News That's Fit To Punt - 30/Nov/2016

Can't Do Anything Right

It's really strange that it took a Liberal Government to put a light rail link in from scratch. Unsurprisingly, they've done a pretty bad job of it.

The NSW government failed to "effectively plan and procure" Sydney's $2.1 billion inner-city light rail project, resulting in a blowout in costs and reduced benefits. 

In a scathing report released on Wednesday, NSW Auditor-General Margaret Crawford said the government's management of the light rail project "suffered many of the same problems" as found with the $16.8 billion WestConnex motorway and the Albert "Tibby" Cotter bridge at Moore Park."Common problems include tight timeframes without justification, project scope defined too narrowly, underestimated costs and overestimated benefits," her report found.

The 2013 business case for the light rail line from Circular Quay to Randwick and Kensington in the city's east budgeted on the project costing $1.6 billion, but a year later it had blown out to $2.1 billion.

They were in such a hurry to green light major infrastructure, they seem to have literally thrown money at it willy-nilly. As with WasteConnex, they've shot through the budget, but they don't really care. No, no, no. Because when you think about it, all the money wasted goes into the lobby that asked for these infrastructure projects and it's the tax payer who foots the bill. The excesses are simply gravy.

It's amazing how vested interests can control a political party so effectively and the only people complain are those directly impacted. The rest of the polity just lets it happen.

But Do They Have The Balls To Follow Through?

Yes, the Federal government in its time of budget shortfalls finally notices the billions going offshore from Australia in the guise of LNG.

The numbers begged not to be ignored by Canberra. 

LNG revenue was set to mushroom from $5 billion to $60 billion over a decade but PRRT returns would sink from a paltry $1.2 billion to a frankly embarrassing $800 million. 

Currently, the only PRRT payments are coming from mature oil rig operations in Bass Strait. 

Effectively, Australia is giving away 85.5 million tonnes of LNG a year for free. Well, to be sold by fossil fuel companies to Japan, Korea and China. 

It was a dogged group of Tax Justice Network advocates - the same people who launched the corporate tax avoidance research that eventually resulted in the Coalition's diverted profit tax - who saw the scandal in the PRRT. 

TJN spokesman Mark Zirnsak, strategist Anthony Reed and researcher Jason Ward drilled into frightening numbers that contributed to a series of stories acknowledged by shadow treasurer Chris Bowen on Wednesday as having precipitated political action this week. 

Morrison's announcement of a "comprehensive" inquiry led by respected bureaucrat Mike Callaghan was a moment where the fiscal wood has been separated from the trees by Morrison.

So Scott Morrison is going to have a comprehensive inquiry he says. This is the government that killed the Mining Rent Resources Tax, so you wonder how they are going to get their silly little heads around 180 degrees in the opposite direction and actually get revenue from what is rightfully for and of Australia. We'll see how that goes. Lord knows there's enough stupid in Canberra but money is money and this is money just slipping off shore without any discussion, let alone any argument.

Dolly Is Dead

No, not the cloned sheep. It's the printed version of that magazine for young girls that is coming to an end.

In a statement, Bauer said the magazine is "responding to the changing demands of how readers engage with the brand by switching it to an exclusively digital model". 

It said November was the biggest month for online traffic in Dolly's history. 

"It is estimated that Dolly will hit 1.2 million [online] sessions this month," Bauer said. "As a result, Dolly magazine will cease to be published bi-monthly. 

"Dolly.com.au will continue to cover breaking celebrity news, fashion, beauty and lifestyle content, with popular fixtures such as Dolly Doctor."

A number of staff are expected to be impacted.

It's interesting that Bauer are putting out the line that the magazine is going to continue as an on-line entity, but that's a bit like saying people live on after death as ghosts and this is a good thing for seances. The writing is on the wall. Nobody buys magazines any more least of all those born this side of the Sydney Olympics. You can't sell media to people who are used to getting it for free.

It's amazing because if they're ceasing to print, they're giving up the ad revenue as well. It has got to be a sure sign that the rest of the magazine businesses are on death row. If there is a demographic coming through that doesn't buy magazines, you can see that there are a whole bunch of magazines that cater to the older demographic that will succumb to this generation not buying media as they grow older. When you add that tot he people turning off free-to-air TV, the mainstream media as we knew it is in massive retreat. Dolly quitting is indeed the canary in the coal mine of mainstream media.

You wonder if anybody will be able to do media and make money in the next 20 years.
So, yes, I'm calling it as a very significant moment.

BTW people, click on some ads on this page for me will you? I need to make a living too. :)

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. 

Grumpy Again

But That Trick Never Works

That old rapscallion and former Howard Government chief of staff, Cabinet SecretaryArthur Sinodinos was on television today, pitching a corporate tax cut. He was saying yes, an income tax might stimulate the economy but a corporate tax cut would stimulate investment and that would stimulate the economy more. This seems to be the mantra of the big end of town which is thirsting for the corporate tax rate cut.

"At least 50 per cent of the impact of cutting company taxes goes in higher wages for workers and higher employment," Senator Sinodinos said. 

"Putting money into the hands of consumers obviously encourages more spending and disposable income and has good incentive effects. But cutting company taxes also has good effects.

"It can encourage investment, it can encourage higher productivity, it can encourage more investment from overseas."

Would that if it were so, Mr. Sinodinos. Earlier in the month there was a report about that sort of thinking which, in a nutshell claimed that it was tried in Canada already and had no such desired effect. 

The Canadian federal government implemented three successive federal corporate tax reductions over the last generation. (Provincial governments also levy their own corporate taxes, averaging around 10 per cent, added to federal levies.) The first stage occurred in the late 1980s: the statutory rate was reduced from 36 per cent to 28 per cent, but various loopholes and deductions were closed in the process. The second reform occurred early this century: the general rate fell to 21 per cent, and preferences for manufacturing and resources were eliminated. The latest cuts were implemented beginning in 2007 by former Conservative Prime Minister Stephen Harper (defeated in last year’s election): he cut the base rate to 15 per cent, and eliminated a 1.1 per cent CIT surtax. Those last reductions alone still cost the federal government over $15 billion (Canadian Dollars) in foregone revenue each year. 

Together, these successive cuts reduced combined Canadian corporate taxes (including provincial rates, which also fell in several provinces) from near 50 per cent of pre-tax income in the early 1980s, to 26 per cent today. In theory, the resulting boost to profits should have stimulated a strong response in business investment. Unfortunately, hopes for this “jobs and growth” dividend have been repeatedly dashed.

Hence, for all this talk about how cutting taxes for businesses would spur investment, I think we need to take that with a dump truck load of salt. The big end of town is simply going to pocket that difference and probably won't even pass it on as a dividend. In the absence of things to invest in, investments tend not to be made. Given that the Australian economy post-Commodity Supercycle is distinctly looking like a services-based economy, there really isn't a whole lot of places investments can be made. There's a great deal of non-incentive (as opposed to an active disincentive) for capital investment to take place. This is why the government ought to be pushing for infrastructure investment and not trying to run back to surplus by cutting budgets for everything. 

As for the claim that would make wages go higher, that's a bit fanciful too because the big end of town has spent the post-GFC years pocketing all the productivity gains and not let wages rise. It's hard to see how money saved on top by these companies would translate into a burst of higher wages, or for those imaginary higher wages to go into the economy as spending when the most likely scenario is for that money to be spent on paying down mortgages - and then the bank sits on that money not investing it in things. I understand the Coalition government wants to help the big end of town but really, this is not going to have any effect. Arthur Sinodinos is simply wrong, working off ideologically driven bad advice. 

