Weekend Links 2-3 March 2013

Here’s a list of things Reynard read overnight.

Global Macro/Markets:

  • Time to End the ‘Monetary Ritalin’: Fed’s Fisher – CNBC
  • Central banking: Doomed to fail? – The Economist

North America:



  • Shinzo Abe’s phaser – FT Alphaville
  • China plans bond overhaul to fund $6 trillion urbanization – sources – Reuters


  • Department of Climate Change under budget firing line – The Australian
  • Expensive housing turns Australia into nation of renters – The AFR
  • Cash rate is king and RBA still holds the cards – The Age


  • Mapping future food inflation – FT Alphaville
  • What do you want? The Volcker Rule! – FT Alphaville
  • Russia’s oligarchs are ditching oil and gold in favor of piles of cash – Business Week
  • Bankers’ bonuses: Europe right, Britain wrong – The Guardian
  • Why Argentina will default in 2013 – Reuters


  1. Finally, we get to see some benefits from Climate Change activities. Looks like Dr No was not just right about dams? ;


    “LABOR is considering dissolving the $218 million-a-year Climate Change Department as part of a cost-saving restructure that could see it merged with another government bureaucracy.
    The department is part of a $1.6 billion-a-year climate change behemoth in place to administer the government’s carbon tax. It also includes the Clean Energy Regulator, the Climate Change Authority and the Office of the Renewable Energy Regulator.”

    Not far aenough. Shut the whole lot down and turn out the lights. The place is a haven for paper pushers and Green lobbyists.

    • Remarkable Summer in Australia Is its Hottest On Record

      Or rather, it was so hot this summer, that the country set a record for its hottest summer since recordkeeping began there in 1910, the country’s Bureau of Meteorology (BOM) announced Friday. For a country that has an arid climate and is prone to heat waves, that might not seem unusual.

      Graphic — Summer temperature departures from average in Australia from 1910 through 2013. (BOM)

      But the summer was remarkable in almost every respect, as the Australian continent smashed records for heat intensity, geographic scope, and duration. Moreover, the heat continued a recent trend toward much warmer summers in Australia, and climate models show that, depending on global emissions of climate-warming greenhouse gases, Australia’s summer of 2012-2013 could be the norm by the 2040s, the BOM said.

      • The CSIRO and Bureau of Meteorology State of the Climate 2012 reports that:

        * Australian annual average daily mean temperatures have increased by 0.9 °C since 1910.

        * Global average mean sea level for 2011 was 210 mm above the level in 1880.

        * Sea surface temperatures have increased by about 0.8 °C since 1910.

        * The main cause of the observed increase in carbon dioxide concentration in the atmosphere is the combustion of fossil fuels since the industrial revolution.

        * Australian average temperatures are projected to rise by 1.0 to 5.0 °C by 2070 when compared with the climate of recent decades.

          • I think you mean million, H&H. Also, the thought that the Department of Climate Change will “save civilization” is risible.

            It’s all up to China now. We are only a tiny bit player.

          • Increases in rainfall extremes linked to global warming

            When we looked at the association between the intensity of rainfall extremes and a record of global mean near-surface atmospheric temperature, rainfall intensity was found to increase at a rate of between 5.9% and 7.7% for each degree, depending on the method of analysis.

            This kind of change is precisely what can be expected if one assumes that the intensity of the most extreme rainfall events will scale with the capacity of the atmosphere to hold moisture. This is well known to increase with temperature at a rate of about 7% per degree.

          • Flannery predicts droughts;


            “PROFESSOR TIM FLANNERY: We’re already seeing the initial impacts and they include a decline in the winter rainfall zone across southern Australia, which is clearly an impact of climate change, but also a decrease in run-off. Although we’re getting say a 20 per cent decrease in rainfall in some areas of Australia, that’s translating to a 60 per cent decrease in the run-off into the dams and rivers.”

            ” So even the rain that falls isn’t actually going to fill our dams and our river systems, and that’s a real worry for the people in the bush. If that trend continues then I think we’re going to have serious problems, particularly for irrigation.”

          • Flannery was right.


            Issued on 5 February 2013 by the National Climate Centre


            Severe rainfall deficiencies for the 6 month (August 2012 to January 2013) period have expanded in central Australia and in large parts of the inland southeast of Australia following below average January rainfall. Severe deficiencies now cover most of South Australia (where August to January rainfall was the lowest on record), large areas of western New South Wales and Victoria, and the southwest corner of the Northern Territory.



            South West WA and agricultural zones are facing a water crisis as dry conditions grip the region, with some towns facing the prospect of running out of supplies.

