of chaos seen on the streets of Athens, and by extension it means the world markets won't be roiled in another GFC so soon after the last one.

Old World Problems

The European Union isn't looking too flash hot these days. Given the choice of kicking out Greece or keeping it and helping it as one of their own, they opted to keep Greece so they can keep kicking it which combines the worst aspect of both options. This does not look good to anybody. Since its inception in the early 90s, the European Union had argue its wide, pan-nationalistic cause against nationalist right wing nutjobs in each and every country. By approaching Greece the way it has for the last 5 years, they've opened up a front to the left as well as to the right, whereby Syriza and Podemos in Spain have now split off to the left of the EU andean demonstrate that the loss sovereignty in the EU project is a major problem for countries with great debt and great unemployment.

Inadvertently, the winningness of Germany on its own has redistributed its low-industrial high-unemployment problem to the PIIGS nations, where they don'thave the control to ameliorate the unemployment being exported out of Germany. All these countries in the advanced, old-world share the problem of not knowing where future growth is going to come from, and so interest rates have fallen to zero, just to keep the economy going and from asset prices from collapsing. In this light, it makes sense that banks become gamblers locked in a zero-sum game (low to no growth) and making money/saving money involves taking it from somebody else (hello Liberal Party of Australia).

The world is running out of growth because there are so few spaces in which to grow. We can chop down all the forests in Amazon and clear out the last remaining wildlife sanctuaries in Africa, but there is not enough space into which the globalised economy can grow. The emerging markets are a higher grower right now, only because they're starting from a lower base. Even their growth will run down, just as it has in China. It's what it means to have a developed economy.

In the absence of a physical frontier, there is only the cyber frontier until space opens up. This explains Google, Amazon, Apple, Microsoft and Facebook, and how Elon Musk is busily building up SpaceX. It should tell you something about where the smart money thinks things are at.

As for Europe, this dynamic is playing out in a new way. Europe will now cannibalise Greece to keep the rest afloat. But it also means the PIIGS are next in line to be cannibalised once Greece descends into the pit of depression. And if the same treatment descends upon the PIIGS, how soon will it become like 1930s Germany where Leftists and Fascists fight in the streets? Or there is a new civil war in Spain? Many of these conflicts now echo older ones, precisely because they're being fought over old settlements that are now being undone in the light of zero growth, ZIRP, and high unemployment. Economic settlements are only as good as the money spent to maintain them. When it becomes cheaper and expedient to let the people starve and fight it in the streets, we'll see some realpolitik and class warfare as a certainty.

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. 

News That's Fit To Punt - 08/Jul/2015

The Optimists' Corner

The really funny thing is that when things are going wildly in a bad direction, somebody will come up with a contrary opinion in wildly the opposite direction. It's hard to fathom it, but on a day where the Shanghai index had to suspend trade on 40% of their blue chip firms to stop people trying to squeeze out the door at the same time, Goldman Sachs said that it sees no bubble in the Chinese equity markets.

Goldman Sachs is sticking with its optimistic forecast in the face of record foreign outflows, the biggest-ever selloff by Chinese margin traders and a chorus of bubble warnings from international peers. The call hinges on the success of unprecedented government efforts to revive confidence among individual investors who watched equity values tumble by 3.2 trillion over the past three weeks. 

"It's not in a bubble yet," Lau said in an interview. "China's government has a lot of tools to support the market." 

Lau, who set his CSI 300 target on July 1, confirmed on Tuesday that the projection still stands. He's been forecasting gains in Chinese shares for much of the past year, a stance that paid off as the CSI 300 surged to a seven-year high last month.

Heck, they may be right. Maybe there will be an almighty bounce soon, what with China's government pumping in liquidity, but... there's just this chart here:

...which sort of paints a picture of how these kinds of things don't work out too well. 

Just to be sure, I sort of poked Roger in HK who - as his living - gives investment advice to the stupendously rich in Asia. To which he replied:

The Chinese can't go to the Macau casinos because of govt crackdown on corruption, so the money's gotta go somewhere. It's like one big wet market where you can get leverage financing. Buy10 bananas for the price of one now and pay later? Yeah give me a hundred!

After lunch, he sent back two phrases. The first, as the market opened was, "Meltdown". A few hours later he told me "It's a Bloodbath." I told him to tell his clients to BTFD ("Buy The Fucken Dips"). I only got a smiley-emoticon back. I'm sure Roger's laughing-out-loudly, because that's his natural nervous reaction to anything out of the ordinary.  

The other wildly optimistic article was this one that said there is no housing bubble, Australian property prices were 30% undervalued. 

What has changed since then is that real long-term interest rates have fallen substantially. That fall made housing more attractive relative to renting, despite the increase in prices." 

