News That's Fit To Punt - 7/Oct/2016

Ross Higgins (1931 -2016)

The only thing I know Ross Higgins from was that execrable show 'Kingswood Country'. 'Kingswood Country' loomed over the early1980s like a cloud of politically incorrect humour disguised as witticisms. As Ted Bullpitt, Ross Higgins was the star of the show that ostensibly poked fun at the suburbanite with a narrow mind. The problem was that if you lived in the suburbs back then, you were surrounded by people who took it as validation of their politically incorrect positions.

I'm not entirely sure where Ross Higgins stood in relationship to his creation; there was an element where the character was much larger than the show so Higgins ended up plugging insecticide in his Ted Bullpitt persona. One thing that was clear that I could see was that Ted Bullpitt crystallised a certain kind of cultural posture in Australia that goes around bullying migrants.

In the case of St Ives High School where I was in 1980, it manifested itself as a massive bullying of a kid in the year above me, who was from Chile. Yes, in St. Ives, that was the closest thing the local orcs could find to calling a 'bloody wog'. The bullying was merciless and pretty much out of control on the school bus, outside of the school grounds where the teachers could not see.

It was one of the most unfair treatments of a fellow student I have ever seen - and believe me, until 6months before then, I'd been living in New York City. If this was racism, I'd never seen anything so fierce and awful; and if this was xenophobia I'd never seen anything so hostile and full of hate. Ted Bullpitt wasn't inciting the hated, that much is true. The problem was that the weekly does of Ted Bullpitt on TV was legitimating this hideous bullying through validating this persona. It gave kids licence to be as vile and horrid. It was no joke, it was more identity politics gone completely wrong.

So the two things I've never really forgiven are St. Ives High School and 'Kingswood Country'. As for Ross Higgins, I'll never really know.

Selling The Poles

What might pass for the Coalition Government's Anti-Arts Anti-Sports policy, a Coalition Senator wants to investigate cutting all  government funding to sport and the arts, as well as selling off 'Blue Poles'.

The firesale was necessary to fix Australia's bloated budget deficit, he argued – although the $350 million painting represents only about 0.07 per cent of the country's $470 billion gross national debt. 

Appearing on Melbourne's 3AW radio with Neil Mitchell, Senator Paterson was asked where the belt-tightening would end. 

"Why do we fund $7 billion a year into the arts and who knows how many billions into sport?" Mitchell asked. "Maybe we reassess and say let's fix some grassroots problems and forget about sport and the arts?" 

"I agree, Neil," Senator Paterson replied. "$39 billion deficit last year. It's not a time when we can really be affording luxury. We've got to look at all areas of spending. 

"I find it difficult to understand why Australia is so generous when it comes to professional sport. Given that there's a lot of private funding for professional sport, I don't think it's really necessary for us to be funding it from our taxes." 

Senator Paterson also volunteered Australia Post as "the next cab off the rank" for full privatisation, but drew the line at junking the $200 million same-sex marriage plebiscite to save money. "It's something we took to the election," he said.

It's sort of funny when you consider the Liberal Government in NSW wants to sell off the electricity poles, there might be some Freudian meme in there somewhere.

There's at the famous story of some ministers wanting to cut arts funding in the UK during World War II and Winston Churchill responding "then why are we fighting this war?" Surely somewhere in the dim dark past the conservatives were for the arts. It's only because they hated the counter-culture so much in the 1960s that they've alienated themselves from the arts and by extension cultural undertakings in this country. There's a reason why there are so many philistines walking around Australia; it's because the Coalition has worked very hard to create them so that they can vote for the Coalition. It shouldn't surprise us that with the absolute dearth of brain power going towards the right that the best they can throw up is a 28 year old Senator with the mind of a philistine, a body of a philistine, but not the same philistine.

It gets worse:

Speaking to Fairfax Media later, Senator Paterson declined to go into further detail about axing funding for sport and the arts. "One privatisation a day is enough," he said, clarifying that he was making "a general philosophical point" about the use of taxpayers' money. 

"When you've got a $40 billion budget deficit, every item of spending needs to be scrutinised more closely," he said. "Let's fight that battle once I've got Blue Poles privatised - uh, sold." 

Senator Paterson said former prime minister John Howard and former treasurer Peter Costello exemplified debt reduction strategies because they mixed structural budget repair with privatisation, such as the sale of Telstra. 

"They would not have been able to pay back the debt with just one or the other. You have to do a bit of everything," he said. 

His main objection to Blue Poles was that it was an American artwork with little cultural value here. "It's a great painting and it's had a huge impact on the art world, but it's not Australian," he told 3AW.

Funny that. If you're going to complain about a work of art hanging in the National ArtGallery not being Australian, you might want to invest in Australian artists a bit more not less. You know, through arts fundings, through state organs like the Australia Council. (God, I don't think I can do this much longer, pointing out the logical inconsistencies of an intellectually deficient government.  I really ought to quit.)

There are people who would love it that the government funding for the Arts was in the order of $40 billion, and that it could be cut. Ah, would that it were so simple.

"'T'werrrrr." That we do elect such imbeciles says a lot about our polity; but then so do all the other things this government does and says.

Quick Shots - 02/Jun/2016

What Yanis Said About Australia

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

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

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

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

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

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

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

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

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

This Damned Election In Australia

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

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

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

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

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

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

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

News That's Fit To Punt - 21/Jan/2016

Dick Smith And Rail

Dick Smith is a character. He's saying he'll run against Bronwyn Bishop if the Liberals preselect her again for the seat of Mackellar. If the Libs pick somebody younger and more open-minded to issues to do with economic growth and controlling population growth.

Mr Smith, who was on a yacht in Bass Strait on Thursday, said there had been a huge response to the news he might run in Mackellar. 

He estimated eight out of 10 people in the northern beaches electorate - where he has lived for decades - are concerned by the prospect of Australia's population rising to 100 million and beyond in coming decades. 

"I live in Terrey Hills and it can take an hour-and-a-half to drive into the city now. People will have to give up driving but there is no plan for a rail line [to the northern beaches]," he said. 

"People want to have backyards and maintain their way of life."

So Dick Smith is -interestingly enough - a conservative who wants a rail service up to the Northern Beaches. The mind kind of boggles at the thought, not because it's impossible but because he's talking about the neck of the woods that would hate having a rail line running through it, even if it were convenient. It's a completely different part of Sydney out there. Even with my North Shore roots I find cultural attitudes up in the Northern Beaches quite strange. It's certainly not helped by the fact that they've kept voting in Bronwyn Bishop to represent them. If there is over 70% electoral support for Bronwyn Bishop in Mackellar as it is, it gives you a picture of just how ideologically whacko they are up there. 

Even if hypothetically Dick Smith runs and beats Bronwyn and goes to Canberra, running a train line out to the Northern Beaches is a state issue. He's going to the wrong place for that particular issue. Certainly if Dick Smith wants rail lines into his neck of the woods (presumably because rail services are convenient and good things), then he should be a lot more vocal and active in supporting rail lines in general, right across Sydney NSW and heck, Australia in general. There are people doing that, working very hard to get things like the Light Rail extension up and running. You don't hear Dick Smith supporting that issue all. 

