Weekend Links 21-22 May, 2016

Each Others Eyes Fred Kress 1987

Each Others Eyes, 1987, Fred Cress, National Gallery of Victoria

China

Asia

 Europe

United Kingdom

 United States

Americas

 Terra Specufestorus

Commodities

Capital markets

 Global Macro

…and furthermore…

…and at the bottom of the 9th

Comments

  1. haroldusMEMBER

    Be that as it may I have just spent the last 2 weeks learning the solo to Stairway to Heaven. Last night was the first night I could play it accurately through at speed with Jimmy.

    Basic pentatonic with diatonic 6 added (ie F in Am ). Or just Aeolian scale if anyone wants to look at it from that point of view..

    • Lucky you. My Fender Telecaster Custom collects dust. I might have time to play when/if RE crashes and can afford to be house husband.

      • Mining BoganMEMBER

        I reckon I play my acoustics three times as much since I became a renter. Got a heap more time.

        That, or the Melbourne weather keeps me indoors a lot more than sunny FNQ.

      • @Mining Bogan – I am also renting – I sold last year end of July. Rents are expensive in Sydney plus still saving and waiting on the never coming crash. But I have to say lot less stress as I can always move into cheaper place and mortgage nightmares don’t keep me up at night.

      • That, or the Melbourne weather keeps me indoors a lot more than sunny FNQ.

        When living in Ireland I used to play a lot more guitar, the crap weather meant I never felt guilty staying indoors all day.

    • Well done.

      I liked to try play the great riffs and solos from Television’s ‘Marquee Moon’.
      That album is another thing completely.
      Here’s the 10 minute title track.
      https://www.youtube.com/watch?v=jlbunmCbTBA

      Words can’t do it justice, but here is someone who does a better job than I could:
      “….every part of the song is a bridge to the monstrous Verlaine showpiece, and yet his guitar solo has no bombast: it climbs and soars in tangible increments, edging its way up scales and pounding like a contained explosion. The structural integrity makes this an Eiffel Tower in a world of Burning Men: in a decade full of guitarists spraying sweat on the arenas, Verlaine comes off like a man punching through ceilings.”
      http://pitchfork.com/reviews/albums/11853-marquee-moon-adventure/

    • Led Zep, one my faves.

      Next up, your weekend podcast from Radio Ecoshock:

      ACTIVIST AND CODE RED AUTHOR DAVID SPRATT WARNS OF DYING CORAL IN AUSTRALIA

      As I struggle to cover world problems, comes a call from Vivien Langford. She’s the host of “Beyond Zero” on 3CR community radio in Melbourne, Australia. “You must cover the mass bleaching of coral in the Great Barrier Reef”, she said. Vivien sent a link to a powerful story by David Spratt. He’s the author of the book “Climate Code Red” and one of my favorite blogs, also called “Climate Code Red“.

      David asks: “After record, mind-numbing coral bleaching, what would it take to ‘Save the Reef’?” Good question.

      David Spratt, welcome back to Radio Ecoshock.

      Download/Listen

      • Biggest load of cobblers I have read in a while – logic doesn’t flow, but should appeal to you R2M

        ******************************************

        Solar

        I met the MD of a UK company called Oxford PV this week, Frank Averdung. The company is a spin-off from Oxford University based on a new material for solar power cells called Perovskite, which is apparently getting some traction. Frank is in town trying to raise some venture capital money here.

        The reason for talking about it, and making it the first item this week, is that he told me about something that happened in Dubai earlier this month that had passed me by: an auction for the right to build a new solar power generator has produced the first ever bids below 3c per kilowatt hour.

        The deal was won by a consortium of an Abu Dhabi renewable energy developer Masdar and a Spanish firm called FRV which has built two large scale solar farms in Australia – one in ACT and one in Moree.

        The point is that the auction in Dubai confirms that solar is now the cheapest form of electricity. This is a huge development.

        It’s true that we’re talking Dubai, where there’s rather a lot of sun, and the facility won’t be generating electricity till 2018, but the standard cost of coal power generation is 6-7c per KwH, so there’s now quite a big buffer between the cost of fossil fuel electricity and solar.

        Last year the growth in global energy consumption was one per cent. The growth in renewables, according to Frank Averdung, was 25 per cent.

        Here are some big facts: the total world consumption of electricity is 18.5 terawatt years (TwY), which is forecast to grow to 28 TwY by 2050. (That’s 18.5 billion and 28 billion kilowatt hours (KwH).)

