Weekend Links, Sundries, and everything else. December 6th – 7th 2014

sheep_race

Hi all.. unfortunately it’s going to be a single post weekend. Both Gunna and myself are otherwise engaged with end of year responsibilities.

Global Macro / Markets:

Americas:

Europe:

Asia:

Local:

Other Random:

Science & Environment:

Technology & Medicine:

History & Society:

Meanwhile back at the ranch:

 

Comments

  1. migtronixMEMBER

    That cyber espionage group gaming stock markets story is pretty funny, coulda sworn they’re called the NSA…

    • We’ve underestimated the value of the FTA apparently. He won’t tell us why. Anyone know what the benefit might be, because I just can’t see it myself?

      Foreign inflationary capital, AUD impact, foreign materials, labour, end product that can’t be accessed by locals………where’s the benefit?

    • Private companies do not serve to protect the interests of the public, only to profit and why should they care about locals when all the people with the $$$ are foreigners. It is up to the government and council to address the issue of affordability. Why does everyone accuse foreign buyers of driving up prices? What about China? Their property market is out of reach for the average citizen, who do they blame? foreigners? We’re always looking for something/someone to blame.

      Property is expensive because the costs of materials have sky rocketed over the past 10 years and the high cost of labor. With the huge drop we see across the board in commodity prices, I think we might see some relief soon! The average net profit a project builder takes home is roughly 10% of revenue. That’s very low…

      • wrong! the cost of construction has remained stagnant in Australia, it’s all land costs.

        agree about blaming others. no sense in blaming the buyer, that’s just stupid. blame shitty policy and enforcement. institute a LVT, enforce foreign investment rules.

      • @joonix,

        You should rephrase your term stagnant to cost cutting and lower standards. The industry has been relentless in taking out skill labour and utilizing materials and systems which cram down prices.

        At some point the diminishing returns effect – everyone – as RE is driven by REMBS volumes before all else.

        Skippy… pretty funny to see some blame investors and owners when the table is set by loan mills under the oversight of financial backers.

      • The Chinese screwed over their own people for greed, they didnt need foreigners. We are encouraging and importing the very same people to destroy our own housing market in the name of greed.

        The cost of materials are not the problem.

    • For over 200 000 years humans have provided and cared for their kids’ futures. Until now.

      So proud to be part of the most disgustingly selfish generation in human history.

      • Solar Powered Car goes 500 miles
        these guys from UNSW are sourcing crowd funding through Pozit http://www.pozible.com/project/188925

        I thought it worth mentioning as we need all the innovation we can get in Australia.

        I have no involvement at all apart from being Australian and concerned with the way our fossil politicians are treating our youth and backing Industrial Age energy sources.

        All the best

  2. A recession/slowdown without a bank shock/collapse combined with a rate cut will not lead to a significant property market decline, I’m afraid.

    There are many people on the sidelines who desperately want a house regardless of the investment / valuation aspects. They’ve saved up deposits but not yet enough.

    White collar jobs generally hold their ground in recessions, remember, not everyone loses their job.

    What causes a crash is when banks seize lending. Once that happens, you can’t get credit and it takes years for banks to recapitalize. Only in 2015 are US banks starting to ease up on very strict lending standards, a full 7 years after Lehman failed.

    People forget that GFC 2008 was not about a GDP recession, it’s about a credit crisis. Everything else that happened was symptomatic of a credit crisis, not the cause.

    Considering the govt has guaranteed the banks, RBA is going to cut rates, and boneheaded pollies will probably throw in a FHB grant … I don’t see a property market correction, and I hate to say it. Best we can hope for is growth below inflation.

    • Agree. House prices are continuing to rise. If politicians start selling, sell. While they own, they’ll sacrifice all else. $15m visas should ring alarm bells.

      Housing is not going down.

    • “Considering the govt has guaranteed the banks, RBA is going to cut rates, and boneheaded pollies will probably throw in a FHB grant … ”

      —joonix

      The G20 initiated the ‘bail-ins’ at the 2010 meeting and was agreed upon at the 2014 meeting in Brisbane.

      In the next situation of insolvent banks as we had in Australia in October 2008, an emergency situation can call on awaiting legislation overnight.

      There will be no bank ‘bail-out’ and people who lend money to banks(depositors) will line up with the rest of the creditors.

    • I think you’ve got your cause and effect confused – the credit crisis in 2008 didn’t cause the crash in the US property market, the crashing US property market caused the credit crisis.

      The US housing bubble topped out as early as 2005 and by 2006 it was clear that it was experiencing a severe correction. This was all a good 2-3 years before Lehman collapsed in late 2008 and credit markets froze.

      I think you also underestimate the fickleness of property demand. A very large proportion of those people on the sidelines want a house because they expect prices to continue going up, and they’re terrified of being locked out forever. If prices are going down and look to continue going down, sentiment changes and a lot of that demand evaporates in to thin air.

      This may be especially true given the ridiculous levels of investor activity in Australia’s market, which i believe is a whole different dynamic to that in the US. When that sentiment changes from inevitable price rises to inevitable price falls, there’s a huge number of negatively geared investors who will staring down the barrel of years of sustained losses.

    • migtronixMEMBER

      F#cking ABC – giving a free and unwarranted advert to the Premier.

      KKR’s investment allows Sundrop Farms to scale its existing operations in Port Augusta, South Australia, by financing a 20-hectare greenhouse facility which will produce more than 15,000 tons of vegetables annually for markets across Australia. Sundrop and KKR intend to develop a hub of agricultural innovation for arid climates in Port Augusta which will allow for further development in countries with similar environmental conditions. Further to those goals, KKR’s investment in Sundrop Farms will also support its plans to expand into the Middle East, North America and other supply-constrained markets around the world.

      Turns out KKR — private equity loaded up with QE anyone? — are the ones who are making this happen and will reap the rewards (rightly so [except for the aforementioned bit about QE]).

      So here’s my issue my folks; I am 100% certain that the only reason the state govt got involved was because KKR knows how to fill all the right forms and grease all the right palms and talk to all the right media managers. So this idiot government that is hemorrhaging jobs numbering in the tens of thousands throws six million bucks at three hundred (well, two hundred actually, one hundred are ephemeral construction) and gets to look all forward looking and innovative — but really they didn’t do anything and consequently will not reap any reward, that will go to KKR and hopefully Mr Saumweber, who will probably set up the next lot of farms o/s.

      Why am I banging on about this? Well to tie it back to my comment above, when I had a three day long argument with Swiftly about how Australia could leverage innovation in the industries it knows well (Ag in that case) if only government would get out and look for and promote said innovation – as opposed to wait for someone to organise a six million dollar photo op – then we could strive to be leaders like the Netherlands, whose government very much supports innovation and get out in front of it and as far I know isn’t particularly photo-opy about it.

      https://au.finance.yahoo.com/news/kkr-partners-sundrop-farms-groundbreaking-230000315.html

    • Mig,

      I agree.

      The hardest part is trying to explain the benefits when most of the population have no idea that the current status quo is a wall of clown town mirrors.

      Of course Australia cannot possible ‘be smart’ or ‘be productive’ when current consumption is floating on a cloud of unproductive capital inflow happy gas.

      The gas has been flowing for so long that few people ask why do we ship millions of towns of raw materials when we could have a couple of robot factories binding or ore and coal into ingots and shipping those or more processed goods.

      Haven’t they wondered how Japan and Korea still have steel and ship building industries but island Oz stuffed to the gills with top quality iron ore and coal does not?

      And they are right – why would anyone turn up to work when their credit card is paid during the night by asset sales – assets which they have never seen and no bugger all about.

      Any change must begin with making sure that people understand the ‘full retard’ business model driving Oz.

      Most people simply do not understand why we have little secondary peocessing or manufacturing. – they assume it is just some stuff that happened and not the result of specific policy choices.

      • Maybe that’s the best short version of the problem I’ve seen yet!

        Amazing that we can’t even get Macrobusiness, i.e. the site governors, to even comment on this fundamental problem! Suppose it shows what chance we have with teh rest of the world – I’ve got almost 50 years of experience to attest to the problem

      • Steel I can kind of see as an Australian industry but shipbuilding?