Why The Government Fighting For A Surplus Now Is A Bad Idea

This one's a few weeks old, but worth dredging up because of Arthur Sinodinos above. 

Here’s a little thought experiment to check the familiar argument that Abbott gave for the need to get to surplus: “Governments, like households and businesses, have to live within their means.”

Imagine that there is an economy where the money supply consists of a single dollar, which is exchanged 100 times per year among this economy’s inhabitants — thus generating a GDP of $100 per year. Then imagine that the government in this economy sets itself the target of running a surplus equivalent to 1 per cent of GDP. If the government achieves its objective, what will GDP be the following year?
Zero. And, if the government debt ratio was more than 1 per cent beforehand, it will be infinite afterwards. 

Why? Because the economy had only one dollar of money in existence, and the government’s surplus took that $1 out of circulation, leaving the economy with precisely zero dollars for commerce the following year. The government budget affects GDP by changing the amount of money in circulation in the economy, and a government surplus effectively destroys money. 

This is utterly unlike a household. Household saving does not destroy money, nor does it materially affect the household’s own income, since a single household is such a small part of the national economy (even if we’re talking James Packer’s household).

Got it? 

If, - like Worst-Treasuerer-Ever Joe Hockey did, - you go around telling important people from around the globe at things like the Brisbane G-20 that what the world needs now is economic growth and lots of it, the last thing you should be doing is busily taking money out of the economy - i.e. don't go around cutting the budget in the hopes of getting back to a surplus. It's akin to saying you want your car to go farther because that's what is needed, and then busily syphoning out fuel from the tank. It's self-defeating and self-contradictory. 

I bring this up, just in case you were wondering why WTE Joe really was WTE, and why Tony Abbott really deserved the tag 'Stupidity' in every post I made about his government. You can lie your way into office, but you can't work out of the office without facing up to facts. And logic. 

You wonder about the education these men failed to get in their fancy-pants private school.

The Devil And Hillary Clinton

Here's something from Pleiades that you might find interesting. 

Donald Trump is as frightening as his opinions are poorly considered. His life has been lived around people whose livelihoods depend on not telling him to shut the fuck up. His nominal constituency by-and-large has no context for this— what to them appears as ‘speaking truth to power’ is in fact a privileged bully enamored with the sound of his own voice. Mr. Trump was born into the class that establishment Democrats and Republicans have spent the last four decades making so wealthy that it separates them from the consequences of their socially destructive actions. Donald Trump is an inheritance-baby insider who plays an outsider on television. It is hardly an accident then that Mr. Trump and Hillary Clinton have been friends for over twenty years.

The Democratic establishment is in the process of shoving Bernie Sanders out of the way to put Hillary Clinton forward as the candidate to beat Donald Trump. The term too-clever-by-half comes to mind. The ‘missed opportunities’ of the last seven years are in the process of asserting themselves. Mrs. Clinton is a war-monger, free-trade-agreement loving friend of Wall Street at a time when a fair portion of the conscious public would just as soon burn the whole mess to the ground with Mr. Trump. The question for those who would vote for Mrs. Clinton to ‘stop’ Donald trump is: who are you going to vote for to stop Hillary Clinton?

It's not like it's even a surprising call. 

As the years go by, the Bill Clinton presidency seems more and more like one big wasted opportunity. The number of things they botched up in the process has been a parade of negative consequences both intended and unintended. For all the popularity he had, Bill Clinton never really did the things for his constituents that made their lives better. He and his wife Hillary did things for their Wall Street friends first and foremost. The America we see today that puts Donald Trump as the Republican frontrunner is a result of the Clinton Presidency as much as both Bushes. It's hard to understand why the Black leadership really want to go around the block again with the Clinton election machine. After 24 years, you'd think it was obvious that they don't get out of it nearly as much as the Clintons do. 

View From The Couch - 16/Dec/2015

ScoMo Is A Different Kind Of Economic Animal

The MYEFO has come out and well, Scott Morrison isn't exactly cutting everything in sight. Yes, he's cutting some things, but he's vowing not to chase the fall in revenue down. 

Scott Morrison has learnt well from Joe Hockey, Chris Bowen and Wayne Swan.

The best thing to do when revenue is collapsing is to let it, lest it bring the economy down with it. 

As he put it: extreme measures would have placed "a hand brake on household consumption and business investment growth" and unnecessarily threatened emerging signs of economic momentum.

That's pretty contrary to the Coalition diatribe about debt only months ago, and as enacted in two disastrous budgets under WTE Joe Hockey. It must be that at heart, we're all Keynesians now, as the saying goes. 

It also shows that the Turnbull Government really is a different beast to the Abbott Government, at least on an operational level. A simple question of "what would Tony have done?" yields images of a cigar-chomping, axe-wielding WTE Joe. Instead, he's telling us it's not going to be austerity all the way down. I don't want to praise Scott Morrison in the least freaking bit but you have to hand it to him, he's not reacting as one would have imagined from his turn as minister for turning back boats. 

I have to admit, I'm a little surprised. On another level, I think I can see we're heading towards ZIRP a lot more than raising interest rates. As it turns out, it's really hard to get the market off the easing bias. Who'd a thunk it? 

Which leads me to the next thing... 

When The US Fed Dons Wolf's Clothing

This is weird when you reflect back to the utter chaos of the GFC at its height in August 2008. The US Fed is about to raise interest rates by 25bps sometime this week or early next year. Indeed, the speculation is that they have to do it this month because there are no more months beyond December and they committed to doing it before the year was out. So, logically, it's this month. The countervailing view is that the situation is so dire and the High Yield bond market is collapsing so fast, the Federal Reserve Bank would have to be crazy to pull the trigger. 

The fact of the matter is, they didn't pull the trigger when it was benign back in October, so we were left asking the question, if not then, when? If things get precarious enough, the FRB is going to have to think about easing again in no time, which means they'll back at ZIRP in a matter months. It is as if Wall Street is permanently addicted to having cheap indefinite credit and anything else makes it fatal to the whole financial system of the planet. In other words, nothing structural has been fixed since the GFC, that caused the GFC. The risk factors are right back up to where they were on the eve of the meltdown. 

And still, the language from Janet Yellen has been that they're going to raise rates because things are going so much better now. Goodness, it's hard to think all the way back to Paul Volcker in the 1980s. Would he have hesitated? No not a chance. 

On a more local note, the anticipation of the move has created ructions in our own equity market in Australia. It's very strange:

"Amazingly enough it hasn't been priced in. It really is quite extraordinary," he said. "Perversely we may see markets rallying on the back of it once we have some certainty about what the central bank is doing in the US." 

"It's all around these issues regarding sustainable, stable commodity prices and whether we get a decision out of the US Federal Reserve," said Mr Lakos.
Chris Conway, head of research at the Australian Stock Report said while some traders were dipping back into beaten down stocks, the overarching vibe was one of caution. 

"We don't expect any large moves ahead of the US Fed decision on Thursday morning (Australian time), with no-one ... willing to take on too much risk or place any big bets despite the outcome being largely expected," he said. 

"We also expect some volatility immediately after the decision but hopefully, once everyone has processed the result, markets calm and we rally into the end of the year."

So shares got oversold in the last 48hours because everybody suddenly remembered that Janet Yellen was possibly/probably going to go for it with the interest rate hike. Which means that if and when it gets announced, shares are likely to bounce back from 2.5year lows. Like I said, this is really weird. 