Dick Smith usually puts his money where his mouth is, as he's done with his line of foods supporting Australian manufacturing, so it's not hard to imagine him actively supporting a good idea. It's just really strange to see him threatening to stand with one of his issues is wanting a rail line. In Mackellar of all places. 

Metaphorical Gun To The Head

The Liberal Party must hate this one. It might even be undemocratic on some level. The Liberal Party putting up Bronwyn Bishop as a candidate for Mackellar again is barely democratic. We all hate her; we think she's a rorter; she's insensitive to the wider electorates' discomfort with her continuing; but she has this crazy support in Mackellar. We don't know if this is because those people would vote for a wooden dummy if it were the Liberal Candidate for Mackellar, or it actually is her singular appeal, even in a blue ribbon seat (I doubt it, but it's possible). 

Nonetheless, the process by which Bronwyn Bishop is retained and preselected as the Liberal Candidate for Mackellar is not any more undemocratic (or, any less democratic in the conventional sense) than most other seats represented by the two major parties.  However if Dick Smith's threat derails Bishop's preselection, then Dick Smith has effectively exercised much great control over the electoral process than any mere single citizen can do. He's basically doing this on the back his wealth and fame, and to that point, he's not that different from Clive Palmer. The Liberal Party has got to hate that.  

Let's say for the moment the Liberal Party backs down and then Dick Smith backs down. That would be a good outcome, but it leaves major question marks about the decision itself being undemocratic. If the Liberal Party pushes ahead with Bronwyn Bishop, and forces Dick Smith to run, it might turn into a proper open race, thus depriving the Coalition of a safe seat. At least that would be more democratic in the proper sense, but the Liberal Party would hate that too. 

The Right Is Wedded To Bad Ideas

The one big thing to come out of the collapse of the Soviet Union was that the Left could no longer be wedded to Marxist economics. That was *it*. 1989 marked the year that the project of 1848 finally came to an end. After that point, you couldn't be a communist because you really only had China and Cuba to offer you intellectual proof of concept, and China was frantically opening itself up for the world to make money. 

One would kind of surmise that the GFC would have done something similar to the Right and disabused them of completely unregulated money markets. Judging from the articles over at Zero Hedge, it seems highly unlikely. That mob is still railing against the command and control model they perceive in the US Fed setting interest rates and carrying out QE exercises to get through the post-GFC era. 

It's this denial that there's a real world problem in not reassessing the framework that characterised Tony Abbott's opposition as well as government. That is to say, the GFC was probably the one time the government had to go in to debt to bail out banks and people's savings, and asset prices. That was the right call to make, if they didn't want the whole economy to spiral into a sequence of margin calls and debts being called in at once and massive liquidation of positions. So with that in some corner of the mind, the Coalition set about complaining about the government debt that essentially bailed them out personally as well as the entire asset-owning class of people in this country. 

With somebody like Bronwyn Bishop, you wonder if she actually understood the problem at all as it unfolded during te GFC, or if she was simply filling out more expense forms for more helicopter joyrides; but that is by the by. Amazingly, there are many people in the electorate who think the complaining-about-the-government-debt was somehow a legitimate intellectual position to hold, and voted for these knuckleheads. 

It is then perhaps a great irony to see China - yes, that still ostensibly communist nation - hit a big road bump in its economic development, and for Australian export revenues to collapse, leaving this Coalition government with ever-diminishing revenue. Even at this juncture, the treasurer Scott Morrison is insisting there won't be a hike on taxes, just more cuts. This low taxation mantra too is looking like one of those bad ideas. Misreading the world going towards renewable energies and insisting on making coal the future of Australia is another one. The climate change denial to stick to that already bad idea of selling coal, is another one of those bad ideas. Other nations have committed to reducing carbon emissions by creating market mechanisms for it. Our nation has decided to go with "direct action" while w try and sell as much coal; 'Direct Action' is costly, inefficient and quite probably ineffective and it's another bad idea they're wedded to, because they argued so vehemently against the market mechanism - the ETS - which of course was a mechanism they themselves proposed when they were in with the Howard Government, so they couldn't back away from it once they had to have some kind of policy.

These interlocking set of bad ideas the Right is wedded to, can only be described as a Clusterfuck. Yes, we're living in a nation of one big Clusterfuck. 

Why Do Climate Change Deniers Still Even Exist?

Because denying it's happening makes them feel more certain in an uncertain world. 

The Mythic Catastrophe Of Government Debt

Taro Aso's Version

Japan's government is deep in debt. Some are claiming this is catastrophic, if not today, some time soon. Taro Aso, the Finance Minister for Japan - former Prime Minster and manga aficionado - begs to differ. In fact there's a video of him explaining why, that dates back to 2010. It's interesting so I'll try and pick the eyeballs out of the little lecture.

Basically, everybody's jumping up and down about government debt. What nobody stops to consider is just to whom the government of Japan owes this money. The answer is simple, it's the people of Japan. If you have any loan book, you'll have a column for debts and column for credits. So on one side of the ledger the Japanese government is borrowing, say 100yen, and then on the other side there must be somebody correspondingly lending that 100yen.

Now, people might disagree and say they don't hold any national bonds for Japan, but actually, they do. They put their money in the bank, and the bank then has to either invest or park that money somewhere, and it turns out, they buy national bonds of the government Japan. And it all happens in Yen.

As for the Banks, they are in their essence simply money-lenders, so if they don't lend out the money deposited to them, they're not going to make money. Unfortunately nobody's borrowing in Japan. There's roughly 30Trillion Yen = AUD$300billion each year of the money, looking to be invested with nowhere to go. And if it doesn't get invested, you get deflationary pressures from the money not getting invested - so the government borrows it to stave off asset deflation.

So yes, the government has borrowed a lot, but the lenders by and large are the people of Japan. Something like 94% of bonds are held by Japanese people, and the rest by foreigners. And even those people are buying those bonds with Yen, so 100% of government debt in Japan is in Yen and no other currency. This is in stark contras to Greece, where only 30% of Greek government debt is held domestically, and it's all denominated in the Euro and not a domestic currency. Greece thus puts out 70% of its government debt to be financed by international markets, who in turn don't trust the Greek government so the going interest rate for their bonds sits at (in 2010 figures) 13%. By contrast, Japanese bonds are going for a return of 0.9% or so, which means Greek debt is going around with 13times more risk.

Even if the debt comes due, the Japanese government can simply print the Yen and pay it. If the money was owed overseas in foreign denominations, the story would be different. It's a totally different kettle of fish to Greece, according to Taro Aso.

How Much Of This Applies Here?

