They Should Change Their Name To Unfairfax

Content Is Not King With Fairfax

It's been pissing me off for a few days so I'm going to have to jus get it out there.
A band - Black Bird Hum - were asked play at the Sydney Night Noodle Markets. They were told that they wouldn't get paid to play, but they should because of the exposure they would get. As any right thinking professional would, the band declined and put it out to the world that Fairfax (who own and run the Nigh Noodle Markets) would do such a thing as to ask a band to play for free.

Black Bird Hum declined the offer, which they received via an agent representing Fairfax. “We’re flattered to be on the radar of a company with an annual ‘Total Group Revenue of $1,867.2 million‘ (FY2016),” the band wrote on Facebook. 

“We have, however, decided to decline the invitation to perform at the event on account of you deciding not to pay us.” The band noted how they have been paid for all of their upcoming tour dates, much like those who would’ve worked on Fairfax’s event. 

“We’re guessing that the sound tech who ran the PA on the night was paid; as were the graphic designers and marketing companies that did the event website, promo and marketing material; and the companies that supplied the lighting, tables, chairs and umbrellas; and the cleaners,” they wrote. 

But despite a Fairfax representative insisting to Crikey that they will “look at how we are engaging with everyone to ensure we are showing RESPECT”, they apparently still haven’t quite grasped the message. 

In an article published earlier this week in The Advocate, a Tasmanian paper printed by Fairfax Regional Media, musicians are taken to task for their ungrateful entitlement, i.e. expecting to be paid for performing live.

And so things just got a bit more nasty. If you go to the Advocate, you will find one Elanor Watt writing:

The real question is, how strong is your passion and what are you willing to do to achieve your goals.

I assume most musicians love making and performing music, it is not one of those jobs that you simply decide to do as you don’t have any other choice, it is considerably passion related much like writing or sports.

If someone was really passionate about getting their music out there, and enjoyed performing then they would take up any opportunity given to them, especially if it means expanding their audiences, drawing in a larger fan base, because we have all seen the movies, anything can happen.

The next issue is worth. Some bands have explicitly implied taking the previous approach insists that artists, well some, do not need to be paid. Are they not worth payment, are the countless hours put into practicing not worth payment.


I consider this issue similar to one that many other people face.

The trade industry for example. My grandmother told me she worked for several years training to be a hairdresser, she was the one who paid for cutting people’s hair, cleaning up, like any employee, but she was paying to do this, to further her skills.

The same goes for university students, yes we pay to learn but we are churning out word after word, some people go on to write thesis’ and contribute to academic literature which is all unpaid.
These people all share the same desire to pursue their goals. They all do this to get ahead, musicians should be no different.In response to these comments, the argument they make completely rules out many other people who are in a similar situation as mentioned previously.

The band seems ungrateful to a potentially amazing opportunity that has been given to them. Dismissing events like this makes me wonder where this band will be in several years time, if they consistently have in their heads they are too good to be even approached for an unpaid gig, what has made them so entitled.

Hundreds of people would be honoured to play at such an event that draws in thousands of people, but hey. obviously royalties are more important to some people.

And so she goes. Where do you start? If a band played a live set at the Night Noodle Markets, clearly it's situation where the corporation is hiring a band to play. If they don't want to pay for it, they should say it's open mic and invite people who want to play for "exposure". Watch all the crazies come out of the woodwork with their banjos and ukuleles and glockenspiels. Of course, they won't do that because they want to ensure a certain standard of entertainment - which is kind of why they would have to pay for the band. It's just a standard business transaction. 

If you have a stage with lights and a PA, and you have crew running around already, it's understandable that it's no big leap to think you can make it better by having a band. Except as the band point out, the lights and the stage and the audio techs are paid. Why on earth wouldn't Fairfax pay for the band? What possible reason could there be but outright disrespect for band musicians? Well, let's look at it in some more detail. 

Fairfax are doing all these Night Noodle Market numbers in order to transition out of just being a print media company. I also know for a fact that they keep their budgets tight and hardly raise them year after year but expect more from their suppliers every year; I know that they charge a shit ton of money for these stall holders to participate; I know this results in stupendous prices when you go to the Night Noodle Markets. In that context, it surprises me none whatsoever that they don't want to pay musicians.  They don't want to pay because it comes out of their margin - that's it. It's not profound; it's not some kind misunderstanding; it's not really difficult to understand.