China Crisis On The Brew

Nobody's really talking about it in the mainstream news but, China's economy's actually on the ropes. How do we know this? Pretty simple. When China was going great guns, commodity prices were up. For commodity prices to hit the skids this low, this hard and for this long, means China's really run out of puff and can't turn the commodities into economic growth. The collapse in demand for iron ore and coking coal is more than telling, it's both a white flag from China and a red flag for the Australian economy.

In that spirit, here's a story that you might find explains a lot of things.

Several local officials in China's Northeast region sought to explain dramatic economic drops in their areas by admitting they had faked economic data in the past few years to show highgrowth when the real numbers were much lower, Xinhua News Agency reported on Friday. 

"If the past data had not been inflated, the current growth figures would not show such a precipitous fall," one official was quoted as saying. 

The report cited several officials in the region who acknowledged they had significantly overstated data ranging from fiscal revenue and household income to GDP. 

Three years ago Liaoning province's GDP growth was reported at 9.5 percent, but its current figure－over the first three quarters of this year－is just 2.7 percent. Jilin's growth was reported at 12 percent three years ago, but its current rate is 6.3 percent in the same period.

That right there is your confirmation. The Chinese figures have been worse than rubbery, they've been fraudulent. Not only is the commodity boom over, we're in uncharted waters as to exactly what the hell is going to happen next in China when all the debt racked up to fake the demand to fake the growth comes home to roost. So if you're inclined to believe this week's offical statement about strong industrial production and retail sales in China... sure why not? Let's all take that blue pill from Morpheus' hand. 

View From The Couch - 13/Dec/2015

Deporting Permanent Residents Has Got To Stop

This is a new kind of human rights abuse - except they tried this shit ten years ago and it backfired.

Mr Bolvaran, who turned 42 on Thursday, came to Australia as a one-year-old when his family fled the Pinochet regime in 1974 and lived in the country since.

During his time in Australia he met and fell in love with Rachel Delucia, with whom he has three sons, two of them under the age of 10.

But his life in Australia was not always so idyllic, as Mr Bolvaran freely admitted.
He fell into the wrong crowd, racking up a petty criminal rap sheet that included drug possession and stealing.

Unfortunately for Mr Bolvaran, who lived in Brisbane on a permanent resident visa, he got caught up in changes to the Migration Act that saw visas cancelled if the holders were sentenced to 12 months or more in prison. 

Those legislative changes have proven to be a sore point between New Zealand Prime Minister John Key and his Australian counterpart Malcolm Turnbull, given the number of Kiwis affected. 

Mr Bolvaran, who could only speak limited Spanish and had no family support network in Chile, was deported last month. 

"I miss my kids … It's my birthday and I miss the hell out of my boys and my partner," he said.
"I'm so far away from her and everyone. This is where I was born, but I'm lost here. I don't know what to do with myself." 

Mr Bolvaran was jailed in July after he pleaded guilty to a string of offences, including drug possession, possession of a knife in public and receiving tainted property.
After serving time in the Brisbane Correctional Centre at Wacol, Mr Bolvaran was transferred to Villawood Detention Centre in Sydney to await deportation.

It's terrible policy. First of all, it metes out a second punishment to the time served. Obviously the punishment doesn't apply to a citizen, so it means there are de facto two sets of laws for the people of Australia: one for the citizen and another that is far more destructive and punitive for permanent residents.

It also makes the Criminal Justice system merely a partial criminal justice system and the Department of Immigration gets to punish somebody for the same crime, a second time (i.e. forget "double jeopardy") just based on their visa status.  You wonder how the esteemed judges feel about that, should it ever be brought in front of them. If a government body that wasn't the judges handing out legal punishments, you'd think judges might "take a very dim view of that sort of thing". I'm sure it violates something called "the Separation of Powers". Hmm... let me think now.., yes, yes it would.

If the punishment is meant to be a deterrent for crime, it's not going to work because it targets a socio-economic group that is likely not to come in contact with the information. None of the cases that have been reported on the issue show that such legislation has any deterrent for criminality. It's imaginary, and prejudicial.

What's worrying is that the ALP are saying they're in lockstep with the government when it comes to this astoundingly stupid legislation. This make you wonder just how good a mind these idiot politicians have, when even a legal novice like this blogger can spot the obvious legal problem with enforcing such bad laws. So much for Shadow AG Dreyfus being such a legal eagle. The thing that make your citizens and permanent residents really lose faith in government as an institution, is when it gives bipartisan support for bad laws.

This is a bad law. Somebody needs to challenge it.

Wrapping It Up In Paris

It would appear that Paris meetings to deal with climate change ended successfully. Maybe 6 years of even more extreme weather events persuaded more governments. In some subtle way, this is what has happened in Australia over the last decade. There are holdouts who still believe that climate change is not real or a UN conspiracy, or has stopped, but in most part the middle of the electorate thinks it is real enough and needs to be dealt with.

Of course, the Paris Summit and its global climate agreement has nothing in it that is binding or demands accountability, so it is a little bit like everybody agreeing to a wishlist for Santa, and if everybody's good, we'll get global warming under control.

When you think about what happened at Copenhagen in 2009, and how it led to the demise of Kevin Rudd, followed by massive infighting in the ALP government, and the subsequent denialist stupidocracy of the Abbott Government, only to see the return of Malcolm Turnbull as leader of the Liberal Party mere 3 months ago - and therefore offering some hope of serious climate policy - it's been a terrible, terrifying, 6 years.

It's 6 years of missed opportunities; it's 6 years of stalled investments; it's 6 years of more carbon being pumped into the atmosphere that could have been restrained; and 6 years of having to live with people who have utterly unscientific views about climate science and having to argue with them as if they had a leg to stand on or had any intellectual merit. The 6 years of extra arguments, extra discussions, extra politicking, extra effort, all makes me feel faint when I reflection it. And this agreement merely gets us to a starting line that might help us get on top of the challenge.

And with Greg Hunt as the minister for the environment still, I have to say I have absolutely no faith that we'll get anything done.

More Budget Cuts To Come

We are - on the whole - way too complacent about the Australian economy. Especially with the collapse in commodity prices for iron ore, nickel, and oil, a lot of our major export earners are suddenly hitting the wall where they can't be profitable digging stuff up form the ground. If you wanted proof the mining boom was well and truly over, then look no further. BHP of course is taking a double punch because of the dam bursting in Brazil, so its shares have slid down from $25 to $17. The resources sector has been in a two year retreat, but lately it's becoming a nosedive.

Clive Palmer is suddenly running around looking for line of credit to keep his nickel refinery going, and that's obviously because of the collapse in nickel prices. All of this decline in income has now shown up with diminishing revenue for the government. This in turn is going to mean the Coalition Government's favourite thing, more budget cuts.

The Treasurer's task of finding spending offsets will be made more difficult by a sharply worse picture on the revenue side of the budget, which has been hammered by plunging commodity prices and stagnant wage growth. 

Leading economists believe the government will be forced to reveal a worsening of the budget deficit of between $33 billion and $39 billion over the next four years. 

The grim picture was a focus of Mr Turnbull's talks with state and territory leaders on Friday. The Council of Australian Governments' joint communique warned of "emerging budgetary pressures across all levels of government, particularly in the health sector".
On Sunday, Mr Morrison said MYEFO update key forecasts to present a "realistic outlook for economic conditions moving forward". 