This is the interesting bit. How much of Australia's Government debt is issued in foreign currency? One imagines the international market version is denominated in the US Dollar, so if the AUD goes down, it gets harder to pay back the government debt. Even so, in a pinch, the Government of Australia could just print what's necessary to pay it back. If the debt is enormous, then presumably this would lead to a currency collapse, but in most part nobody's going to be calling all the debts at once, and the RBA knows exactly how much money there ought to be in the market place to the extent as to know what the currency price should be, or whether printing that money is going to usher in massive inflation or not, as the case may be.

So even if government debt in Australia were to reach, say, 100% of GDP, it's probably not going to be the same as the Greek government's debt situation. And because it is more like 20-odd% and not 100%, there probably isn't a case for making the kind of fuss the Coalition made in opposition and then during 2014 with their fateful budget. Which is all an elaborate way of saying, all this fixation about government debt that the Coalition keeps using to bludgeon the ALP is a load of bullshit.

Not only is Australia not in any kind of debt crisis as the Coalition alleged at the top of their lungs this decade, even the debt we have is not going to have the kind of dire consequences for us as private sector debt is going to have. If the Coalition government under Tony Abbott had had a shred of decency and intellectual honesty, they would have formulated policy to tackle the ballooning private sector debt instead of banging on about the government sector debt. After all, if there are savings there looking to be invested and the government doesn't utilise that money, it contributes to a deflationary pressure on assets, as per Taro Aso 's lecture.

As things stand, the Australian Dollar is stubbornly high by the RBA's estimation; money is flooding in to Australia, buying up property and commercial assets. It's hardly the picture of currency collapse. People want 'in' on the Australian economy as it is. The constant banging on about the government debt essentially exposes the Coalition as inferior economic managers, who will necessarily hurt the Australian economy through their policies that always centre around cuts. You'd certainly wonder if this government actually understood what it was dealing with when it talks about government debt. One wouldn't advocate endless stimulus packages, going deep into the red like the Japanese government has done in the last 25years (it isn't necessary), but one probably shouldn't be fretting about the debt level when there are other things to worry about like a looming economic slowdown.

Twenty-Five Years, No Recession

This leads me into this weird anomalous state of affairs, of what's been happening for twenty-five years. There is a whole generation of people walking around Australia who have never experienced a recession. Back in the 1980s, Australia spent half its time in a recession of one kind or another. There are many explanations for how this came about, one of which is the rapid expansion of the Chinese economy and our role in supplying that demand; but also the cumulative effects of the macro-economic reforms and deregulation that unleashed the massive growth in the domestic economy as well as the enormous impact of IT on productivity.

If you look at any one of these elements, we're not likely to get them again. So, if you think about the slow down and change in China's economy, the limits of deregulation, and the limits of IT-induced productivity growth, we're not likely to see the same sort of stretch going forwards. That would indicate that at some point we'll be back to the 1980s scenario of a recession every few years, and by then we'll well be wondering just how lucky we got when we had 25years of uninterrupted growth.

It really is hard to see where the next big growth engine is going to be. Some have suggested India, but India is wilfully avoiding the kind of manufacturing-&-export led growth that east Asian nations have undertaken. They've gone straight into developing a high tech sector based on computers, IT and services. This means it is unlikely to duplicate the Chinese scenario for Australian commodities exports. Both the Gillard and Abbott governments banked on housing and construction as growth engines to take over after the mining boom but it ignores that constructing buildings or infrastructure isn't a growth engine for an economy in of itself. If anything, it's a recipe for sending us back to boom and bust cycles of the 1980s.

Of course we could get lucky again and have another mining boom. It's hard to see who would fuel it, but we tend to get lucky that way - hence our self-inflicted moniker, the lucky country - but the problem remains that we don't really have a good plan for when the luck is not there. When the luck is not there, the Federal government is going to have do a lot more than run around talking about government debt; we've seen how austerity in down times simply does not work. If anything is likely to lead us to being like Greece, the obsession with cutting government debt at all costs just might be the path that leads us there.

View From The Couch - 17/Sep/2015

The Crippling Global Debt

Walk-Off HBP had this little conversation he wanted to share. It's Satyajit Das talking about the problems of our global economy. The gist of it is pretty much in line with the prevailing observations about where we are in the debt cycle. There's a mention of Hyman Minsky in there as well, describing the various stage of debt financing and how the Australian housing market is definitely in the third phase out of three phases wherein it is no capable of paying off the loan principle or interest, and the only hope of making the money back is through capital gains of the underlying asset.

Satyajit Das' cheery interview leads us to understand that there is no real distinction between public and private sector debt, which in turn means our colossal private sector debt in Australia is ergo problem for the government and society at large. Not that it matter much today, but when Tony Abbott was going on about the debt, he really should have looked at the private sector debt instead of the government sector debt.

Even so, Das doesn't think there's much governments can really do to address this problem. After all, when looked at globally, since the peak of the GFC we've leveraged up 17% more global debt rather than pay any of it down. Nobody really deleverages, nobody really get through austerity and austerity in of itself does nothing to address the large mountain of debt. Das doesn't think debt jubilee is even possible without wholesale destruction of value.

Which is in many ways the crux of the problems. Nobody wants to give up the price tag on what they are sitting on. The people who carry on how there is no property bubble in Australia do so on the basis of trend lines and market relativism (so to speak) but completely ignore the absolute numbers and what they mean. They argue "It's in line with what things are worth" and totally ignore the fact that "worth" might be the most contestable notions - much more so than "I never had sex with that woman" or "I am not a crook". Thus, as Das points out, we're living in houses with price tags that have been 'financialised' and inflated - but we're happy to bask in the wealth effect which is the dtluionary thought that we got wealthier sitting in our houses doing nothing. Worse still, the inflated price represents how global capital tried to find returns and being unable to do so, landed in housing. As the money recedes when debts are called in, people's positions are exposed, and suddenly the price tags don't look so tenable any more.

Yet the world over there are people who borrowed money to buy things and when the debt gets called in early, are forced to cash out on the spot and lose money, or work very hard to stave off the debt collector. The post-GFC world has been marked by one effort after the other to secure these positions of 2007, trying to fix them in amber so people don't have give up their positions, their things, their assets that they got through borrowed money. The reason we kick the can down the road is essentially to preserve those people. And to that end the world has seen Quantitative Easing to facilitate that there is enough cashflow otherwise to make up for the debts that *can't* be called in, added with the monetary easing through low interest rates.

If that's not spooky, I don't know what is. We're doing all this "kicking-of-the-can-down-the-road" so Deutsche Bank doesn't blow up over Greek Bonds and derivative products based on Greek Bonds. Thus the Greeks have to wear austerity to save a German bank except of course in Iceland, they just let the banks fail. It probably worked out a lot better for Iceland to do so. The Greeks have no such choice. But Greece is actually what the future looks like for many parts of the 'Emerging Markets' world. Global debt will rob sovereignty from nations, communities, right down to individual people.

On Tony Abbott Being A Sore Loser

Look, he might be a sook. In the vernacular I grew up with, we call those, sore losers. Being a sook is what my office cat does on Fridays. Sore losers is what humans do, even when they're told not to do it. Kevin Rudd was a sore loser too, but hey, he came back like a champion. At least, my old tennis coach PB would mount those kinds of post-hoc argument: "That's what Champions do!" (Bless you PB wherever you are today.)

