News That's Fit To Punt - 19/Sep/2015

ZIRP Didn't End Today

After months of threatening to lift interest rates, the US Fed decided not to raise interest rates today. Which is pretty damn amazing really because it does nothing but punch a hole in the credibility of the US Fed when it talks about how it sees its own policy. Think out it for a moment. If it were the RBA and Glenn Stevens, it would be unthinkable for him to spell putsch a move for 9 months of the year, only to squib on the threat when you were supposed to do it.

As it is, the RBA has us on a strange parallel world to ZIRP with our very own TWIRP, which is causing its own havoc. Interesting then that the constraints of the US Fed running ZIRP forcesAustralia to adopt its TWIRP and so Glenn Stevens wants to urge Janet Yellen to just get on with it.  Of course if the US Fed does raise it even 0.25%, about a trillion dollars worth of derivative contracts go up in smoke. but this is the thing about derivative contracts: they're only tangentially related to the real world economy.

Of course, the reason the US Fed didn't raise their interest rates according to Janet Yellen's statement is that they are concerned about China's economy - Something both Glenn Stevens and Michael Pascoe think are over-stated as being problematic. And yet, you have to wonder what the US Fed knows about China.

The Wild Wishcasting Phase

Those conservative chumps in the Coalition must be dreaming big, now that albatross Tony has been sent packing, and the poll bounce shows they would demolish a Bill Shorten-led ALP if there were an election held today. They haven't had numbers like since the days of Julia Gillard and even then Tony Abbott himself had terrible poll numbers. They might have to go back to 2010 just before Kevin Rudd got knifed by Julia Gillard to a time when they had a commanding lead in the polls.
Which is to say, at least for this week they've got it good.

They're probably starting to think big about how this might translate into votes, but really we need to put a big caveat on Malcolm Turnbull's alleged popularity. For a start if your predecessor is Tony Abbott, even a pile of dog dung is bound to come up smelling roses. This electorate was dying for something much better than Tony Abbott, so naturally there would be a poll bounce.

But here's the thing, if Malcolm Turnbull is really going to capture votes from the Left, he's seriously going to have to do something that even the hardest credential-ed lefty is going to admit is good, and that means having to do something the right hates, and there's simply no leeway in Malcolm Turnbull to do any such thing. And that being the case, it won't be long before the stench of old Liberal and National Party policy positions will stink like the dead fish that they are, and bring Malcolm Turnbull's popularity down to their level.

In turn, the smart advice going for Lefties is for them not to get too excited.

Not All That Dies Old Is Bad, Not All That's Young And Remaining Is Good

I haven't paid much attention to the Canning by-election brought on by the death of Don Randall. Don Randall of course tabled to motion for a spill back in February and was founded in his car not long after that. If this were a mafia movie, you'd draw your own conclusions - but it is not, they say he died of a heart attack in his car. It's hard to tell what sort of MP he was, but if he thought enough to urge his party members to dump Tony Abbott, there was probably a decent man right there.

Andrew Hastie is the man running for the coalition in his place and he's an ex-SAS man. This sort of candidacy makes my skin crawl because those guys lead a pretty narrow life with a narrow world view and they might have a world of experience in the extremes of a combat zone, they're not guys known for a deep and compassionate outlook on their fellow man.

Andrew Hastie has accused the ALP of not supporting our troops in the Afghanistan based on his personal experience. It seems like a really crass thing to say in your run up to your polls, and really shows you the sort of grubby candidate that he is. It's pretty bleak that a sensible elder dies to be replaced by some narrow-core one-eyed zealot. Our polity is doing really badly right there.

Ragging On Bill Shorten

You can count me as one of the people who got very hot under the collar about Bill Shorten's role in bringing down Kevin Rudd in 2010. I'm still not that crash hot about how that all went down as you know; but then, I wasn't exactly crazy about the whole ALP way before Kevin Rudd even became Leader back in 2007. For a better part of 24months while the Abbottoir reigned, Bill Shorten's stint as Opposition leader has looked at times like a very contrived, stage-managed wave to *his* people, a knowing wink that he was just going to sit pretty and be a small target - even though Tony Abbott made things simple.