Fairfax have conjured up an event where they charge stall holders money in exchange for providing an event space. They spend a portion of that money and squeeze out as much as possible from the production company so that they provide infrastructure such as power, lighting, staging, audio and assorted decorations. And the rest of it is their margin. It's a business, so you wouldn't do it if you didn't have a margin. The question then follows, if you're willing to have the infrastructure of a band performance and pay for it, why the hell wouldn't you want to pay for the band? 

It really goes to the core of what Fairfax thinks is its content. Presumably they think it's the food and therefore not the band playing music. What really is staggering is that the people who produce this event think the band should come free in exchange for 'exposure', because that would suit Fairfax just fine. All this says is that Fairfax doesn't want to spend the money because it's greedy. There's nothing excusable about it or anything that can be misconstrued as a misunderstanding. 

You know what's really crazy about all this? They've always been happy to pay some DJ in the past. Yes, a fucking DJ. Don't let anybody fool you that the Fairfax corporation has any "RESPECT" for musicians, or content. 

View From The Couch- 20/Mar/2016

Unfairfax

The press is in die back. They even make movies about it so it must be true. Fairfax has been making cuts to so many parts of their newspapers for so long we've lost perspective on this, yet it's a process that still continues on.  There are no say answers as of yet, but meds companies, interchangeable with news outlets have gone into decline as their business model got eaten alive by the internet.

And so we come to this week's news that Fairfax is thinking of cutting 120 jobs, and the journalists are striking.

Striking Fairfax Media journalists have branded the company's proposed editorial cuts "aggressive" and "unnecessary". 

On Thursday, Fairfax announced it would seek cost reductions equivalent to 120 full-time jobs from its newsrooms in response to difficult market conditions. 

As well as job cuts, the company has flagged the potential to save money through tightening contributor budgets and reducing travel costs and expenses. 

The announcement sparked a wildcat strike at Fairfax's operations in Melbourne, Sydney, Canberra, Brisbane, Perth, Newcastle and Illawarra. 

On Friday there were protests outside the company's offices in Sydney and Melbourne.
"This came as a surprise. It was a fairly aggressive way of doing it in our opinion, and unnecessary," The Age journalist Simon Johanson said of the proposed cuts while at the Melbourne rally.

Fairfax CEO Greg Hywood said the cuts were necessary to sustain high-quality journalism, which is of course a bit like growth-through-cuts and may even be pursuing peace-through-war and ignorance-is-strength. You get the picture; in the absence of anything cogent to say the CEO falls back on a phrase that sounds more platitudinous than considered. It's even stranger because not so very long ago, a bunch of Fairfax editors were beating their chests to say how well they were transitioning to digital story-telling. 

The truth is, nobody wants to pay for anything that's 'content' now. It's been this way since the advent of the internet. It has gotten to the point that advertisers don't want to pay for advertising because of the internet, while subscribers represent a minority of people who want to consume. Whatever made commerce, commerce, has broken down when it comes to the business 'content'. At the end of the day it means fewer outlets, fewer journalists, fewer reports, less information to go on. 

As the pool of journalists shrinks, the diversity of ideas also diminishes. By diversity I don't mean, ethnic voices or more input from LGBTQ people, I mean the sheer ability to provide nuanced, mule-faceted understanding of complex social phenomena. With less analysis comes a less informed public which gives rise to ever more dumbed-down populists. The rise of Tony Abbott and Donald Trump  are symptomatic of the less informed public that has a very gross, unrefined understanding of issues; and all of this comes before whether journalists are fulfilling their obligation as the fourth estate. 

I mean, where else do bloggers get a reason to blog?

One Of Our Submarines

This business of procuring the next generation of submarines from somewhere has turned into a three way bid for the tender. The contestants are Japan, Germany and France. The French have boldly offered some political advice as well as technical advice.

Speaking to Australian journalists in Paris this week, the firm's chairman Herve Guillou​ and deputy chief executive Marie-Pierre de Bailliencourt​ said lithium ion battery technology was not yet sufficiently developed to use in submarines and doing so before it was perfected would be dangerous.

