Double Disillusion And Other Follies

Could Be Good To Tip Over The Table

Some months ago when it became clear that even the Liberal Party had grown a little browned off with an Abbott Prime Ministership, I had this wicked idea that maybe Tony Abbott might forestall his own backbench rebellion and call for a Double Dissolution election, just to spite his disloyal minions and get a jump on the situation. Of course I was 1) joking 2) speculating wildly 3) guessing he was crazy enough to cut off his own balls topside his dick.

Turns out, Tony Abbott is thinking of a Double Dissolution as an option.

Tony Abbott and some of his cabinet ministers have canvassed the prospect of an early double dissolution election to be held in the next few months. 

A minister who was present at the discussion over a private dinner on Monday night said that the idea was talked about but "not under serious contemplation".

And the Prime Minister told Fairfax Media that "the government intends to serve a full term". 

But the mere fact that it was mooted has had an unsettling effect inside an anxious government. 

"The concern is that Tony might consider it to forestall any move against his leadership," said a minister. 

"Given his increasing desperation, there could be a rush to the Governor-General," with the implication that Mr Abbott would gamble government to preserve his position.
The scenario canvassed at dinner was that the government would bring down its second budget in May and then quickly call a double dissolution election, ostensibly to clear an obstructionist Senate.

... and thereby forestall another possible spill. From this we can gather that Tony Abbott is indeed 1) a joke 2) Wildly speculative and 3) crazy enough to cut off his own balls to spite his dick.

Like I say, this stuff writes itself.

Stop The Lies, Please

I've been following this GFC thing and its aftermath as closely as I can here and I have to say that Greece is the canary in the coal mine of the post-capitalist world. If Greece goes, then Portugal, Italy, Ireland Spain are not far behind and this is all because these countries rebound up in the Euro, owing too much to German and French banks. If Greece 'goes', so do the other PIIGS countries, the Euro is finished, and so are some of the biggest banks in Europe. Financial Market hell will be unleashed upon a long-suspecting (and suspect) world, resulting in "scenes from 'Rise of the Planet of the Apes' but without the apes".

So far, the world has managed stave off this spectre. The neck of the question has been what it means for Greece to 'go', in the sense that it is enough to unravel the Euro. Greece has many reasons to quit the Euro, but the best reason of them all is so that it can issue its own currency, and devalue it against the Euro so that it can get some breathing space. Without this 'Grexit', Greece has no option but to listen to what the Germans tell them and this is no longer viable because what the Germans are telling them is wrecking the Greek economy and society.

The three big points to remember about Greece is that it is a member the Euro and therefore cannot set its own currency policy; it is a member of the Euro in such a way that it has no control over the greater economic policy and conditions; and its government is in debt to the tune of 164% of its GDP.

It is then, mighty insulting when the Prime Minister of Australia says that Australia was somehow a likely candidate in becoming like Greece.

"Under the former Labor government we were heading to a Greek-style economic future," the Prime Minister told 2SM host Grant Goldman. The Greek economy has been notorious in recent years for high levels of spending and debt, culminating in the Greek government-debt crisis.

I mean, how? How on Earth is Australia going to get remotely close to where Greece now finds itself? It's like saying I am in danger of driving off The Gap in my Range Rover wearing a Chelsea FC jersey when all I own is a Mazda 2 and I commute to the South from the Inner West, and I hate Football. I mean, yeah, I might, but a lot of ducks would have to line up before that happened.

To be like Greece, Australia would have to give up its own RBA to a body like the European Central Bank (doubtful and unlikely), give up its own currency and start trading with a shared currency with much larger economic bodies (possible but not any time soon), and then proceed to rack up debt in that shared currency to 4 times the debt we currently have - and that's an overly generous estimate. If you look at the OECD chart, it thinks the Greek debt is 147% of GDP while the Australian  government debt is 11% of GDP, making the different more like 14 times than 4. Our economy - with all its faults and problems - is as close to Greece's economy as Bondi Beach is to the Acropolis.

In short, the Prime Minister is lying.
He's not cherry picking stats or fudging numbers approximating or reducing arguments to talking points, or playing semantics, no. No benefit of the doubt goes to this one, he's lying to scare the ignorant, and scare them into not voting ALP, and thereby hope to pickup some loose votes from the stupid and ignorant. It truly is pathetic.

Thus I say bring on the Double Dissolution to end the Double Disillusion of this mendacious miscreant government. We've really had enough of this stupidity. Really, we have.

UPDATE: More Folly - Pyne Wants To Fine Universities

After I put this entry out, it turns out Christopher Pyne has been working on a diabolical plan whereby universities are punished if the graduates don't pay up with their student debt.

Universities churning out graduates who do not repay their student debts would face financial penalties under a proposal by Education Minister Christopher Pyne aimed at securing Senate support for fee deregulation. 

Despite a 34-30 Senate defeat on Tuesday, Mr Pyne vowed to reintroduce legislation this year to allow universities to set their own fees.
"We will not give up on ensuring that Australia has the higher education system it needs - the best in the world," he said. "Great reform takes time." 

Universities Australia chief executive Belinda Robinson warned that without increased revenues university vice-chancellors would consider increasing class sizes, shedding staff, closing campuses and discontinuing some courses.

-----------------

Mr Pyne proposes "a mechanism to make a proportion of each higher education provider's direct grant funding contingent on its performance against a key set of indicators" - including the debt not expected to be repaid (DNER) by their graduates.
"We are confident that the higher education sector will be responsive both to transparency of data in this area but also to a relatively modest amount of their annual grant funding being at risk in relation to their DNER performance," he said.
The government aims to have proposals ready for discussion by July. They would take into account repayment differences based on gender and rural and regional factors.

Graduates do not repay their debts if they are earning under $56,000, exit the workforce or move overseas.

The value of student debts not expected to be repaid is forecast to grow to $12 billion by 2017-18 - 23 per cent of all outstanding debt.

Which is all very plant-your-face-in-your-palms crazy. Education is an investment a society makes in its own people. There's just no two ways about it. You only have to look at the terrible third world nations where governments opt not to make these investments and how the lack of education perpetuates poverty and low economic growth. It's bizarre and ideological buffoonery for this government to cary on as if the money invested into education is somehow a terrible cost and impost on government. With that kind of illogic, nobody would do anything to get educated - which is clearly not what these conservative politicians have done for themselves. So this attempt to narrow the doorway to tertiary education is doubly pernicious as it contains within it a hostile streak that can only be described as class warfare, as well as this moronic obsession to off-load government investment into education.

If money spent on education really wasn't an investment but some kind of loss-leading loan, then surely students would have the option of bankrupting themselves out of this debt - a surely as some of the wealthy do in this country. The fact that they don't allow this to happen means the government agrees that the money spent on educating and training people is an investment from which the government hopes to benefit through higher earnings leading to higher taxes upon that individual.

If there ever were self-defeating, contradictory position, it would have to be the conservative impulse to cut taxes and sell off government assets that earn revenue and complain when government is always in deficit. Ignore for the moment the perennial problem of people carrying on like the national budget is some kind of private household ledger that needs balancing, minutely on a constant time scale.

Basically, Christopher Pyne wants to encumber students with student debt in such a way as to cut government investment in education, cut government support for people getting education, and somehow magically produce growth out of a population that either has too much student-debt to do any consumption, or produce a population that is so averse to getting an education thanks to the threat of the student debt they cannot produce the economic growth the government seeks. He's socialising the debt, but he's doing the debt-loading as a pre-condition of adulthood. And he thinks this is somehow a fantastic idea.

Its so stupid. But this stupid thing is exactly what these idiots want to implement. It's not even an issue of fairness (which it also is, but I'm putting it aside for a moment), but an issue of basic logic. It's like these people can't think through the ramification of their own stupid ideas.
This is what happens when you put an ideological idiot in charge of higher education.

Being An Aussie Blues

"I Fixed It!" - No You Didn't

Christopher Pyne declared he'd fixed the deregulation bill to get it through the senate. He was most chuffed about it and put in this performance, which earned him much derision and ridicule (as it should).