An even then I have enough perspective and patience to say, the ALP need to let Bill Shorten do his thing, what ever it is. There isn't an easy road to government; there isn't a short cut.

In the wake of the Turnbull seizing the day, Shorten's approval rating has sunk to 24% and there are now grumbles in the electorate about his 'performance' already. This is galling because it's from the very same people who wanted Malcolm Turnbull over Tony Abbott but vote only for the ALP anyway.
Folks, you need to grow up and grow a brain.

Mind you I had a chance to chat to somebody who told me they were one of these ALP voters who wanted Malcolm Turnbull and their reasoning was that independent of sides, Abbott *had* to go for the good of Australia (which is hard to dispute) and that it was now time for the ALP to step up and put in their best leader to square off against the best the coalition has brought to the table. I enquired of them who they thought the better leader would be and they answered in a heartbeat, "Albo!"

When I expressed incredulity, they replied that Tanya Plibersek would make a better leader than Bill Shorten. I just want to point out that the ALP haven't contested a single Federal Election with Bill Shorten as leader. Do you think there might be a problem with the Australian political culture precisely because the electorate is already so bloodthirsty? These politicians are only reflecting our choppy-changey electorate.

It's not shopping for shoes or the next sugar hit at the candy store. It's political leadership we're talking here. ALP supporters would be out of their fucking minds to want to start jockeying for replacing Shorten.

Everybody's Talking House Prices

One Step Beyond The Piketty-Fence

One of the more curious aspects of the burgeoning inequality is that it is more generational than class oriented. As society ages, you see that there are gobs of elderly people with assets and lots of young people in debt. The older generation says, "we had it tough when we were young,"ignoring how distorted the maths has become to the point that the young will not get a shot at the same sort of asset accumulation without inheriting it. In the past, this sort of thing was great impetus to go on a colonial exodus but there are no more frontiers on a globalised world. We are now so deep into the consolidation of the world that average wealth in the formerly advanced nation is deflating down to the emerging markets where their average wealth is rising.

All of this is to say that in a country like Australia, its unlikely the younger generation will be accusing the kinds of a sets accrued by the older generation today.

Which brings us to this interesting article today.

Piketty reckons we're on our way back to the drastic inequality of earlier centuries and recommends a global wealth tax be imposed to prevent it. 

In the current edition of The Economist, young Matthew Rognlie says he thinks Piketty missed some important points.

In a new paper presented at the Brookings Papers on Economic Activity in March, Rognlie fingers what may be the major flaw in Piketty's influential book: It's not the return on capital per se that has been soaring beyond economic growth since 1970, but just surging house prices. 

Rognlie says the return on non-housing wealth has actually been remarkably stable.
He has other arguments with Piketty but the housing insight is the hot and challenging one.

This is interesting because if all other asset classes remain stable in their returns over a long period of time and it is real estate that is somehow skewed to be higher, then it stands to reason that people would enter the real estate market over other asset classes. Kind of explains the moral hazard inherent in the Property Bubble that has been blown into existence by the central bankers - and they did this through faulty CPI calculations. Still, we have what we have, and the solution to the problem is not palatable to those who have.

But that's only part of the solution to the housing problem. If any government took that problem seriously and could ignore the rent seekers, medium density should be the default option for cities like Sydney. Anyone with a suitably sized block of land or any group of willing neighbours should be able to build a fashionable row of terraces instead of their isolated boxes, if they so wish. 

Those who prefer their own quarter acre would, of course, be welcome to it, and the land tax that it would incur in a rational nation interested in sensible tax reform.
So put your hand up if you're genuinely interested in a fairer society, in preventing increasing inequality, in making housing more affordable for your children, in living in a more efficient, greener city with better infrastructure, and, effectively, freezing housing prices and restoring individual property rights? 