        The maximum potential power from all the wind blowing around the earth is apparently 75-130 TwY, but the planet would have to be more or less covered by windmills, which might look untidy.

        The amount of electricity available from photons hitting the earth’s surface from the sun is 23,000 TwY per year.

        The two main problems with solar have been cost and intermittency (there’s no power when the sun’s not shining).

        Both of these problems have more or less been solved now: the second by battery storage technology, which is producing a lithium boom, and the first through the rapidly declining cost of solar PV.

        Eight years ago the price of silicon was $470 per kilogram; now it’s $15. Silicon only represents nine per cent of the cost of installed PV (residential), so while it’s important, the main thing is improving efficiency in installing it and extracting more electricity from the photons.

        Oxford PV’s Perovskite apparently provides a big improvement in efficiency, which will lower the cost further. Unfortunately it’s not available to retail investors yet so this is not a pitch for you to invest in it (I won’t be investing either, not that they asked me to).

        Over the past couple of decades, we’ve been witnessing, and experiencing, a succession of technological revolutions that are having a massive impact on us as investors – algorithmic trading, cloud computing, social media, online retailing and so on.

        The switch to solar power, now the cheapest form of electricity, is potentially the biggest of them all.

        Oil

        A discussion of the oil price naturally flows from the above. The rally to $US50 a barrel has prompted a re-emergence of the bulls: hedge fund long positions on NYMEX (bets that the oil price will rise) are near the all-time record levels of June 2014.

        That was just before the oil price peaked at $US120 and then collapsed, so what hedge funds are betting on can be seen as a counter indicator – a “kiss of death”.

        The collapse in the cost of generating and storing solar power is the main reason to think that $US50 is a ceiling for the oil, not the start of another long rally, and therefore the new floor, but there’s more.

        Oil prices are no longer controlled by Saudi Arabia or OPEC. This has been demonstrated again over the past month by the fact that the price rose after Saudi Arabia failed to agree production cuts with Russia. The Saudis, Russians and Iranians are all now producing oil flat out for cash, and will keep doing so because cartel behaviour is now pointless with UAS shale producers sitting there ready to flood the market at any opportunity.

        This means that oil is now just like any other commodity, with the price determined by the least efficient supplier whose production is needed to meet demand.

        In other words, with the destruction of OPEC, the price will be set by the marginal costs of the US shale and Canadian tar sands producers (when demand is strong) and by the Middle East producers when demand is weak. It won’t be set by the budgetary needs of Russia and Saudi Arabia, or what the big oil companies have found or even by temporary disruptions like the recent ones in Nigeria.

        That suggests a maximum, not minimum, price of $US50 a barrel.

        Share markets have tended to move in a direct relationship with the oil price, rather than inverse, as you would expect. A lot of investors are still seeing the oil price collapse as a bearish signal for global growth and investing.

        This is another short-term marginal pricing issue: it will take a while for the benefits of cheap oil to flow through, whereas the negative impact on those directly affected by lower oil prices is more immediate. Also the effect on overall market indices is magnified when traders react to the prospects of oil producers and their bankers, but that’s not offset by the long term benefits because they’re too far off.

        The fact that solar is now cheaper than fossil fuel electricity means that much of the oil and coal that has already discovered will become stranded assets. It means that searching for more of the stuff is a waste of time and money – a huge misallocation of capital. Yet that’s what most oil (and coal) companies believe is their main skill.

        In fact, as the budget positions, and political security, of the regimes in countries like Saudi Arabia and Russia continue to deteriorate they are likely to produce more and more oil at lower and lower prices. And as time goes on, supply disruptions and geopolitical events will become less important.

      • RT, re perovskites:
        http://cassandralegacy.blogspot.com.au/2016/05/an-energy-miracle-but-we-already-have-it.html

        Here, the discussion is on perovskite solar cells; a technology that promises to be cheaper than that based on silicon. Perovskites are a large class of materials; those being studied as solar cell materials have several advantages, including the fact that they can be manufactured in the form of thin films, don’t need to be so extremely pure as silicon, have a band gap close to the theoretical optimum.