"I fixed it", he declared, visibly quite proud of himself.

...only to have his bill defeated in the Senate.

The Senate has rejected the Abbott government's proposed higher education changes - including the deregulation of university fees - for the second time within three months.
The government's bill, which would have allowed universities to set their own undergraduate fees, was defeated by 34 votes to 30 on Tuesday night. 

The government fell three votes short of the six crossbench votes it needed to pass the changes. 

Senators Bob Day, David Leyonhjelm and John Madigan voted in favour of the bill while senators Ricky Muir, Glenn Lazarus, Nick Xenophon, Zhenya Wang and Jacqui Lambie voted against it.

So much for that one. What can you say?

Off The Cuff Gratuitous Offence To Ireland

Maybe the Irish are sensitive about being Irish. But what can a people do being born in a certain place with a certain heritage? There are much worse things in the world, like being born intemperate like our Prime Minister.

Taoiseach Enda Kenny has told an Irish newspaper he had watched Mr Abbott's video and rejected the perception that Ireland was synonymous with alcohol. 

 (I confess, I don't know how to pronounce Taoiseach)

Mr Abbott prompted criticism last week for the video message, in which he awkwardly describes St Patrick's Day as the one day when "it's good to be green".

He proclaims Ireland's most famous day "a great day for the Irish, and the English, the Vietnamese, the Cambodians and everyone who cares to come to a party".
Mr Abbott signs off his message with an apology that "I can't be there to share a Guinness or two or maybe even three". 

Mr Kenny said he had heard Mr Abbott's comments and he didn't agree with them.
"I've heard the Prime Minister's comments. He made them. I don't agree with that," he was reported as saying in the Irish Independent. 

"I think that it is perfectly in order for so many Irish people in Australia to have an enjoyable celebration of St Patrick's Day and St Patrick's week, and to do so in a thoroughly responsible fashion. 

"There has been a long-term view of a stage Irish perception. I reject that. I think it's really important that we understand that we have a national day that can be celebrated worldwide, St Patrick's Day."

I think the word got out that Tony Abbott is now a free-to-all punching bag. Much as I hold Tony Abbott in low esteem, I don't think he was that offensive. Needless to point out that the Irish diaspora is huge. St Patrick's Day is all over the anglophone world. Nobody thinks it's exclusively a day for alcohol consumption, or that it is a day of alcohol consumption because it's an Irish holiday. I don't really get the objection. Is Mr. Kenny really that interested in responsible drinking in Australia? I can't imagine it.

I think Mr. Kenny is one of those people looking to take deep offence in the most innocuous of comments. Well sir, here's a bit of advice to you Mr. Kenny: leave the kicking of Tony Abbott to us Australians and stay the fuck out of things you don't understand.

WTE Joe Hockey Lives Up To His WTE Status

Worst Treasurer Ever Joe Hockey ran into serious flack on television. He was asked why he hadn't abolished Negative Gearing and reclaimed it would force up rents. That was a red rag to the bull - and a bull arms with facts at that:

It was absolutely true that rents went up fast in Sydney, "which might have been there wasn't a lot of housing being built in Sydney in the couple of years previously". 

"But look beyond Sydney and rents were dead - barely moved in Brisbane, didn't go up very far in Melbourne, didn't go up very far in Adelaide. They did go up very fast in Perth which makes you suspect very strongly that the race memory we have of abolish negative gearing, that rents will go up, is a race memory built on Sydney." 

Daley said rents shouldn't go up because "by definition what happens at the auction is that the investor doesn't win the auction but someone who wants to live in the house does. Net impact, there is one less renter and there is one less rental property. Net impact on the rental market, zero."

Yep. but even more damning than the Negative Gearing bit was this section:

Then Daley took on Hockey's claim that he was delivering the biggest infrastructure program in Australian history. 

"It certainly hasn't gone up," he said. "It's probably tailed off, at least in as a percentage of GDP." 

Hockey said Daley was wrong. "For a start we put $1.5 billion into WestConnex in Sydney," he said. 

Daley reminded him that the project predated the Abbott government. He said not a single new project approved in Hockey's first budget had received a green light from Infrastructure Australia. 

Hockey deflected the accusation by saying Melbourne's East West Link had at least been subject to a cost benefit analysis by the Victorian government. He was reminded that the former Victorian government refused to release it in part because the numbers didn't stack up. 

When Hockey said the tax discussion paper wouldn't consider tax increases, Daley said that was exactly what was needed. 

"We as a society have essentially decided to spend quite a lot more money on health. It's good news, it's keeping people alive for a lot longer. The bad news is someone's got to pay for it. We've agreed as a society to have an national disability insurance scheme scheme, that's terrific but somebody's got to pay for it." 

"So far we've had relatively little discussion about the fact that taxes will probably have to go up, and of course no politician wants to talk about that."

And Joe Hockey promptly stopped talking about it. Didn't mention having to raise taxes at all.
It must be great fun to be made to look like a complete dill in front of all those people in TeeVee-land. Of course, this being Q&A, it probably rated at best 8%. I sure as heck didn't watch it.

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. 

Quick Shots - 12/Mar/2015

At Least He Won't Get Tortured

Contrary to my belief that he would end up in G'itms getting tortured by the US Marines, Jake Bilardi seems to have gone up in smoke with a suicide bombing squad.

The passport of a Melbourne schoolboy apparently killed carrying out a suicide bombing in Iraq overnight was cancelled in October last year, just months after the teenager left Australia to fight with Islamic State. 

Islamic State claims the schoolboy, who converted to Islam aged 16 after self-radicalising on the internet, died in a series of co-ordinated car bombs across the city of Ramadi.

Foreign Minister Julie Bishop says the government is trying to independently verify Mr Bilardi's death and has been aware of his presence in Iraq and Syria "for a number of months".

I guess that's that.

Lives Still In The Balance

It's strange that we're all worked up about Andrew Chan and Myuran Sukumuran as a nation, but... we are. We just are. But it still seems a little too soon for a post-mortem of the sequence of events. All the same, this bit caught my eye:

Regrettably, when we attempt to analyse the sequence of events leading up to this point, it seems Australian institutions are just as adept at sidestepping difficult questions and inconvenient truths. Last Thursday the head of the Australian Federal Police, Andrew Colvin, categorically denied the agency would have blood on its hands if the executions went ahead, pointing to judicial findings that vindicated the actions of the AFP. 

As it happens, the Federal Court of Australia did indeed rule that the AFP acted lawfully in providing information about the Bali Nine to the Indonesian National Police (INP). The issue of culpability, though, ought to go beyond what might be narrowly construed by the courts and also ask broader, doubtless more vexed, questions that encompass moral as well as legal imperatives. Did the AFP comply with specific national legislation and protocols relating to international police assistance? Yes, they did. Did they also act in a way that exposed Australian citizens to the death penalty? Yes, they most certainly did. 

Former Justice Minister Duncan Kerr was highly critical of the way the AFP ran the Bali Nine operation, noting that standard operating procedure at the time was understood to be "do not co-operate in capital punishment investigations". In particular, Kerr criticised the way the operation seemed to reflect the broader problem of Australia's equivocal approach to the death penalty. 

There's also no doubt the actions of the AFP went against the spirit of the Mutual Assistance Act but, perplexingly, protocols guiding informal police-to-police assistance differ from the Mutual Assistance Act and did, in fact, permit the AFP to assist in the investigation stages of offences that attract the death penalty.

Basically, they were sold out to a country that would execute people and the AFP is denying culpability on a bunch of legal technicality. They put people in harm's way. I'm sure they sleep well at night but it seems to me a form of self-preservation unbecoming of men who stand for the law.

The Same Old Shi-ite

Gina, If You Don't Like The Business, Get Out

Gina Rinehart is complaining mining projects cost too much in Australia.