            “In the South West, a number of the Water Corporation’s independent water schemes are suffering due to the drying climate, which delivered unprecedented low rainfall in 2010, fairly ordinary inflows for 2011 and well below average rainfall again this winter,” he said.

            “Drinking water dams across the South West are 40 per cent full on average.”

            A Water Department spokesman said more than half of the 30 sites used for tracking rainfall across the South West recorded their lowest July totals.

    • How will the coalition manage the 1.6bill? It is going to take time or some black swan to immediately repeal the carbon tax. Via a double dissolution? Then if they win both houses what will a coalition designed bureaucracy to manage government led direct action look like? Perhaps Mr Abbott prefers prayer time as the solution?

      • “what will a coalition designed bureaucracy to manage government led direct action look like?”

        Not sure but hopefully it is a couple of phones, a computer and a handful of accountants that will get the job done. I can think of a lot better uses for $1.6 Billion than this Climate Dept pigs trough. We are after all talking about Taxpayer money.

    • Would have thought that’s what the Dep of Sustainability, Environment, Water, Population and Communities was for. Should never have been a Dep in it’s own right.

    • His comments on currency wars, the attractiveness of equities etc are also all good stuff

    • This week’s ‘The Forum’ is on a similar topic.
      The Challenge of Ageing
      http://www.bbc.co.uk/programmes/p014wlnp (Listen now)
      http://www.bbc.co.uk/podcasts/series/forum (Podcast)

      In a recent interview on local radio (ABC 891) Senior Australian of the Year 2013, Emeritus Professor Ian Maddocks, suggested that in the future senior Australians might need to be required (in an unpaid – ‘volunteer’ – capacity) to visit and informally assist in aged care facilities (i.e. not replace paid nurses and carers, but be an extra presence – to offer human company etc.). He suggested the newly retired might need to forgo an o/s cruise or two to perform this kind of civic duty.

      When I heard his comment I thought about the description of life in Kagoshima (Japan), which is written by a Fijian economist who was on sabbatical from The University of the South Pacific. if mollycoddled westerners are to become more civic minded they could learn a thing or two from Japanese society where to sweep up a bit of grime, or to pick up some rubbish that has been left behind by others, is not beneath anyone’s dignity.
      Kagoshima University, Kagoshima and Japan: learning curves for a Fijian

    • We do not have a population pryamid, we have a vase and are in far worse shape than the US, which has had quite large immigration.
      1. GST to 20% would tax those over 65 more (taxfree threshold to approx $40k for wage earners)
      2. Death tax on any amount over 1 million at 25%
      3. No more lump sum payments of Super to pay out the mortgages and then go on the full pension.
      4. Reverse mortgages provided exclusively from our govt.
      We have to work out a way to tax the over 65 mores and not rely on the workers simply paying more tax into an unfair system. A couple can live in a $2million home, with little other assets and get the full pension. Mad as batshit!

  2. What’s going on with the MSM today? The coordinated property spruik has hit fever pitch with advertorials, sorry lead articles, in the Canberra Times, News.com, SMH and The Age.

      • Aware of that, but each has it’s own regional bent on this weeks mega property advertorial.

          • Even our local paper has a front page spruik today along the same lines. I have a mate who was made redundant at News and he now works for a firm that does editorials & articles from a non descript building in central Sydney on behalf of local, regional & national papers – one kitchen many restaurants strategy.

    • What’s going on with the MSM today? The coordinated property spruik has hit fever pitch with advertorials, sorry lead articles, in the Canberra Times, News.com, SMH and The Age.

      I think there is a now-or-never, do-or-die effort afoot to get the gravy train moving again. Another 6 months of slump in the market will see the investor class heading for the door.

  3. Rosella’s Sydney factory shuts down.

    No-one cares. No-one bothered posting a link. 120 years!

    For nearly 120 years Australians bathed their meat pies and sausage rolls in Rosella’s tomato sauce. But this may be confined to history after the Rosella food factory in Sydney was shut down on Friday.

    It seems we can’t even make food now.

    • If, as the Kouk tell us, we’ve never had it so good then why are companies like Rosella hitting the wall? Think we all know the answer to that.

    • Yeah, heard this might happen. Am quite sad that it now has… 🙁

      More Aussie owned brands gone. More Aussie made brands gone. More demise of Australian manufacturing.

      Sell ’em dirt, and build houses we can sell to eachother, eh? (and ignore the CAD and its serfdom implications…)

  4. Lorax, in this forum I am afraid that manufacturing and Industry in general is seen as the red-headed cousin with learning issues at the family bbq. No interest, hope it goes away and dies quietly.