Julia Gllard's speech about being a woman wasn't everything and wasn't nothing, but something, was her only sore loser moment. Judging from 'The Killing Season' she does like to kid herself of a lot of things, but she doesn't seem to go sore all that often.

...but Tony Abbott? he's just.... argh...  For fuck's sake he faxed in his resignation to Sir Peter Cosgrove. Who the fuck does that in this day and age?  It says everything about the man who came to power promising ruin the NBN and 'fulfilled that sorry promise". To the end, a techno-loser, unfit to be PM in the 21st Century.

So I get it - he's a sook AND a sore loser. If you don't get it there's something wrong with you. But then this is a nation of sore winners, which is  a category I've never comes across outside Australia. Yes, we as a people can bask in the moments of great defeats and deep humiliation even though we won the war, so make of it what you will. Tony Abbott was in some limited ways, an exemplar of his nation.

News That's Fit To Punt - 16/Mar/2015

We Said The Same Thing About Julia Gillard

The not so big news is that the Federal Liberal MPs are unhappy with their Prime Minister. Former Minister and prominent-blowhard columnist Amanda Vanstone was heard making this remark in a 'Four Corners' episode:

Speaking on the ABC's Four Corners program, Ms Vanstone said it would be a simple mathematical calculation in the end which would determine Mr Abbott's grip on his job. 

"Understand this, as you get closer, every marginal seat member is thinking 'I could lose my seat', every safe seat member is thinking 'we could lose government and I won't have a chance of being a minister and I might be too old next time', so they're gonna be looking at what the polling says and whether they can win and they will stick with a prime minister who can win and they'll cut one off who can't," she said.

They're not words you want to see spelt out if you're Tony Abbott, but I remember these moments on the ALP side when Julia Gillard's polls stayed at 27% approval rating for months on end. All kinds of arguments were mounted as to why she should be doing better but ultimately she never recovered, and the backbenchers removed her for Kevin Rudd in order to "save the furniture". Oh what fun times those weren't. 

So the rough locus of politics being what it is, it's unsurprising that Amanda Vanstone can see the writing on the wall for Tony Abbott's Prime Ministership. He might have gotten himself a 6month reprieve but if the next Budget dogs it like the last - and let's face it, the last one is still dogging it, - then he may not have that 6months grace that he thought he had won at the spill.

None of this is really new news. What's more interesting is that the electorate has moved on to a post-Tony-Abbott sort of brain-space and have essentially written him off. The SMH has pulled the article from its site but this morning it was reporting that the swinging voters Western Suburbs of Sydney had abandoned Tony Abbott and called him an embarrassment. It was so bad the article is now off the main page and has to be dredged up by Google. 

In the groups, Mr Abbott was described as "just very incompetent and an embarrassment internationally" by one participant. 

Another said Mr Abbott was "an embarrassment. He is an absolute embarrassment. Every time he opens his mouth he just says the wrong thing." 

Some participants viewed Mr Abbott as unreliable and untrustworthy.
"He doesn't present well," said one participant. "He doesn't give you ... no matter what he's talking about, you don't feel confident." 

One woman declared: "He could be talking about the weather and you'd still think, oh… I don't know." 

The latest Fairfax/Ipsos NSW poll revealed close to one in 10 voters who supported the Coalition at the 2011 state election intend to change their vote on March 28 due to the performance of the Abbott government.

You'd hate reading that if you were a Liberal MP, no? 

I Owe, I Owe, It's Off To Work We Go

It's not exactly news that Australia's private sector debt is a much bigger problem than the public sector (i.e. Government) debt. Here is an article outlining just how bad it is. 

Barclays chief economist for Australia Kieran Davies says private sector debt-to-income gearing is currently at an all-time high of 206 per cent, up from a pre-global financial crisis (GFC) level of 191 per cent. This put Australia just within the top 25 per cent of the world when it comes to leverage.

However, when it comes to household debt - which includes mortgages, credit cards, overdrafts and personal loans - Australia leads the global field, according to Mr Davies, with credit continuing to pile up while the rest of the developed world is paying it down.

Using nominal gross domestic product, the bank estimates household debt at 130 per cent of GDP, which is the highest level on record.

The ratio compares with 78 per cent globally, down from an all-time high of 81 per cent in 2010. However, Australia is not too far ahead of a range of European countries. 

"Examining the distribution of household debt, Australia has the highest gearing of our large sample of countries, although it was practically a tie with Denmark (129 per cent of GDP)," Mr Davies said. 

"Switzerland (120 per cent) [and] the Netherlands (115 per cent ) were the next closest countries."

And so there it is, in fairly easy to read charts. The problem of course is that the more government tries to cut its expenditure, the more the private sector takes on debt. So to some extent the private sector debt reflects the government cuts that have already taken place - except it's not businesses taking on the debt. 

Mr Davies also found that while consumers and mortgagors are busy racking up debts, Australian companies have become more thrifty.

It said that non-financial corporations reduced their gearing from 84 per cent of GDP in 2008, as the GFC began to bite, to 67 per cent in 2011. It was the first period in which outright debt levels fell since the early-1990s recession, said Mr Davies. 

Companies had since leveraged up again to where debt represents 76 per cent of GDP. Even still, corporate Australia was markedly more prudent than the country's individuals.
"Although Australian corporate leverage is high by past standards, it is surprisingly low compared with other industrialised countries," said Mr Davies. 

"That is, world leverage, calculated as the simple average of the sample of countries, is currently 106 per cent of GDP, down modestly from the all-time high of 111 per cent of GDP reached in 2009." 

The bank warns that risks continue to build in economy, particular as the Reserve Bank of Australia eases monetary policy.

So, to some extent the government is right in trying to contract and cut, given that the Private business sector can afford to take on more debt... but for the housing bubble. And so, the RBA can't exactly be cutting rates even more unless it wants the housing bubble to go even more ballistic. 

But back-tracking a bit, you wonder how the RBA might have found itself in this rather silly position. My best guess is that ever since they changed the way they calculate CPI, they've been under-reporting inflation; and this under-reporting of inflation has been going on for some time, which bolstered easier monetary policy in the last 20+years. We know this because the cost-of-living has been skyrocketing ahead of CPI for the duration. Which means households have been getting a sweeter deal on property in the last 20years which accounts for the great housing bubble we've managed to engender. It's easy to see in hindsight, but who's really counting? Nobody's owning up to it; they were denying it even existed as recently as last year. 

In a very real way, we can now see the interest rate should be sitting higher but for the GFC where every other central bank has embarked on easy-money and ZIRP and QE programs which has essentially dragged our own RBA towards a similar kind of easing. It really is a rock and a hard place. If they raise rates, it would cool down the housing market but it will discourage the already low business investment, smash confidence and raise unemployment. If they go towards ZIRP, the housing bubble will continue to expand, and when the next crisis hits, it would be time to print money so the banks that are too-big-to-fail, don't blow up. 