        That, however, doesn’t necessarily make perovskites a “breakthrough” in the field. Even assuming that perovskite cells could reach an efficiency high enough to be marketable, the problem is that, at present, the cost of the cells is only about 30% of the total cost of a solar plant. Even if perovskite cells were to cost half as much in comparison to silicon ones, that would be no improvement unless their efficiency were to match or exceed that of silicon. Otherwise, the whole plant would probably cost more because it would have to occupy more space.

      • Yeah but we cannot store the mid day sun (which seems to be figures that everyone wants to quote these days). Figures they are quoting are just not realistic.

        One key flaw on that above article is that power generation technologies such as photovoltaic solar cells, require efficient thermal management, typically having ~15% efficiency in the conversion of light to electricity with more than 70% of solar energy lost as heat. The most commonly used component of passive thermal interface materials, include silver, aluminium oxide and/or other metal or ceramic particles used to fill the voids and grooves created by the imperfect surface finish of two connecting surfaces – improving surface contact and the conduction pathway across the interface, is an area that has the potential to increase efficiency substantially. While thermal conductivity and thermal resistance associated with thermal interface material are important characteristics of the material, the ultimate metric for the performance is the temperature rise reduction (i.e. how that particular material reacts as a heat sink).

        If you want the real investment story – this is it…

        https://www.youtube.com/watch?v=q1JlBEkAmIc

  2. NEW ZEALAND HOUSING: DRAMATIC POLITICAL PROGRESS …

    EVEN GREENS SUPPORT SCRAPPING AUCKLAND RUB (URBAN LIMITS) … INTEREST CO NZ / KIWIBLOG

    Urban Limits abolition: Greens support Labour & English ramps up pressure on Auckland Council … Interest Co NZ

    http://www.interest.co.nz/property/81678/english-capitalises-labour-call-auckland-abolish-urban-boundary-ramps-pressure

    EVEN GREENS SUPPORT SCRAPPING AUCKLAND RUB (URBAN LIMITS) … KIWIBLOG

    http://www.kiwiblog.co.nz/2016/05/even_greens_support_scrapping_aucklands_rub_but_goff_doesnt.html

    Further information within Fridays MB article and on thread …

    Auckland council fails basic land supply economics – MacroBusiness Australia

    http://www.macrobusiness.com.au/2016/05/auckland-council-fails-basic-land-supply-economics/

    • Hugh baby how’s the demolandia? I have a cunning plan: let’s nosebleed immigration and only provide employment in the square encompassing Flinders to Victoria, Spring to Spencer. Should work out super

    • Can’t even think up your own comments, can you? You are the worst plagiarist I have seen on the interwebs.

      JustAnObserver
      May 20, 2016 at 10:19 am
      “Bad loans are made in good times”. As succinct a summary of Minsky’s Financial Instability Hypothesis as I’ve seen.

      • The Traveling Wilbur

        Mmmmmm… poor form indeed, but what made you Google the post? The fact that the unquoted text was coherent and concise?

      • Plagiarism is when you take credit Mav, tell me, did I do my usual sign off and as anyone could clearly tell the comment is one of the first below the post. Sorta the way you roll tho, making knee jerk assumptions et al.

        Wilbert… coming from those that think RE and Bank drama are about supply and demand or ev’bal consumers, I take that as a compliment.

        Disheveled Marsupial…. anywho thank for your support wrt MMT and Black…

      • The Traveling Wilbur

        @skippy You don’t have to take your name off it (though that’s hard as it’s included in the header of the post automatically) what you do have to do is point out when your work includes someone else’s. Quotes help. Naming the author works well to. Apologising for adopting their efforts is another method. See below for an example of how it’s done.
        As to your other point – I don’t even have an opinion on those matters (not smart enough), so you’re inferring incorrectly I’m afraid old chap.
        Have a good weekend.
        Wilbs out.

      • Wilber….

        If you snipe expect some back. As far as being accused of plagiarism its mavs drama, he could not even address the issues the post brings up or the comment I used as a leader into it. Mav was just looking for something to broad brush me with, you know he could have asked or by reading the link clearly see the facts, but no he has to insinuate I’m laying claim to the comment….

        Disheveled Marsupial…. Mav seems confused about Sanders advisors too…. not surprising tho…

      • Skippy, when you quote someone, you need to literally “” quote / unquote them. Otherwise, it is plagiarism. Anyway, I don’t expect your drug addled brain to understand such simple etiquette.

      • Being rather precious here, aren’t you Mav? And you too, Wilber. Skip provided a link to the web page containing that truely amazing revelation, for Gor’s sake. NOT plagiarism.