        There ain’t no Australian shipping industry to buy the damned things, so doesn’t seem likely.

        Then again, I guess there ain’t much of an Australian manufacturing industry of any kind to buy the steel, so…

        Also, pelletised iron ore is far easier to load into a capsize bulker than slabs of steel.

  3. Mmmmm and still no real MSM coverage of the Nuclear Dump deals happening or the French waste due back here soon…
    Tender is open as I understand it.
    How much projected revenues? In the early days Howard thought a possible $100 billion.

    The only news is that is will not be on Central Land Council land…
    http://www.sbs.com.au/news/article/2014/11/07/no-nuclear-dump-nt-central-desert

    Last we heard from the govt was that it was ‘open season’…
    http://www.abc.net.au/news/2014-10-02/nuclear-waste-dump-muckaty-station-pastoral-ian-macfarlane/5786338

    • This is good. Glad to see the engineers are so respected and that the Australian culture and education system can product some clever people with high standards. Shame there aren’t more opportunities here for them, and lack of a domestic investment/support structure for those who seek to build their own companies.

    • Check out print Sunday age sport for coverage of 200 odd Australian automotive students in sae racing comp. wonder how much of a future something like that has post 2017?

  4. http://www.macrobusiness.com.au/2014/12/raise-taxes-to-undo-howards-budget-folly/

    Yesterday people were saying an incompetent government won’t be able to keep the ponzi going. I think they’re wrong.

    It’s not hard to open the gates to rich people that want to come to sunshine, freedom and political “stability” (for now).

    We’re not Ireland. Who would want to emigrate there?

    I’m with @Flawse. This could go on for a decade and there’s no need for competence. In fact incompetence (and of course self interest) is the recipe for rising house prices and that’s exactly what we’ll get.

    We’ll sacrifice all else (and have already proven that) for rising prices. There’s lots more resources to sell at bargain prices, we can import cheap labour to make it happen, there’s lots more assets to sell including housing, there’s millions of rich people that want to come to Australia, mostly with ties already here.

    Sydney and Melbourne are now “global prime real estate” because we’re too selfish and politically dumb to stop it.

    • I do some work in the US immigration area and when I speak with wealthy clients, I propose Australia as an easier alternative for investor immigration. I still haven’t heard any interested, one Indian flat out said no. Take it for what its worth, but not everyone wants beaches, and Australia is no closer to India than the US. The US is better for an investor and an entrepreneur and has areas with lower COL. Plus, SoCal has a superior climate to Sydney and is devoid of ethnic tensions.

      • @joonix..Thanks for that.

        It’s a big world though. There’s plenty that want to come here, maybe they treat it as a little holiday home in Sydney.

        If I had millions I’d hedge my bets around the world.

        These people are already rich and have their fingers in pies all over the world, they don’t need Australia for opportunity, just leisure.

        http://time.com/2852740/china-millionaires/

      • @coolnik…I agree with them. Australians are racist because they’re scared.

        I’m scared, but I’m certainly not racist.

      • The Indian perception of Australians probably comes from tales from call centre workers.

        I suspect that the sound of an Indian accent on the phone is now sufficient induce instantaneous stereotypical Tourette Syndrome symptoms in most Australians.

        It’s more fun to get them to hang, like the time when one rang and my response was “Oh, thank god you rang, I was just about to call for a male prostitute.”

      • migtronixMEMBER

        I don’t know mayan I love the Indian debt collectors “may I confirm your address?” “can I confirm yours?” ‘my address is irrelevant sir… ” ” so is mine to you, are we in the same jurisdiction?” “sir my clients inform me…” “Well your clients can get in touch with me..” “… Click”

      • One take is that they are actually considering their kids future education and employment options.

        In that regard a US passport is probably far more valuable than a Aussie one especially if one has a positive outlook on STEM or IT fields.

      • I have a young friend who is a bit of a comedian. He drove an Indian bloke so far round the bend one night the bloke said ‘Fuck your mother’ My young mate instantly replied ‘That’s a bit rough! You haven’t even taken her to dinner yet’

        I wish I was that quick.

    • Basically it boils down to this. When everyone is trying to sell, the govt will provide buyers (to sellers) in equal number (at least) from somewhere, or itself become everyone’s buyer of last resort.

      Fairytale stuff.

      • @ortego “When everyone is trying to sell, the govt will provide buyers (to sellers) in equal number (at least) from somewhere”.

        Exactly. The Irish government would have done that if they could. It’s very possible and is probable in Australia.


    • We’re not Ireland. Who would want to emigrate there?

      Who wouldn’t want to emigrate to Ireland?

      They’ve got Bushmills, and it’s quicker to fly to Beijing from Dublin than from Melbourne (not to mention Europe and North America)

      Also, it seems like Bono lives in the US now, so that should put the biggest possible objection to bed.

      • @Statsailor

        “quicker to fly to Beijing from Dublin than from Melbourne” Most people wouldn’t know that including me.

        “Bono” Funny.

  5. migtronixMEMBER

    Here’s a quirky observation for you lot:

    I reckon #libspill wouldn’t even get trending on twitter anymore its so much priced in! Bwaaahahahaha Libs failed spectacularly hard — and don’t let 3d fool you with his attempt to rewrite history about “there some things that didn’t need to be in the budget”, he was running the leaner line HARD against anyone but ESPECIALLY those “who are best suited to reposition over time”.

    It wasn’t a failure of message 3d is was the indefatigable arrogance this neo-con cohort of Libs paraded to the nation daily – they had arrived and were going to decide what Australians really wanted!

    Never mind that Australia is a progressive, secular, nation with a strong tradition of scientific inquisitiveness and achievement, no they had decided it’s actually Baptist southern USA and everyone was going to like the hard-religion agenda. Insanity!

    Then worked shady deals to beam about burying Gillard’s Tax when, again, the majority of Australians, even if they didn’t like paying it, pretty well accepted “the narrative” (I hate that phrase but clearly I’m referring to AGW) of why the tax was necessary (if only for the sake of international cooperation)

    Australia’s national character is almost perforce an internationalist one, where Australia’s see treaty obligations as defining their place in the world, and again this government decide to triple down on the US alliance and made Australias neighbors deeply suspicious and cooled relations considerably. To what ends? To give NSA more powers?!?

    And, of course, it just goes on and on and on and on. Some of the worst eighteen months politics has ever seen…

    • Great post.

      The idiots don’t dominate Australia like they do in the US or as much as the cultural cringers would make you think. Generally a much more reasonable and sensible culture, very much less reactionary and extreme.

      It’s been good to see the push back in Parliament as well as Public. Good to see they aren’t taking this hook line and sinker. Bush and Corporates were able to fully smash everything down without much opposition in their early days.

    • I have been quite impressed.

      The determination of the ideologues in the LNP to steer clear of the dreary battler seducing pragmatics of Howard in pursuit of a clean simple vision has been enjoyable and something that generally you don’t see outside of University Campuses where shutting down the ‘Women’s Room’ is the often the main objective of the lads in striped shirts and RM Williams.

      Oz Politics needed a bit of True Believer hijinx.

      Nothing like a Blue Blood rumble !

      • Here’s a hare-brained scheme I’d like to run past you Pfh:

        When national service is talked about its always training kiddies to die — what if instead it went something like this;

        The CEO of every corporation than generates X income in Australia per annum has to do 2 weeks service in Treasury every 3 years, this way instead of capture of government by industry we might start to get government capture of industry via their being involved in more ways than political donation. This is kinda how standards bodies work anyhow. They might start individually to realise the state they are collectively putting Australia in. Thoughts?

      • migtronixMEMBER

        BTW pfh on re-reading your post I think we had plenty of True Believer rubbish with KRuddy.

        Perhaps what we need is actually mundane management?

      • Well KRudd did market himself as Howard but younger with cuddles.

        “I am an economic conservative”

        And the current crop (Husic, Wong, Swan, Chalmers etc) seem very excited about scoring an invite to the Fin Soc end of year keg party.

        I am reading the AFR dead tree edition and in Perspective Ms Tingle is explaining that the LNP ministers are literally in shock that there is an economic threat on the horizon.

        Kid you not.