    We can always sell more dirt and pump up another housing bubble. All you need is to wish hard enough that we will be back to business as usual and it will happen!

  5. On climate change:
    1. It is absolutely clear that the mainstream science supports the IPCC overall position (even though mistakes have been made in some areas and the details of the position continues to be refined)
    The chance of Lord Monckton being the next Galileo are remarkably slim!
    2 A risk management approach is warranted when the threat is so large and expensive. Lower growth is a small cost for saving the world.
    3. From a selfish point of view, some argue that Australia should mine and sell all its coal while it can before it is banned or uneconomic. Given the low employment provided and the amount of imported labour and equipment involved and the low level of royalties and taxes on profits I don’t personally agree, but a full analysis is not available as far as I am aware. Hansen says that the utillisation of available fossil fuel resource of coal and non-traditional oil would be a disaster. He’s been pretty much right on everything till now. I’ll go with him.

    • DrBob127MEMBER

      “This government has left the people on bread and water, selling off state assets for peanuts to pay back debts that were contracted by corrupt politicians to benefit bankers,”

    • DrBob127MEMBER

      “If not today, things have to change tomorrow and we need to remain in the streets for the government to fall.”

  6. Bobby Fischer

    No one has mentioned the ideological crusade going on in Queensland, so lets stir up the right wingers with some unpleasant exposure of privatization myths.

    In fact, it is well overdue for MB to do a special exposing these great big lies of privatization (it is your family silverware too that is getting flogged off to private interests). Numerous stats are noted supporting these positions at this site (American), but not cut and pasted for the sake of brevity.


    Myth #1: Privatization saves money.

    The Truth: Privatization often raises costs for the public and governments.

    Myth #2: Private companies do a better job than the public sector.

    The Truth: Many examples show declines in service quality under private contractors.

    Myth #3: Privatization allows governmental entities to better anticipate and control budgetary costs.

    The Truth: Cost estimates are extremely unreliable and privatization can cause result in unforeseen budgetary consequences.

    Myth #4: Privatization allows governmental entities more administrative flexibility.

    The Truth: Privatization requires substantial administrative resources for monitoring and oversight.

    Myth #5: The public still maintains control over a privatized asset or service and the government retains the ultimate ability to make related public policy decisions.

    The Truth: Privatization can bind the hands of policymakers for years, allowing private companies significant control of a privatized asset or service and the ability to dictate important policy decisions.

    Myth #6: If anything goes wrong, the government can easily fire the contractor or adjust the contract.

    The Truth: Reversing privatization involves huge costs and service interruptions.

    Myth #7: Companies are chosen for privatization contracts on the merits, not based on political or financial connections.

    The Truth: Government for profit opens doors to unscrupulous behavior by politicians and businesses.

    Cue GSM with ludicrous thesis of how the private sector can somehow find ‘efficiencies’ within previously run government monopolies, pay large and increasing shareholder dividends and management remuneration, and yet miraculously provide a cheaper service to the community – despite numerous examples domestically and worldwide where this NEVER occurred with full privatization of essential government services such as electricity and water.

    • Bobby Fischer

      I should have noted that privatization can have many aims in real world politics:

      1. It can be a pragmatic approach to solving typically short-term problems where the private sector is purported to be more efficient.

      2. It may simply be a tactical response in order to achieve broader policy or political goals e.g. changing balances of power, attracting new players or power brokers into the fold or rewarding political supporters for their loyalty.

      For example, this goes a long way to answering the Q Rumplestatskin posed a few weeks back re: why corporates hedge their bets and give to both political parties. Answer: when BOTH mainstream parties are engaging in privatization (as Labor slowly drifts further and further to the right of the spectrum), it is worth donating to both parties if you are a corporate, as they are both empowering capitalists beyond measure (the not so hidden class warfare)

      3. It is purely ideological. Government wants to simply lower expectations of their role in providing and maintaining essential services. This comes with less oversight, monitoring, flogging off all possible public infrastructure to private interests with the added benefit of crushing class structures e.g. public servants who previously had permanency lose it, unions are crushed etc. The added market incentives lead to large incentive structures meaning overpaid private sector CEOs and management abound.

      Given the Campbell Crusade we have seen thus far, Nimrod Noddy definitely falls into categories 2 and 3 i.e. screw the public and reward all private sector interests who bank-rolled his campaign.