      • The Traveling Wilbur

        Jeez guys… moderate the tone? And that goes for you too Mav. Please. Axy raises an interesting question, but the reason I chose the words “poor form” is because it is the author’s obligation to make clear what is their work and what isn’t. It shouldn’t be up to the reader to discover that for themselves. In this instance something that a reader looking at only the article would not discover as the comment linked to was not the one included in the MB post. So ‘bad habit’ more than theft was the concept I was trying to communicate with my choice of words. That said, given the subject of Mav’s post I do need to apologise for the light-hearted comment at the end of my first post. Sorry Skip.

        As a writer, I would be upset if my efforts were reused by others, even indirectly, without citation. I should have said that and made it clear that there was nothing else to it from my perspective.

        Well said – can all of you guys cease the personal attacks, one upmanship and endless drivel or do I need to spend all day in deletion mode – Spambot. Your questions on spam management can be directed to [email protected]

  3. MT may be very intelligent, but he certainly lacks any political nous. Was it Keating who said he had poor judgement?

    Mal, if you’re wondering why your polling is going south I’ll give you a tip. The more strident you sound on border protection and refugees and the more you support that potato head of a dunderklumpen immigration minister, the further south it will go. You need to learn how to dog whistle properly, you’re a complete amateur at it, as are the rest of your “team.”

    The guy must be a political moron if he can’t see where this is going; this is going to be a lot closer than I expected and my guess is a large number of people are having second thoughts on the Libs, but they assume others haven’t changed their minds, hence the 57% who still believe the libs will win.

    Definitely not a leader, the guy’s panicking and we still have 40+ days to go.

    • MT is actually very dumb, the only thing he has are manners of a rich and smart person but he lacks any substance.
      he made money thanks to connection to the wealthy and powerful Packers, Wrans, Withlams, Hughes, … not thanks to his abilities or knowledge

      • You’ve got a point there doc. MT reminds me of the cuddly bunny Duracell ads – bright and breezy until the battery fades and then ………….. it’s all droop. There’s nothing like an election wind up to test the agility tho and after two weeks he’s run out of innovative commentary and is now locked into party mantra. That happens when poliies are not too bright … I don’t think he”ll last the distance unless he has another chat to his bum pals in the AFP to knock over a couple more ALP candidates … hang on, that didn’t go so well, so maybe stick to the party line … he can always blame the spin doctors!

    • ceteris paribus

      Yes, he has lost all confidence in himself. He has lost nuance and metaphor in his style. He is parotting scare stories which, to the attentive listener, communicate his own fear of loss.
      I guess an important question is how attentive listeners are to this emotional dimension in his words.

  4. Homes: What you can buy for $75,000
    Gee, I could buy something nice, in cash in the States. Tasmanian dumps aren’t even that cheap most of the time…

    • Did you say you were coming back to Melbourne, or have you not settled on a city? But you’re right, $75k won’t get you too far. I haven’t really looked, but I would imagine the starting point in Melbourne’s very outer suburbs would be around $200k. That might get you a crappy/unlivable unit somewhere (if you’re lucky). What are prices like in Tasmania? I’d consider moving there if I could get work.

      • I’m moving in with my parents initially while I figure out how to live in Australia. The Mornington Peninsula (south of Melbourne is not a bad place to do that I guess). Who knows where I’ll eventually end up, but it won’t be a big city, 15+ years in Beijing has cured me of cities!

      • “I’m moving in with my parents initially while I figure out how to live in Australia. The Mornington Peninsula (south of Melbourne is not a bad place to do that I guess)”

        Crazy, small world! I live in Hastings on the Mornington Peninsula. Certainly cleaner air then Beijing! Good luck with the move back.

      • For real??? Haha, wow. I’ll be in Bittern. My first job was checkout chicking at Tuckerbag in Hastings. Then I had a stint at the Drive though bottle s.hop at Kings Creek hotel back in the day, I did not know how to deal with the customer banter, so they put me in the bottle shop rather than behind the bar. Also used to work at the Bittern General Store. I really like Hastings, none of that Balnarring pretentious bullshit ;). The area has really changed since I moved away in 99.