"We know that the technology today that is used is the same one used in cars and in cars they explode," Ms de Bailliencourt said. "The Australian people ask us for proven technologies and proven solutions … [that are] safe for the submariners, safe program-wise and safe cost-wise ... What I'm saying is there's no proven lithium ion technology today." 

The French bid leaders suggested the Japanese were being forced to use the more advanced lithium ion rather than conventional lead acid batteries because otherwise their boat would not be able to go far enough for the Australian navy's needs. 

But Ms de Bailliencourt and Mr Guillou said a partnership with France would also bring strategic benefits without the risk of becoming entangled in the historic enmities of north Asia. 

Choosing Japan for strategic reasons could mean Australia's being "dragged into a third country's own political affairs", for instance "if there's war between Japan and China because of the islands, because of commercial routes". 

Asked if she was suggesting Australia could be dragged into a war with China, she said: "I'm not suggesting anything. Make your own conclusions 

"We know about Japan and China. The history between the two countries is way from being done. We've absorbed the German-French wars. We've fought them ... We're lasting friends. But there's nothing that has been even started yet between China and Japan for reconciliation."

Talk about whacky and wild and totally self-serving. If it were true that Australia were at risk of being dragged into a conflict between Japan and China, it's not entirely clear how buying French submarine guarantees Australia gets to sit it out, given the current alliance arrangements.

I'm trying to remember the moment in history where the world feared the great French submarine fleet.

The role of the French submarine force in 1939 was to act in concert with the French fleet and with France's allies against the Axis powers, with particular responsibilities in the Mediterranean. It also operated in defence of France's overseas territories and colonial empire. This changed in 1940 with the fall of France and the signing of the armistice with Germany. 

One submarine had been sunk in action, and several others scuttled to prevent their capture; seven others, in British ports at the time of the armistice, became part of the Free French naval force (FNFL). The captured Aurore class boat Favorite was taken into German service as UF-2, a training ship. However the majority remained under the control of the Vichy government. 

Over the next two years 16 submarines were lost in Vichy service, mostly in clashes with British and Allied forces. 

In November 1942, with the invasion of Vichy territory by the Germans, many of the remaining vessels were scuttled, or captured by the Axis. Those that survived, or managed to escape, joined the FNFL; despite losses, and with replacement from allied navies, France ended the war with 20 submarines in service, having lost 50 boats from a variety of causes.[3]

That reads like the cheese-eating-surrender-monkeys really know what they're talking about when it comes to submarines. I'm sure the French are experts at underground warfare, but their cred on underwater is a lot lighter. 

Jokes aside... It's sort of odd that Australia has its own Australian Submarine Corporation, but Tony Abbott decided to go shopping overseas for a submarine fleet. It's worse than a vote of no-confidence, it is another nail in the coffin for killing off manufacturing in South Australia. It also reverses the many attempts to shore up high tech and heavy industry in South Australia.  You'd think the likes of Cory Bernardi would have something to say about this more than Safe Schools and Gay Marriage, but it's just another example of how Senators for the two major parties don't have to look after their constituents' interests. 

In the process Tony Abbott has insulted the current fleet of Collins class submarines and put South Australia's electorate squarely against the Coalition. The initial scuttlebutt of picking Japan as the source of the next submarines also flew right in the face of 'traditional Australian sensibilities' which is normally about hating on anything Japanese - which kind of reveals that Tony Abbott may not actually be so Australian to begin with. Then, backing down from the initial rush to go submarine shopping in Tokyo, the Coalition government under Malcolm Turnbull has embarked on this rather odd tendering process. 

Contrary to the amount of money it is all going to cost, the next generation of submarines for the RAN are not going to be world changers any more than the current Collins class submarines have changed any aspect of the balance power in the Pacific. As with the F-35, munitions manufacturers have a way of inflating the efficacy and benefit of arming up with expensive bits of gear. It's all a money sink. All of this discussion is symptomatic of a chaotic government. 

Gina, Please Go Away And Leave Our SMH Alone

More On That Gina Rinehart Fairfax Fiasco

This business of Gina Rinehart trying to get seats on the board of Fairfax Media is getting very strained.

Mrs Rinehart said Fairfax's performance over the past five years had been ''distressing'' for shareholders. To Mr Corbett she wrote that the milestone share price would represent ''only a 50 per cent loss'' since he became chairman in October 2009.