"You know if Australia doesn't export, someone else will," Mrs Rinehart told Fairfax Media on the sidelines of the Global Iron Ore & Steel Forecast conference, in Perth, on Wednesday. 

Mrs Rinehart, who is estimated by BRW to have a $20 billion fortune, said it was high costs, rather than low iron ore prices that affected her Roy Hill project. 

"What affects the project is high costs," Mrs Rinehart said. "As I have said so many times it is really important government cost burdens are lowered. We have regulations; be it approval processes, be it permits, be it licences, be it the checks that have to go on after those compliances." 

She said governments needed to take regulatory costs seriously.
"They have to cut these government cost burdens because our costs are incredible," Mrs Rinehart said.

And there you have it. It costs money to do business in Australia and the governments at both State and Federal level want a piece of the action. This, from the woman who famously complained that African workers are willing to work for $2 a day, why couldn't Australian workers do the same? It was a stupid rhetorical question that completely ignored the absence of choice involved in people getting exploited at $2 a day. 

But of course, Australian workers want a lifestyle and this is not acceptable to Gina who on the same occasion opined the average Australian was bone lazy and undeserving of the opportunities on offer - completely oblivious to the $2-a-day condition she wanted to have here.

It strikes me that if all these things really are such dreadful things, she should get out. God knows she has enough money, she doesn't need to do more. If it's not going to make money, fit's not going to break even, then stop doing it. It's not like we're putting a gun to her head to do this stuff. 

Because Bog-Off Really Means Bog-Off

Tony Abbott's really in some kind of warped zone where logic disappears and strange chains of thoughts manifest as utterances and complaints. He's certainly not about winning friends at the international level. 

In the correspondence, Australia told the UN it "sincerely regrets" missing by almost a year the 180-day deadline to respond to the committee's July 2013 ruling, which called for the refugees to be released and compensated. 

But the government's eventual response, made in December last year but not public before now, gives no ground to the UN committee finding that Australia was "inflicting serious psychological harm" on the refugees in indefinite detention.
The government said prompt medical treatment is provided and "Australia is committed to minimising the factors that contribute to mental health deteriorations of individuals in immigration detention". 

The majority of the refugees with negative assessments are detained at a Broadmeadows detention centre in Melbourne's north, where a spate of suicide and self-harm attempts have taken place. 

Police were called to the centre as recently as December and laid mattresses on the ground after a Burmese man spent a night on the roof threatening to jump.
The government also disagreed with the committee's interpretation of "arbitrary" detention and "arrest" that Australia has accepted under the International Covenant on Civil and Political Rights. 

Professor Saul said the UN committee – an expert panel elected for four-year terms to act as independent legal experts – is the closest the world has to a human rights court.
In a written submission to the committee he described the government's response as "wholly unacceptable". 

"The key legal point is the government is completely rejecting the committee's authority to interpret and apply human rights standards in the convention, which Australia has agreed they should do," Professor Saul said. 

"It is really giving the two-fingered salute to the world."

Well, no surprises anywhere there. It's like he's going for broke in the Pan-Galactic Interstellar Dickhead Stakes. In his case, it really is a lifestyle choice. 

Youthful Stupidities

White Jihadi From Oz

There's nothing more depressing than reading about somebody who is on the path to becoming the next Jihadi John or David Hicks. What kind of thing happens to youths who decide the causes are for them? There's something disturbed about people who would want to join a cause that espouses medievalist virtues and sensibilities. Most normal people would be browned off at the decapitations of prisoners or the mass rape or the slave trade in which ISIL is indulging; but those are apparently not negative-points enough for some.

It's hard to find much compassion in the misplaced enthusiasms of youth if upon deep research and thinking, your conclusions lead you to join ISIL. The day he is captured by the US Navy SEALS, he'll be off to G'itmo for torture as night follows day - and then we'll be in that stupid legal limbo again trying to get him back. And he'll probably want an apology out of the government like Hicks wants.

Speaking of which, I was offered an insight about David Hicks which was interesting. In his youth, Hicks must have seen 'Rambo 3' and was deeply moved to sympathise with the Mujihadeen. He probably aspired to being Rambo, a white man amongst the natives, fighting alongside them against a great state - and somehow this teenage fantasy congealed into the actions that led him to Afghanistan.  Hence that famous photo with the grenade launcher.

You look at it to this day and you still think, what a moron. You can add Jake Bilardi to that growing list of idiots, the league of morons.

Can People Really Change? And Does It Matter To Politicians? 

The pathetic legal soap opera that is the execution of Andrew Chan and Myuran Skukumaran continues.

Sukumaran told Schou in May last year he did not hate those that handed him the death penalty. 

"No. I accept what I did was wrong. I know that I should be punished for it, But I do think that the death penalty is too excessive and I should be given a chance ... 

"I think I can do a lot of good in the outside if I ever go free ... I would want to do stuff like work and make good stuff and help people. That's what I would be hoping to do."

It's pretty depressing just reading that. They were young dumb and full of stupid notions about the world and got themselves into this jam. Now that they've outgrown that youthful stupidity, they are about to pay the ultimate price for those very same stupidities. You really wouldn't wish this on your worst enemy.

I guess there is some irony in being executed at the order of a guy who's name is Joke-O. Sort of rhymes with Yoko. As in, Yoko Ono.

Meanwhile some people remain stupid, well into their old age.

The former Navy chief, who is a controversial political figure in Indonesia, said Australia was trying to pressure Indonesia into cancelling the executions by raising the issue of its $1 billion in Boxing Day tsunami aid and discouraging visitors to Bali.

He reminded Australia that Jakarta had been working hard to prevent asylum seekers attempting to travel to Australia in boats. 

"If Canberra keeps doing things that displease Indonesia, Jakarta will surely let the illegal immigrants go to Australia," Mr Tedjo said on Metro TV. "There are more than 10,000 [asylum seekers] in Indonesia today. If they are let go to Australia, it will be like a human tsunami."

Very unedifying. You can't go around accusing people mixing up issues when you then go on to to do exactly that. No? I guess this is the kind of stupidity we're up against. We shan't prevail.

News That's Fit To Punt - 09/Mar/2015

He Said WHAT!?

There are days where you simply don't have words to describe the acute surprise, the acute embarrassment, and the acute pain of having this idiot:

...as our Prime Minister. Today is one of those days.

In extraordinary comments on Monday afternoon, Mr Abbott attacked the UN and said its representatives would "have a lot more credibility if they were to give some credit to the Australian government" for stopping boat arrivals.

"I really think Australians are sick of being lectured to by the United Nations, particularly, particularly given that we have stopped the boats, and by stopping the boats, we have ended the deaths at sea," Mr Abbott said. 

"The most humanitarian, the most decent, the most compassionate thing you can do is stop these boats because hundreds, we think about 1200 in fact, drowned at sea during the flourishing of the people smuggling trade under the former government."

The un-ironic stupidity is breathtaking. The boats being "stopped" only happened because of the deterrence offered by the Manus Island detention centre being a terrible place to end up. So even the "stopping the boats" he wants credit for, rests on the fruits of what the UN would term torture. Which means he can't get credit for that.

Worse still, the asylum seekers are being sent to Manus Island because the ALP choice of Malaysia was disqualified because Malaysia wasn't a signatory to the UN convention on refugees. And thanks to Tony Abbott's own drama-queen efforts as the opposition leader, they could not be brought to Australia, and had to be sent to Manus Island as a last resort. There's nothing in this that isn't somehow Tony Abbott's own damn fault.

As Paul Keating said, "God help us all, God help us all."

The Mental Health System Is About To Break

"Big" works in Mental Health and he is always full of stories about how the system is stretched to breaking point, and then they halve the resources. Or stop replacing broken fluoro tubes in the building. Or stop fixing broken toilets. And stop cleaners' contracts. Alas, making the situation even more miserable to the outside eyes, the mental health workers are with the HSU. Yes, that same union that had that Craig Thomson guy spend fantastic plastic money on hookers and had Kathy Jackson and Michael Williamson and all kinds of characters that had the smack of corruption about them. Having ended up in court in the wake of the Craig Thomson affair (and never was the use of the word 'affair' been more accurate as double entendre), ensnared by their own bizarre politics and rorting, the HSU became the least effective representation for its union members. 