        Without an extended digression on conspiracies (I think Skippy is leaving you in his dust on that front lately 🙂 it does tend towards profound stupidity and ignorance as an explanation for LNP performance to date.

      • Mining BoganMEMBER

        Stupidity and ignorance.

        These morons actually believe the myth that they’re better economic managers, and that’s even when shown the weight of evidence that disproves it. They believed investment would boom when they took over just because. Not one whit of understanding of economics among them. Morons.

      • MB, while putting on a great display of incompetence this government is actually very dangerous. Incompetent governments can bumble along, but are just that: incompetent. A dangerous government is very different. At an IPA function 12 months ago before the election, Abbott spoke about implementing many of the policies that appeared in the budget while publicly saying otherwise. Shit like that is dangerous and shows that true heart of the ideologically driven government. Abbott will pursue the agenda regardless of outcomes. No wonder the back bench and the more level headed types within the party are getting nervous.

      • @ Pfh007,

        If you want to extend the CT label, in my case, it would be expected with some fleshing out. I don’t take kindly to drive by insouciant quips.

        “it does tend towards profound stupidity and ignorance as an explanation for LNP performance to date.”

        Nope.

        Money has set the playing field for decades, that some thought short term false positives vindicated their ideology – is – a case study in group and individual psychology – sociology.

        Skippy… in the past some stuff could just wash, tho, this time 7 billion people and the orb say…. NO.

        Case in point:

        “Herman and I went to the [Carter] White House and it was explained to me, that this was the whole idea of tar sands. The aim is to use so much water that it creates a drought in America. The drought was seen as doubling or quadrupling grain prices. In essence, the idea was for America to pay for higher priced oil with higher priced grain. This would support the balance of payments enough to finance U.S. military power throughout the world. In the process, of course, it would starve as much as a quarter of the population of Africa and Latin America.”
        – M. Hudson

        http://michael-hudson.com/2014/10/think-tank-memories/

      • migtronixMEMBER

        Money has set the playing field for decades, that some thought short term false positives vindicated their ideology – is – a case study in group and individual psychology – sociology.

        Otherwise known as a conspiracy?

        *shakes head*

      • History is not a CT mig-i.

        Such as money equals votes in America through the legalizing of bribery via Citizens United.

        It was the same for the rail road Barons back in the day, their story’s are legend in political machinations. Which imo blew up quite spectacularly in the end, with cascading bankruptcy’s all over the country.

        In addition the Liberty League was interfaced with a variety of fascist who tried to use their collective wealth and power shape sociopolitical reality, as they saw fit. Obviously their wealth was the only validation needed to prove their ideological bent, all other disciplines of intellectual inquire were rendered moot. Funny thing is it took a mercenary to thwart their plans, had a gut full and probably did not want to end their life with that, on the plate too.

        To this condition many have coined the term corporatist agenda, with the sociopolitical application as inverted totalitarianism, and its metaphysical placement as neoliberal.

        Skippy… mig-i your inability to provide context to any opinion or “belief” you hold is not a good sign of intellectual capacity or mental flexibility. Must have something to do with slavish devotion to some ideological [one size fits all metaphysical treatise]. A condition also know as a religious stance.

        PS. My comment was directed at Pfh007, I think he can reply for himself.

      • Skippy,

        “… don’t take kindly to drive by insouciant quips….”

        LOL- They are your stock in trade.

        In any event I will leave it to others to decide what if anything you contribute might warrant the CT label.

        Somewhat ironic that despite your fundamental concerns, many of which I share, and your characterisation of historic events and the roles of the players involved you would reserve a role for private banks in the endogneous creation of fiat money.

        pffffft – when the highway beckons why linger in the roadhouse – when the burgers may better but still pretty crook.

      • See its always about monetarist money obsessions and not operational reality’s. The history of bimetalism or reserve currency is epic in its barbarity, it had zero effect on stopping anything topical to human suffering.

        FYI Fiat is – our – currency, now if you want to discuss the events which lead to it being sequestered for vested interests, we might begin to have an informed conversation. But that can’t happen because some have this ideological predisposition which leads to object fetishes. Fetishes which become a singularity of thought, all things can be reduced to the form of a medium of exchange from an acute perspective of an atomized individual.

        Skippy… one would think antisocial criminality would better serve as a topic than how one feels about stuff and how it might store expectations.

      • “………if you want to discuss the events which lead to it being sequestered for vested interests, ……”

        Not really, we know that.

        My question is why do you support an ongoing role for those vested interests in the creation of the fiat / public money supply?

        Why not just take them out.

        Much simpler to explain and much easier to frame.

        Public currency for public purposes – complete control by the representatives of the public.

        Private Bank or crypto-currencies for those who choose.

        People can freely exchange between the two.

      • Firstly I don’t support the vested interests as they have little regard for anything other than themselves. Secondly institutions should be bound by social contract – license as it is – our – state and not the plaything of rank ideologues or socially destructive enterprise.

        Bill Black is quite befitting in wrt issues such as control frauds, both banks and corporate, and discharged his public service with ethical purpose. Too the degree that he brought on the ire of both politicians and industry participants.

        As far is money goes anyone can create it, you just have to find someone to take it and in the end pay tax in the national currency [albeit tax needs serous reform]. My main issue is when the money is used for criminal activity’s, which bitcoin has a propensity to do. Now as far is fiat is concerned, yes it has been used for many nefarious and malignant activity’s, both banks and corporations have utilized it these ends, yet it leaves a trail that can be used in court.

        Part of the problem seems to revolve around the ad hoc nature the modern monetary system, due to the hang overs from the past, that and some desperately don’t want others to become to informed. It might lead some to getting ideas which ends the party for others.

        Fiat does not provoke bad anti social behavior, that would be the realm of low ethical philosophical enabling. So the question is – what philosophy sets the enviroment and who supply’s it, and why.

        Skippy…. its quite strange that with the knowlage base we posse today, that so much of debate is centered around 16th to 18th century metaphysical musings…

      • You talk utter crap sometimes/often skip.

        Leaves a trail that be used in court? Like Iran/Contra????? Un-fucking-believable!

        How the US sent $12bn in cash to Iraq. And watched it vanish
        Special flights brought in tonnes of banknotes which disappeared into the war zone

        http://www.theguardian.com/world/2007/feb/08/usa.iraq1

        You’re full of it merc!

        As for Bill Black? He sent thousands of bankers to jail and less than twenty years later they were too big to fail — that worked really fucking well didn’t skip?

        Utter lunacy…

      • Mig-i,

        Who is the ones with the governments ear… voters or the ones with the money use to bribe them…. cough donate??? ICAC is a start I guess.

        Are you saying mig-i that fiat invaded other country’s, that fiat has agency all of its own, that it is animated and possesses cognitive ability’s. I never knew…

        Skippy…. mig-o… there is no deus ex machina, everything is political, that some think they can concoct a reality without it, are fighting the entirety of human history. Good luck with that.

      • So your concept is to abolish government and then what, the corporatist play nice.

        Skippy… actually a lot of what you promote is corporatist friendly IMO.

      • Society is – us – always has been and always will be. That some believe its a relationship between themselves and a creator myth, is another story altogether. We have evidence going back several hundred thousand years to back it up.

      • @skippy much of what you write strikes me as Barry Jones revisited, Absolutely no insult intended, I respect the guy enormously but I always find that as complete as his ideas / theories are, they only makes sense in some alternate universe a kind-of parallel reality …trouble is there’s no way to get from here to there.

        I suspect Pf is trying to map out a middle road one where currency has meaning and is not simply some abstract infinitely fungible concept. Personally for this sort of world I prefer a simple to implement scheme where Import credits must be earned and are the property of exporters. This creates a sort of Bancor international goods/services exchange medium which is outside the direct control of banks. Of course it’ll be gamed (transfer pricing being but one example) however the big difference is that those gaming the system will be motivated to keep the local production beast alive (transfer pricing makes no sense when there is absolutely no production being undertaken within the country). That my friends is about the best we can hope for at the moment.

      • migtronixMEMBER

        Fiat does not provoke bad anti social behavior, that would be the realm of low ethical philosophical enabling.

        Then why does bi-metallism/monetarism provoke bad anti-social behaviour?!?