''And if the five-year decline in paid circulation and in revenue of the Fairfax mastheads do not reverse prior to the 2012 AGM, we ask that you tender your resignation at that meeting.''

This is a really interesting construction by Ms. Rinehart, not only of the company, but her own company Hancock Prospecting. First of all, no company operates in a vacuum. The general business climate in the last 5 years has been anything but smooth sailing. The technological changes as well as demographic and consumption habit changes have put all media companies on the back foot. This applies equally to Hollywood Studios to free to air TV services to newspapers and magazines to (most notably) record companies. I'm no expert on media company share prices, but the vast majority of them have been taking a bollocking.

On the other hand, Ms Rinehart's stupendous wealth from mining has also been a function of the times as resource demand has  exploded in Asia, and her firm is essentially feeding that demand at ever increasing rates. She is not alone in this sudden rise to super-wealth. There are others in the same category, notably Andrew Twiggy Forrest and Clive Palmer, who also share Ms Rinehart's desire to privatise our democracy - to own and fuck over like some toy poodle or a sex slave. However, the most salient point to make is that the fall in share price of Fairfax and the rise in wealth of Ms Rinehart are both more to do with sign of the times than anybody's individual talent or skills.

So, if Mr. Corbett were to be held to account for falling performances on the terms Ms. Rinehart is framing it, it would in no way actually reflect Mr. Corbett's talents at the helm of the company. And I say this with the utmost of agnosticism about the efficacy of talent in top managerial positions in such firms. Equally, if Ms. Rinehart thinks these kinds of benchmarks are what should be used to measure the performance of the Chairman of the Board at Fairfax, then it suggests she has no idea of what it is, in which she has bought a 19% stake.

There was an experiment done in psychology where they got a bunch of students to play 'Monopoly'. A portion of the students were given a substantial cash stake advantage, which they used to win. Afterwards they interviewed these winners, and not one of them put it down to the financial advantage with which they entered the game. They all claimed they won on the back of their nous and skill. And this is essentially what we have with Gina Rinehart - somebody who was given a dirty big endowment at the beginning, who thinks that somehow she's risen to her position through talent and hard work, and that these are the things that matter. Worse still, she is using this misguided view of herself and the world to bludgeon her way in to the boardroom of Fairfax Media.

And all of this is even before she tries to mount her idiotic agenda of having an Andrew Bolt be her mouthpiece, and try to persuade us that findings in Climate Science are somehow inaccurate and wrong and cannot be relied upon.

I am led to think of Bill Gates who equally amassed a fortune on the tide of his times, and in that process garnered much vitriol and opprobrium. Some of them were funny and cruel, like the one in the South Park movie 'Bigger Longer and Uncut' where he is brutally executed by an US Army general because Microsoft Windows does not work as advertised. He even had a reputation as a petulant, vindictive, childish nerd of a CEO who worked hard to stake out a near-monopoly (there's that word again) position in a particular market. And even he didn't resort to try and buy the New York Times to change the perception of him or the world. So when you have such a basis of comparison, it seems pretty obvious just how odious an attempt Ms. Gina Rinehart is making, to poison the press in this country.

If she really wants credibility as an owner that leads to any seats on the board, the very least she can do is sign the Charter of Editorial Independence. It all starts with that commitment. While she cannot bring herself to do it, then we cannot but help conclude what she wants to do is manipulate the press to suit her own little agenda.

News That's Fit To Punt - 30/May/2012

Julian Assange Loses Appeal

Here it is, fresh off the press. Julian Assange is going to be extradited to Sweden.

But his lawyer Dinah Rose, QC, asked the UK Supreme Court court for two weeks in which to consider the judgement and possibly to request that proceedings be re-opened as she believed part of the judgement was based on a legal question that had not been raised during the hearing and which she had not had a chance to argue on. She said this related to the Vienna Convention on the Law of Treaties.

The court gave Mr Assange a stay of 14 days on the extradition order so that Ms Rose could make the application. Mr Assange did not appear in court.
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n a majority decision of five to two, the judges decided that the European Arrest Warrant issued by Sweden asking for Mr Assange's extradition was legal and should be enforced.