      • You moved away around the same time my family moved in! I think we moved here around 97ish (give or take a year). Unfortunately Hastings has lost some of its charm over the past 15+ years. Much like the rest of Melbourne it has become overrun with people- although nothing compared to Beijing! The thing is Hastings felt like a small country town when we first moved here. I loved it, but they’re slowly growing and yuppifying it. Kings Creek Hotel is still here though. Other than the massive wind turbine they built the hotel hasn’t changed too much. But yeah, eventually even Hastings will be out of the reach of the working poor.

      • We moved from Karingal to Bittern in 88, after 6 months traveling around Australia in an old 4WD and a 2nd hand Jayco (which we still use), we couldn’t hack suburbia anymore. The last two years I’ve been back the huge increase in population in Hastings/Bittern/Crib Point has been surprising and also a tad disappointing, but one thing I’ve learned from China, nothing ever stays the same, you’ve just got to deal with it. Yeah the yuppification of Hastings is quite obvious, and to me was initially very surprising, for sure even Hastings will be out of reach of the working poor or whatever the correct terminology is these days. Still at least you got the pool instead of Sommerville (my old man is still annoyed Balnarring got the skate park and Hastings didn’t). Anyway would be great to catch up in person early next year when I move back.

      • Yeah, you’re right about nothing staying the same. Hard not to be sad about it though. But yes, the growth has been incredible, and it’s certainly not isolated to Hastings. It’s very much a Melbourne story. It will be interesting to see what happens between now and when you come back to Australia.

        ” Anyway would be great to catch up in person early next year when I move back.”

        Definitely. It would be interesting to hear your experiences living in Beijing, too!

      • Most of those Mallee/Wimmera towns have sub $75K offerings. There’s not much there to be honest and they’re mostly in decline. Hopetoun has a nice lake, Warracknabeal has an awesome pub but they are bitterly cold in winter and blistering in summer, with practically no spring and autumn. But if you’re after peace and quiet, many of the smaller towns are just retirement places for farmers once they leave the farm. If it was me, as a budding retiree I’d choose Warracknabeal for the Creekside Hotel, the decent shopping strip and newish hospital.

      • Have a few mates in Warracknabeal, area town of around 3,000 at a guess, good schools, brand new hospital being built now and only 40 min from Horsham. Seems a well funded country area town, which is quite rare l think.

      • billygoatMEMBER

        @ Gary Horsham has rampant ice use. Apparently so does Wagg, Albury Wodonga and many of smaller country towns in middle of no where.

      • @billygoat

        I spent a night in Alexandra a few years ago and while reading the local paper what caught my eye was that there was an open discussion about the problem of ice and how it could be dealt with. They can see that it is devastating too many people to just be a simple law and order issue.
        From what I gather, these communities are trying to deal with it but they haven’t got the resources or the skill-sets to tackle it. It doesn’t help that when the local paper tries to begin an adult discussion on a hard issue they are competing with the noise of the MSM that often just goes back to outdated Christian moralising and simple heros and villains reporting.

        There was a good 4 Corners piece on the issue.
        http://www.abc.net.au/4corners/stories/2014/10/20/4108571.htm

        ‘Chasing the Scream’ is a good recent book on drugs and how we attempt to live with them.
        http://chasingthescream.com/

      • Yep Billy, avoid any town with a Centrelink. Although worryingly, speaking to a friend who’s a country Sergeant, he tells me more and more of the ice users are your average working middle aged men, rather than your stereotypical dole bludging bogan.

      • Charlton Avoca and St Arnaud are nice places as I recall them just passing through (several times) some years ago now though.

      • jimbo,

        ” Although worryingly, speaking to a friend who’s a country Sergeant, he tells me more and more of the ice users are your average working middle aged men, rather than your stereotypical dole bludging bogan.”

        That is indeed the issue. The Herald Sun portrayal of the drug problems within our communities doesn’t assist in changing it, because it has nothing to do with the reality on the ground. Most of the drug issues are not independent of the other problems within in the communities as well.

      • “Most of the drug issues are not independent of the other problems within in the communities as well.”

        I suspect it’s a bit like family violence. It happens across all socioeconomic groups, but some groups are just better at hiding it than others.

      • Funnily enough I spent 4 years of my childhood near Ouyen. I started primary school in a little place called Minyip. Moving to the Wimmera is not an despite good childhood memories. The olds still have friends from that time and they keep with all the major changes, unfortunately the community is not as strong, large or robust as it used to be. But the old Minyip bakery is responsible for my inability to pass a country bakery and not go in.