Worse still, the mental health workers have had a gag order placed upon them as a term of their employment. Not only are they sewn up with medical confidentiality, they're specifically not allowed to talk about their conditions at work to the media lest they get terminated. When you consider there aren't may private sector posts for mental health workers, you can see the New South Wales government has been gagging an entire sector of workers. 

Finally, the Sydney Morning Herald has put a slit into the curtain of silence. But they're only getting the doctors' side of the story. 

For years doctors have complained about the serious underfunding of mental health services. The reason? Most people think it's because performing more surgeries and cutting waiting times in emergency departments wins elections, while making sure someone with schizophrenia is properly supported and medicated in the community doesn't. 

Today Fairfax Media revealed that the situation is reaching crisis point. 

Doctors around the state cheered when the government, just after it was elected, allowed local health authorities more control over health services in their area. But the downside of the decision was that some areas with particularly stretched budgets have looked to mental health services to find savings. It's almost impossible to close a hospital bed without serious political ramifications, doctors say. But leaving a community health worker position unfilled? That's much easier to get away with.

All of the charts might be correct but it's only scratching the surface of the problems in funding, and worse still, it hasn't even gotten down to the day-to-day people who handle all the mentally ill people who live out in the community. There are horror stories to tell there. 

Consider this fact. When Julia Gillard and Wayne Swan were making cuts in their last budget, one of the two places to get an increase in funding was Mental Health. It hasn't been nearly enough to cover for the shortfall in funding; and WTE Joe Hockey has been trying to cut even that funding. 

Politicians are really fucking this up badly. There simply is no other interpretation. 

Screen Australia - Abnormal Business Practices

Pleiades sent in this link.

Companies associated with actor and film producer Claudia Karvan were paid $10.5 million by Screen Australia last year. Karvan is on the board of Screen Australia. 

Companies associated with fellow director Joan Peters, a media and entertainment lawyer, received just under $14.8 million in production grants, consultancy fees, travel grants and assorted transactions with Screen Australia.

Companies associated with actor and film producer Claudia Karvan were paid $10.5 million by Screen Australia last year. Karvan is on the board of Screen Australia. 

Companies associated with fellow director Joan Peters, a media and entertainment lawyer, received just under $14.8 million in production grants, consultancy fees, travel grants and assorted transactions with Screen Australia.

Companies associated with fellow director Joan Peters, a media and entertainment lawyer, received just under $14.8 Companies associated with director and film producer Rosemary Blight picked up $2.2 million in production grants and travel to the Toronto Film Festival. 

Payments of $1.5 million were made to companies associated with filmmaker Rachel Perkins and for a project in which a "close family" member of Perkins was involved.
Payments were also made to companies associated with the former chairman of Screen Australia, Glen Boreham, companies associated with deputy chair Deanne Weir and companies associated with another director, Richard Keddie. 

There is no suggestion of anything amiss. The transactions are duly recorded in the notes to Screen Australia's financial statements and the website features a conflict of interest policy. One can't help wondering though – as normal procedure on conflicts is for a director to leave the boardroom when a related party transaction is being discussed – that Screen Australia board meetings must resemble more a game of musical chairs than a traditional, boring old board meeting, as members excuse themselves. 

In two decades of digging around company accounts, this reporter has never seen anything quite like it; no less than five pages of related party transactions. 

"Screen Australia is fortunate to have an expert industry board ensuring decisions are well informed with an industry perspective. The agency adheres to a strict conflict of interest policy that ensures fairness and accountability," a spokeswoman said. 

We had stumbled on this quite by accident, in the process of researching a story on why the Australian film industry was not living up to its potential.

Are we surprised? It's a freaking rort. That it's all nepotism and paying one's spouses out of the public purse is as rife as it is, as costly as it is?

Need I say any more?

'The Missing'

Relentless Sadness

Back in 2006, the McCanns lost their daughter Maddie in Portugal. In the weeks that followed was a terrible media circus, which reminded one of the Azaria Chamberlain case from August 1980 in the Northern Territory of Australia. Just as things happened in the Chamberlain case, bereft of clues and leads the Portuguese police moved to investigate the McCanns. It was predictable as it was misguided but not every police department on the planet got the memo about the dangers of crap police work and bad guessing.

The media for its part generated the sort of frenzy that - one can only guess - really pleases Rupert Murdoch with the hopes of selling lots of tabloid newspapers. In any case Maddie was never found and her case lingers as one of those high profile cases that flare up in the media from time to time. All of this goes to show that the things that have nothing to do with a missing person case can be just as brutal as the missing person case itself. The fishbowl life of being the focus of media is more than half the problem.

'The Missing' basically takes that dynamic and lets you live through the harrowing experience vicariously. As entertainment goes, it's rather difficult and challenging; perhaps even perverse in its desire to inflict you with the horror of being hounded by the media while trying to find out what happened to your child. In the process, the ironies abound. It's not for the faint of heart or the morally conscientious. What characterises the entire season is this sadness for the missing that is barely manageable. The unrelenting sadness is gruelling as it is insightful.

So, here's the spoiler alert as usual.

What's Good About It

It's a very compelling series to watch. The performances are great - especially the actors playing the French and Romanian characters. We know James Nesbitt very well and Frances O'Connor is solid a performer as you can hope for, but because we know them from other works, we tend to see the performer no matter what. While we recognise the other actors they and their performances imbue the whole series with theses of reality to carry the realism necessary. Tcheky Karyo, Emilie Dequenne and Said Taghmaoui put in fine performances to make the show work.

The characters are truly fucked up. There's no other word for it. Everybody central to the events has messed up inner lives and it all comes out. Nobody is innocent or without having made some transgression. If it's not outright guilt, it is character weaknesses that undermine these sad people in this sad drama. But it's a good kind of pessimism that draws out what makes the broken hearted carry on. That part of it is very interesting.

What's Bad About It

There are moments toward the end where the series falls in to a sort of generic crime show melodrama. In the early going, the show heads out to very challenging areas, but succumbs to a kind of pat story telling in order to wrap things up. Having worked so hard to establish a sense in which life is incomplete, jagged, mismatched and not at all perfect, the last episodes tie things up like a good little episode of Mrs. Marple. The hand is deft and the craft is solid, but for once it works entirely against the artistic vision established earlier.

Also a repetitive pattern begins to emerge where people who could offer clues refuse to help, need to be cajoled and coerced, but eventually live up to their better selves. It's part of the sense of completeness that betrays the initial successes of the episodes. It's as if the writers are leaning back on tried and tested tricks to get them through some parts that are not as well conceived.

What's Interesting About It

Like the very cerebral despair of the studied pessimism in 'True Detective' season 1, this series has a very visceral unquenchable yearning for all the people who go missing. Yet unlike 'True Detective, it never goes abstract, it always stays as a compulsion for the main character Tony Hughes who lives on hope of finding his son; but this hope has desiccated into a determination to ascertain what exactly happened to his son. The process of his hope drying out into this sinewy determination is what is explored on one side of the show. Ultimately the show closes with the very inability of Tony (and by extension us) to close the gap on the missing people. Their absence is a gaping blackhole the sucks up our emotional energy and being. This stands in contrast to the sudden transcendental realisation in 'True Detective'. Seen together, 'The Missing' delivers us to the front end of 'True Detective' at which end we reach a point of irrationality not so much to explain it, but to accept the cruel ironies of existence itself.

What Becomes Of The Distraught

The series taken as a whole can be topically retitled 'Fifty Shades of Grief'. Every nuance of the loss is worked out, investigated, prodded, interviewed, challenged and gone over with a fine tooth comb. The emotional landscape of the whole enterprise starts off with being aghast and simmers and boils in a soup made of guilt and blame and self-loathing. The known and unknowable gets a work out as ideas, but what the series is doggedly interested in is the feeling of this terrible loss which brings into focus various fears.