If the court does not allow its proceedings to be re-opened, Mr Assange's only other legal avenue would be the European Court of Human Rights in Strasbourg. If that court should agree to take his case, he would be allowed to remain in the UK until the hearing.

The scarier thing for Julian Assange of course is the likelihood that he is then swept to the USA where a Grand Jury indictment awaits him.

Mr Assange's legal advisers are believed to fear that if he goes to Sweden he could then be extradited to the United States, where authorities are considering a range of charges against him over Wikileaks including espionage and conspiracy.

American authorities link him to the case of US Army Private Bradley Manning, who faces court martial over 22 alleged offences, including "aiding the enemy" by leaking classified government documents to Wikileaks.

UA prosecutors reportedly believe that Private Manning dealt directly with Mr Assange and "data-mined" secret databases "guided by Wikileaks list of 'Most Wanted' leaks.

Nothing there we don't already know. Anyway, we should mark the moment where Julian Assange lost his appeal to be extradited to Sweden.

The End Of The SMH As We Know It?

Who'd a thunk the Kiwis were scabs?

Fairfax staff walked out at 5.30pm.

The move came as hundreds of journalists from publishers Fairfax and News Limited met with union officials at stopwork meetings today over ongoing concerns about jobs in the industry.

Fairfax plans to move the mostly sub-editing jobs from newspapers in Newcastle and Wollongong to Fairfax Editorial Services in New Zealand.

At 7pm, the company issued a statement saying it would continue to publish as usual and was disappointed at the decision to strike.

Well, that's dramatic. Of course it kind of makes sense in the way that all jobs can be out-sourced on some level. If I may, I would  submit that this is a bad decision. The moment you out-source a part of your business, it's a commitment towards a shorter corporate memory and opening the door to a potential nightmare in prcocess failure. A simple example might be Foxconn who, at arms length from Apple managed to do considerable harm to the Apple brand.

On the other hand, it is entirely reasonable to think that Kiwis can provide the same service as sub-editors in Australia with a much lower cost. If Fairfax thinks these are totally fungible processes, then you can understand how this is happening. Perhaps we as the public should be grateful they didn't send it to India or the Phillippines like the Telcos do it.

Hypocrisy Truly Knows No Bounds

...or rather, Hypocrisy they name is Abbott.

The government moved to gag the debate and Mr Thomson, who has always voted with Labor since being exiled a month ago, instead joined the other crossbenchers who, on principle, never support a gag motion.

The Leader of the Opposition, Tony Abbott, and the manager of opposition business, Christopher Pyne, made for the doors but Mr Abbott was ordered back by the Speaker, Anna Burke, because it was too late to leave. His vote was counted.

Which is totally motivated by this little bit here:

The opposition does not want to ever accept Mr Thomson's vote, fearing it could create a precedent in which it may have to grant him a pair in case he takes extended leave from the Parliament, thus negating any numerical advantage it would achieve from his absence.

Mr Abbott has also been demanding the government never accept Mr Thomson's vote, claiming it is tainted.
Sitting in his office while the numbers were being counted,

Mr Abbott told the National Times Labor should refuse to accept Mr Thomson's vote just as John Howard used to refuse the turncoat senator Mal Colston's vote by having a Coalition senator abstain.

He said the Coalition would never be trapped into having to grant Mr Thomson a pair.

Kind of self explanatory.

This Craig Thompson affair has been pretty awful for the last 2years. it won't go away because the Coalition - in their retarded bully minds - think that if they can get Craig Thompson to quit, then there would be a by-election and hey presto, they get that seat and with it the government. What they don't seem to get is that the destruction of Craig Thompson's life through trial by media, as engineered by the Coalition, is going so far into questionable territory that it would taint an in-coming Coalition government for a long time. If Tony Abbott is  willing to do all this to an individual to get his way, then how safe can any citizen feel in this country?

It is true that the allegations against Mr. Thompson are pretty vulgar and scandalous (if you have that turn of mind) but so far charges have not been laid. Yet it is also true that Mr. Abbott is trying to turn Parliament into a kangaroo court and the execution room where death by public opinion is the sought means. His position goes from total disapproval of Fair Work Australia because it favours the unions, but a 100% acceptance of its findings against Thompson after a four year inquiry, during which while it was going on, he used the ongoing investigation as an example for how bad Fair Work Australia was.

You can't make this stuff up.