But, as the Demtel man used to say, there's more. If the AUD keeps falling past the US75c mark, the import prices will go up significantly enough that even the artificially suppressed CPI will register the inflation. In which case, interest rates would have to go up, and with it will go housing prices and consumer confidence. Inevitably we're going to hit a recession. The question is how deep it's going to be and for how long. If 20years of growth comes to a shuddering stop, then it might be a very long recession. 

And, as the Demtel man used to say, there's even more...

The Free Set Of Stake Knives In Our Backs

The engine for the 24year run of growth of the Australian economy, Communist China is - to not put too fine a point on it - pretty fucked up. 

So where does Shambaugh see evidence of imminent collapse? He lists five "telling indications of the regime's vulnerability". 

First is that "China's economic elites have one foot out the door, and they are ready to flee en masse if the system really begins to crumble". He cites a survey of 393 millionaires and billionaires by Shanghai's Hurun Research Institute; 64 per cent said that they were emigrating, or planning to do so. 

Second is Xi's harsh political repression: "A more secure and confident government would not institute such a severe crackdown. It is a symptom of the party leadership's deep anxiety and insecurity". 

Third is the hollowness of official belief in Xi's doctrines. Officials are only going through the motions, he says. He recalls sitting through a conference on Xi's call for a "China Dream" where it was "evident that the propaganda had lost its power". Demand for a pamphlet by Xi was so feeble at the Central Party School bookshop that the sales staff were giving it away. 

Fourth, Shambaugh says, corruption runs deep and will outlive Xi's anti-corruption purge, which will succeed only in enraging powerful interests. 

Finally, the economy "for all the Western views of it as an unstoppable juggernaut is stuck in a series of systemic traps from which there is no easy exit," he says. Xi's attempt to break the traps, his economic reform plan, is encountering stiff internal resistance.
The exact manner and timing of collapse, says Shambaugh, is impossible to predict.
Predicting the demise of China's regime is not quite as startling as it might seem. In some ways it's entirely routine. 

The blindness of the West to the imminent collapse of the Soviet Union was a chastening experience. Analysts since have been hyperalert to a Chinese Communist downfall.

And there we have it. Peter Hatcher spends the rest of article making a case for why it might not be so fucked up, but the economic problems are starting to mount up - and they are remarkably like the problems faced by the rest of the developed world. Too much government debt, a housing bubble, capital flight, ageing population and stagnant growth. And generally speaking the case against a Chinese collapse are just as based on inductive reasoning as those who predict it on the basis of history. 

Plus, we know that the GDP reported by the Chinese is often party wish-casting and no reflection of reality. It may take a while yet for complete collapse but the collapse in commodity prices is telling us quite a lot about how bad things are in China. It was enough to prompt Gina Rinehart to hurriedly sell up her stake in Fairfax Publishing. 

Absence Of Sustained Leadership

Just a quick note about NSW politics which goes to the polls in a fortnight. In the last so many years since Bob Carr retied, it has gone: Iemma (37months), Rees (15months), Kenneally (27months), O'Farrell (37months), Baird (11months). It's pretty choppy no mater how you look at it. Iemma won an election but Rees didn't get to one, Kenneally was booted out for Morbid Obeidity, O'Farrell did himself in with the wine bottle gift thing and Baird is trying to keep government with just under 12 moths under his belt. 

This has run parallel to Rudd I (30months) Gillard (36months), Rudd II (3months), Abbott (18months and counting to the end). What we can discern from all this is that even if you're offering good government from a managerial point of view or policy aspiration point of view or operational point of view, 3years is about the grace you get from your own party, and this is so short because the party gets so little grace from the electorate. And apart from Rudd and most parts of O'Farrell, bits of Rees and start of Kenneally, and Baird where polls were good, extreme unpopularity in polls essentially drives change. 

I would posit that what has happened is that the electorate has chosen the polls as a means of sending a message when they cannot vote. With the ever tightening news cycle and the advent of social media, everything has to be immediate, and this is reflected in the fast an furious change of leaders on both sides. It is no accident that Tony Abbott is in strife. If he thinks the people vote in a Prime Minister, then he has to accept that the polls are telling him they made a mistake and want him gone.  

I am yet to decide if this is an improvement or a form of political decadence, but I do think Australia has hit some kind of new phase in democratic politics that is quite peculiar. It may not end if and when Turnbull or Julie Bishop take over, and when they lose, it won't change with Bill Shorten in the Lodge. 

Miscreants On A Mission

The Predictable Drive In To The Ditch

The news this week is that Tony Abbott's poll figures suck more than ever. Hands up if you find his surprising? No? Didn't think so.

The really interesting bit in all of the commentary is how Tony Abbott is trying to characterise his first year and a bit in government by saying there are accomplishments a plenty to go with the things they couldn't get done. In the list are things like the repeal of the Carbon Tax and the Mining tax. He doesn't seem to understand that these taxes weren't some idle notions dreamt up by the Left to destroy conservative Australia, but fairly important planks of public policy, in as much as revenue raising for the government was concerned.

For a guy who came to power banging on about deficits, Tony Abbott sure has't helped himself as Prime Minster if he thought the high points of his government were abolishing taxes that were paying for useful things. It also ignores the great retreat of car manufacturing out of Australia, a sequence of events precipitated by TonyAbbott's own government. The point being, all the accomplishments he lists are things that probably need not ought to have been done, while all the things for which he is receiving blame and rancorous criticism and - let's face it - hollered insults are things also he shouldn't have undertaken especially because they are his ideological projects.

In short he may well claim the glass is half full but it's no good if the fluid in the glass is urine.

The Tricky Submarine Situation

Not a lot of people are standing up to point out the problem with the ASC. It's a shame that the person making the most sense is Paul Sheehan. Maybe it's like a broken clock being correct twice a day, but after he pens his usual poisonous character assassinations of the ALP politicians, he points out something that needs to be pointed out (God knows I hate quoting this man):

"ASC was delivering no submarines in 2009 for $1 billion. They have not improved their output … They are $350 million over budget on three air-warfare destroyer builds. I am being conservative. It is probably more than $600 million but because the data is so bad I cannot tell you. You wonder why I am worried about ASC and what they are delivering to the Australian taxpayer. Do you wonder why I wouldn't trust them to build a canoe?" 

At last the truth about this from a defence minister. Billions of dollars have been poured down the drain by both sides of politics on this giant pork barrel for South Australia. The ASC could build a canoe, but it would cost a million dollars and spend more time in repairs than on the water. 

The ASC has accumulated an abominable record of cost over-runs and should never have been awarded the air warfare destroyer contract. Johnston's refreshing candour was an admission that the ASC has been a financial sinkhole for decades. It is more a strategic liability than a strategic asset. 

Senator Johnston is also the first Defence Minister in a hundred years to seriously confront the bullying sub-culture in the Australian military, which has a recorded history of rationalising these practices dating back to 1913. 