Dr Tulip and his co-researcher compared the cost of renting and buying identical properties, avoiding the common trap of comparing national average rents with national average prices. Because owned homes are typically "bigger and nicer" than rented homes, a lot of the apparent price difference reflects a quality difference. 

They calculated the annual cost of a bought home from the purchase price, the transaction cost, the expected mortgage rate and the running and depreciation costs offset by expected capital gains. 

The annual cost of owning a home bought in April was likely to be 2.7 per cent of its value. The annual cost of renting the same home was likely to be 3.9 per cent. 

"So you can either pay 2.7 per cent of the value of the property to buy, or you can pay 3.9 per cent of the value to rent," Dr Tulip told the conference.
"The undervaluation is 30 per cent. 

"It's unusually wide, the widest in at least 30 years. I can take you back further but the data quality deteriorates the further we go back.

Ri-i-i-ight. I can follow the maths where 3.9% is 30% over 2.7%. But this is based on TwIRP. I wonder what it would look like under ZIRP - probably even better. Mathematically speaking, the gap would open up even wider as interest rates asymptotically reached towards Zero. While mathematically being true, you sort of wonder whether the real world economics would reflect such calculations. When we get down to ZIRP, we may no longer have banks that are willing to lend to people wanting to buy multimillion dollar homes as their first homes, given that the economy is at a zero-sum game. 

Anyway, I just thought you'd be amused by those two wildly optimistic views of what we are looking at: a market crash in China and a property bubble in Australia.

The 'Greferendum', Revisited

Walk-off HBP thinks this one's a bit alarmist, but it contains some really interesting information that is a little disturbing. 

Greek premier Alexis Tsipras never expected to win Sunday's referendum on EMU bail-out terms, let alone to preside over a blazing national revolt against foreign control.

He called the snap vote with the expectation - and intention - of losing it. The plan was to put up a good fight, accept honourable defeat, and hand over the keys of the Maximos Mansion, leaving it to others to implement the June 25 "ultimatum" and suffer the opprobrium.

This ultimatum came as a shock to the Greek cabinet. They thought they were on the cusp of a deal, bad though it was. Mr Tsipras had already made the decision to acquiesce to austerity demands, recognizing that Syriza had failed to bring about a debtors' cartel of southern EMU states and had seriously misjudged the mood across the eurozone.

Instead they were confronted with a text from the creditors that upped the ante, demanding a rise in VAT on tourist hotels from 7pc (de facto) to 23pc at a single stroke.

Creditors insisted on further pension cuts of 1pc of GDP by next year and a phase out of welfare assistance (EKAS) for poorer pensioners, even though pensions have already been cut by 44pc.

They insisted on fiscal tightening equal to 2pc of GDP in an economy reeling from six years of depression and devastating hysteresis. They offered no debt relief. The Europeans intervened behind the scenes to suppress a report by the International Monetary Fund validating Greece's claim that its debt is "unsustainable". The IMF concluded that the country not only needs a 30pc haircut to restore viability, but also €52bn of fresh money to claw its way out of crisis.
They rejected Greek plans to work with the OECD on market reforms, and with the International Labour Organisation on collective bargaining laws. They stuck rigidly to their script, refusing to recognise in any way that their own Dickensian prescriptions have been discredited by economists from across the world.

"They just didn't want us to sign. They had already decided to push us out," said the now-departed finance minister Yanis Varoufakis.

So Syriza called the referendum. To their consternation, they won, igniting the great Greek revolt of 2015, the moment when the people finally issued a primal scream, daubed their war paint, and formed the hoplite phalanx.

Mr Tsipras is now trapped by his success. "The referendum has its own dynamic. People will revolt if he comes back from Brussels with a shoddy compromise," said Costas Lapavitsas, a Syriza MP.

"Tsipras doesn't want to take the path of Grexit, but I think he realizes that this is now what lies straight ahead of him," he said.

Holy cow. So basically, the Euro creditors do want a Grexit, and sent terms that would be rejected by Greece and stuck to their guns. Tsipras didn't want to go to a Grexit so when he called a referendum, he was hoping to 'lose' to a 'yes' vote and use that as a catalyst to take Syriza out of government and the ongoing non-negotiations. But of course, the 'No' vote won which meant that Tsipras wasn't able to get his ticket to get out of the ongoing non-negotiations and had to head back. This explains Varoufakis' exit better, and how on Monday a new Finance Minister arrived Brussels without a plan. Yep. The Greek cabinet war gamed the Grexit and didn't like what they saw, so they tried to get back to Brussels with a white flag, but of course, there can't be a plan because they didn't expect the 'No' vote to win so resoundingly. 