      Everybody needs to consider Australia’s not so glamorous history with privatization – are our collective memories really so short? EG:

      – Telstra (disaster for service quality and price)
      – Commonwealth Bank (disaster now threatening financial stability in this country along with the other 3 cartel members)
      – User pays HECS system (how are those debt loads going there kiddies? Getting a little large I see)
      – Qantas divestment (what a wonderfully crap performer it is; perhaps a good divestment)
      – international and domestic airports (price gouging anyone?)
      – IT outsourcing everywhere (expensive failure at state and federal levels)
      – employment service outsourcing (hopeless flop re: meeting service outputs i.e. finding you a job)
      – all the extra spending on private/independent schools (waste of money)
      – subsidies and tax penalties re: private health insurance (complete flop with massive cost blow-outs in cost of health insurance) etc

      Based on this track record, privatization is simply a DUD in this country.

    • Bobby Fischer

      For those who like a fictional framing of the state of Queensland politics, perhaps this will help. 🙂


      Adapted from South Park – Episode 808

      [Polling station on voting day. Nicholls and Costello are handing out flyers for the LNP; Labor cronies are doing the same for their tribe. An average Aussie couple is approaching the polling booths]

      NICHOLLS [in a sneering tone]: Be sure to vote for Giant Douche.

      COSTELLO [curling his lip in a supercilious smile]: Giant Douche is your man!

      LABOR CRONIES: Vote for Turd Sandwich! This is the most important election of our lives. Turd Sandwich brings us hope for change we can believe in. A vote for Turd Sandwich is a vote for tomorrow!

      JOE SIXPACK [to wife Plain Jane]: I don’t think I can justify giving my vote to either a Giant Douche or a Turd Sandwich.

      PLAIN JANE: But Joe, don’t you know politics is always a choice between a giant douche and a turd sandwich? Since the beginning of time, every election has been between some douche and some turd. They’re the only ones who suck up enough to make it in politics. But they can still make a difference.

      JOE SIXPACK: Maybe. But the question really then becomes – “Has Giant Douche done enough to warrant being our Premier for a second term?” Turd sandwich might provide a change of direction that is badly needed. Or better yet, maybe neither of them?

      PLAIN JANE: Babe. You need to think a little harder about this. A vote on a stupid turd sandwich is simply wasted. And to even consider not voting!? Joe… do you know how many people died so that you could be given a choice between a Giant Douche and a Turd Sandwich?

      JOE SIXPACK: Sorry honey, I’m not voting. I think the whole thing is stupid and meaningless.

      COSTELLO [with haughty arrogance]: A vote for Giant Douche means cleansing away the debt sins of Turd Sandwich! Only Giant Douche has the economic credentials to steer the state through the stormy waters!

      LABOR CRONIES [in response]: Turd Sandwich provides voters with the complete package! The turd and the coin… and the lettuce and the olives! Vote 1 Turd Sandwich!

      PLAIN JANE: Do you see now Joe? It is clear that a turd sandwich would simply be an embarrassment and a disaster for the state.

      JOE SIXPACK: You just don’t understand the bigger picture Jane!

      PLAIN JANE: Are you calling me ignorant?

      [Cut to polling night. Joe Sixpack and Plain Jane are watching the TV telecast in anticipation of the victory declaration]

      ANNOUNCER: It’s pretty close, but it looks like Giant Douche will win his second term and have a ‘mandate’ for ripping the state a new a-hole.

      JOE SIXPACK [distressed]: Oh No!

      PLAIN JANE: Have you learned the importance of voting now hon? You have been given the right to choose between a douche and a turd; classic democracy in action. Unless you put that freedom to the test and decide who you like best then you are robbing yourself of your inalienable rights as a citizen.

      JOE SIXPACK [in a resigned tone]: I see clearly now. It is better to reinforce the Giant Douche/Turd Sandwich false duopoly than to waste my vote, because it is usually the only choice I will have in this corporatocracy. Despite this, I still think you need to consider changing your vote in the future for the opposition.

      PLAIN JANE: Are you serious? Your proponent is simply a turd sandwich…

    • Send in the clowns… Patrician i have been wanting to ask about Huf-haus. Is there a similar business in Australia that you have used? I love there work.

      • The Patrician

        I contacted Huf Haus and definitely no service to Aus at this stage.

        From what I have seen there are serveral small Aussies trying but no-one near Huf standard to inspire me with confidence.

        The Huf key for me is in their build quality, systems and volume. There are numerous pre-fab manufacturers of varying quality in Aus but none offer the complete service to the standard of Huf.

        There is a niche in the Aus market for the taking.

      • Alex Heyworth

        I’m sure you are right, TP, but Prebuilt, Modscape and Ecoliv all look ok to me.