"As was demonstrated by the recent National Accounts data, our economy is transitioning from resource investment led growth towards broader based growth," he said. 

"Part of this transition involves dealing with the challenges of lower commodity prices and a declining terms of trade from their historic peaks in the wake of the mining investment boom. 

"The government will continue to restore the budget by controlling expenditure and supporting policies that grow the economy. The budget will not be restored by increasing the overall tax burden on Australians."

So says ScoMo. A lot of this stuff killing revenue is outside of the government's control. Yet the fixation with budget deficits will mean there will be a fresh round of razor gang activity but really, they'll probably find they have to spend the money anyway. It's like the domestic violence thing. The Abbott Government cut $300m out of domestic violence related expenditures. Turnbull has had to go back out and spend $100m. When it's all said and done, he'll probably have to spend the other $200m anyway, because there were probably very good reasons that $300m was earmarked for the program.

If you think it through from a historic perspective, at this point in time these razor gang exercises in austerity are redundant, if not futile. Certainly since the second budget of the Gillard government, there's been significant cuts to government programs. Add 2 of the Coalition's own efforts and you'd have to say 4 years of cuts would have been pretty deep. It's very visible that the Federal Government is running pretty lean these days. What the government has to do is get more serious about tax reform. 

The problem is, it's not a government that likes wage rises, seeing that they represent the employers' lobby. All the talk of raising revenue has been around raising the GST, another regressive bit of policy-talk. In that sense it's a government of vested interests that won't talk its own constituents down from their fighting-a-class-war posture. It would rather just hand over the bill to the wider community and be proud they're trying to balance the books. It's only 3 months or so of Malcolm-In-The-Hot-Seat but this government is looking sclerotic already. When the slowdown hits the wider electorate, and it will, I doubt Malcolm Turnbull is going to stay so popular.  

View From The Couch - 19/Apr/2015

The Grown Ups Are Gone

I don't really know what politics became so daft as it has this decade. When I was growing up, politics seemed a distant rarefied thing that happened elsewhere from one's sphere of existence; and if you are a pre-teen or a teenager, you are mostly right.  It is with gaining the right to vote that suddenly it becomes our intellectual burden to consider things we would rather not. After all, who in their right mind wants to think about the GST when they can think about - oh I don't know - whether England will recall KP to the test side. One has very little control over either those things, but at least with cricket you get some entertainment value. Nobody is entertained by the GST or the very topic of tax policy, let alone taxation itself.

Yet, it used to be that our political leaders were genuine leaders. Whether that was Gough and Malcolm or Bob Hawke with Paul Keating, or even John Hewson for that matter, politicians could be seen to be men trying to do better by the common man and trying to improve the country. They were so clearly adults, and we as citizens would be guided by their wise counsel. Somewhere along the way we got a different measure of politicians. Perhaps it was the internet that made the world go much faster than the dignity of politicians could cope. The first decade of this century really eroded the gravitas and dignity of politicians.

And so we now live in a time when politicians are much less adult-like. It doesn't offer much confidence. Worse still, they are making a hash of it and nobody seems to be able to bring them to account properly. I know I sound whinge-y when I write this, but the political class has long ago decided to cynically exploit the trust of the electorate; the downside of this decision is that it leads to truly stupid policy positions - Like Wasteconnex.

The current Federal government finds itself in a time of dwindling resource income and so must make cuts and consider raising taxes. Instead of coming out and saying "we need raise taxes", this government is hoping to let everybody bracket creep into higher tax brackets. This is partly because they have no political courage (and worse still, have all the reasons in the world not to have political courage) it's in their political credo that the only good thing to do with taxes is cut them.

Things get little weird when the people who are espousing "an end to entitlements" doggedly refuse to surrender entitlements for the rich like negative gearing and cuts to Capital Gains on residential properties or for that matter monies going to private schools. What they should be saying is "an end to poor people's entitlements" and be more honest about it, but of course that doesn't win you votes, so it's the rather confusing "an end to entitlements" as if it is some kind of universal position. They strike this posture because the universal makes them look more statesman-like but also the confusion sewn by this posturing is exactly the space into which they insert their nasty little class-politics, thereby doing the exact opposite implied by the universal posture - at the same time accusing us of misunderstanding their universal posture. As you can see, it's a complicated shuffle step of lying and dissembling - and we in the electorate have to wear this enforced double-think gobbledygook as if it is actually intelligent.

Yet this is the kind political discourse we're left with, and it just seems to get worse each week. By rights, the conservatives should be having a field day in setting the agenda but the way it is playing out suggests that none of them have coherent train of thought as to what to do about the future. Because they cannot fathom the future they sub-contract out the thinking to advisory bodies that come back with things like the Inter-Generation Report that prognosticates a certain kind of economic future but without climate change incorporated into its calculations. These are clearly not the most mature or smartest people in the room; they're the people who have convinced themselves that they are the smartest and most mature people without any supporting evidence. And again, we as the electorate have to bear with this kind of haphazard pseudo-think as the basis for policy conceited on the wishful notion that somehow global warming isn't happening.

And so as we approach the Budget in a few weeks, I can't help but wonder where all the adults have gone. It's been 20 months since the Coalition won office and it can't be coincide that both Gough Whitlam and Malcolm Fraser shuffled off their mortal coil in this time frame. As Paul Keating once warned us, "God help us all, God help us all."

More On That Point About The Unemployed

I'm not unemployed, but it's not like I don't live with the fear that one day I might have to join the unemployed throng. At a certain age, it's just going to be dismal an experience as you can have. It's not like you can inductively reason your way to never falling out of the employment loop.

It's an odd phenomenon but nobody gets less respect than the able bodied unemployed. It's just the way it goes. Being a dole bludger isn't really a lifestyle choice any more than remote communities of Indigenous people living where they do. Centrelink hound people harder than the old DSS and CES, and there are plenty of conditions whereby the government cuts payments to people and then they're not even classified as unemployed. They're something else, but they no longer show up as unemployed in the ABS stats. The Centrelink people are given the incentive to kick as many people off, because this suits the government agenda of "lowering unemployment". That was a Howard government thing.

In the last years of the Howard government, unemployment figures fell. They fell because many people got hounded off unemployment benefits and then glommed on to disability pensions. When you have no work prospects, any excuse to get government money helps, and so Australia found itself with a growing epidemic of disable-bodied people that weren't there a decade before. In the last year of the Howard government, they decided the thing to do was to make the disabled work a few hours a week, depending on the (un)severity of their disability.

Should you find yourself on the wrong side of say, 50, or end up as the long term unemployed who got placed on the dole queue thanks to a shift in the industry they were in, then the stigmatism attached to being unemployed can be unwarranted aggravation. The strange thing is that more and more industries are closing down without necessarily giving rise to new industries to absorb them. Specifically, in the case South Australia where the car manufacturing business is going to stop operating, there are going to be a lot of people with non-transferrable skills. What industries are they supposed to head towards? It's a mystery because not even the Federal Government that precipitated the big end to car manufacturing in Australia knows where the next growth industry is going to be, or if it can absorb these workers.

I mention all this because where the next growth is going to emerge, has been a bit of a mystery for a good decade. The Dutch Disease as the downturn was known in the wake of the Dutch petrochemical boom, has settled down on to Australia leaving a property bubble and record private debt. The Gillard government decidedly took the tack that it was going to be housing, based on the fact that construction constituted 25% of our GDP, and that there is a lot of union membership in the sector. The folly of trusting in such a recovery in the face of the property bubble and high private sector debt seemed worse than foolhardy, more like bind to reality.