Knowing all this now makes me more frightened. Thanks to both Greece and China, commodities have tanked as has the AUD. We may well not notice it immediately, but our balance of payments got worse by default in Australia. All this stuffs made us collectively poorer, and it's just the beginning. Economists are now readjusting the RBA outlook, thinking there's more than likely a interest rate cut coming. If it does, well, so much for TwIRP. 

Honey I Bolted Together A Telecaster

The Latest In The Guitar Lab

It's been a while since I've built a guitar. It's a mix of the AUD slipping from parity, the general sense of "what more do I need to do?" and running out of steam that's kept me from doing anything, but this week I've managed to get my gumption up and screwed on a neck to a body. Yep, 4 screws and suddenly I had myself a new guitar.

The neck is a Mexican Stratocaster neck. The frets feel small compared to the normal jumbos I'm used to, but it's a very nice vintage gloss finish neck. It's not quite a flat deck - there's a bit of a camber but barely noticeable when you play. The only thing that's not stock about it are the Fender locking tuners I've put on to it.

The body is the wild card in this marriage of parts. It's a Squire Vintage Modified Cabronita body that was going for cheap, even though it was loaded. The pickups are stock Fender pickups - a Fidelitron in the neck which mimics the Gretsch Filtertrons, and a Alnico V single coil in the bridge. There's much scuttlebutt on the net as to who exactly manufactured the single coils. There's strong unconfirmed suspicions/nods that it's a Tonerider. The body wood is basswood, but it is very heavy and solid.

There is also a Bigsby-licensed tremolo on it, which is surprisingly sturdy but a *bitch* to restring. Overall the guitar has a nice vintage-y tone to it and plays really well.

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. 

Quick Shots - 05/Jul/2015

Communist Manifesto & Thomas Piketty

I've been re-reading this thing from Penguin Classics. The actual manifesto is relatively short. There are reams of writing in the introduction part of the book trying to contextualise the thinking and social forces that made the important points of the book so important to so many for decades.

Why am I reading this now? Partly because I like reading Penguin Classics, but also because I'm about to read Thomas Piketty' book' Capital in the 21st Century'. The Manifesto is a thunderously loud book as it pronounces so many things about testate of capital, the bourgeoisie and the proletariat. I'm getting the whiff of 1848. I'm also getting a mechanically-minded refresher on how Marx thought the Revolution was inevitable. When you read this as an older person, you tend not to be persuaded by the energy of the thing.

Speaking of which, I've actually got Piketty's book on Kindle - I'm trying something new. I'm trying to read big serious book electronically. My experience of trying to read books on phones has notion great. At the end of the day, no matter how big the phone screen gets, it's still not quite size of a proper book so you get tired all the squinting or flicking. I've read PT Barnum's book on the iPhone but I haven't had the patience to read Pete Townshend's autobiography - it's just too big.

So far the Kindle is proving to be a delight. It's a very different experience to reading a fat book, but that's probably the best thing about it. I'm slow on the uptake when it comes to gadget-gizmos so this might strike others as incredibly backwards but basically, I'm barely getting to understanding the upside of digital ownership of media.

Greek Referendum

It's the day of the vote as we speak. For a nation that could be the undoing of the European Union, the government has a weird sense of due diligence about it. The vote represents the government seeking a final mandate to tell the Troika to stick their non-deals where the sound doesn't shine. During the week it came out from IMF economists that indeed if Greece were ever to get out of its position of debt it would need more money for a bailout and its demands to have some debt reduced would ave to be taken aboard. One imagines the boffins in the ECB and by extension the German finance ministry thought this was a bit of friendly fire, while Tsipras and Varoufakis did a little fist pump in being validated.

That being the case, it would be a crazy Greek voter to vote 'yes'; they all ought to vote 'no' and get on with either getting a better deal out of the troika or doing the Grexit. In any case, the Germans are surprised that the home of democracy has a leftist government that actually went to its people for a mandate. They should've seen it coming, given that they gave no ground whatsoever in the five months they've been talking to this sam government.

I'm not a betting man on things like this, but my best guess is that the Greeks do vote 'no' and put the Grexit on the table for Tsipras. I imagine that around lunch time Sydney tomorrow, we'll be seeing the results.

UPDATE: And it's looking like a resounding 'No'. Markets are going to open to chaos today, they think. The view is the 'no' vote puts the entire country at risk, but then, a 'yes' vote with continued austerity was not going to make things better in Greece either. Caught between rock and a hard place, then' option allows the Greeks to have a sense control over their doom. The reports also say that the Euro negotiators have lost faith in the Greek leadership, but when you think about the logic of the bailouts, it was inevitable that Greece was going to walk away from an arrangement that does not actually help ordinary Greek citizens.