        It’s always circular with you, where if your heros are misogynist racists that doesn’t matter, but if someone else uses a phrase that once appeared on the buffett menu at a MPS dinner party late August, 1958 in up state New York, well they must be drinking the AET kool-aid…

    • Wow Mig, you actually wrote something worthwhile.

      See what you can do when you slow down?

      Less is more my friend.

    • Putting all politics aside, and for the sake of our country, I long for some inspirational leadership right now. Its not a want, its a need.

      While I’ve kind of enjoyed the MB-view of the Australian economy playing out, and watching the likes of Gittins, Pascoe, Bloxo, Aitken and Mad Adam squirm as the whole tragedy unfolds, now that its actually happening its pretty bloody depressing.

      Who can lead us out of this morass? Obviously not Abbott and Hockey. Shorten is thoroughly underwhelming and the election is two years away anyway, and we need change NOW. So it has to be Malcolm.

      I’m hoping for some truly catastrophic polling before year’s end that gets the hard heads in the Liberal Party counting the numbers over the summer break. If the election was closer Abbott would be in serious trouble already, but with two years to go, most of the backbench would still have some hope of an Abbott recovery. It was a measure of just how much the party hated Rudd that they left it so late to ditch Gillard when it had been obvious for months the election was going to be a massacre, and the hard-right of the LNP hate Turnbull every bit as much as the ALP hated Rudd.

      Last night there was another poll shocker for Abbott, 55-45, LNP down 4.
      https://twitter.com/GhostWhoVotes/status/541191796236103680

      And it looks like the ALP has surprised everyone in winning the Fisher by-election:
      http://www.adelaidenow.com.au/news/south-australia/south-australia-labor-party-on-brink-of-victory-in-fisher-by-election-cliff-hanger/story-fni6uo1m-1227147211844

      Extraordinarily, people with polar opposite views such as 3d and myself would like to see a Turnbull ascendency. Hopefully those who distrust Turnbull because of his Goldman Sachs background can appreciate that he is the least bad option for the foreseeable future, and light years ahead of the alternatives.

      God help us all if Abbott is still Prime Minister in two years time.

      • “You can’t stop immigration because without immigration you’d have no growth’ Turnbull

        So the economic policy of the nation, under Turnbull, would be some sort of expanded population/RE/Bank ponzi while flogging natural resource assets and established business to foreigners to pay for it all.
        FFS There has to be somebody somewhere with the slightest grasp of reality?

      • flawse: Agreed, that is the most troubling of Turnbull’s views, but Big Australia is a near unanimous policy amongst our elite apart from Kelvin Thomson.

        Again, MT is the least bad option. What do prefer, appallingly bad policy across the board, or mix of mainly good with a few bad?

      • GunnamattaMEMBER

        3d, believe it or not I have spent yesterday and the eve before down the Vic/SA border – about the primest Torynuff country there is, I spent time with family connections of one former PM and three Ministers – all Torynuff.

        There seemed to me to be a mood for blood. Torynuff blood.

      • Frankly I’d prefer Senate blood. BBQd Lambie for entree.

        As I said I now suspect Abbott/Hockey terminal. I retain the view the Budget was reasonable (not revolutionary and possibly needed a bit of gusto) but brought down by the GP copayment being levied at an odd number and proceeds not being being applied to revenue. Secondly youth welfare changes were unnecessary, easily portrayed as mean spirited. Deficit levy on high income earners clearly unfair.

        Extraordinarily minor quibbles, (easily rectified) and yet what a brouhaha erupted!

        Abbott and Hockey failed the big sell and lost control of the agenda entirely oblivious of the circling elements of the media who loathed them, the bloody mindedness of Labor to thwart Supply Bills and the narcissistic loons in the Senate, high on their own supply – Senate can’t initiate Supply Bills – it is not the seat of Government…

        It’s time for an articulate new team free from pre election promises, capable of defining the challenges facing the nation, capable of bringing the media along with them – this is essential. God knows where we’d end up if Shorten and the Rejects regained power in 18 months time. Our children and theirs would pay the price.

      • Whatever 3d live your own history, the Tories attempted to reinforce the worst parts of the budget – you did this too remember? – with pejorative assignations and nebulous pursuit of “narrative” instead of tackling tax, which you implored us over and over again to just sit tight and wait for the next budget/recommendations. You were spectacularly wrong and are still trying to hold onto any credibility. You have none.

      • Extraordinarily, people with polar opposite views such as 3d and myself would like to see a Turnbull ascendency.

        You shouldn’t find it extraordinary, you should find it scary.

        Turnbull has demonstrated over the last year that he is quite happy to let any principles he may have fall by the wayside to deliver the message he is told to.

        Consequently there is little reason to expect any meaningful change in policy from a change in leader. It’ll be the same turd sandwich, just in a craft sourdough whole loaf rather than high-protein, high-fibre, overprocessed sliced white.

        “Least bad” ? Maybe if he were the leader of a hung parliament with a raft of independents and microparties in the Senate to keep a check on things.

      • Rubbish. I said from the outset the youth changes were harsh, the copayment fee medical research fund ill conceived and PPL whilst nice in theory timing was not.

        The Abbott Government flagged early on the forthcoming Tax discussion paper and it was always ambitious to expect significant change prior to this. I have not been among the multitudes here at MB castigating the Abbott government for not acting on NG super GST without appropriate discussion. If they had can you imagine the outcry from every quarter – particularly as such relatively minor Budget policy attracted such hysterical response.

        It was politically juvenile to have expected significant tax change without discussion, debate and sell.

        First Budget should lay direction; second implement direction and third, reassess, adjust if necessary to ensure long term objectives on track.

      • Sure you did, “harsh but needed”, “best suited to reposition over time “, “healthcare should be a shared responsibility”….” Mig take your meds”…

      • Now the PM is announcing changes to PPL – if correctly reported – to make it ‘more economically responsible’. Wtf. What exactly is the messaging there! If Abbott actually said that, on PPL which has had strong critics, conceding it irresponsible as initially proposed is an own goal. Add to the mix some of the 1.5% levy on corporates footing the bill to be diverted to childcare, further complicating the sell.

        Another round of ammunition delivered gratis to Labor and its media acolytes.

        A consistent coherent communication strategy is desperately in order.

      • Mig

        I think the Budget could have been stronger.
        I agree with the GP copayment.
        The meds have calmed you immeasurably.

        Well done.

      • General Disarray

        A leadership change will only help them short term if they don’t move away from the delusional ideology over reason shenanigans they’ve been pursuing. Frankly, if that’s the ‘agenda’ they need to gain control of, they are screwed.

        This is a good example of why the LNP rusted-on are sinking the party: …youth welfare changes were unnecessary, easily portrayed as mean spirited. Deficit levy on high income earners clearly unfair.

        See, the problem with the youth welfare changes is not that they were ‘mean spirited’, it’s that they were easily portrayed as such. In contrast the deficit levy on high income earners was clearly unfair, never mind it being a temporary measure, and a political move to provide cover for what was otherwise an open attack on the less well off.

        Another: Abbott and Hockey failed the big sell and lost control of the agenda entirely oblivious of the circling elements of the media who loathed them…

        It’s this type of delusional view that’s really sinking the LNP. The rusted-on can’t seem to see the product is the problem, not just the sales pitch. Also, it’s remarkable that those who cling so tightly to the Murdoch media could assert unfair or biased media coverage is a problem for the government. I guess when you’re used to consuming your news with a flurry of pompoms and a big shout of “Go Team!!” any criticism might be disturbing but this goes back to the key issue – being unable to understand why the product is the problem.

      • Some ideological conviction is necessary. Some belief that the policies you enact lead to an economically robust, equal opportunity, innovative society capable of supporting those in need and rewarding hard work and competitive enterprise.

        The Budget had a couple of missteps, relatively modest and rectifiable.

        Problem was Abbott and Hockey lost control of the agenda when the ‘Unfairness’ meme took hold. Fact was very little unfairness existed in reality but poorly conceived ideas like the youth welfare changes ignited/confected the equity issue. Abbott’s pre election utterances have come to haunt him, the result is a PM and Treasurer always on the back foot, playing catch up.