I think I just lost the owner-occupier and NIMBY vote.

Such is life. Yet the working definition of inflation is too much money chasing too few assets. The  fact that the rise in property prices haven't shown up in CPI calculations tells you something about Central bankers and which side their bread is buttered.
Anyway, people are still incredulous that there is a Bubble going on.

Despite almost 30 per cent price growth in Sydney over the past two years and strong 15 per cent growth, too, in Melbourne, Dr Wilson doesn't believe there is a bubble in Australian house prices, nor does he anticipate any sort of collapse. 

Responding to the Reserve Bank's latest jawboning about the high level of investors in the Sydney and Melbourne property markets, he said: "There's no prospect in the foreseeable future for a sharp fall in prices without a sharp rise in interest rates, which is the main catalyst for a housing correction." 

While interest rates will eventually rise, he points out: "Clearly, the environment is for flat or falling rates to stimulate a weak economy." 

Then, there's the housing shortage.

That reads like the perfect denial: There is no Bubble and it won't pop. The black swan says hello.

Let's imagine a scenario for a moment that something catastrophic happens in China and the property market pops because the leveraged banks call in all the debts at once. Everybody panic sells and prices crash. The RBA would cut rates further from the historic lows where they sit. If the plunge is bad enough, the RBA will go to ZIRP to shore up the banks. Worse still, if there's not enough liquidity to cover the whole system, the RBA will print money by unleashing its own QE programme. A rise in interest rates would be the farthest from anybody's minds in that context. And there may even be people who think, "we should borrow money now with this record low interest rate and buy a house..."

So even in the most catastrophic situation, you can see that somebody is going to be in there buying up on ZIRP money and borrowing from banks propped up with QE money. Which is exactly where America is at right now.  The market's broken because the interest rate is sitting at zero. Nobody is making sensible decisions about money because at zero interest rate, you can't. You'd be a mug not to borrow as much as you can, right up to the edge, and over the edge and down by the river; seasons will pass you by the rates go up, you go down... but until that day, you're under no threat so you make hay by borrowing everything at zero capital cost.

That scenario suggests the Property Bubble can't pop because the central banks won't let it pop - which is kind of a crazy-scary notion. We're saying that the central banks will indefinitely put off the endgame. If the endgame never arrives, the status quo can be kept and rack up as much debt as it likes - at zero interest - and you just keep on going doing what you're doing.
How is that not a moral hazard?

The flip-side to all of this is that the RBA is most unwilling to raise interest rates in fear of the bubble bursting. If it's worried about the overheated housing price, there's really only one medicine: jack the interest rates up to historical norms. Let deflation set in if it must, but tame the damn Property Bubble. The fact that they haven't (and won't) indicates the people who set the policies themselves are so deeply in with the Property Bubble they couldn't possibly do it. Nobody wants to die, but nobody wants to take the medicine. The rest of it is trying to stretch out the limbo as long as possible.

Somehow, somewhere along the line, we really screwed the pooch.

Where QE Has Taken Us

The Central Bank Conundrum

In the past week, Mario Draghi put through the policy of negative interest rates. He said the idea was to push savings out and into investment. This has had scribes scribbling around the world as to exactly what it means, but parsing through the writing it appears the most dreaded thing for central banks is asset deflation. It appears that we've hit a point in history where we just can't let asset prices fall because too many things are tied into the prices as they stand, even if they are bubble prices. In other words, the whole Zero Interest - and now Negative Interest policy has been a desperate attempt to keep everything in their leveraged positions.

To this end, central banks around the world have been running what amounts to a price-keeping-operation, partly through printing money, partly through bluff, but also by buying equities. It turns out central banks have bought 29trillion in equities around the globe. 'Abenomics' in Japan has been running a gambit where pension funds have been buying equities at the behest of the government. 29 trillion is a lot of money when you consider the size of the US economy is 17trillion. No wonder investors around the world have looked at prices of shares and said a bust is due. Yet amazingly share prices of blue chips have kept soaring. Well,they would if Central Banks are buying them with printed money.