News That's Fit To Punt - 01/Feb/2012

Citizen Rinehart

The richest woman in Australia, Gina Rinehart has set her mind on buying into Fairfax, the company that owns the Sydney Morning Herald, and the Age, amongst other mastheads. The response coming out of the Fairfax stables has been interesting.

Here's Michael West:

The Murdoch press is already favourably disposed to the Minerals Council view of the world while Rinehart's politics are said to be strenuously ideological in the fashion of her late father Lang Hancock. Rinehart control of the Fairfax mastheads could have a dramatic influence on politics in this country.
Any tussle, then, for the venerable Fairfax mastheads would entail not just economic considerations, but community and political issues too. These issues would play into the hands of the institutional shareholders who would no doubt demand recompense for parting with the major mastheads and the effect this could have on the attendant Fairfax transactional businesses, which feed off the enormous online traffic.

Apart from matters of price, then, there would be much focus on the likely direction of Fairfax editorial. And some ideas from Lang Hancock in his book, Wake Up Australia, provide some hints, such as how "we can change the situation so as to limit the power of government".

"It could be broken by obtaining control of the media and then educating the public," he wrote.

There were several ideas on how to gain control of the press. One was for Australian retailers to refuse "to give advertisements to any paper which did not support a change in the constitution to reduce government to an absolute minimum".

"Control of the press could also be obtained by several of the big mining groups banding together with a view to taking over one or more of the present giant newspaper chains which control the TV and radio channels, and converting them to the path of 'free enterprise'," he said.

That's pretty sobering. the SMH might be transformed into a broadsheet with even sillier, shallower, more fascist tendencies than a Murdoch rag. I think it would be the end of public discourse in Sydney.

Here's a link to what politicians think:

Political reaction to the news of mining billionaire Gina Rinehart's increased stake in Fairfax Media has been mixed with Opposition treasury spokesman Joe Hockey saying he is "comfortable" with the move.

But the Australian Greens have described the trend towards a handful of individuals owning swathes of the media as "dangerous".

Communications spokesman Scott Ludlam says concentrated media ownership by individuals means Australia is unhealthy for democracy.

Senator Ludlam says the national laws against concentration of ownership in the media are now far too weak after being "gutted by the Howard government".

The Greens Senator claimed Ms Rinehart has "indicated a desire to have more influence over national affairs" and that she had "campaigned against Labor's mining tax to protect her own commercial interests."

Interesting how Joe Hockey is merely comfortable. You'd think he'd jump up and down with joy at the thought that a right wing nutjob is trying to seize editorial control of the SMH.

For the record, this is Gina Rinehart's view on several subjects:

Mining tax:
"[The Minerals Resource Rent tax] damages investor confidence and renders formally attractive and value-adding projects less viable".
"One of the issues that needs to be tackled is the cost, risk and time lost on approvals, permits and licences before revenue can be earned, [which] has very greatly increased in Australia, making it almost impossible for small companies to carry and comply with such burdens," Mrs Rinehart said.
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"If our costs get out of kilter through excessive taxation or excessive regulation on top of our other high costs we already have, this is just making it more difficult."
Carbon tax:
"We must drop these taxes or we risk the bureaucracy becoming the only growth industry in Australia."
"After this unnecessary shock to investment and exploration the carbon tax (and MRRT) is causing, we should also demand from our politicians that they introduce legislation that requires a majority by referendum before they can introduce any new taxes or tax increases."

God help us all from this woman's political views.

Anyway, I note all this because it was interesting how the SMH kept spitting out bits and pieces about Rinehart today as the story unfolded. It ain't over 'til the fat lady sings and at the moment she's busy buying up shares.

Between An Angry Devil And A Poison Deep Blue Sea

It just gets worse and worse over in Greece and by extension, Europe.

All leaders of the euro zone are insisting that forcing private creditors to take a hit on Greek bonds constitutes a “unique” event, for fear of causing contagion. But spreads on Portuguese bonds are rising to alarming levels, and the outlook for Italy and Spain is still wobbly.

“An inability to tackle a problem the size of Greece inspires little confidence in the ability of the EU to tackle Italy and Spain,” says Sony Kapoor, head of Re-Define, a financial think-tank in Brussels.