And there's the crux of the biscuit. The ASC has been going for some time chomping up money at a greater rate than desired while delivering sub-standard product (pun unintended). There is no competition for the ASC, so if the Australian government dreams up a product it needs, the ASC is there to take the money and waste it until it delivers a poor product that roughly approximates the brief. It's a happy little monopoly where there is no need to cut costs or make savings.

Yet this very monopoly has led to the notion that Australia should buy ready-made subs off the shelf from Japan, which is causing a lot of heartburn in the ranks of the white Australian sentimentalists. After all, how could we fight them in Kokoda and Darwin and wherever else and suffer the indignities of the Burma railway; and then buy their bloody submarines? Why indeed? The noises coming out of Tokyo and in particular the Maritime Self Defence Service is the mirror opposite where they would rather not part with hard won know-how of how to run proper submarine fleets, just for mere filthy lucre. Why indeed? (And I say, with allies like that, who needs the Chinese?)

It is a rational and sensible idea to buy the submarines from Japan. However it is obvious as daylight that it won't be happening. It's a bit like the high speed railway thing - If they ever decided to do it, they'd have to ask the Japanese to help, and of course, rural Australia would have a fit. It's about as likely as buying Space Rockets from Japan, Fighter Jets from Japan, Helicopter carriers from Japan, Tanks from Japan, small arms from Japan, communication devices from Japan... You get the picture. Cultural sensitivities being what they are, it's going to be "No Jap Sub, No Jap Anything."

And this is before we mention the problem of not having our own industry to build our own defensive wares. Bob Katter knows all about that one.

This leaves the Abbott Government squirming and Defence Minister Johnston twisting in the wind because they don't want to keep throwing money at the ASC. But they need to keep throwing money at the ASC because it's pork-barrelling that has to be done. And while I am a decidedly pinko leftist social democrat sort of dude, I have to say the ALP argument that buying subs from Japan is bad because of job losses in South Australia, seems too much of an endorsement of pork-barrelling.

So what can they do? They ought to split up ASC vertical into three companies and make them compete for tenders for contracts. It's the only way: Break up the monopoly. It's one thing they should be looking at privatising. But you know they won't - and more's the pity.

A Decade Of Pain To Come

This one's from Walk-Off HBP who is probably rightfully worried that things can get worse than merely having a government of miscreants and nincompoops. Yes, it seems if things don't look bad enough now, they can get a whole lot worse.

My worry has more to do with Abbott's economic priorities, which ignore how rapidly the world is changing around the Lucky Country. Although Abbott has talked about diversifying the economy away from its dependence on China, his policies have effectively done the opposite. 

Where the previous government moved to tax outsized mining profits to fund investment in education and infrastructure, Abbott has changed incentives so that commodities and mining companies become a bigger share of the economy and have an even bigger voice in politics. Scrapping plans for a carbon tax, and resisting any serious limits on emissions, has made the economy more vulnerable to international shocks and made Australia a punch line at this week's global climate talks in Lima, Peru.

Instead of undertaking painful and costly restructuring, Abbott has prodded the central bank to loosen monetary policy more and more. Whether all that easy money is pushing Australia toward a subprime-loan crisis has now become a matter of serious debate.
Over the last year, anytime a journalist asked Abbott or Treasurer Joe Hockey about frothy real-estate prices, they were dismissed as nervous nellies. When I probed Hockey myself in September in Sydney, he derided such views as "rather lazy analysis". 

Yet in an interim report in July, David Murray, the former head of Commonwealth Bank of Australia, called the surge in housing debt since 1997 and banks' exposure to mortgages a significant risk. Since that time, Murray's panel said, "household leverage has almost doubled," and "higher household indebtedness and the greater proportion of mortgages on bank balance sheets mean that an extreme event in the housing market would have significant implications for financial stability and economic growth." 

On Sunday, in the final report to emerge from his yearlong inquiry, Murray urged specific reforms, including cuts in much-loved housing tax breaks. The report called for "unquestionably strong" capital levels, which could force the four biggest banks to keep another $25 billion on hand for a rainy day.

It's a bit long but then, the list of things the miscreants and nincompoops are doing is long. What can I do? Some times I think we must look like idiots to the world. Here we are donning the hair shirt of unnecessary austerity and going around pretending that Global Warming isn't real. It's not exactly a government of integrity and clear-thinking that we've voted in for ourselves.

Clearly we're idiots. 

Maybe The Work Ethic Thing Is Not Universal

The Weird Things You Think Up When You've Got The Flu

I had the flu (again) and was laid out for a couple of weeks. I'm really only recovering my lungs this week and I've had a lot of stuff to think about at work so I haven't been writing much here. Apologies for the break in transmission.

Anyway, in-between the moments of headaches and coughs and general ordinariness, I had this insight that maybe our society putting too much emphasis on the work thing. It sounds crazy, I know, but here's the thing. We've come to the point where our government has so demonised the 'dole bludger'. that they don't want to hand out unemployment benefits to somebody under 30 for 6months while they are unemployed. The work-for-the-dole programs are presented as this great idea where these young long term unemployed people are made to work for their unemployment benefit money.

But when you think about that, you have to ask if that job they're doing is absolutely necessary. If it is necessary, then why isn't the government paying proper money to get that done by proper professionals? It's paradoxical because if the government had that kind of money it wouldn't have to cut the dole. So what you have is the government insisting that some random, context-free 'work' be accomplished when in reality it might not be relevant to the economy except it makes some people feel better that lazy people are being made to work.

What if the point of life isn't work and getting money? Maybe we're looking at unemployment benefits all wrong. Maybe what the dole really is, is a kind of dividend we pay out to members of our society based on the increasing efficiency of our society? Consider for a moment that the rewards for work are not distributed in any kind fair way.

Take Gail Kelly, the retiring CEO of Westpac who reportedly got paid 12.8million dollars this financial year. No wonder she's quitting. That's like winning lotto. With all due respect to her fine acumen as CEO and qualifications, there's no way her efforts were really worth that much. And her effectiveness probably had a lot to do with turfing people out of jobs to make Westpac a more efficient organisation. Which is to say part of her $12.8million remuneration involved putting people on the dole and taking their share of the capitalist money pie.

This sort of distorted sharing of the profits of business is happening all over the place. If there's such a disconnect between work and the rewards, I don't see why we have to pretend that it's all about the effort. Let's face it, somebody can only work so many hours the work-for-the-dole program, as hard as they can, for as long as they can, but nobody is ever going pay that person $12.8million a year. That $12.8million is simply not related to effort or dedication or skill. How can we then pretend that it represents fair value for Gail Kelly's work?

It's more rational to say, at some point there is no connection between work and its rewards. It's just circumstance and chance. So why do we insist that the connection applies to unemployed people all the time? It seems more delusional to think that the merits of the work ethic applies to everything all the time, given the extreme ends of employment and unemployment.

And it's not like the unemployed come from nowhere.

Economic Rationalism Always Kills The Golden Goose

Try this for an example. Imagine a person working for company A, manufacturing product B. Company A decides to move production to China. This is good for the company because the production of B gets cheaper. usually, it's like the fraction a cost, so let's say there's a 75% saving right there.