Now I'm not one of those people that bangs on about the failing of the fiat currency but any way you look at that situation and you have to ask, should equities be a one-way bet? But the Central Banks do this because they need share prices to stay high.

Zero Interest rates have been in place for many countries and the effect of that has been to amplify the carry trade where the US Dollar has surged out to 'emerging economies' in search of yield as well as re-inflate the property bubble in places like California and London. Once again, asset prices are getting supported over just about any other consideration. So much so that a hypothetical interest rate rise of 0.5%would jeopardise US$13trillion worth of derivative products. Again, we're not talking chump change here.

The problems of falling asset prices would be the banks being unable to cover all the positions. Take Deutsche Bank, which has  200trillion dollars worth of exposure to derivatives as an example. If asset prices deflate even a little, there will be massive movements in those derivatives and would easily wipe out Deutsche Bank. And if Deutsche Bank should fail, the fallout form that would be a whole bunch of banks going down with it.

And so we're stuck with Central Banks busily trying to re-inflate asset prices whether they be shares or property or bonds. They're printing money to do it, which means inflation is going on pretty hard out there somewhere. The proper analytical explanation of inflation is going to be too much money chasing around too few things. If you print enough money there are too few things by definition. If the printed money is then used to buy the share market, it seems the inflationary effect will be amplified. Similarly if money is  printed to buy the bad debt derivatives from the subprime loans crisis, there will be too much money chasing around too few proper investment vehicles. What happens i the things that are affected the most are not houses and fancy commodities but things like grain and foodstuff? Doesn't that sort of destroy the purchasing power of people living in the third world? Won't this bring massive social stability around the globe? And still the Central Bankers are trying to re-inflate the asset bubbles.

It's not the speculation that is the problem; it's the process of simultaneously destroying value while preserving prices.

When the GFC came about, there was much discussion about moral hazard and the US TARP bill which was an emergency loan to banks to shore up their bottom lines. We threw precaution to the wind and supported TARP because without it, our banking and our  superannuation accounts would have been shot. Since then banks have received the mos support from Central Banks in order to set their books straight. The bankers even drew up  Basel II and Basel III agreements so that banks could be held to a standard to lessen systemic risk - or so the argument went. And yet the net effect of all this has bee the destruction of the middle class in America (with the possibility looming for Australia yet), with the super-rich getting ever richer. The guy on Main Street got taught a lesson moral hazard at his own expense, after having his life savings taken hostage. The guy on Wall Street simply got a green light to continue doing the stupid things that got all of us into such a sticky strait.

So 6years-going-on-7, I think it's a good time as any to ask just how well all of this is working out. The debt of the world combined sits at 720trillion dollars. The world economy combined is somewhere around 70trillion. We're not easily going to pay off that mountain any time soon. That being the case you wonder how long the whole charade is going to go on. We might have kicked the can down the road nicely back in 2008, but we're running out of road.

Discounting Inflation

One of the more pernicious things that has happened since sometime in the 1970s is that governments have changed the way they measure inflation. The net result of doing so has been to under-measure the real inflation out in the market place and claim inflation has been tamed. Again, this was particularly true in Clintonian America of the 1990s, where they invented some strange practices, which have since been adopted by the rest of the world as a 'standard'. The basket of goods used to measure CPI has changed so much since the 1970s that it really bears no relationship to the figures that have come before. It's been made to look more palatable by adding in luxury goods as well as items imported from overseas instead of items produced in the first world, which of course means we're importing the deflationary pressure from the third world.

Obviously it works out much better for Central Banks and governments if they can turn around and point at lower inflation figures. The problem is that we are printing money in an awful hurry in many parts of the world, and at the same time China is running out of cheap labour which meas there won't be a whole lot more deflationary force to be imported from China, the world's second largest economy. In fact the Australian Financial Review had a headline in the last week saying just that; that the RBA has erred on the side of too low an official interest rate.