Germany parried demands, from Mr Monti and others, to enlarge the firewall by merging the existing temporary European Financial Stability Facility (EFSF) and the permanent new European Stability Mechanism (ESM). This would enlarge the fund from €500 billion ($659 billion) to €750 billion. Mrs Merkel said the matter should be discussed in March, as decided in last December’s summit.

March, says Angela Merkel. The Economist suggests the investors should take more losses.

What is the best way out of this mess? Step one is to force private bondholders to take more losses. They have been treated with kid gloves so far because European governments insist the debt deal must be voluntary, thanks in part to a misplaced fear of triggering credit-default swaps. That must change. Discard the veneer of voluntarism and Greece can be tougher on its creditors. It should pass a law that retroactively introduces collective-action clauses into all domestic-debt contracts (making it easier to impose debt deals on recalcitrant bondholders). If it does this now there is still, just, enough time to organise a big, coercive, but orderly, restructuring of Greek bonds by March 20th.

So mark that date down as the date hell will break loose on the markets again. 20th March.

While I'm at it I think it's worth linking to this little thing from Boris Johnson.

Now in the old days, before the euro, there was a simple solution that allowed the Italians to keep producing cars of the same quality and to keep unit costs down. It was devaluation, and if you look at the postwar career of the lira (and just about every European currency) against the Deutschmark, you can see how it worked. As the mark appreciated, it was more expensive for Italians to buy a German car; and as the Italian currency fell, Italian cars remained a good buy in Germany. The tragedy now is that this option is closed off for the euro-zone members - and look at the Italian car industry.

Manufacturers can no longer use the lira to compete on price, and they are being utterly stuffed. Italian car sales fell 15.3 per cent in December, while sales of German cars grew 8.8 per cent. The Italians now produce fewer cars than the British do, and their markets are being relentlessly gobbled by Audis and Beemers and other beautifully engineered machines from Germany.

It is worth pointing out again that the Germans get a great deal out of the Euro for being the Euro in that it lowers the prices of their exports significantly; which is exactly why Angela Merkel is running around trying to save the Euro because the Germans stand to lose a lot if and when the Euro breaks up and they have to reissue the Deutsche Mark, and it appreciates like the Yen and suddenly nobody on the planet can afford German products except "the 1%". It might be cheaper to buy all of Greece than to keep haggling over its debt.

Property Bubble Babble

I know this blog has gone in weird directions at time in pursuit of interesting tidbits to do with the GFC, and I have to say one of the weirder aspects of the GFC has been the sustained property bubble in Australia. It's so weird, people are used to this bubble but as I pointed out yesterday, there's no real reason for Australia's real estate to be so much more pricier than other parts of the world. yes, it's really nice here in parts, but so are Greek Island Villas that come in cheaper than some flats in long-established suburbs in Sydney.

Anyway, I got this link from Skarp today which points out 4 reasons why there is a bubble going on, tangential to what the other fellow Professor Steve Keene says. Embedded in it is this link here, which is sort of prequel to the other link. The take away message is that it wasn't the non-recourse lending in America that led to the subprime problem, it was the extreme lending. Housing prices don't always go up, and in the long view of history, any tie that it does is an anomaly. There is no housing shortage as claimed by the peak bodies, and Australian banks have not lent conservatively as claimed, which feeds back into the recourse lending argument.

I do want  to point to this bit:

Rational discussion about the state of the property market is fraught. Many outspoken bubble deniers are conflicted by their interests in industry and government. Many – not all – are employed by, consult for, manage, and/or own organisations with a direct interest in maintaining the status quo of an overvalued property (land) market. These institutions are primarily commercial lenders, investment banks, real estate intelligence firms, insurance, real estate agents, Treasury, the RBA, vote-seeking politicians, and the mass media.

Skilled and intelligent specialists, trained in neoclassical economics in leading US institutions, did not see their enormous housing bubble until it burst in front of them with horrendous consequences. What makes Australia’s “experts” any more competent?

As investor Jeremy Grantham has noted: “Bubbles have quite a few things in common but housing bubbles have a spectacular thing in common, and that is every one of them is considered unique and different."

All this is to say it's worth looking at the Australian housing market with a good deal of scepticism. Even if prices don't collapse, it's hard to make a case that it's going to keep going up. If I were an investor, I'd be looking at another asset class.