So let's say they're generous and Company A might pay out a redundancy to the worker which effectively buys them out for length of time until they allegedly find another job. But the person might not find another job because all the companies are moving their manufacturing to China to get that 75% saving. Pretty soon you have all these workers who lost their jobs who can't get another equivalent job, because those jobs disappeared too. Pretty soon, they're the long term unemployed.

Meanwhile, company A has pocketed the 75% saving in manufacturing costs and posted it up as profit. Shareholders lap this up because it represents 'efficiency' and 'productivity'. So in one fell swoop, they've made an unemployed person in their own country and then given that job to somebody halfway around the globe, and pocketed the change. This has more in common with killing  the golden goose; but this kind of thing has been the mainstay of managerial theory for something like three decades. And they keep coming up with reasons why this is somehow going to lead to a better economy while in fact the middle class has collapsed in America and is sinking in Australia. it's clearly self-serving corporate nonsense.

What most governments say when this happens is that these people have got to be re-trained. In reality the retraining programs often fly in the face of what actually happening in the market place for jobs. If a person loses a join the manufacturing sector, then it's cheap and easy to retrain them for something else in the manufacturing sector. If the entire manufacturing sector is shrinking overall, then it's just musical chairs where somebody misses out on the chair each round. At some point the government has to re-train these workers out of their sector which is going to cost more time and money.

The point of all this is to say, corporations regularly export the jobs and collect the difference as profit. They even devise ways to pay taxes by going international and feeding earnings through some weird tax scheme in tax havens like Luxembourg. It seems incredibly inequitable to lump the government with the costs of the unemployment imported from the third world, then complain that the government is spending too much money on welfare. If the business lobby don't like this so much, they should just bring those jobs back and employ people. It always amazes me that the ALP don't just tell the business people this, but instead go on about working with businesses and hand over subsidies which are bribes to stop them killing these golden geese.

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!

 

 

 

 

Quick Shots 01/Jan/2014

Hey, First Post Of the Year From Me

I've been busy watching a few silly movies on FetchTV in between the seasonal obligations. It's pretty cool watching on FetchTV because it saves the on the trip to the video store if nothing else and it sure beats buying more media. I've been stuck in the bad habit of buying stuff because I still have the carry-over from the ear when DVDs were actually worth something. It was ever so brief, but they were important for a good half a decade there until Blu-Ray came along and scotched that little bubble.

My New Years resolution last year was that I shouldn't just buy more media, but a) sometimes it is easier to just buy the box set and b) sometimes it's better to own than rent and c) it's impossible to stick to arbitrary rules meant that I bought my fair share of stuff. It's a bit of a worry if you can't remember if you've bought something or simply watched it on a rented bit of media, but if I think I'm going to go, "you have to watch this scene!?" or "you just have to hear this guitar solo!" then it's better to own this stuff.

Still, it's weird having a pile of this media that grew to be irrelevant so quickly. At least with LPs and CDs, there's an argument to be made that mp3s are a their best worse than either LPs or CDs, and that moving on to just data on hard disks isn't really an improvement in your listening pleasure. Besides which, you can squeeze a hello of a lot more out of LPs and CDs by having better speakers and amplifiers. Video is different.

With 4k TV looming in the not too distant future, even the marvelous Blu-Ray 1080p format is going to look pretty outdated in the next few years. I'm sure there's 8k and 16k TVs beyond that, and without an NBN pumping at last 50mbps it's going to be difficult to run the IPTV services on 4k and up download services, so maybe buying media won't become totally extinct. Let me just say, 4k is gorgeous. You're going to want this much more than the time you went from SD PAL or NTSC to HDTV. (That being said, I do seriously  wonder if there's any joy in seeing 4k TV footage of Kanye West or Miley Cyrus twerking.)

Getting Bad Advice

The news this week that's been most grating has been this business of Maurice Newman proclaiming that climate science on global warming is delusional.

In an opinion piece in The Australian newspaper, Maurice Newman, the Prime Minister's pick as head of his Business Advisory Council, claimed high energy costs caused by the carbon tax and the renewable energy target, introduced by the Howard government, had eroded Australia's competitiveness. Under Labor and the Greens, Australia had been taken ''hostage'' by ''climate change madness'', Mr Newman wrote.

"Newman!!"

It's really no big deal except for the fact that it's wrong and willfully wrong, and that he is slated to offer up advice to the Prime Minister based on this kind of idiotic denialism. If nothing else, it shows Tony Abbott still thinks the science on this is 'complete crap'. What's even weirder is that because the first 100days of Tony Abbott's time in office was 'complete crap', we're not surprised in the least bit find that his business advisor is a highly motivated climate change denialist.

Can We Please Stop With The Government Debt Hysteria?

This one came in from Skarp last week but I've been a bit preoccupied. Paul Sheehan - he of the rather squeaky voice and reflexively right-leaning views - wrote this rather tawdry column.

At 12.30 on Tuesday, Hockey, who has also been the stand-out thespian of the new federal parliament, will unveil the real horror, dysfunction and narcissism of Kevin Rudd's contribution to Australian political history, disably assisted by Julia Gillard. Hockey will release the mid-year economic and fiscal outlook, known in the trade as MYEFO, which will show a budget deficit much worse than Labor led us to believe, probably close to $50 billion, debt obligations much higher than Labor led us to believe, and unfunded liabilities that are so irresponsibly crushing the government will have to walk away from many of them. The most monumental folly is the National Broadband Network, whose economic rationale was worked out on a piece of paper by Rudd. The scheme subsequently created by former communications minister Stephen Conroy would cost more than $70 billion and never recover its cost of capital. The Abbott government will have to start again.

The way that paragraph is written, you'd think that the sky was going to cave in. Fortunately, professor Steve Keen had this article as a retort:

I’m not going to debate (or defend) Kevin Rudd’s personality, but getting this hysterical over a $50 billion deficit in a $1.5 trillion economy? Oh come on: that is slightly less than 3 per cent of GDP (the precise GDP figure is $1.525 trillion, according to the Australian Bureau of Statistics). Comparable figures for some of our trading partners are 5.5 per cent for the USA, 6 per cent for the UK, and 10 per cent for Japan. Australia’s deficit for 2013 is almost 50 per cent below the expected average for the OECD of 4.8 per cent of GDP.

Of course, finding that out doesn’t require a trip overseas: all you have to do is search the web. But what a trip overseas might alert Sheehan to is the economic performance of the rest of the planet – and especially of those parts of it that, as he does, make the size of the government deficit the only stick by which economic performance is measured.

The rest of the article is Keen dismantling Sheehan's stated position that all this debt is somehow crippling and wrong.Austerity i a terrible thing; not to mention the fact that it doesn't work.