This is of course kind of ironic because on the one hand central banks the world over are fighting to have more inflation and no deflation on asset prices. If they simply went back to measuring the CPI the old way, they can probably see just how much inflation there exist sin the current system. Also, by under-measuring inflation, they're setting themselves up for lower interest rates and thus looser monetary policy which of course does lead to more inflation. The longer the low interest rate regime runs, in a sense we're making real a greater inflation without having the means to measure it. We're already way too comfortable with the low interest rates. Even without the discussion on moral hazards, you'd think the central banks have got to figure they have one on their hands.

News That's Fit To Punt - 15/Sep/2012

Q.E 3 - Infinity

The biggest news of the week for me wasn't the storming of the US Embassy in Libya but Ben Bernanke saying he's just going to leave the tap on until stuff gets better. Indefinitely.

''We are trying to create more employment … the tools we have involve affecting financial asset prices,'' Bernanke said at a press conference after the Fed's announcement. Companies felt there was not enough demand for their products, and if the value of homes, shares and other assets improved, Americans would be ''more willing to go out and provide the demand'', he said.

The open-ended nature of the stimulus is one measure of how hard the Fed is now pushing. Another is the fact that it has softened a focus on containing inflation that has dominated central bank thinking for decades.

Bernanke insisted yesterday that the Fed was not intentionally trying to raise inflation to a point where it more aggressively depreciated America's daunting $US16 trillion debt load, an option that has been there from the moment the global crisis began.

It was, however, ''not going to [be] premature in removing policy accommodation'', he said, adding: ''Even after the economy starts to recover more quickly, even after the unemployment rate begins to move down more decisively, we're not going to rush to begin to tighten policy. We're going to give it some time to make sure the recovery is well established.''

The success or failure of the ''do what it takes'' quantitative easing strategy that is being rolled out on either side of the Atlantic depends on whether companies and individuals respond. In the US at least, the capacity to do so has been demonstrated before.

That's some pretty drastic tap turning. They're already at 0% interests rates, and committed to that for a long time to come. now they're going to spend 40billion a month buying crap paper, printing money to do it. Tea Party types are going to have a stroke. Gold investors are going to have jism-spasms.  Commodities are going to rise again and save Twggy Forrest.

I've had a little l think about what all this means because since the GFC, central bankers and treasury officials from around the world have done this thing of trying to stimulate the economy. This includes things like the TARP bail outs as well as the Rudd Government's big stimulus package which staved off a nose dive into a depression (and the more time goes on, we have to give him credit for that decision lone).

The problem is, at this point we're having to wonder about the 'moral hazard' that was decried at the time by certain people who felt that bailing out bankers was one thing but bailing out everybody was a terrible thing because they might just keep doing what they were doing that got us all into the mess. Note, they weren't as hard on the bankers as they were on socialist governments that just gave out the money for people to pay down their credit card debts.

But 4 years removed from that chaotic time, the great danger seems to have been the possibility (or even probability) that asset prices might go into reverse and we have a deflationary spiral. The big fear, as it were, seems to be that if everybody ends up being foreclosed upon by their banks and are forced to sell their houses, then there would be all these homeless families who owe more money to the banks even after being forced out of their homes. And this seems to be the scenario everybody is furiously trying to avoid, both over in the USA and over here in Australia.

So we come back to the moral hazard bit. Just as a token of understanding, RBA boss Glenn Stevens was saying earlier in the year that it wasn't acceptable for people to be assuming that property only goes up; and yet we have governments around the world totally invested in making sure they never come down. You'd be stupid not to buy into the Property Ponzi scheme that gets bailed at the first sign of a crack. Nobody is willing to give up their houses. Should they be made to by market forces? It seems the Federal reserve in the USA says no and, - this is the amazing bit - What they're saying is that they're going to take the value off the house by stripping the value out of the price tag on your house.