        The biggest error: a delusional underestimation of the extent of much media hostility toward the new Government, toward Abbott in particular. From day 1 war was declared by ABCFairGuardian.

        Combine that with an inability to gain control of the public media space, to successfully articulate the message and you have problems.

        Combine that with a Senate controlled by powermad loons aided by Labor and you have real problems – which is why you must have the media on side – so powerful is their influence on public opinion.

        It’s fixable 😉

      • I retain the view the Budget was reasonable

        Not all the measures in the budget were outrageous in themselves, what was outrageous was the complete absence of shared burden (apart from the deficit levy for high income earners, which seemed very much an afterthought to make the budget appear “fair”)

        I actually agree with you that the deficit levy is poor policy, it would have been much better to have cracked down on tax expenditures and kept a flatter income tax scale. Indeed, I think the government would have widespread community support for closing down the rorts, but instead they went in the opposite direction by rolling back Labor’s perfectly reasonable changes to FBT and super incomes.

        Not only that, they abolished the carbon tax and kept all the compensation (#$}?!)

        This isn’t about selling the message, its about poor policy choices. Everyone knows what needs to be done to fix the Australian tax system:

        1) Simpler, flatter income tax scales
        2) Remove all the tax expenditures and rorts
        3) Broaden the tax base and reduce reliance on income taxes.

        Hockey completely failed to do this. Completely. There’s no denying it. If you can’t do these things six months after you’ve been elected in a landslide when can you do it?

        He failed. No excuses. Time for someone else to have a go.

        Lets hope Malcolm has a Fightback! type document in his back pocket.

      • The biggest error: a delusional underestimation of the extent of much media hostility toward the new Government, toward Abbott in particular. From day 1 war was declared by ABCFairGuardian.

        If you actually believe that you are so far gone you are beyond help.

      • Some ideological conviction is necessary. Some belief that the policies you enact lead to an economically robust, equal opportunity, innovative society capable of supporting those in need and rewarding hard work and competitive enterprise.

        Great. Fine. Agreed.

        Show me what Hockey did to deliver this?

        Treasury would have been screaming at Hockey to do the things we all know need doing:

        1) Broaden the tax base
        2) Simplify the tax system
        3) Remove the distortions and rorts
        4) Reduce reliance on income taxes.

        He did none of that. He went backwards on closing down the tax expenditures. He narrowed the tax base by removing the carbon tax and MRRT. He increased the reliance on income taxes.

        What a gutless effort.

        If you’re gonna be a reformist government of the right, then at least do a Hewson and produce something worthwhile like Fightback!

        Come on 3d, tell me I’m wrong.

      • Tax reform is notoriously difficult at the best of times. Extremely naive to have thought a new government in its first Budget would tackle a raft of measures untouched by the previous incumbents six year dynasty!

        Abbott flagged early on a determination to address tax reforms and the Murray Report is the first tranche of debate. Ideally this would have followed on from successful Budget 1 implementation.

        I agree and always have that a couple of Budget measures were ill conceived. Worthy of the histrionic response, no. Simply rectify and move on. Of concern in regard to PPL for example, the Government appears to be digging itself a new hole. Why aid existing hostility?

        They say things come in threes. Antagonistic media, obstructionist Senate and, sadly, a PM and Treasurer caught in the morass.

        New year, new team.

      • Naive my arse. Stop making excuses for them 3d. They made poor policy choices and you know it.

        You can only do the big reforms very early on. Howard did the GST, Hawke/Keating floated the dollar etc. What have Abbott and Hockey done?

        Their main claim to fame is to have reversed the one tough reform of the Gillard government — carbon pricing.

        Seriously that was about as smart as Beazley’s GST rollback, and history will judge it very poorly.

    • General Disarray

      That seems a fair assessment mig.

      The arrogance is a huge problem but the contempt that flows from it could be more problematic. To lie so blatantly – lie about lying – requires contempt for the audience. It’s possible to get away with this for a short period but not when it’s the governments default position. J Bish is probably the only minister that hasn’t been tarnished by this contemptuous obfuscation.

  6. Hmm Richo faces ICAC…..If memory serves me correctly his friend Medich’s case should be before the courts finally….we all remember the infamous tape or Medich bragging about how easy it was to bribe / corrupt officials which Richo listened to and concluded it was irrelevant.

    Hmm wonder if there’s a deal on offer…squeal on Richo and get away with murder otherwise the man in black becomes some bogans toyboy.

      • The last political speaker on that first clip summarizes all that is wrong with a ‘concerned’ view of the current monetary system – ( i.e.”Let’s keep it the same, but let’s work on it”). She asserts that:

        “We should encourage younger households not to rely on their meager current savings, but to borrow for today’s purchase of a house and current consumption, to be paid back from their future labour”

        Sound good! But they don’t, and they won’t…

        Today’s debts are expected to be paid back, not by the current borrowers, but by the next owners/borrowers who will reimburse the present owners via a transfer of inflation guaranteed capital gains. It will always be the labour of the next generation that is expected to pay for the debts of the present and previous ones if the system is not fundamentally changed.

        If today’s purchase stayed static at today’s nominal purchase price, or even fell, then today’s debts would indeed be paid off by tomorrow’s earnings, and by the very people who undertook that debt.
        Until politicians understand that, we shall continue to rack up debts on a monumental scale for ‘someone else’, and likely one of our children, to pay off, until they can’t. And I reckon that reality is about now……

      • migtronixMEMBER

        That House of Commons link was brilliant, cheers pfh!

        I too would like to commend the Honourable Member for Whickam for introducing the debate — and I second your comment J!

        Here’s a thought; if its true that there had not been a debate on the issue for 147 years, and the Commonwealth of Australia Act was a debated and passed in that parliament much later, has there EVER been such a debate in Australia’s parliament? Serious question.

      • Not that I am aware of but It is possible as it seems that once upon a time more people had a clue.

        Possibly not in Oz though – having a clue is generally grounds for raised eye brows.

        I still cannot believe that they are still teaching the multiplier bull sheezus.

        That is plainly deception.

  7. http://www.theland.com.au/news/agriculture/general/politics/vic-loss-not-feds-fault-abbott/2718709.aspx

    “Vic loss not fed’s fault: Abbott”

    Misjudgment as bad as Workchoices. These are the clowns running our country.

    Even if “Vic loss not fed’s fault” wouldn’t it be smarter to say, we’ve gotten the message? WTF is wrong with these idiots?

    I kind of like they’re this dumb because every day they become a little bit more unelectable and the damage becomes a little more less reversible. Then again, it also means we get the other idiots back.

    Australia needs to absolutely crash before we can recover. That should be clear to everyone watching human nature and voter behaviour.

    There’s still millions of people that have faith in both these absolute party failures. Scary stuff.

    • You really do have to wonder. Peter Hartcher has a spot on piece exactly that; what part about ‘we’re fed up with your bullshit’ don’t these ass clowns get?

      Fractious leaders play an old tune

      Broken promises, stalled reforms, a combative parliament and micromanagement to the point of paranoia: to a weary electorate, it’s all too familiar.

      http://www.smh.com.au/comment/fractious-leaders-play-an-old-tune-20141205-12170c.html

      Bronwyn Bishop concluded her remarks from the Speaker’s chair for the year by saying:

      “Most of all I think that the people of Australia can be proud of what happens here, even with our argy-bargy. It is a wonderful democracy.”

      As she and the rest of the parliament returns home for the long Christmas recess, they’ll discover that the Australian people have another view entirely.

      Amen Peter.

    • Wouldn’t go so far as to say ‘not Tony’s fault’ but I do think the Geoff Shaw debacle meant that the LNP could only win with a truly masterful politician leading the charge and everything going their way.

      It’s kind of like, if I decided to have a footrace against Usain Bolt wearing safety boots, it’s not the inappropriate choice of footwear that means I don’t win.

  8. Hey Mig. Have you got some kind of algorithm that alerts you to new posts or something? I bet you’ve got something going on?

    Tech nerd. I mean that respectfully and kind of jealously too.

  9. Our home just went up for auction and didn’t sell.

    The highest, and only bid was 45k less than the owner purchased it for 5 years ago!