Insisting On Being Stupid

I don't know what more ca be said about all this 'Q&A' business, but Tony Abbott has ordered his front bench not to appear on the ABC's panel talk show. Yes, he ordered them, and by god they will obey their Fuhrer of Foolishness, the Sultan of Stupid, the Master Moron, the Id Yacht himself. Hooray for Australian politics.

"The Prime Minister has communicated that he does not want any frontbencher to appear on Q&A," the spokesman said.  

"Barnaby was told this tonight and apologised to Q&A that he would not be able to appear." 

Communications Minister Malcolm Turnbull - who has said he opposes a boycott of the program - is scheduled to appear on next week's episode of Q&A. The Prime Minister's stance leaves Mr Turnbull with a difficult decision: to defy his leader or to act contrary to his previously-stated position.   

Mr Abbott's parliamentary secretary Alan Tudge withdrew from last week's episode ofQ&A, saying it was inappropriate for him to appear while a government inquiry into Mr Mallah's appearance was underway. The Department of Communications inquiry has been finalised and a summary of its investigation was released on Friday. 

Fairfax Media understands the ABC will not seek to replace Mr Joyce with another government frontbencher. Host Tony Jones is expected to address the issue on air on Monday night. 

Good grief. The shame of it is more petulance rather the evasiveness and the desire to be unaccountable that is driving this boycott. But that's what you get when your politicians know no shame.

Meanwhile it appears Bill Shorten has nose-dived in his popularity in the polls. Mr. Shorten now has a negative approval rating, much like the fine PrimeMinister of the land. I don't know that Bill Shorten is doing such a bad job, given that his jobs to give the government as small a target as possible until the election is called, and then go and recite and reprise all the slip ups the government has made when the election comes. I'd imagine it was the fallout form 3 weeks of 'The Killing Season' bringing back memories of his role in the Rudd Removal and the Gillard Removal as well as how he lied to the media saying he was backing the Gillard as he quietly switched horses to Rudd in 2013. Yes, it was dastardly business for all involved, but you can't expect that one to stick.

Quick Shots - 01/Jul/2015

Greece Is Now In Default

It's weird how they've been beating about this bush but Greece is in default as of last night when they failed to pay that 1.6billion euros. They couldn't pay it because the IMF wouldn't lend them any more bail out money unless they cut pensions instead of raising taxes. The weird thing of course is that the people Greece failed to pay was the IMF. Yes, that's right, all these 5 years, the money has been cycling through Greece to keep paying its debts right back to the people bailing them out. The apparent convoluted and seemingly redundant move of money is of course because the IMF bought the Greek bonds to stop bond holders getting a haircut except those Greek bonds are tied to trillions of derivatives sitting on Deutsche Bank's ledgers and if they blow up, it really will be Europe's Lehman Bank moment.

So what happens now? There are many scenarios, but they're all made doubly complicated because Alexis Tsipras announced a referendum for his people as to whether Greece should or shouldn't accept terms from the Troika. In a nutshell, if the referendum votes No, it opens the door to the Grexit and backs Tsipras' hardball tactics with the Troika. If they vote Yes, it sort of steals the thunder from the Syriza Government. Either way it's nice to see the country that gave us words like drama and democracy is going to the mats with both.

'Prexit'

Unbeknownst to most of he world, Puerto Rico is also about to default. Once again, this one is mired in some strange complexities that make the situation worse than it appears on paper. Basically, Puerto Rico is not one of the states of the USA. It is a 'commonwealth' which allegedly means it can't declare bankruptcy like a city the USA, which means it is a little like Greece in that it can't get out of its functional union with the USA and it can't pay its debts. It's a little interesting this is coming to a head at about the same times Greece is trying to wind up its farce.

China's Share Market Crash

It was only a couple of weeks ago in the middle of June people were noticing how much the Chinese share markets had risen in such a short span of time. All kinds people were coming out of the woodwork to place bets on the markets and lo-and-behold they had share bubble going in no time flat. Now there's a big correction going on and it has sunk 20% from the peak, which is of course the definition of the start of a bear market.

I bet a lot of mum-and-dad investors in China would be spooked by that; but you had a market with terrible fundamentals drawing enormous amounts of money. Some of the companies being listed were no better than shell companies with nary a product to their name. It's the classic model of bubble behaviour when too much money is chasing not enough good stuff; that show yo get the kind of frothy market you have in China. It's like that anecdote about Joe Kennedy who sold short on equities in 1929. It is said that once he saw a shoeshine boys giving stock advice, he knew the bubble had to be over. Let me tell you they had articles about exactly that in April this year.

If you can't read tea leaves, the least you can do is read history.