Yes, you can still keep your $700,000 price tag on your house; you won' be foreclosed; but that $700,000 won't be worth the $700,000 you bought it at, because we're printing money to destroy the value faster than before. And it won't show up in inflation figures because people won't sell their houses often enough to make it matter.

In the long run, the property bubble in the first world racked up a certain sum of unrealistic prices, which has to be wound back. Rather than let the deflation give back those prices, they're going to switch on inflation so that the dollar value diminishes to match the real value.the point is, going forwards, there is nothing to say that Real Estate is a better investment than shares or bonds because they're going to inflate away any gains you make beyond the market. It's probably a good thing if it blunts property speculation, but judging from the news this week, overseas investors are piling into Sydney Real Estate, most likely because of the moral hazard or actual lack thereof.

Somewhere Steven Keane is laughing and crying.

Eying The Charging Bull

Are things really that bad in America right now? Don't look now but the Dow Jones finished at 13,593.57, marking a 5 year high. by which we mean, it's the highest it's been since the GFC started 5 years ago.

US stocks rose for a fourth straight session on Friday to close out the week at nearly five-year highs after the Federal Reserve took bold action to spur the economy, a move that could keep equities buoyed in the coming months.
Shares of Apple Inc, the largest US company by market value, ended at an all-time peak, and Exxon Mobil , the second biggest, hit a four-year high.

Equities are in a run-up that has pushed the S&P 500 to end higher for four consecutive months. The extended advance has come mainily from actions by Europe's and the United States' central banks to keep interest rates low and stimulate their struggling economies.

The Fed said Thursday that it would keep up its aggressive bond-buying until unemployment falls. Chairman Ben Bernanke said he wanted to see a convincing improvement in the economy that could deliver sustainable job creation.
Bernanke's comments are "going to create an artificial floor on the market, meaning that we could see higher prices over time," said Paul Nolte, managing director at Dearborn Partners in Chicago. "Any correction that we get will be no more than a few per centage points."

The Dow and the S&P 500 both closed at their highest levels since December 2007, while the Nasdaq ended at the highest since November 2000. The small-cap Russell 2000 index closed at the highest since April 2011.

The Dow Jones industrial average ended up 53.51 points, or 0.40 per cent, to 13,593.37. The Standard & Poor's 500 Index closed up 5.78 points, or 0.40 per cent, to 1,465.77. The Nasdaq Composite Index gained 28.12 points, or 0.89 per cent, to 3,183.95.

For the week, the Dow rose 2.2 per cent, the S&P climbed 1.9 per cent and the Nasdaq added 1.5 per cent.
The S&P is now just 6 per cent below its all-time closing high of 1,565.15 despite a relatively weak economy and economic risks around the world.

The Dow might set an all time high by the end of the year. The same thing goes with all the other American indices. This might all be 'irrational exuberance' as Alan Greenspan called the 2009 rally, but he doesn't seem to be saying it now.

I know there's a 'Fiscal cliff' coming later this year, but that is why Bernanke opened the sluice gates and let it rip. When it crashes over the all time highs, this is likely the start of a new bull run in US equities.

Lining Up For A Beating
Back  here in Australia, there's been another bit of Rudd-pronouncements and a round of "is-he-won't-he". This time Simon Crean managed not to go out there and slander Kevin Rudd. The election last weekend yielded some interesting results, all food for thought and the main dish on the food-for-thought degustation is that the ALP is likely to get bollocked hard in NSW at the next Federal election.

A second backbencher from western Sydney, John Murphy, spoke up. Murphy is especially vulnerable. He holds his seat of Reid by a margin of 2.6 per cent.

He agreed with Swan that the ALP performance had been ''patchy'' and cited two contrasting local experiences. The Labor mayor of Canada Bay council, Angelo Tsirekas, managed to win a 10 per cent swing in his favour.