These fears include pedophilia rings, and organised criminal gangs from Eastern Europe, the illicit drug trade and freelance journalists with nary a qualm about destroying the lives of their subjects to make their own. Through all the emotional mayhem is this couple trying to make sense of the indecipherably awful emotions attached to the loss. The scrambled eggs of sadness and despair cannot be unscrambled back into an egg, and we are shown this over and over from so many angles.

The sense of loss is overwhelming and to a point, mind-warping. It even pushes a strange plot point through which you might not countenance in any other context. At that point the sadness becomes irredeemable. You certainly wouldn't want the McCanns to watch this series. It just might kill them.

Getting Away With Murder

It's a morbid thing, but in order for films, books, and TV shows to go somewhere radical, it has to posit the unacceptable as somehow reasonably explained. 'The Missing', daringly posits a situation where we can imagine ourselves committing a murder for exactly the same reasons as the character on screen. In other words, it cross our taboo and legal injunction against murder and presents a 'righteous' kill. Texts that venture to these places have to embrace a nihilism to countenance the murder, but also appeal to our sense of justice in order excuse the act. It's a tricky business.

Essentially, you have to imagine the worst crime possible and then be confronted with no option to access the law and its indifferent judgment. In Clint Eastwood's 'Unforgiven', this is done by showing the law itself as being a corrupt and dangerous liability to the community involved and so Will Munny shoots Little Bill - and the audience is there all the way with Clint Eastwood. It is the central, desperate act of that film. In 'The Missing', it comes somewhere in the middle and it is in many ways tangential to the action. When we get to the end we realise how arbitrary the murder was and it leaves avery bad taste.

Yet, the series does no drift into the kind of nihilism. Instead it involves society and family and the law at many turns. It's just that the individuals opt to ignore the law to let the murder go through. And  even if it is understandable, the fact that it is tangential makes the whole series a little odd. It's a little like you're making a movie about a coverup, and somewhere in the investigation you discover a ring of gang rapists. it is so sickening the searchers kill the gang rapists and bury the evidence, but the story goes on and the cover up is exposed to show something totally unrelated to the gang.

It has that kind of disjointed quality to it, and you remain disturbed by the murder.

Fearless Wrinkles

I'm going to be a little mean here. I'm not proud of it, but it was pretty glaring so, here goes...
The general thing about makeup for screen is that Hollywood is always smooth while UK dramas are deep in realism. The deeper the realism in the UK, the deeper the wrinkles get. The funnier and dumb-and-dumber a film gets in Hollywood, the smoother the skin tones. The realism is very deep in this film given the makeup we see. I'm really in awe of the fearless wrinkliness of both Nesbitt and O'Connor.  It's as if they just don't care, this is what humans look like in their late 40s. Except a craggy O'Connor looks a bit like what a female Joker might look like in a Batman movie.

Coincidentally I was watching 'Beneath The Planet Of The Apes' and was struck by how sweaty shine on the forehead is common place in early 1970s movies. It's the harsh key lights and the flat lighting to get an exposure on insensitive/slow film stock. I don't know when that shine became a taboo because you sure don't see it in the late 80s. So somewhere along the way, some makeup technology breakthrough took place together with advances film stock. And while there is no such sweaty shine on the face of the actors in this series, it sure seems like it was lit and made up for maximum wrinkles.

We grow old. It's a myth we get better looking with age as Hollywood keeps laying on the makeup. But when you se the blunt realism of skin blemishes and neurofibromatomas and warts and pimples and scars, you are so to taken aback by how artful the artlessness is made out to be.
The wrinkles add to the overall sadness as reminders of our mortality.

Intergenerational Report

Turning Japanese, Then Embracing A Grim Future

It's here. We're headed for a ZRIP future for sure now. The Intergenerational report being waved around by Joe Jockey in his ever diminishing quest to lump all the problems on to the poor essentially outlines a future of diminishing population growth as well as economic growth.

It predicts marginally slower economic growth to 2054-55 (2.8 per cent) than has been the case in the past four decades (3.1 per cent) coupled with a massive spike in the number of people living past 100, and a doubling of the number of people in the over 65 category. 

While the government has not committed to a further hike in the age pension eligibility age – often erroneously called the retirement age – the report's projections of a shrinking workforce, as a proportion of the wider population it supports, means there will continue to be pressure to lift the age from 67 set by Labor, to 70 and perhaps beyond, if it can get it through the Senate.

"The number of centenarians is an extraordinary story," Mr Hockey said in releasing the report. 

"There are only 100 in 1971, there's going to be 40,000 in 2050. 

"There will be fewer people aged between 15 and 64 relative to each person aged over 65.

"Sixty-five is the traditional working age, obviously that is changing, but in 1970 there were the equivalent of 7.5 people for everyone aged over 65. It's currently 4.5 and it's dropping to nearly three." 

He said older workers had remained in the workforce even through the GFC because their income from investments had been hit, helping to achieve high levels of older workers still. 

"This is the grey army that is going to deliver prosperity in Australia's future and we need older Australians, we want older Australians if they choose to do so to remain in the workforce and to come back into the work force," he said.

That last paragraph sounds painfully like the catch cry in Japan where older workers are expected to stoically stay in their jobs. The intergenerational report is painting a picture where the population is ageing, and economic growth diminishing over time, and the future prosperity being dependent on the participation of women and the elderly - and probably mostly just elderly women.

Seeing that this is the Gen-X blog after all I may as well point it out: the newsflash here is that the Intergenerational Reports highlighting the rather grim outlook that Gen-X won't able to retire.
That being the case, the only hope is that there are significant rejuvenation remedies in the future so that working into old age ceases to be a problem. Indeed, if those technologies come online as predicted by Ray Kurzweil and his Singularity scenario, then old age won't matter. It would remain appropriate that we continue to work and only when we take ourselves off rejuvenation and prepare for senescence and embrace death would we be allowed a pension.

The trickier problem is that the delimiting economic growth is going to come from the lack of room in which to grow as well as the ageing population. We're not that far into the process but in the post-GFC New Normal, we're already butting up against the limitations of not only our economy, but that of China which is straggling if not falling off its perch. If China's growth has been our growth engine, we'll have to be dragged down by the fact that China's workers have peaked and are now rapidly growing old. The space for economic growth to take place on this planet isn't as big as it has been in history.

Dare I say, it is going to make space look a lot more likely as a colonial destination.

Market Bears, Ready To Dance

Lemmings With Credit

I'm a real market bear when it comes to the property market, especially because I still live in Sydney and I think valuations on the whole are unhinged when compared to the rest of the world.

I get it, Sydney's a great place to live and it has so much going for it, but it also isn't exactly London, New  York, Tokyo, Berlin or Paris in the culture stakes. So if people living here are bidding up the prices houses off their own bat, there seems to be a level of narcissistic parochialism to value one's place so highly. Especially when the whole local market agrees. That's more lemming than bulls or bears. But for the price of a 2BR apartment Strathfield, buy can buy a gorgeous condominium on a Greek Island facing the Aegean Sea. Forget whether you want to liven a cash-stapled Greece or not for a moment, the disparity in what you get for the same money is rather stupidly large.

With that I bring you this link today. It's David Murray, former head of the CBA saying that the RBA is in a bind exactly because the economy is not doing well, but housing prices are irrationally exuberant (to borrow from Alan Greenspan of yore).

Mr Murray, who previously headed the Commonwealth Bank, said the low-interest rate environment had seen house prices rising in capital cities like Sydney and Melbourne - which was not only making housing unaffordable, but putting the entire financial system at severe risk. 

"It is a serious issue and if interest rates continue to fall, there will have to be prudential offsets to limit the risks in the housing market," he warned.
Asked whether that should include a cap on borrowing, Mr Murray said: "There's different ways it can be done; in other countries they've limited the loan-to-value ratios for second properties. 