    The speculator is taking it off the market now, presumably because in 2 years time it will have doubled from the original price. The Guv’ment guarantee it.

      • Yep, we rent.

        Even at record low ’emergency’ interest rates, it is nearly half the cost to rent the house. That’s just rent v mortgage cost, not taking into consideration all the other costs associated with owning a mortgage.

      • migtronixMEMBER

        Hey me too, it just threw me that you said “our home” then “the last buyers” 😀

      • We consider it home.

        We may have to put up with Inspections and the possibility of it selling from beneath us, but it comes with free maintenance and we have lots of disposable income to spend on living.

      • migtronixMEMBER

        Wow! Lazy 80k huh?

        Lorax economy housing market – “I’m melting, meeeeellltttiiiiiiinngg… UP”

      • Get in! and in 5 years time you too might be able to sell at a 50% premium.

        ….No?

        Didn’t think so.

        No ‘sane’ person would contemplate this as a viable strategy.

        Which sums up the mental state of the current market quite aptly.

        In-sane.

        Its gone beyond a bubble.

        And no government or god will save it.

      • “The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behaviour akin to that of Cinderella at the ball. They know that overstaying the festivities will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem though: They are dancing in a room in which the clocks have no hands.”

      • @willy_nilly. I love that graph. I think unit volumes are so low it’s easy for the numbers to be skewed.

      • Just collecting the end of year performance bonus for management and boosting shareholder returns. Surely this will provide shareholders with more ammunition to vilify any capital recommendations from the Murray enquiry. Could also be a leveraged expectation on interest rate decreases.

        Pitting the shareholders against the regulators is a good strategy.

    • They never learn. They buy back shares at the top of the market, only to raise capital at the bottom later.

      What are those called who are doing the same thing over and over again and expecting different results?

      Oh yeah, fools, of course!!

    • “Can’t be good”?

      Have they started a motion to repatriate all the Danish owned gold to their home soil yet?

  10. “Why do pollies struggle in business ? – AFR”

    Isn’t it because pollies try to run businesses based on ideology?

    • Perhaps it is because they have to end up taking responsibility for their decisions and actions. Unless they get a nice consultancy gig. Then they can just keep telling people what it is they want to hear.

      • Well that’s a political issue that needs to be sorted, Bitcoin does not address that problem set. Its just another Going Galt exercise in adolescent behavior, usually do to a hyper sense of individuality.

      • “……Its just another Going Galt exercise in adolescent behavior, usually do to a hyper sense of individuality…..”

        Is that your position to crypto-currencies generally or just Bitcoin?

        Who cares what private currencies people choose to use and why the characterisation that requires more ‘unpacking’ than a Betty Windsor Royal Picnic?

        Surely, the bigger problem, though I concede you do not seem to think so, is that the public fiat currency supply is largely controlled by private banks determined to keep it that way.

        Private currencies for private purposes, public currencies for public purposes.

        Why preserve the rotten blending of the two?

        Why object to the purely private?

        You need to break on through to the other side!

      • Private banks are granted license by the state and as the state is the well spring of all economic and social activity, due to its power to create law, all can remedied.

        It should also be noted that a large amount of capital seeking is done out side the traditional banking system, the shadow system is orders of magnitude larger. The Plaza Accord was the launch pad for that condition imo, I did provide a link pointing out the correlation to banking losing the traditional capital markets and then sought out its replacement with C/RE. Which then went spastic with all the free market – self regulating enabling from certain economic ideologues.

        Skippy… the current system was built largely due to repetitive economic crashes out of the 17th – 18th and early 19th hundreds. Then the free market nutters went crazy bringing up the GD, it took the pecora commission and the new deal in the end to sort shit out. Then things started to revert around the 70s, look at me now maw….. same shite… different day… yet some are confused????

      • So now your telling me your a communist???

        As I clearly stated before, both the hard left and the hard right both suffer from the same monetary malady. In the end all you get is a change of scenery, yet its still a case of the new boss is the same as the old boss.

        Skippy… I thought you knew I don’t do ism nor ologys.

      • Alright skip only you know the truth

        Must be quite the cross to bear.

        Skippy… I thought you knew I don’t do ism nor ologys.

        And yet all you do is talk about sociology and psychology and social anthropology and libertarianism and monertarism and bi-metallism, anyone would think you don’t listen to yourself.

      • Sociology and psychology are not rank theological musings about the universal nature of humanity or the universe we reside in. Hell if psychology is such utter nonsense, why do corporatist spend billions a year on it.

        Ologys and ism refer to metaphysical sociopolitical concepts created out of whole cloth e.g. libertarian[ism], commun[ism], Sciento[logy], Capital[ism].

        Look I’m not the one pigeonholing myself by affiliation with sites like ZH, an AET fundamentalist mob [corporatist mouth organ], devoted to ron paul which puts gary north at his house for a BBQ prayer curricle, manic bimetalism bugs, and operates on a high school level of historical knowlage.

        Skippy… when pressed with facts, all you seem to be able to produce is highly specious opinions about stuff… up your game and try a bit harder…

      • migtronixMEMBER

        Sociology is precisely theologically inspired musings, that you think humanity comes with an instruction manual show how far down la la land you MMTers have travelled.

        YYour association with Naked Cap, a MMT pro wall St pro City mouthpiece masquerading as “it’s the user not the tool silly” sociological anthropo reductivism… is deeply revealing imo

      • Skippy,

        Shadow banking is a lot closer to what banking should be about than the current mutant public / private hybrid that is currently called banking.

        If a shadow bank – which is basically just a non banking licence lender – makes a loan that goes dud OR they cannot return the deposit they go broke – like any incompetent risk taking enterprise.

        As for creating a bottomless taxpayer guaranteed solution for banking fractional or zero reserve fraud in the 19 th century that is why we are where we are now.

        It was a MISTAKE.

        You seem incapable of thinking about how risky the MMT approach (not the accounting) is with private banks continuing an endogenous money creation role.

        The only explanation that makes sense, considering you just rupture logic circuits and randomly spouting gibber whenever you are asked to explain, is that a lot of MMT is US based and they have decided that trying to sell govt control of the public money supply is just too hard in the land of the libertarian survivalist gun toting memes.

        Kinda ironic isn’t it.

        I will ask again – what are the best reasons you have for why private banks should have a continuing role in relation to the CREATION of the public fiat money supply assuming they are again permitted to issue promisory notes in their own name.

      • Pfh007,

        The private bank issues is a regulatory problem which is compounded by ideological capture and information arb in the public sector. That can be remedied.

        As far as your shadow system preference I would point out that’s actually when SHTF due to the plaza accord, which then went the full retard with unregulated insurance [thank you rubinites]. The GFC was at the end of the day, the result of criminally negligent risk management through out the entire credit markets [banking and shadowl]. Private sector banks were just a small slice of the total pie and the belling of the cat moment.

        What screws everything up is the cog dis the libertarians suffer when you put the government in front of markets as markets are here to serve society and not the other way around e.g. let gawd sort it out. The whole idea that negativity will compel rational economic actors to not engage in destructive behavior is prima facie ludicrous. Worst part is once the damage is done you can’t go back in time and fix it, capital destruction has already occurred. In addition that was the premise which enabled all the problems we face now, have you forgotten the last few decades?

        Private banks don’t create public money, you should know better or are trying to frame the issue in your preferred window dressing. Private banks create credit assets which are represented in national currency notes, the banks do not have printing presses in their basement. HPM is solely the realm of the sovereign, banks as part of their reserves are required to hold them.

        Skippy…. personally I was pro the Swedish solution, yet the tightly coupled nature of the markets, due to the toxic derivatives, seems to have nipped that in the bud. Largely because rectifying banks does noting to reconcile the shadow system. Heck it would probably increase the shadow sector.

        PS. not all of our dramas are due to monetary issues, ideology set the playing field for market actors. The Lord of the Fly’s mentality compounded with primates on fermented fruits did not pan out so great…. eh. AET and neoclassical ideology has been a massive fail. It just makes one wonder how some could keep blowing themselves up and yet think all they have to do is tinker with how something is created, that if they imbue it with enough divine quality’s, utopia will spring forth eternal….silly buggers.