You sort of wonder how people like Paul Sheehan keep jobs as columnists. It's like he gets paid not for his thinking and critical faculties - which on the whole seem faulty anyway - but for how hard his blowhard entries blow. And they really blow. Sheehan's symptomatic of what's making the media market worse in this era. You just can't trust what any of these sloppy commentators write.  but somehow they're up there with a public soapbox on the SMH masthead spreading his kind of nonsense. I mean really! Why do they have to give 'equal time' to stupidity and misinformation?

But back to Keen's take home message about Government debt:

I would far rather see governments acknowledging the problem of private debt, and doing something concrete to reduce it – since the financial sector should never have been allowed to create much of that debt in the first place. But as a second best policy, government spending should buffer the impact of the decline in private sector deleveraging. To do otherwise is to turn a serious recession into a genuine Depression – as Europe has done.

Behind the veneer of apparent fiscal prudence, that is what hysterical articles like Sheehan’s are encouraging – in utter denial both of the actual cause of the crisis and, more importantly for a journalist, in ignorance of what even casual empiricism shows has been the actual impact of austerity.

That, just about sums it all up.

Fear Of The Known

They Believe In Their Own Bullshit

What really frightens me about the Liberals and the Nationals is no not just what they will do, but just how much they believe in their own utter bullshit about how they are better managers or that they are better managers of the economy. It's true that they're not going to come out and say "hey the ALP did a great job in riding through the GFC" but instead it's been this huge diatribe about government debt. Well, there are two things bigger and scarier than Federal government debt in Australia and that is local council debt and private sector debt.

Here's the vaunted Economist magazine's Global Debt Clock page. yes, that's Australia in red there, and the thing is Australia's public debt is high. Yes, it's true, but if you look at it, the figure sits at 27.1% of GDP. As of 31 August, the Federal Government component of it is 11.3%. It's not comparable to places where the debt is sitting at 78.3% of GDP (the USA) or for that matter 232% (Japan). You should check out what other countries in red are suffering. It is true that the Federal budget position is worsening as revenue drops, but it is hardly the kind of crisis the Liberal is talking us up into. If after all that spending and all that alleged mismanaging, the debt is 11.3%, then hooray to the ALP.

More to the point, there's something like 16% of GDP sitting on the shoulders of local councils - and nobody really knows how they're going to pay that back. But I guess that's not really a Federal issue to win votes so  you don't see the Libs and Nats running around talking up that even bigger public debt.

Private debt is another matter entirely, and nobody wants to touch this because the economy is a house of cards built on confidence. Nobody wants us to lose the confidence we have in our economy but quite frankly we've not really made it through the property bubble and prices are heating up again in major cities. We're nowhere near digesting the debt tied up in mortgages across the country, and we've started to look at housing as the next engine of growth after the mining boom tapers off. Except you don't hear a peep out of the Libs or Nats about this too because they like the wealth effect of having inflated asset prices on people's ledgers. They won't be repealing negative gearing any time soon. They like inflated property prices, low disposal income. They like being asset-rich cash-poor, even if that ends up hurting growth prospects for the economy.

It's a joke that they're out in front with such shoddy economic thinking that even a novice can see is bullshit, but there they are believing in the self-flung shitstorm of bullshit. Somebody help us out here. We're about to vote in the party of the property bubble again. And they haven't learnt their lessons at all. They're coming at us with the same rhetoric they came at us in the first place. If it's the personal failing of Tony Abbott, that's one thing but it's not - the whole lot of the front-benchers are trotting out this bunkum. Their back-benchers? Staying out of the spotlight as much as they can so as not to put their foot in it.

So this is it. The inevitable moment when the born-to-rule club comes back into power to run their austerity program which will inevitably hurt the economy. Good grief Charlie Brown.

What Price Transport?

The Social Costs Of Infrastructure Costs

Count me as a big sceptic when it comes to infrastructure investment. The whole Private Public Partnership experiments carried out since the mid 1990s has turned out to have been a crock as many infrastructure projects ended up being more tollways that weren't needed. in the mean time the various governments have failed to deliver the kind of infrastructure that is actually needed. Nothing that puts Australian infrastructure on par with other countries gets made, and there never seems to be any will power at any level of government to reduce our reliance on cars.

Still, one has to worry when one reads articles like these.

As motorists in the major cities sit in cars gridlocked on highways and commuters stew in packed trains, they cannot help but contemplate a sense of Australia falling behind. Doing nothing about traffic congestion in the capital cities is costing the economy $12.9 billion a year, according to the Bureau of Infrastructure, Transport and Regional Economics. With the population growing rapidly, this cost is set to rise to $20 billion a year by 2020.

Penny Bingham-Hall, a former strategy boss at the construction company Leighton, says Australia is lagging behind other nations in infrastructure construction because of its ''chronic lack of investment and the short-termism of our political thinking''.

''Australians like to think of their country as a modern developed nation and think of Asia as Third-World. But the world is changing,'' she says. ''When I first started travelling to Asia 20 years ago that thinking may have been accurate but now Asia is boasting some of the best infrastructure in the world.''

Japan has great infrastructure to be sure, but it also has it in excess. How much so? Well, as I covered this a few days ago, they're going to borrow 50trillion yen to top up their 47trillion yen or so tax revenue to service a 220trilion yen budget and debt burden. The missing bit is going to be filled by more government debt. The only reason the Japanese have great infrastructure is because of all the corruption from general construction companies that had politicians in their pockets, and the politicians who green-lit a whole bunch of infrastructure projects as a jobs-for-the-boys routine for well over 60years under a mostly Liberal-Democrat dominated agenda.

I guess it's a case of damned if you do, damned if you don't. In Japan, they went ahead and made the infrastructure while racking up a colossal debt, while in Australia, we're refusing to build the infrastructure because we desperately want our government to stay in surplus. You'd think then that when they put together the Private Public Partnerships in the 1990s, they would have done a better job of picking exactly the kind of infrastructure that was needed, but no they didn't because there was corruption between the NSW government and the boffins at Macquarie Bank that came up with this stuff. That's a lot of Beth Morgans that got laid, so to speak. The point is, as a society we got off relatively light in that only 'the hot money' got burnt:

The recent failures mean governments are under greater pressure to meet the huge shortfall in funding as investors run scared from piling equity into so-called ''greenfield'' infrastructure projects. Leighton has made clear its appetite for investing in such projects has been ''very much reduced''.

''The government does need to bare a big chunk of the responsibility for those failures. After all, it was their tenders which created a model that attracted a lot of hot money,'' says Andrew Chambers, an infrastructure analyst at Austock. ''If the government was going to tender something like that today, the hot money wouldn't be there. The sensible money was never there.''

It's a very strange thing. The future over in Japan is that the Japanese people are going to have to pay for it through increased taxes, or lose their savings through hyper-inflation. In Australia, we're being asked to lose this money in infrastructure through the private sector ripping off investors with inflated traffic forecasts, or by losing it in lost productivity as we all sit in grid-locked traffic. There actually is no "making money" in infrastructure but everybody keeps deluding themselves that infrastructure ought to be this great money-spinner for investors or governments. Maybe everybody needs to go back to the drawing board and re-define how infrastructure actually functions in our society.