The Abbott Government that followed has been worse as it has set out to dismantle the renewable energy sector, pushed out the automotive manufacturing; hobbled the NBN and cut science spending (bye-bye High Tech) and generally laid waste to the non-mining sector while repealing the ming tax. All of this goes to show the considerable confusion in the political leadership operating down in Canberra - but you expect that with the sort of rampant crony-capitalism that this government has adopted as its main agenda. What is good for their mates is all that counts, may the rest be buggered by the next GFC.

Realistically speaking, there is going to have to be a pretty big effort in re-training people and placing them into growth industries. The government is trying to dis-incentivise people getting re-trained by slapping a price tag on the education and refusing to foot the bill itself. Worse still, it seems to have no vision of from where the new growth is going to come. If indeed re-training is what is going to be needed for the ageing long-term unemployed, the government is doing a terrible job of letting people know where the new employment is going to be.
But then lack of vision is nothing new with this government.

News That's Fit To Punt - 07/Apr/2015

RBA Doesn't Cut Interest Rates

It's amazing how a non-news makes the news. The RBA did not cut official interest rates and so the share market went into a bit of a spin. You can read the statement they issued but a non-change should mean no news, but here we are.

Fear of fuelling the Sydney and Melbourne real estate markets appears to have trumped hope for job-seekers and borrowers across the nation with the Reserve Bank leaving the official cash rate on hold in April rather than opting for cheaper credit to spark a new round of hiring. 

But a rate cut has now become almost certain in May - just before the federal budget - after the RBA listed the pre-conditions and backed specific efforts through tougher regulation designed to "contain" house price growth being inflated by prospective landlords. 

"Growth in lending to investors in housing assets is stronger than to owner-occupiers," RBA governor Glenn Steven said in his monthly statement. 

"Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The bank is working with other regulators to assess and contain risks that may arise from the housing market."

The unemployed go a mention in there. It's this traditional thing where if unemployment is too high, they cut rates in the opes that it promotes businesses to hiring people. You get the feeling that they're not hiring at 2.25%, would they necessarily hire more if the rates gets down to 2.00%? And keep in mind, at such historic lows, what kind of fragile business would it be to need 2.00% interest rates to decide, "hey, we'll hire more peeps!"?

On the other hand, the correlation between lowering interest rates and more investors entering the market is more direct; I mean, there is no cushion of business sentiment, it's straight up maths. So the equally blunt question is, what kind of investor gets into property on the basis that interest rates are at 2.00% but it's too hard at 2.25%? Equally weird as the business that can only hire at when interest rates are at 2.00% - but not necessarily symmetrical. I would dare say the investor balking at the border of 2.25% is far dogdier than the employer balking at the borderline of 2.00% and 2.25%.   

Either way, the unemployed person is like the garni du jour next to the sandwich. They can't get a job because god only knows why and until they do, they can't get into property and even then it's doubtful that they can without shouldering greater risk or higher interest rates. It simply doesn't help them in the near-, mid-, or long-term that interest rates are cut, and it can hurt them when they go up. That's a tough spot. I was thinking as I was reading the article that the CPI under-reporting has doubly hurt the unemployed because they get less dollar value from the dole than they used to, and they're further away from ever owning any assets so they're locked into being poor in the medium term if not right out to the end of their lives. 

Well done RBA! 

Ideology Gives Rise To The Thought Police

I was doing the St. Johns ambulance First Aid course last week. Every time it came to dealing with the upper torso and the inner thigh, the male instructor would lay down the fact that it would be better to find a female person to do it than doing it as a male. I get it. It might be misconstrued. So, the First Aid instructor might have had a few brushes with the gender politic thing and came off second  best, or maybe he witnessed the results of being misconstrue, but it was made absolutely clear there's a gender divide. Personally, I'd do exactly as instructed. I sure as hell wouldn't do anything that could be misconstrued and that would mean I would go look for a woman to deal with a female injured person. Vital minutes could be lost, but - fuck that - I'd rather not be misconstrued either. 

The point is, you still have to think of gender in an emergency. Why the hell would sexism ever disappear? This led me to think that even when the final bastion of sexism is destroyed, it would just get reinvented as this kind double-think. On that note, I present to you this stupid article:

Labor's health spokeswoman Catherine King attacked Senator Leyonhjelm for another of his posts in which she said he trivialised the serious issue that is breast cancer.

Under a Catallaxy Files article titled "Feel a boob day", "DavidLeyonhjelm" wrote "It's not enough to perve. Detecting breast cancer requires palpation." 

"One of the best ways to do this is to bet a woman 20 cents you can make her tits wobble without touching them. After a minute or so of close up staring at them, you grab them with both hands and make them wobble. Of course you then give her the 20 cents. It's a small price to pay for reducing breast cancer." 

Senator Leyonhjelm admitted making the second comment, saying this was a "longstanding joke" between him and his wife as it had actually happened to her in real life and urged others to see the humour. 

"At the time a guy actually did it to her, she giggled but I think I found it more amusing than she did," he said.
"Have you ever heard of FTITCTAJ? F--- Them If They Can't Take A Joke," he said. But Ms King said it was no laughing matter.

"Breast cancer is a tragic disease which takes a terrible toll on Australian women," said Ms King. 

"Every day in Australia, on average, 40 women are diagnosed with breast cancer, and 8 women will die of this disease. 

"I cannot comprehend how anyone could make light of this in such a degrading, and juvenile fashion.

Argh. It gives me a headache that they're arguing this in the Senate. If there's one thing worse than the doublethink necessitated by the political correctness, it's the unreconstructed sexism of older men who make no attempt to re-examne their position. 

And wowsers. 

Go On Joe, Bite The Hand That Feeds You

Down in Eden-Monaro, a famously swinging electorate, the voters have been polled and they say they are angry with tax avoidance by big corporations and are anxious about penalty rates. 

Polling obtained by Fairfax Media found more than nine out of 10 people in the NSW bellwether federal seat of Eden Monaro believe the government is not doing enough to ensure large companies pay their fair share of tax. 

The issue will take centre stage this week with the first public hearings of the Senate inquiry into tax avoidance. Representatives of Google, Apple, Microsoft, News Corp and miner Glencore are due to appear in front of the committee.

Almost 75 per cent of 707 people polled in Eden Monaro said big companies paid too little tax, while just 3 per cent said they paid too much. In launching the tax white paper process, Treasurer Joe Hockey flagged the need for a corporate tax cut to make the Australian business environment more internationally competitive.

You wonder if this message is getting to WTE Joe. After all, given how much the international miners  donated to the Coalition, you'll never be sure that the Coalition isn't a puppet for these interests.  WTE Joe is allegedly trying to get more tax out of these companies through a 'Google Tax' but it wouldn't mean much unless it was getting everybody - and by that we include Rupert Murdoch, whose Australian operations shipped 4.5billion out of Australia before tax. Will WTE have the fortitude to tax the biggest media benefactor for the Coalition. Or will he do what he did last year and go after the small fry harder while letting the big fish swim away with billions? Because being even handed with this would mean going after the very hand that feeds him and his party. 

News That's Fit To Punt - 01/Apr/2015

If A Fool In April, Perhaps A Fool All Year Around

This isn't a prank. Our treasurer really is the Worst Treasurer Ever. He's only waking up to it in his second year at the helm.

With the budget reeling from that external shock, the latest NAB quarterly consumer anxiety index has, for the first time, put consumers' concerns over government policy higher than the usual pre-occupations with the cost of living and worries over job security.