"Singapore and Hong Kong have done that, for example, but the lower these rates get, the more governments will have to consider these responses." 

The Reserve Bank of Australia signalled its concerns about an overheating property market when it left rates on hold on Tuesday, and flagged it was working with other agencies on how the issue might be tackled.

It's interesting that the former head of the CBA wants to come forward and say all this. The RBA and Federal government have been hosing down concerns about the property market for some time, trying to portray the irrational exuberance as a good thing. Of course if it contributes to rents rising, it does offset the massive deflation we're also importing, which I commented on in the previous post. The problem as it were, is that they keep rewriting how they measure inflation so they have been under-reporting the inflation coming through from property rises and rents, while they've been factoring in deflation of things with more elasticity than food, shelter, and energy.

Anyway, I don't know if it's a typo, but this bit caught my eye:

In the event of another global financial crisis, Australia would probably not be in as a strong a position as it was economically last time, and could lose 20 to 150 per cent of its GDP as well as see up to 1 million jobs lost, he said. 

It was the severity that had to be managed.

"It's just not the case [that] we're immune from trouble here," he said.
It would be a real concern if the cash rate was to fall to the 1 per cent range. 

"In the post-crisis world we're in, asset prices - with monetary easing - keep getting inflated," he said, pointing to the high price-to-income ratio for houses in Australia. 

"There only needs to be a noticeable pick-up in employment and this can turn very very difficult … APRA and the Reserve Bank have a real problem here."

So, the first eye-popping figure is the possibility of losing 150% of GDP. We talk about growth in the developed world in terms of single digits: 3% is desirable, 5% is great 7.4% is practically Chinese propaganda. 150% means we wipe out as much as our annual output in asset losses, and then another half. That's an unimaginably huge bite, and if that should happen, I don't see how the four pillar banks and Macquarie survive this impact. Not to mention the 20-25years worth of 3% growth it would need to re-reach from whence it falls.

The other weird one is the "pick-up in employment" - by which I think he means un-employment. Otherwise it doesn't make sense. If un-employment picks up,  there are whole portions of the market that are in debt up to their eyeballs who are going to suffer and fold on their mortgages - and that's surely going to be ugly enough for APRA and the RBA. I figure if employment picks up and the economy starts over-heating, they'd just raise rates.

Seriously. I want to figure out how to short Australian real estate.

And Equities Are Overpriced They Say

The other burgeoning asset bubble is in equities. Lots of elderly people and retired Baby Boomers are moving out of bonds and into equities because a) interest rates are too low b) dividend yields are attractive, c) the share market is less complicated than other financial instruments.

So here's today's scare-campaign article:

"Economic fundamentals are offering limited justification for surging share prices. Rising unemployment, falling business investment, stalling inflation, weak confidence, a decade of dysfunctional government and inconsistent policy are weighing on confidence and restricting much-needed investment for growth," he said. 

Mathan Somasundaram, a Baillieu Holst equity analyst and author of market newsletter Sunset Strip, is comparing current conditions to what happened prior to the 1987 stock market crash and the GFC, which saw the sharemarket nearly halve in value. 

"If you look at the market forward PE (price-to-earnings) series since 1986, any PE expansion above 15 has not ended well," he said. The current PE is around 15 times earnings compared to a historical average of 14 times, as shown in this graph:

If you're a retiree, what are you gonna do?

If you read Zero Hedge like I do, you'd know those guys are screaming the US markets are overpriced, rigged and non-indicative of the true state of the US economy. Moment like this I'm tempted to say they'd have a good case to argue the same about Australia's equities market.

All the same, I don't think we're seeing that much of a peak. the current scuttlebutt is whether the AllOrds will break 6000, but even that is neither here nor there in as much as much of what was devastated in the GFC hasn't really come back as far as the Allures companies' share prices. Compared to the property markets, it's hardly as if the equities markets are far away from historic norms. The Australian property market on the other hand is sitting at a place that is much whackier than that. 

And Our Cities Are Broken Anyway

Here's something from Ross Gittins that might be of interest. 

Researchers at the Reserve Bank have shown that if you draw a graph with home prices on the vertical axis and distance from the CBD on the horizontal axis and then plot actual prices, you get an almost perfectly downward-sloping curve for Sydney, Melbourne, Perth or Brisbane. On average, prices are highest close in and lowest far out. 

For the five mainland state capitals, 60 per cent of all the employment growth over the five years to 2011 occurred within 10 kilometres of the centre. But here's the problem: no doubt because inner-city house prices were so high, about 55 per cent of the population growth occurred 20 kilometres or more from the centre. 

In other words, we've been developing a big economic and social problem few economists have noticed: a growing spatial divide between where the jobs are and where people live. 

It's an economic problem because it increases the economy-wide costs of each day's production of goods and services. It's a social problem because, for the most part, those costs fall on the less-wealthy working families living in outer suburbs. Some of the costs come as dollars paid, some as time wasted and some as opportunities forgone. 

The growing distance between where we live and where we work means car travel in peak periods is getting slower in all capital cities. Traffic is slowest on inner-suburban roads, because that's where most people are travelling to or from.

And is the State Government of NSW in a position to do anything about it? Probably. Will they do anything about it? Nope. But they watts to vote for them in exchange of an illusion that they're doing something about it. Honestly, Westconnex is not the solution, it's more crony-capitalist excess.

I think the healthiest thing to do for the electorate is to vote out each and every government at every election until a government gets in and starts solving these problems. Until then it's going to be Morbid Obeidity meets Nick-Greiner's pension-funding. 

News That's Fit To Punt - 02/Mar/2015

No Interest Rate Cut From RBA

After the hoopla leading into this week, the RBA opted not to cut rates today. Here is a list of my random thoughts in no particular order:

No.1, I'm amazed that I'm blogging about it. If you told me as a teen that I'd be interested in this topic, you could've knocked me over with a feather. I'd quit on Commerce and flunked Economics. Mr, Kramer was a cavalier sort of teacher who gave me the shits. And Liza-the-teacher's-pet was pretty insufferable so I dropped economics going into my senior years at high school. But here I am blogging about friggin' interest rates - I do surprise myself, yes, I do.

No. 2 is "I guess they're keeping their powder dry". They've been using that phrase a lot since the GFC and what they seem to mean is that things could always get worse, so when it really gets worse, they'll unleash the even-lower-interest-rates. And on to ZIRP we go, eventually... but for now, no cuts. Which is also interesting because nobody has been suggesting they should go up, and that means the economy really is worse than when it was much higher.

No. 3 is "Wow, they were spooked by the Sydney Real Estate market". What can one say? The indiscriminate rise of the property bubble souffle in Sydney does seem like a kind of moral hazard writ large, so it does make some sort of sense that they might want to rein in the excess even if it means not lowering the rates. The corollary of that is that Sydney's property excess is weighted exactly the same as the immediate needs of the rest of the economy. Think about that for a moment and then think through whether that's sustainable. No? Didn't think so.

It's The Wrong Order, Tones

One of the phrases that Tony abbott is known for is 'Dead Buried and Cremated'. He famously uttered these words in reference to Work Choices which buried the Hoard government and John Howard's seat in his own electorate in 2007, and how theLiberal Party had abandoned the thought of trying to go back to it.

Today he's saying the GP Co-Payment is 'Dead Buried and Cremated'.

Now, you might not believe it from this blog but I am a stickler for some detail and it seems to me you don't cremate a body after it's been buried. Logically, he should be saying 'Dead Cremated and Buried'. That makes sense. The way he's been saying it makes no bloody sense, and so lends us the suspicion that perhaps he is not a very logical human being - and being a Prime Minister, this might present problems.

Anyway, just though I'd fire off that cheap shot because it's been bothering me for a long time.

Renewables On The Rise

The Denialist Abbott government has done a great deal of harm toinvestent in reneablesin this country but it's nice to see some comaniesgetting things done. Here's Carnegie Wave Energy doing their thing.