      • migtronixMEMBER

        The private bank issues is a regulatory problem which is compounded by ideological capture and information arb in the public sector. That can be remedied.

        Theres that textbook gibberish…

      • OK mig-o says stuff…. done and dusted.

        Skip…. reply to your sociology quip in filter so till or not it passes.

        Sociology is the academic study of social behaviour, its origins, development, organisation, and institutions. It is a social science that uses various methods of empirical investigation and critical analysis to develop a body of knowledge about social order, social disorder and social change.

        Skippy… ergo it is an ongoing attempt at describing the human condition and not a proscriptive attempt as you forward.

      • Mig-i,

        Go inform yourself of the problems with monetary systems from the 1800’s forward, its a bloody mess. What occurred to our present system was a hostile takeover by the corporatist who engaged a bunch of metaphysical philosophers to concoct a narrative that suited their agenda. They even had to re brand the academic title of sociopolitical theory to economic science in order to grant the dept a gravitas it never had before.

        Barneys and W. Lippmann were the lunching pad, they had a few hiccups but regained control in the 70s.

        Skippy… hard to tell sometimes if you just suffer a low information bar, rank ideologue that engages in pettifoggery or some bad mix of a bunch of stuff.

    • Oh the irony; Blankfein, Dimon etc oversaw the destruction of trillions then profited on the subsequent bailout and not an investigation in sight.

      • Wow that was bizarre, wonder what price Rogoff thinks gold would go to in that scenario. Cheers for that cee

      • Kenneth Rogoff? you mean the one that got caught out manufacturing data to support an ideological view and was part of the International Monetary Fund’s (IMF) imposition of austerity as a cure for severe recessions. Ken Rogoff, Carmen Reinhart, and Rajan were the leading economists at the IMF who championed the imposition of austerity. The plan that’s working out so well to date.

        The same IS-LM wankery [prescriptive not descriptive of reality] that got us here in the first place guy, that’s just scraping the bottom of the barrel now. He could not even come clean when errors in methodology were clearly pointed out.

        Now he wants to present the opinion that the form money takes is the issue and not oversight…. shezzz…. maybe he has a hard time looking in the mirror…

        Skippy… although the 900 year financial crises paper was a good bit of work it failed to incorporate a huge amount of data wrt environmental and sociological factors. Too narrow in scope.

    • Good find,
      Shame that the piece is from 2009, that makes it harder to gain traction in the press today.

    • migtronixMEMBER

      Is that daring to suggest that *cough* science comes second to funding, and that results maybe skewed in search of future funding?

      I’m shocked, shocked, I tells you!

      • Now, Mig, don’t start Denying the Science…but I know we’re on the same page here…
        Funny how we all know the bog standard jealousy, competition and skulduggery characteristics of humans, yet somehow put scientists above this fray…nup, doesn’t wash.

      • migtronixMEMBER

        Funny how we all know the bog standard jealousy, competition and skulduggery characteristics of humans, yet somehow put scientists above this fray

        On that JR (ha ha brings me back to watching Dallas in the 80s in Portugal – they had nothing on Brasilians TeleNovelas but JR was a dude!) see the story linked above about Crick selling his Nobel Prize. To be honest I don’t think science and politics have been this closely wedded since the time of the Phaoros before the Ptolemys…

      • migtronixMEMBER

        Argh! I did mean Watson, thanks dumping.

        And yes indeed, transistor boy had similar proclivities

  11. ABC management axe the great 7:30 Report but leave the disgraceful QandA?

    They’ve learned nothing. Just axe the entire ABC.

  12. The Murray Report calls for:
    – Bank capital levels to be raise
    – Mortgage risk weights to be narrowed
    -Self-managed superannuation funds should be banned from borrowing to buy assets such as property
    – It identified “distortions” the tax system…they include differentiated tax treatments on savings such as deposits and fixed income investments, negative gearing and capital gains tax…

    Now. What, if anything happens now?!

    • Self managed funds maybe J but….

      Remove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements by superannuation funds.

      Dear God!

      • GunnamattaMEMBER

        This is what it says, P86…..should be an end to SMSFs negative gearing (which relies on non recourse loans being extended to the SMSF)

        Description

        Government should restore the general prohibition on direct borrowing by
        superannuation funds by removing Section 67A of the Superannuation Industry
        (Supervision) Act 1993 (SIS Act) on a prospective basis.

        This section allows superannuation funds to borrow directly using limited recourse borrowing
        arrangements (LRBAs). The exception of temporary borrowing by superannuation
        funds for short-term liquidity management purposes (contained in Section 67 of the
        SIS Act) should remain.

        Direct borrowing in this context refers to any arrangement that funds enter into where
        the borrowing is used to purchase assets directly for the fund.

        Objectives
        • Prevent the unnecessary build-up of risk in the superannuation system and the
        financial system more broadly.
        • Fulfil the objective for superannuation to be a savings vehicle for retirement
        income, rather than a broader wealth management vehicle (see Recommendation 9:
        Objectives of the superannuation system in Chapter 2: Superannuation and retirement
        incomes).

      • GunnamattaMEMBER

        Geez, a bonfire of the property speculators would be nice……

        P278

        Negative gearing and capital gains tax

        Capital gains tax concessions for assets held longer than a year provide incentives to invest in assets for which anticipated capital gains are a larger component of returns. Reducing these concessions would lead to a more efficient allocation of funding in the economy.

        For leveraged investments, the asymmetric tax treatment of borrowing costs incurred in purchasing assets (and other expenses) and capital gains, can result in a tax subsidy by raising the after-tax return above the pre-tax return. Investors can deduct expenses against total income at the individual’s full marginal tax rate. However, for assets held longer than a year, nominal capital gains, when realised, are effectively taxed at half the marginal rate. All else being equal, the increase in the after-tax return is larger for individuals on higher marginal tax rates.

        The tax treatment of investor housing, in particular, tends to encourage leveraged and speculative investment. Since the Wallis Inquiry, higher housing debt has been accompanied by lenders having a greater exposure to mortgages. Housing is a potential source of systemic risk for the financial system and the economy.

        Differentiated tax treatment of savings

        The tax system treats returns from some forms of saving more favourably than others. For example, interest income from bank deposits and fixed-income securities are taxed relatively heavily. This distorts the asset composition of household balance sheets and the broader flow of funds in the economy.

        To the extent that tax distortions direct savings to less productive investment opportunities, a more neutral tax treatment would likely increase productivity.

        The relatively unfavourable tax treatment of deposits and fixed-income securities makes them less attractive as forms of saving and increases the cost of this type of funding.

      • Fulfil the objective for superannuation to be a savings vehicle for retirement
        income, rather than a broader wealth management vehicle

        That’s one of the stupidest things I’ve ever read! WTF is retirement income if not a wealth management vehicle!?!?

      • Retirement income (or ‘savings’) is a treasure chest of goodies just waiting to be reamed by a rainbow’s spectrum of financial institutions, from every corner of the globe.

        Probably the last of the great chests of goodies, actually.

        Irresistible to psychopaths.

      • @Gunna yeah that’s nice but they don’t mention why everyone takes advantage of the concessions, because the income tax schedule is f#cked up

      • GunnamattaMEMBER

        Well that is something of a conclusion to draw from the Tax Summary PP278-281

        Like I know it doesnt say it, but anyone looking at that list of Tax related issues could draw only one conclusion…..

        Which isnt to say out politicians couldnt completely come up with something else to feed Australia’s economic future further into shite

    • Nothing of course, abit like the Wallis Inquiry. A bunch of the soft options will be implemented – the appearance of doing something when doing nothing. Good luck with even beginning the conversation on phasing out tax breaks for housing, shares and superannuation. This is a government can’t even get consistency in story on simple things like the GP Co-payment! How these fuck wits are suppose to sell such significant changes that affect a large slice of their voter block, their own self interests and ideological platform would be a bloody miracle. Put simply, they’re not up to it.

    • Well there’s nothing stopping a banking “fee” of around 300bp payable to local depositors and funded by mortgage holders. Then the precious OCR can be dealt seperately.