"Government policy is now the single biggest cause of anxiety for consumers, just ahead of cost of living, while job security continues to cause the least stress," said NAB's group chief economist Alan Oster.
"What it basically says is that the consumer is still scared, that's basically the bottom line."

The bank has warned that the sense of anxiousness is prompting consumers to eschew "non-essential" spending in favour of either saving or paying off non-discretionary commitments such as utilities and medical bills. 

Asked what concerns consumers identified and what they intended to spend on, Mr Oster said: "It's very much a picture of consumer who is doing what they have to do and who is not feeling happy."

How dumb is that? They ran an election campaign on scares, and now that they're in power they've sunk the economy with the very same scares. People believed them. Then they cut the budget hard, and so the people believed them more. If you lie to the people enough, they believe your lies and do the things that come back to bite you.

The Customer Is Always The Patsy

During the GFC, all the banks were found out; by found out, I mean, the world found out that the banks didn't carry enough liquidity to cover all the extreme positions. In Australia, the government guaranteed the deposits and basically backed the 4 major banks and Macquarie Bank, declaring them "too big to fail" (Also known as TBTF). Since then there's been BASEL, I, II and III agreements demanding that banks carry more capital.

Here's the response to the rise in demand to raise and preserve capital:

Two of Australia's largest banks are warning that interest rates on loans could rise if they are made to carry more capital, suggesting they will favour shareholders over customers as global regulators consider creating larger equity buffers in banks to protect the financial system from future crises.

In a dialling-up of resistance to being forced to increase capital carried against mortgages, as recommended by David Murray's financial system inquiry, the Commonwealth Bank of Australia said higher mortgage risk weights, which determine the riskiness of a loan and how much capital must be set aside, would "restrict the cost-efficient provision of credit to consumers". A consequence would be "that costs for home loans increase on average across the economy", the bank said.

You gotta laugh. Of course they would argue that  - but they're taking the piss.
That's exactly how we got into trouble in the first place when big banks in America started handing out cheap loans to inappropriate people, and then divvied up the debt positions and turned them into mortgage bonds. When the inappropriate loans customers defaulted, the whole edifice came to a stop and the whole financial sector gagged on the shit sandwich that we have lovingly come to remember as the subprime loans crisis.

Yes, all those stupid 'subprime' loans all blowing up at once! The banks are misremembering the sequence of events that nearly destroyed them. If banks need to store more capital to be safe, then they should. If that means a couple of points higher on the interest rates, so be it. If this scares off some of the customers, well heck, you probably don't want those subprime-y customers. This is not a bad thing.

Iron Ore Hits Rock Bottom, Could Even Go Much Lower 

Yeah, let's see now. In the 6years we've been able to see the spot precision iron, it's never been so bad for iron ore prices.

Iron ore started the year at $US68 after losing half its value in 2014, but the fallout has accelerated with a fresh record low of almost $US51 a tonne hit on Wednesday.

The question has changed quickly from whether the price would have a five in front of it in 2015 to whether the price start would start with a four. 

A flood of new supply from the majors - BHP, Rio, Brazil's Vale and Fortescue Metals Group - and stalling Chinese steel demand growth have together crushed the price.
Despite the cries of protest from Fortescue, which is the highest cost producer of the majors, as well as smaller industry players, and the state and federal governments whose budgets have been smashed by the price collapse, Rio and BHP are sticking firmly to their expansion targets.

UBS mining analyst Glyn Lawcock said the iron ore price could soon fall into the $US40s but that would not push Rio and BHP to review their strategies.

"Having a four in front of the price is not far away and is entirely possible given what we've seen in the past few days," Mr Lawcock told Fairfax Media.

And yes, it could very well get there soon.
Here's a quick question. How is it possible for China to be growing its GDP at 8.7% in 2009, 10.1% in 2010  and 7.5% this year, while iron ore fluctuates this much in-between? If anything makes you suspicious of Chinese GDP numbers, it's the relative stability of the GDP figure sin thecae of such fluctuating costs of raw materials. It's basically more evidence that the GDP figures from China are made up 'aspirational targets' and not actually measured values.

The current drop in spot prices has been credited to the explosion in the supply side for iron ore, but it seems more pertinent to ask why the demand side for why iron ore is dropping so much.

Are We Done Yet?

The Politics of I-Don't-Even-Know-What-Any-More

At the turn of this decade, politics in this country hit a kind of low note. It was deceptive because we simply thought that the low was about as low things would go. That is to say, at the first sign of waning polls, Julia Gillard marched in and removed Kevin Rudd from the office of Prime Minister. Which of course unleashed so much ill will in the electorate that it resulted in a hung Parliament for Julia Gillard who subsequently rushed to the polls. The rest of it is in the history books, but it bears repeating because for some reason we seem to be at a similar impasse.

The only exception I would make is that Tony Abbott has never so much been popular as grudgingly accepted by even those in the Liberal Party, and in a quick 16 months or so has exhausted the support of even his own party through his inability to govern. Predictably - and it was no great shakes predicting this - he has been an awful Prime Minister who has essentially mistaken his winning the election as a big mandate for him to do things that were not asked of the Coalition in government.

We won't go over the tragic decision of repealing the Carbon Pricing or the Mining Tax. but it is also their budget that has been nothing short of a disaster and 9months later is yet to be passed, by a decidedly hostile senate. Everything they've done has either been shit or a mess indiscernible from shit.  It has in most part, been a government of idiots, flailing like an angry mongoloid child having a tantrum in a supermarket aisle. The evident lack of self-knowledge amplified into a rejection of the world as it truly is, but the main protagonist incapable of understanding the intellect-gap and how short they fall.

But weeks after my last denunciation there are now serious murmurs amongst the Coalition ranks that Tony Abbott might have to go, or that Peta Credlin at least must go. Just as it came about with the ALP in 2013, the self-preservation instincts of backbenchers has kicked in. Yes, they really are muttering about who might replace Tony Abbott (who like Kevin Rudd and Julia Gillard before him when deposed, is still in his first term). This time the conservative base is very upset with their own man because he flip-flops, and can't sell the message to the electorate.

This is quite noteworthy because it suggests the Coalition's conservative base actually thinks what Tony Abbott tried to push through in the budget and the negotiations since are good ideas worth pursuing. A rather frightening thought. There's basically a goodly portion of the Australian electorate that can't resist its inner fascist and freely let's reign their fear and loathing. There are a lot of delusional nutbars out there voting for the Coalition. That being the case, we have to surmise that Australia is a lot more fractured and diverse than ever before. The diversity includes many hues of righting nut-jobbery. Is it any surprise this 'diversity' gets reflected in the necessarily fractious and disagreeable Senate?

You have to feel a little bit for the social conservatives of this country because they're on the wrong side of history, but they have to be wedded to the economic hardline ideologues who are also changing this country in a such a way as to disadvantage them. They probably just want change to slow down and for things they took for granted - like being able to be homophobic, racist, class-prejudiced and xenophobic - to not disappear. It's a crappy position to take or be in, but they just want to keep the things that give them a sense of identity - like being able to be homophobic, racist, class-prejudiced and xenophobic - and keep being that way without being ridiculed; but alas history is moving away from that sort of thing. And so they rail against the "politically correct" 'elites' who live in urban centres, but their very own political partners are psychopaths who want to tear down most social institutions so that economically it resembles a game of Monopoly where each man/woman is on their own and winner takes all.