But in Auburn, where Labor had long held an unassailable dominance, the party had been outpolled by the Liberals by a margin of two to one.
If that's not an alarm, Murphy said, I don't know what is. We've got to take notice and get into these communities, he urged. Canada Bay and Auburn fall within Murphy's federal electoral boundaries.

Swan offered a reassurance that things would turn around but again offered no strategy. A third MP, Stephen Jones, echoed the concerns of Hayes and Murphy.

It was a moment of ironic tang for some in the room. Some caucus members remembered hearing Julia Gillard justify her coup against Kevin Rudd by saying that she was not so much troubled by the Rudd government's difficulties but by the fact that he seemed to have no plan to get out of difficulty.

Well, that would be painful in the caucus room, but really, this moment was going to come on the back of February's big leadership spill that was supposed to put paid to Kevin Rudd and allow Julia Gillard to win the electorate. Except the electorate isn't listening. I don't mean any disrespect, but I will continue to say that I won't vote for Julia Gillard because basically if the ALP was happy to risk the future of Australia in the hands of Tony Abbott, then I am not doing anything worse by taking the exact same risk, by donkey voting for the Lower House at the next Federal Elections (I'm voting for the Australian Sex Party in the Senate).

It doesn't matter what Julia Gillard has done since February or will do on to the next election. The reasons for me not voting for her have been writ in history. The ALP can't unfuck that goat.

Speaking Of Terrible Tony...

Student politics on campus is an often silly, shitty, horrible, bizarre thing. You always wonder what the storm in a teacup is, but it's always nice to know that it can have real life repercussions, for 35 years one from some SRC arguy-bargy at the University of Sydney's SRC, we've been hearing what a prick and a hostile misogynist  Tony Abbott was at university.

Barbara Ramjan beat him hands down. She was of the left but her work as the SRC's welfare officer made her a popular figure on the campus. The night her victory was declared, the SRC offices saw wild scenes of bad-boy behaviour: flashing, mooning, jeering and abuse. Abbott watched all this. His loss was a very public disappointment. He approached Ramjan. She thought he was coming over to congratulate her. "But no, that's not what he wanted," she recalls. "He came up to within an inch of my nose and punched the wall on either side of my head." Thirty-five years later she recalls with cold disdain what he did. "It was done to intimi­date." Abbott tells me he has no recollection of the incident: "It would be profoundly out of character had it occurred."

Pure ugliness of his character on full display. Anyway, in the wake of that publication, we've seen a few other people pop up and corroborate the account and Christopher Pyne - the evil leprechaun of the right - say it's all water under the bridge and not important enough to be talking about.

It took Tony Abbott a full week to hide from the mushroom cloud, after which he emerged and denied it. Well it is a well known rule of blame-assignation that "he who denied it supplied it" so it must have been him to cause that stink on campus back in 1977. Then he finally emerged and  said a Labor dirt unit dug it up.

Fronting the media yesterday for the first time in almost a week, Mr Abbott sought to reconcile his previous statements that he could not recollect the incident and that it never happened. ''How can you recall something that never happened?'' he said.
He did admit to another allegation - that after Ms Ramjan became the SRC chairman and asked to be known as chairperson, he called her ''chairthing''.
''There were lots of silly, embarrassing, childish things done in student politics and I wasn't immune to that,'' he said.
Mr Abbott denied the wall-punching allegation and claimed the matter had been dredged up by a Labor dirt unit. ''There is a Labor dirt unit and it's feeding information to people left, right and centre,'' he said.
Ms Ramjan, who has been telling the story for years, told the Herald it was ''absolutely'' true and she rejected outright that Labor put her up to it. ''I have never been a member of a political party in my life,'' she said. ''He's a bully.''

I don't doubt that he is a bully for a moment. It's nice to know that student politics is of some consequence, when it comes back to bite Tony Abbott in the metaphorical arse - yes, the very same one he was hedging on offering Tony Windsor in exchange for being Prime Minister.