The world’s first grid-connected wave power station has been activated off the coast of Western Australia (WA).  

After more than a decade of testing and demonstrations, Australian company Carnegie Wave Energy has switched on a pilot project that has begun feeding wave-generated electricity into a local WA grid.

“This is the first array of wave power generators to be connected to an electricity grid in Australia and worldwide,” said Ivor Frischknecht, CEO of the Australian Renewable Energy Agency, in a statement. The Agency has provided $13 million of the $32 million project.
The company’s technology named CETO after a Greek goddess of the sea converts ocean swell into zero-emission renewable power and zero-emission desalinated freshwater.

The company says its system is “different from other wave energy devices as it operates under water where it is safer from large storms [and corrosion] and invisible from the shore”.

Which is pretty damn cool. We're not all totally drongo backward climate change denialists in this country.

Worst Treasurer Ever Joe Hockey Pushes On A Rope

This is kinda interesting. WTE Joe has ordered a forced sale of a mansion in Point Piper bought by an overseas (read Chinese) investor for 39million. The investor has 90 days to sell. Which will likely result in a lower price which would put some downward push on the wonderful property bubble in Sydney from the top end of the market. It might be irrelevant to the extent that everybody else still wants in on Sydney.

However, it might be the beginning of a process whereby Chinese investors trying to repatriate their money outside of mainland China - read 'capital flight' - might see Australia as not such a good destination. Especially if the place is sold for much less than the $39m that was originally paid for last year. That might send a signal to the Chinese-runaway-money sector that maybe Australia has just as much irrational risk as mainland China, with as little recourse as mainland China. If so, it might cool down the top end of the market significantly.If the FIRB and WTE Joe start doing a lot of these, then it might lead to a rout.

In other words, depending on WTE Joe Hockey's commitment to this course of action, it could indicate a political willingness to prick the Sydney property bubble. Of course, it's not clear what would happen should the Sydney property bubble get pricked - but it's something new coming from the WTE Joe Hockey.

Or he could be doing it just so one of his cronies can pick the property up for cheap. That wouldn't be surprising in the least bit.

The End Of The Road

Well, this is most likely it. Andrew Chan and Myuran Sukumaran are going to be transferred to be transferred to Nusakambangan where they run the executions. It's a drag.

I haven't given it a whole lot of thought over the years because I figure you have to respect the local laws. There's sufficient merit in the legalistic argument that the local laws should be obeyed. Socrates took the hemlock saying even bad laws are laws. It has been embarrassing to see just how much the Australian media has made of their plight in one sense that the more we argue for leniency, it looks like we're pleading a case of exceptionalism to apply tour citizens.

Be that as it may, there's also a fairly fundamental question what a prison sentence is supposed to be. If it is to punish, then that's the moral dimension we find ourselves in and no argument about mercy issuing to get us over the line with the punishers. But if the prison system genuinely about rehabilitation, then there is no place for capital punishment. And so with Andrew Chan and Myruan Sukumaran, we have prisoners who can prove the system correct. Executing them is contradictory.

The longer this has dragged on, I confess that I've grown more hostile towards Indonesian arguments that are bolstered on sovereignty and post-colonial retribution. Those issues have nothing to do with these men they are about to execute. The Australian position requesting mercy and leniency is that we object to the capital punishment, universally. That we would argue with the same vehemence for their citizens facing decapitation in Saudi Arabia seems totally lost on the Indonesian government. Contrary to the accusation that Australia is somehow hypocritical, it's simply not true. We would argue against all the death sentences being meted out on this planet, equally, with equal vigour.

Yet now we are down to the point of miserable acceptance and burgeoning insults. Indonesia is going to have a really hard time winning back the sympathy of the average Australian. It doesn't make any difference to them; but it probably should in the same way that we should hope to win their respect.

Doubting The Economists

You Sort Of Wonder About These Economists

This article has economists warning the RBA against going further with lowered interest rates. And it's pretty weird because the underlying assumption seems to be that eventually interest rates will head back to what have been historic averages.

Merrill Lynch senior economist Alex Joiner said that households who take on too much debt in the low rate environment could be caught out once rates rise. 

"Inevitably rates will move back to a more normal level and that is when we see the debt servicing ratio-income used to service debt, moving higher - households they will be much more sensitive to upward moves in interest rates," said Dr Joiner. 

Mr Montgomery noted in a website post on independent publishing service, Cuffelinks, that eventually "the price of those assets (stocks and property) will be pushed way too high," said "After that, a large number of investors will, sadly, suffer financially again – from buying too late and paying too much."

Basically, they're worried about asset bubbles. They're the same economists who weren't worried that property market was bubbling, not that long ago. It is true that if you borrow money and buy high  in an asset class, you stand to lose a lot of money when prices go down (like, duh). Yet it doesn't seem like that is what is fuelling the ASX; it's the yield of the shares that, even at 3%, sit higher than the 2.6% offered on term deposits. I'm sure the elderly with their nest eggs would rather not be there, but they're forced to be there for the yield. If the RBA cuts rates some more, it's not going to change that calculation. The point at which they had to take that risk came a long while back; way back when the RBA and these economists were busy denying there was a bubble in property.

Go Figure that one out! They suddenly noticed everything is looking a bit peaky rather than say, rosy? 

The problem is that in the long term, we are likely headed for a ZIRP regime in Australia because once the mining boom is truly finished and run its course, and commodity prices fall to historic norms - which is more inevitable than interest rates in Australia - then we won't have an economy worth investing in, which will reflect itself in the low to zero interest rates. ZIRP is - in extremis - the capitalist end game where winner takes all. This is what is not understood by this current Federal Government, which is quickly losing revenue and unable to make the cuts it wants to make on ideological grounds and not on practical grounds (and won't compromise either, which is an even worse story). 

Yes, in theory a lot of people would be in trouble if they borrowed money and thought interest rates would never go back up to say, 6-7%. but we haven't had the kind of economy to justify 6-7% interest rates since when Kevin Rudd was PM the first time around. we'd love that kind of economy compared to the post-GFC "new normal".  Worse still, the RBA is never going to raise interest rates just to scare off speculative investors when it thinks it needs to cut to stimulate the economy. I mean, when has that ever happened? If it's true the RBA won't be raising interest rates to scare off speculators, then it's only going to raise the rates if the figures are genuinely looking like the economy is overheating. For that to happen, unemployment needs to drop to under 5%. Again, that hasn't happened since Kevin Rudd was PM the first time around, and it would be a nice problem to have. 

You can only conclude these economists have got it ass-backwards. The Bust - the mining bust that follows the boom - has already set in. The economy is sliding downwards in growth and facing deflation. The Federal Government is crazy, clueless and crap. Industries are closing or declining and unemployment is rising. Older people have been forced to stick their term deposit nest eggs into shares (for dividends) and property (to collect the rent in cash) - the only two ways that pay better than the term deposits. Credit can hardly expand any more. China can't buy any more because they've crashed against the debt limit too. For various reasons the economy is already in much worse situation than say, even 2 years ago when Julia Gillard was still fending off Kevin Rudd the second time around. 

The markets might look bullish today, but it's against a stark backdrop of a long term secular bear market. Nobody is getting out unhurt; but for the older generation, they have to be in it just to pay their way in retirement. In that scheme of things, cutting the interest rate again is hardly the problem. The real problem is that we have a boatload of problems and this Fe'ral government hasn't go a plan except tax the poor and punish the poor and spread the misery amongst the poor. 

Importing Delfation

Nobody really talks about it much but you can get some amazing things at Daiso. Yes, the chain store that sells Japanese designed generic stuff for $2.80 each. From kitchen utensils to handkerchiefs to pens to hammers, they sell all kinds of things for $2.80 each. And it's not all crap; in fact far from it. 