The changes being pushed by the Liberals are going to hurt the bush. It's no wonder Clive Palmer and Bob Katter can see an angle that slants differently to the National Party, and run with it to the extent that they have.

All the same, it's impossible to feel sorry for the Liberals who find themselves in the pickle of having believed their own bullshit (and not, say, climate science); they've now led themselves into a political cul de sac with a monarchist nut job ex-trainee-priest ideologue. That one, is all on them. This current phase in the electoral cycle where they have discovered that none of their ideas are any good and their leader is despised by the majority of Australians, is all of their own making. It makes for much Schadenfreude joy. The shoe really is firmly shoved on to the other foot now. If the defeat of Kevin Rudd in 2013 was inevitable, then so was this descent into the abyss of hostile public opinion. They got there through pursuing a single-minded political unreasonableness and denying basic reality as presented by science and economics. I wouldn't mind seeing them twist in the wind for a while longer for comedy value. They are such idiots.

Some  may say this is no laughing matter; I would contend the LNP Coalition Government is Laughing Matter itself. A pure, distilled essence of Stupid.

It would be curious to see if the Liberals replace Tony Abbott with anybody. I feel they likely won't do any such thing. This is because the Liberals tend not to swap leaders in Government; they tend to swap their leaders more often in Opposition. They didn't try to change mid-stream in the last year of the Howard government to Peter Costello, and they sure didn't change horses at the end of the Fraser government. You have to go all the way back to the post-Menzies era to see the Liberals swapping Prime Ministers and that sort of led to the rise of Gough Whitlam. I'm sure just the thought of that makes them leery.

If they don't replace Tony Abbott, they are likely looking at a one term government. If they do replace Tony Abbott with anybody (Bishop, Turnbull, a sack of catfood, it doesn't matter), they'll be reliving the ALP script. Whilst they are the best friends of the boardroom psychopaths, I do wonder whether they have the sort of gumption to be psychopaths themselves and replace Tony Abbott with a straight face. You know, channel the inner Mark Arbib, or for that matter their inner Bill Shorten.
Somehow I think that is not on the cards. We're going to be in for 18 more months of Tony Abbott as PM. So no, we're far from done yet.

Dogs Are Better People Than Politicians

Couldn't Keep Denying

It amazes me that the Abbott government keeps limping on being the way it is. Normally, being the host nation for something like APEC or the G-20 burnishes the standing of a nation, but somehow Tony Abbott and his miserable government managed to lower the standing of Australia, simply by being their climate-change-denying selves. At the end, Tony Abbott made a speech to the effect that all the governments represented at the G-20 wanted to do something about climate change. It hardly seemed plausible given the degree of resistance mounted and shown by the same government, during the lead up to the G-20 meeting. It sure was hard not to talk about something all these guests anted to talk about it.

I guess that's the nature of summit meets. The host nation doesn't really get to control the agenda if it isn't a nuclear superpower. Tony Abbott made Australia look like an adolescent who is in denial about having to do chores, on the international stage. I'm sure the world took notice. Now that China and America have decided to do something about climate change, then it also activated Clive Palmer and the PUP's agenda of keeping an ETS. Greg Hunt might think they've mothballed the thing but it might comeback from the dead sooner than people thought. After all, the problem with Direct Action is that it is not scaleable in the same way as the ETS. The more there is to cleanup, the better it would be to simply ramp up the ETS again, and be done with it.

No Cuts To Adelaide ABC? Then Don't Make Stupid Cuts

Chris Pyne, he of the Coalition Government that came to power promising not to make any cuts to the ABC and SBS but promptly started cutting as soon as they got in, started a Chang.Org petition to stop the ABC cutting the Adelaide production facility.
Let us now count the shades of stupid in this petition and petitioner.

1. He's a freaking minister of government. He's a lot closer the to the decision making than public petitioners and their petitions. 
2. He is a freaking minister of a government that is cutting $254million to the ABC budget.
3. He is a freaking minister of a government that is cutting that $254million in the face of the ABC asking them not to make such cuts.
4. The alarming hypocrisy of a minister of a government making largely gratuitous, political cuts, on alleged economic grounds (whether true or not) can't complain about such cuts affecting their electorate. 
5. Since when does Chris Pyne care about the ABC's production capacity anywhere? If he's going to start caring about that, maybe he should be looking into the plight of the Film & TV industries a lot more carefully?

Naturally we are underwhelmed. It would be a great shame if the Adelaide unit had to close because of the cuts. It would be a shame if any production facility had to close because of the cuts, because that's the very zero-sum game this government set up. You sort of wonder if these people have any actual brains.

Hooray For Jacqui Lambie (Can't Believe I Just Typed That)

Jacqui Lambie has been going rogue for a few weeks now, over the conditions of defence personnel and something to do with their Christmas bonuses. It has gotten to the point where to refuses to pass anything of the government unless they do as she says, which is to say, she's holding the government to ransom, all on her own-some. The early net effect of this ornery statesman-ship is that the ALP has corralled her into stiffing the Coalition's plans to water down the Future of Finance Advice changes.

This is no ordinary stiffing; this is being described as a "body blow" by the SMH, but more accurately, it's the moment when it has become untenable for the Coalition Government. To date, the Coalition Government has managed to get some of their idiotic plank of policy through the Senate thanks to Clive Palmer making deals with them. Only a couple weeks ago it looks like Palmer was the idiot in letting the Direct (In)Action policy through in time for the Brisbane G-20 summit. Yet now, the rogue PUP Senator is undoing done deals.

If it's bad enough that Joe Hockey's government hasn't been able to pass its awful-awful-awful budget, six months hence from its big debut, then the PUP disintegration ought to give them pause. This might be the moment where it forces the Coalition (the No-alition) to properly think about a Double Dissolution, because they ain't getting it done now. The earliest opportunity to vote out these drongos would be most welcome.

News That's Fit To Punt - 13/Jul/2014

Garbage In, Garbage Out Process

Leading economists are rejecting the basis on which the Abbott Government is proceeding with cuts. They don't think there is a budget crisis. At all.

We knew this going into the election last year, we've known it since; people ave been saying it across different media for most of the time since; and the only people who think there is a crisis is the Coalition Government. I know we've been through this topic on several occasions, but basically our Federal government debt is miniscule compared to the debt carried by other OECD nations; most of the government debt we do carry is in the local councils; and the big debt problem is in the private sector, where low interest rates have ruled supreme since the Global Financial Crisis has allowed for bubbling asset speculation on borrowed money.

In short, the government could possibly wipe out the debt in a small number of years if it were bloody-minded enough to not to care what happened to he economy. But nobody asked for this, and it would rewrite the social consensus about what government does. While that is an enormous problem all of its own, I want to focus on something for a moment. This government came up with the worst-received budget of all time on the assumption that there is a budget crisis when there manifestly is no crisis at all whatsoever. it stands to reason that none of the solutions they've reached for have gained any traction in the electorate.

Never has a bigger load of garbage been shoved into the process of government in this country, and never has it given rise to so many garbage policies you wouldn't wish upon anybody (okay, except maybe Iran).

Cue Jerry Harrison

The myth that grew up around Senator Ricky Muir arriving in Canberra was that he was a 'Bogan' - meaning exactly what, it's hard to say because Bogan-ism isn't a political credo, it's a class-conscious insult - but here's an article that reveals he might not fit the prejudices of the media. The way the media have portrayed him, he's been anything from the second coming of Pauline Hanson to some rural Victorian village yokel idiot who got lucky in the exchanging of preferences (as if such things happen regularly).