        I think I read recently Ouyen has settled a Burmese ethnic minority refugee group rather successfully, they work in the chicken processing plant there (or it might be some other northern Wimmera town).

      • Had random people shouting at us(non-white) from their cars when we stopped over at Horsham. So the image I have is that of a whites only Hick Town.

    • the ultimate tragedy of Australia is not high average or high median price of the more but the price of the 10th percentile.
      It may be sad to see city median home being 7 times median income but the real tragedy is that there are millions of families who works hard full time for minimum wage but there are handfull of homes priced below 10 times minimum wage.
      As opposed to USA for example, working poor in Australia cannot even dream of ever buying even in the cheapest and dodgiest suburbs
      Price distribution in Australia

      • I was watching a program on TV last night, channel 9. (Nine life maybe?) it was showing houses in Portland I think it was…A young couple was looking at houses around $100k USD.

        I think they got a reasonable house for $126K USD, I thought programs like that would be banned here? Might be the punters some weird ideas or something? Like that housing should be affordable for some strange reason?

        These kids thought it was a lot of money, and it is… But what makes it so sad is that young people in this country are totally screwed…

    • Not too much to get concerned about then, as home prices are likely to be 50% or more lower in real terms by the time most people retire in a few years time.
      (My expectation being the ol’ 61.8% lower than wherever the current highs eventually settle. Not even I see an Irish/Japanese/Spanish 76.4% !)

      • 61.8% is still a solid crash and it may not be too far. If the monthly numbers on unemployment (low but part time jobs only and ever lower hours worked), inflation and wage growth stay where they are or deteriorate a bit over the next 8 months then the Auto industry will do the rest. Ford in Aug and Holden and Toyota in 2017 – these two may bring forward their closures if economy slows down and sales are down.
        And there will be a brief period where people will pick up few bargains @ 75+ % discounts from panicked sellers. Especially if China manages to close the taps on the outflow of you know what.

        Plus we have to reduce our wage structure if we are to become competitive again. And that in itself will kill the RE. Politicians wont say it but both parties are indirectly and sometimes directly setting conditions for this to happen. They just wait for the economy to collapse and sell us the austerity pill. If, or perhaps I should say when, this scenario plays out then all bets are off on how far RE will fall. In the Current economy everyone will will find it hard to even think of such events playing out but I really think they are possible. Current and last two governments (John H and Rudd/Gillard giving tax cuts instead of building future fund) did not prepared us to fight of another global event.
        If any global event eventuate we will suffer significant damage. Any global event this time around will include China in one form or another and that will not be good for us. I doubt China will embark on another binge spending to boost the zombie companies.
        On the briight side we can all buy houses for $75k in Syd and Mel and Popcod can safely return back home. lol

      • “Not even I see an Irish/Japanese/Spanish 76.4%”
        But it is possible. At the moment as economy is still moving, sort of, it is hard to imagine but we are on shake ground.
        If next 8 months continue to show same or slightly worst numbers in employment (part time jobs only and ever lower hours worked regardless of the rate is), wage growth and inflation, the Auto industry will do the rest. Ford in Aug and Holden and Toyota in 2017 unless they bring forward their closures due to slow sales.
        Also, both political parties are engineering for some sort of economic slowdown so they can sell us the austerity pill that we need anyway if we are to become competitive again in this part of the world. Last 3 governments did not prepared us for another global event. All those tax cuts from Johnny and Kevin will come to bite us very soon. Without those tax cuts and without NG we would not have RE bubble and would have had very large future fund (especially if we introduced Mining Supper Tax in those early years) that can be used to boost economic activity in times like GFC. If we are to experience another such event we are truly stuffed. I doubt China will save us this time around – they can’t afford another binge spending on zombie companies.
        And sooner or later China will find a way to stop the outflow of you know what. It is slowing already.
        Call me a fool but I do believe we can have an Irish/Spanish scenario here.

      • 61.8%? Janet, you didn’t specify what type of housing will fall by that much. With the rate of poor quality apartments being built, it’s entirely possible, but decent sized houses or townhouses not too far from the city? No, prices at the moment are still soaring higher than ever. Especially houses on full blocks. As more and more houses get pulled down to make way for blocks of dogboxes, houses will only become more expensive, unfortunately.

      • Nikola…

        You can never, I repeat – never – compete against low wage and regulatory countries… don’t your remember Larry Summers memo…

        Disheveled Marsupial… its stuff like that which go us into this mess in the first place imo…

    • Yeah. Those individuals will be retiring in 40 years. The time to panic is now!!!!