    • “Financial System Inquiry’s Murray report calls for major banks to hold more capital to protect against potential loan losses”

      Far more to it than that. I’m actually pretty impressed and very surprised with the conclusions. Murray certainly won’t be getting invited to any Christmas parties by his former banking colleagues and our worse-than-Swan-already Treasurer must be wishing he’d never called for the enquiry.

      http://www.theage.com.au/business/tax-breaks-on-housing-shares-and-super-distort-behaviour-benefit-the-rich-murray-20141207-121x1c.html

      Mr Murray takes particular aim at tax breaks for housing, saying negative gearing and capital gains tax exemptions on the family home “tends to encourage leveraged and speculative investment” and “is a potential source of systemic risk for the financial system and the economy.”

      An on capital gains concessions, Mr Murray pointed out how it was a tax subsidy for the wealthy and reducing it “would lead to a more efficient allocation of funding in the economy”.

      “All else being equal, the increase in the after-tax return is larger for individuals on higher marginal tax rates,” he said.

      While Mr Murray does not outrightly suggest scrapping them, his report puts them forward as concessions that distort behaviour and create risk, which increases the chance they will be examined in the upcoming tax white paper.

      http://www.theage.com.au/business/banking-and-finance/murray-inquirys-key-recommendations-20141207-121w56.html

      Capital and Competition

      The FSI called on mortgage risk weights to be narrowed between the major banks and their smaller competitors by raising the average internal risk weights required to be held by the major banks.

      This would address some of the “competitive distortion” and the costs to making the system more competitively neutral were modest.

      The FSI proposed that the major banks which hold less capital because of their use of internal risk weighted models should increase their average risk weight to between 25 to 30 per cent. The required quantum would be a one percentage point increase in major bank’s common equity Tier I levels from currency levels.

      The FSI said this would increase funding costs to the banks that would be born by shareholders and consumers.

      Leverage Ratios

      Leverage ratios aim to make up for any failings in the models used by banks and regulators to calculate capital by using a simply dollar for dollar approach.

      The FSI claimed that the major banks current leverage ratio of 4 to 4.5 per cent would mean that a GFC style shock would be “sufficient to render the banks insolvent”.

      The FSI said the banks should target a minimum leverage ratio of between 3 and 5 per cent. A leverage ratio would provide a “backstop” againt the risks of using models to determine capital levels.

  13. And yet, there was a pungency to the line (delivered by a nameless Coalition squealer) that was something of a relief, particularly when juxtaposed against the Prime Minister’s cheery assertion, before a room of his stricken colleagues, that “this has been a year rich in performance”.

    In a world of pointless euphemism, sometimes it’s actually better when someone just goes off their tits.

    Personally I think Crabb has the political acumen of an emeritus professor of orchestral arrangement and less understanding of economics still but anyway…

    http://m.smh.com.au/comment/tit-for-tat-hockey-quote-a-sign-of-government-panic-20141206-1215f2.html

  14. Victorian Labor already loved Abbott after last weekend and now SA Labor does as well. He really does have the magic touch.

    http://www.abc.net.au/elections/sa/2014/fisher/commentary.htm

    This is an 8% swing towards a 12 year-old state government in a seat Labor hasn’t won since the 1985 state election. This is a result that can’t be blamed in electoral boundaries. Someone is going to have to take responsibility for this result. Will it be the state Liberals? Will the finger be pointed at the federal Liberals? This is a very bad result for the Liberal Party in South Australia.

    • General Disarray

      Extraordinary results, AB.

      It’s hard to see this not being a result of Fed politics influencing state results. There seems to be a trend that started to grow under the last government.

      Is this what happens when we have particularly bad government or could we be seeing a shift toward the public identifying the Fed brand more closely with their state relatives?

    • Christopher Pyne spotted at an Adelaide cafe today after his interview on the Bolt Report, upgrading his mobile plan to unlimited texts.

      • GunnamattaMEMBER

        I hope you arent telling us you sat through Pyne being interviewed by Bolt…..

        I’d need an awful lot of acid to come at that

      • I always need a good laugh after a typically weak episode of Insiders. Bolt never fails to deliver. Comic.Genius

      • “Senator Xenophon said he is in talks with a range of mystery high-profile candidates to run for the Upper House. The party will be called NXT — Nick Xenophon Team.

        He said the current system was at breaking point because of a lack of trust in politicians.

        “Australians just don’t feel like the major parties are looking out for them,” he said.
        “I will try and find like-minded people, to run in every state and territory, who share the same commonsense approach to politics, and at the next federal election we will ask the Australian voters to give us their support.’’

  15. GunnamattaMEMBER

    of course those of us here at MB have known and been saying this for some time ………

    Tax breaks on housing, shares and super distort behaviour, benefit the rich: Murray

    http://www.theage.com.au/business/tax-breaks-on-housing-shares-and-super-distort-behaviour-benefit-the-rich-murray-20141207-121x1c.html

    Now that the sustainability of those breaks is in serious doubt I would observe two things……

    1. Removing those breaks certainly shores up the budget bottom line: and
    2. There may just have been better times to buy Australian real estate

    (The Torynuffs can have either the RE market implosion addressing these reforms implies [which they are on course for already] or they can bring supply to bear so fast it will make our eyes water (I know some builders in Turkey who would take up a 457 visa opportunity and build the abode I would like for peanuts)

    • migtronixMEMBER

      or they can bring supply to bear so fast it will make our eyes water

      Whaddya mean Gunna? Guy already did and as you’ve observed previously, it hasn’t helped Docklands/South Melbourbe/Southbank or anyone else out.

      BTW I’m really enjoying today’s return of winter… cosy!

      • GunnamattaMEMBER

        I’m talking about supply people want…….not fobbing them off with dog boxes in the Khrushchevkas of tomorrow.

        Of course on the subject of the current financiers of Mr Guy’s works (and I would have thought that any aspiring politicians – except those wanting to draw attention to the housing market – would do well to line Mr Guy up in the years ahead) I note that the corruption in China issue is beating loudly yet again

        Zhou Yongkang can expect tougher treatment than Bo Xilai: analysts

        http://www.scmp.com/news/china/article/1657113/zhou-yongkang-can-expect-tougher-treatment-bo-xilai-analysts-say

        Not a bad wintry style morning for driving across the Western Districts at a good rate of knots, too…..

    • The Murray Report was always going to raise these issues (and GST) as part of the broader discussion on reform. A planned exposition if you will. Orderly and methodically revealed post successful implementation of Budget 1.

      Something went awry!

      But it can be salvaged, the issues Murray raises addressed and structural reform in the national interest instigated. Too important not to.

    • migtronixMEMBER

      Are you no longer going for generalisimo but something much more drastic – oh Sulieman the Magnificent? 😉

    • Do these Turkish builders pay you $200k for the sheer joy of building? Seems like the only way to make the price reasonable after buying the land.

      OTOH, in the off chance our RE does implode, and our experience mirrors others during the GFC, 457s are going to need to come guaranteed hot and cold running Cristal and supermodels to reduce the outward population flow.

      http://online.wsj.com/articles/SB121434067659000991

  16. Joe Hockey:

    “Our charge is to do what is right to strengthen the Australian economy and ensure that the financial system is as robust as it can be,” he said.

    “Now we have got to weigh up carefully the implications for financial services providers. But I want to emphasis we need to prepare now for the challenges that may lie ahead.”

    Challenges???

    I wonder what dear Joe is talking about?

  17. GunnamattaMEMBER

    The message is slowly but surely sinking in………

    Rattled banks up the ante

    http://www.theage.com.au/national/rattled-banks-up-the-ante-20141207-121vy8.html

    The Murray recommendations are designed for the long term and, although there has definitely been no scaremongering in the release of the FSI report, a falling property market is, front and centre, the primary economic disaster scenario for Australia.

    Such is the concentration of bank assets in housing, such is the sheer size of our overseas borrowing component to fund the housing market, and such have the prices run up – with only a blip during the GFC – that a correction is not a matter of “if” but of “when”. No market, even Aussie house prices, rises for ever.

    • That was published by fairfax? Gee whiz.

      No doubt about it – the beast faces its existentialist threat.

      The banks can save themselves of course, by having regulators curb their hunger for Strayan flesh (for a while).

      Or they could be allowed to keep feasting away.

      And sell us all that rope….

      🙂