The so-called ''rev-head senator'' outlined personal passions that include organic food, which he grows and eats from his garden in rural Victoria, preventive healthcare, which he is interested in championing at a political level, and renewable energy, following his surprise intervention last week to protect the Australian Renewable Energy Agency from the government's budget knife.

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Senator Muir revealed a broad belief in the environment, renewable energy and organic food. ''Just because someone is a motoring enthusiast doesn't mean they are an environmental vandal,'' he said. ''I don't think many people would argue that renewable energy is the way of the future.''

Asked whether he would use his balance of power influence to push for preventive health programs, he said: ''I will certainly look at it with a very open mind, that's for sure.''

For the Coalition, that's a Trojan Horse. The guy called himself a "motoring enthusiast" sounding like he's pro-roads and pro-construction and he's turned out to have a far more nuanced and sophisticated take on the environment and civilisation than anybody on the side of the Coalition. You could do a lot worse than that, and in looking at the sorry lot in the Coalition ranks, Australia has done a lot worse than Ricky Muir for a very long time, but Australia might have just got lucky right there with this Senator.

She said let's ride, rev it up, rev it up little boy and ride!

Not A Bubble (Nudge Nudge Wink Wink)

As we've learnt over our lifetime, nobody ever sees the big financial disaster coming. It's always "This time it's different". So in that spirit, I just want to say it's very different this time with housing in Australia because there's a ton of money being laundered out of China looking for landing spots and Australian Housing has turned out to be one of those asset classes.

Thus you have to take it with a grain of salt when economists say "yes it's overpriced but no, it's not a bubble". If you believed that then maybe I can interest you in this nice little coat hanger-shaped bridge in Sydney Harbour that you might want to buy. The conventional wisdom now is that it's never a bubble until it pops.

As with these things I've had a little while to reflect on it and it seems if there's one thing that limits future growth in an economy it is rent-seeking and there are a lot of rent-seekers. This is understandable because housing construction forms such a large part of the economy in Australia, somebody has to be the lobby that twists the economy in some way. In that sense negative gearing appears to be just one of the economically irrational policies we have going. Naturally if you look through old articles in the SMH for negative gearing, it is is littered with articles defending the policy - which in turn reminds us of this blanket denial that there is no bubble going on. Sure. No bubble, and negative gearing is working a treat.

So as with most things to do with what pundits say, you can be assured of two things. They're wrong, and we'll be the ones to pay for it.

The World's Worst Kept Secret Is 'Out'

Ian Thorpe says he's gay. I don't know what to say except we knew about this from way back in the heady days of the 2000 Sydney Olympics and all those gay people saying they gave him a pearl necklace. The denials over the years were comical and the topic of much derision. In this day and age, it shouldn't be such big 'news' but I guess wowserism is always going to make this news.

People, come on, he didn't win because he was or wasn't straight or gay.

What The MP Writes To Us

Craig Laundy, Federal Member Of Reid

The Federal budget has been such bad politics, the MPs have been asked to go stump for it in their electorates, trying to explain the extraordinary political stink bomb let off by Tony Abbott and Joe Hockey.

In the cover letter, Laundy insists that there is a budget emergency. He cites in his letter that Australia's debt - Federal government debt - is 200billion for which we are putting ourselves further into debt at the rate of 1billion more to pay the interest rate on the 200billion. Just looking at the numbers, it seems he is saying we're paying 12billion a year on 200billion which is about 6%.p.a. This can't possibly be right because the RBA has its rate at 2.5% - the lowest in the history of the RBA - so even the numbers don't stack up in first glance. Australian Treasury Two-year note yield rose significantly today and was 3.74% today. So either Laundy can't do the maths or the people who ghost wrote the letter for him can't do maths.

It's almost as if these people want to cut the budget because not only do they know they're no good at maths, but also that they want to do away with complicated compound interest rate calculations from budgets forever, and that's the only reason a surplus looks so-o-o-o attractive to these munchkins. It's not for their mendacity (which they are mendacious, but we'll let that slide for a moment) but their willful stupidity and fearlessness in admitting it, that they even mount their position in this way.

Debt - bad. Surplus - good. D'uh. Complicated compound interest calculations - bad. Surplus - good. D'uh and double D'uh. The worrying thing is that just because they insist it's 6% doesn't make it 6%.

And you worry about people who want to shortchange you 2.26% even in a hypothetical discussion. That's a 60.43% inflation in the interest rate right  there. Leaving the total dodginess of the sums aside, economists have determined that running a budget surplus is going to be a 1% drag on the GDP growth, so the assumption that surpluses are good for economic growth is completely stupid.

Laundy then argues that the people who argue that there is no emergency are "engaging in political spin". It's a firm assertion, but most sensible people would see it the other way around - that it is Mr. Laundy and the Coalition who are busily "engaging in political spin" to somehow force-feed us the unpalatable budget they have concocted. After all, if it weren't such a shitty budget, why would they have to come up with a super glossy A3 brochure as well as this cruddy letter?

The sentence which follows is even more strained:

What use is having the lowest mortgage in your street if you not only can't afford the repayments, but have to ask the bank to borrow more money to pay the interest on your loan?

In a way, perhaps yes, it's interesting they picked that as a metaphor. First of all, likening government debt to being underwater with a mortgage is deeply suspect. We're not all working to pay off Parliament House - we're paying taxes so the government can do things. That's not a small difference. That's a big difference. You worry about people who conflate their arguments - especially straight after they've tried to con you out of 60.43% of the interest rate return. After which he insists for the third time "be in no doubt this is a budget emergency and it is clearly unsustainable."

I understand that the Abbott government is doing its best to overstate the dramatic need for cutbacks but coming up with stupid metaphors isn't exactly persuasive. The letter says "something has to be done". Well, even if that were true, the case certainly hasn't been made that something should be what the Coalition is proposing in its budget.

Glossy But Crappy



The chinless wonder with the gerbil charm in the bottom left is our local honorable Federal Member for Reid. Enough to make your knees weak with the fear that a rodent may be gaffer taped and inserted into one of your orifices by this man.

The Coalition never really sent out what their exact policies were, prior to the September election. They were going to stop the boats and repeal "the Mining Tax" and "the Carbon Tax". They repeatedly told us there would be no cuts to health or education. So what does the glossy brochure tell us?

1 We've secured Australia's borders

2. We're fixing Labor's debt and deficit mess

3. We're laying down a strong foundation to grow the economy and create more jobs

Well. I. Never. Would've - in my wildest dreams - thought they would do such things. Not only did they not have policies worth writing about - they had handy slogans instead - they've lied about what they would do. They've raised taxes, cut health and education and they've gone bananas in trying to shut down science and technology development in this country, not to mention done their best to shut down agencies dealing with climate change. That bit was predictable.

What was not predictable was that they would then send out a glossy brochure that hurls even more slogans off the page.

The problem with democracy is that we are always held hostage by the lowest common denominator of intellect. The dumb-and-ignorant, amassed in numbers will always beat the individual thinkers with their puny one vote each. And thus sloganeering has replaced proper discussions of policy. It's as it is with Gresham's law where bad currency rids us of good currency, bad ideas have rid us of good ideas and bad thinkers have rid us of good thinkers. What's remaining is the media spectacle that is the Abbott government and their flunky right wing nutjob media commentators. You never would have thought Australia would sink this low, but ... it has. Let the gerbil-baiting begin!