I bought a kitchen knife from Daiso about 3years ago and it sees daily use. I compare it to the $25 (pre-GST I might add, English steel with 25year guarantee) thing I bought in the mid-90s and have to report that the Daiso knife is probably even more useful as the day-to-day kitchen knife. Forget the hundred dollar Global knife, this thing rocks. So essentially the kitchen knife cost has dropped 90%, if you're willing to use a Daiso knife. Bowls, ditto. Plastic containers, the same. Crystal glass wine glasses, handkerchiefs, LED torches, glass jars, the list goes on and on. Unless you're hooked on branding for your goods, you can outfit a house on $2.80 stuff from Daiso and get decent use value. Heck, I even got a pair of ebony chopsticks. Ebony! For $2.80!

Which all goes to show how much produced goods have been commodified. True, one can show off with one's Global knife set but everything one paid above $2.80 is suddenly suspect as marginal value. Yes, the Global is sharper and more durable. Yet I can sharpen the Daiso knife and when its edge is totally spent I can go get another one for $2.80. The value added on the Global knife has got stiff competition if all one does is slice vegetables, peel some fruit and cut up bits of meat. Getting value out of the value added in the Global knife is going to take serious skill and dedication. Which is fine if you're a chef, but I'm just not one of those guys. 

They haven't yet started selling electric guitars at Daiso, but even electric guitars have collapsed in price thanks to manufacturing in South Korea, China, Indonesia and Vietnam. You can get an archtop for $500. Think about that, and the price tag on a Gibson ES-175 (around AUD$5500) and you can see it's 90% down. They're building cars in India to be sold for $2000.00. They're still crap but it won't be long before they perfect it and it would be road-worthy here, and suddenly it would be 90% down on the Toyota or Ford or GM offering. Eventually you'll get a choice of a branded car with all kinds of extras or something for 10th of the price that gets you from A to B and not much style. It's not that far into the future, and it's going to kill branding. 

So deflation for goods is everywhere thanks to globalisation. It's pulverised our manufacturing sector in Australia. It's going pulverise a lot more. When I go out on weekends I see lots of people shopping furiously. But if they're buying bargain goods in huge quantities, I can see how retail would be having a difficult time, trying to grow profits. Margins would be flattering and you'd have sell a truckload of stuff before you made good profits. But that's just a problem for today and tomorrow. 

Here's what I can't figure out. What happens if China crashes, and the excess capacity for production dries up? Would that wind up the Globalised market in such a way as to deny us these cheap goods? If so would inflation suddenly kick in? It may well do. Or maybe China with all its state interventions never crashes, in which case everything is just going to keep deflating. That just doesn't seem feasible though, does it? Can we really have a world economy that produces more and more for less and less profit? In any case, I watch the Daiso effect of deflation with a certain amount of trepidation. The picture it paints about the globalised world of paper slim margins is quite frightening. 

'Whiplash'

Movies About Music Are Hard

...Especially when it's about drummers. The fine technicality of drumming is visually dramatic but it's the subtle things that make a drummer's performance stand out or fail or be whatever it is. Whether it's Buddy Rich or Art Blakey, or Omar Hakim or (or for that matter Keith Moon or John Bonham or Stewart Copeland), it's actually the little things they do that make all the difference - how they lean into the beat or pull the beat, how they accent the counter, how they bring contrast to the dynamic and underline the melody. So it is with great trepidation one watches a film like 'Whiplash' as it tries to encapsulate jazz drumming.

Drumming is hard. Just ask Terry Bozzio who makes it look easy but works like hell to get his sound. It goes without saying that you wonder if a film is up to capturing the intricacies of the difficulties themselves. This film comes awfully close.

What's Good About It

The songs 'Whiplash' and 'Caravan' get a working out, but otherwise the film mercifully goes through tiny fragments of music, almost vivisecting the elements of playing these songs. J.K Simmons plays a formidable scary instructor/conductor and the moments when the music flows is great. But more interestingly the director restrains from letting the music flow, and this creates amazing tension because watching and hearing the snippets makes you want to hear the whole damn thing played out - something that gets served up in the last section.

The world contained in the movie is surprisingly small. There's a conservatory of music, there's a band, there's a hall of faceless people, there's a cinema with one employee, a girl who is a brief love interest. And this creates an interesting effect where loneliness is played out as something claustrophobic.

What's Bad About It

As tough as J.K. Sommons' character Fletcher might be, there's something unrealistic about his vision of music having great value. The point of course is that his band is expertly attuned in such a way s to win competitions and sustain his reputation, but it becomes rather unbelievable that such a joyless bunch of musicians can be so good as to win so many competitions. The more bullying he becomes, and ratchets up the drama, the more bizarre the vision of his music seems to the audience. There's a certain limit to the kind perfection and precision he is conveying, especially in the context of jazz music.

If he wants machine-like precision, he can programme a drum track on cubase or Garageband and be done with it. It would never make a mistake, it would always play on tempo, and never complain or wilt or tire. But would that be jazz? If a human being couldn't do it, is that still jazz? I tend to think the answer is in the negative so this Fletcher character seems like a tremendous phoney and not sufficiently authoritative at all.

What's Interesting About It

It's interesting that it got made. And I don't mean that with my usual sarcasm-fuelled insult for something like a movie directed by Dolph Lundgren; rather, that it is interesting that a film that is so much about the musical experience could have been conveyed so well on paper that it got investment. The world of cinema is a lot more interesting than I gave it credit. You could have fooled me with the rush of comic book superhero movies being churned out, but no, something like this can still get up.

If You Can't Get Your Technique Down...

At one point there is a headline on an article cut out, stuck up on the wall that reads "If you can't get your technique down, you wind up playing in a rock band". It might even be true. But it's nothing to be ashamed of if you do.

Drumming And Human Consciousness

Just coincidentally, I stumbled upon this page after watching the film. Here's a lengthy excerpt which is of great interest:

But even though a steady drummer may be more intelligent than his or her bandmates, the drummer's gifts can be shared: a tight beat can actually transfer that natural intelligence to others. In studies on the effects of rhythm on brains, researchers showed that experiencing a steady rhythm actually improves cognitive function. One psychology professor at the University of Washington used rhythmic light and sound therapy on his students and discovered that their grades improved. Similarly, one researcher at the University of Texas Medical Branch used that method on a group of elementary and middle school boys with ADD. The therapies had a similar effect to Ritalin, eventually making lasting increases to the boys' IQ scores. 

Granted, these studies focused more on the effects of rhythm on the mind rather than on the mind behind the rhythm. Still, drummers' consistent rhythmic focus has positive effects on them and those around them. When drummers bring a steady rhythm (and their corresponding problem-solving abilities) to a group setting, they actually create a "drummer's high" for everyone around them. University of Oxford researchers discovered that when drummers play together, both their happiness levels and pain tolerance increase, similar to Olympic runners. Observing that high led researchers to hypothesize that drumming was integral to community-building and that sharing rhythms could be the sort of behavior necessary for the evolution of human society. 

Drumming is a fundamentally human thing. A lot of modern music has shifted towards drum machines over humans to create ultra-precise electronic rhythms. But it turns out that what we typically perceive as error is really just a uniquely human sense of time: Researchers at Harvard found that drummers harness a different sort of internal clock that moves in waves, rather than linearly as a real clock does. They match an innate rhythm that has been found in human brainwaves, heart rates during sleep and even the auditory nerve firings in cats. When a human drummer plays, he or she finds a human rhythm.

So on some fundamental level drumming is a window into our own brains concerning time. Even the precision demanded by Fletcher is in some ways entirely bogus given the way we are wired to sense rhythm as well as participate in rhythm.

The machine beat problem goes back further in rock and pop because they (we) have aggressively adopted machine beats to eliminate the messy problem of recording drumming, drummers and the sheer emotional commitment to go with hanging out with drummers. But a machine beat is always known to be a machine beat by its precision. A genuine, well-played groove becomes elusive with the machine beat. Thomas Dolby's solution was to throw a good bass player against the machine beat to let the bass player generate the groove against the machine beat, but even then it's not the same thing as playing with a real, live drummer. What a human drummer provides is human-ness itself.