    • ErmingtonPlumbingMEMBER

      Philip Adams is my favorite Champagne Socialist. Who can replace this beloved wise old Aunty when he departs.

    • A very good discussion.
      https://radio.abc.net.au/programitem/pgoWGzX1mV?play=true

      David Morgan describes exactly what is wrong with current society, but do you think anyone will take action to change things? I’ve made a concerted effort not to become a work-a-holic that is successful in work but unsuccessful in life. It can be hard when you work with a bunch of narcissist’s who think that by working more and more and more they are going to be happier and more successful than you.

    • Spooky! I ran across this the other day, but didn’t read it!, when searching for the link I’d read about ( somewhere!) re the blood machine scam in The States that had a parallel in the Danish TV serial “Follow the Money”. Maybe it was the swamping of his old blog that poked him back into action!
      http://www.imdb.com/title/tt3638488/

    • Thanks from me too. And the Artworks. This one is really cool – never heard of the guy though.

      The links are something special, cheers

  5. After nearly ten years of talking about this with anyone that wanted to listen to me – negative gearing is now an election issue. I thought I’d take the time to write a piece about negative gearing, and my thoughts about the impact of any changes.

    What is Negative Gearing?

    Negative gearing is the ability to write off a loss on an investment (property, shares, businesses) against other personal income. Unlike many other countries around the world – individuals that invest in property (at a loss after depreciation and operating expenses), and offset this loss against their everyday income that is derived from an unrelated activity (typically a full time job). 1.2 million Australians currently do this (representing a very large voting block during election periods), and the cost of negative gearing in forgone tax costs the Federal government over $10 billion per year. This subsidy to the housing industry does very little to increase housing supply (it’s main intention) as over 90% of ‘investors’ purchase existing property – as opposed to building something new.

    Negative Gearing and property investment gained popularity from the late 1990’s onwards, primary due to the Capital Gains Tax discount that was introduced by John Howard and Peter Costello. People invest in property to take advantage of two distinct benefits. It creates a lower taxable income during the investment holding, and then enables a capital gains tax discount when disposing of the investment. Twenty years of gains in property values has made property investment a preferred option, as the returns have been higher than managed funds, cash deposits, and stock markets over the same period. There is also a false belief among many people in Australia that the government will ‘back stop’ the property market if it all goes sour.

    Why does it need to be changed?

    Massive property price increases over the last 20 years, have put entry to the housing market out of reach to the average Australian (single income at the average wage). Large deposits are required to purchase property – meaning that many prospective buyers take decades to build a deposit, or are heavily reliant on family funds to enter the housing market. There are many examples of households with two incomes are delaying family creation decisions, leading to a lower birthrate, and a reliance on immigration of new entrants to Australia maintain the tax payer base over the longer term.

    The majority of the wealth effect generated by the credit and mining boom has been hoarded by older Australians – as many of them owned property before both of these booms started. There are many people in Gen X and Gen Y that make life and financial decisions based on the likelihood of receiving an inheritance of assets from parents and grandparents. There is another cohort of people that have simply given up on working hard for themselves, or taking innovative business risks, knowing full well they may have parents or grandparents with significant assets.

    For those that have entered the housing rat race – a very large percentage of disposable income is tied up in mortgage payments and rents. This limits the discretionary spending that is required for other industries to grow and emerge on a world scale. The upwards pressure on both house prices and rents also puts upwards pressure on wages to increase, resulting in Australian businesses being less competitive on a world scale. It could be argued that the rapid increase in property prices and the associated wage increases – is a major driver of the decision of many global manufacturers to cease operation in Australia.

    Why grandfathering changes is important?

    Housing is the biggest asset that most Australians own, and any changes that could impact the value of this asset need to be carefully considered. The concept of ‘grandfathering’ – where by only properties acquired for the purposes of investment after a certain date are impacted, makes sense. I do however have question marks about how the federal government would enforce this given that land titles are a state responsibility, and taxation is a federal responsibility. Unless there was strong linkages between all state land titles offices, and the ATO – the grandfathering proposal is unlikely to work (as it would effectively be an honesty box system when people do their tax returns). As part of the proposed changes, it would actually make more sense for changes to the constitution to be made – and the ‘land titles department’ to be moved from a state to a federal responsibility. Then the Federal department could issue every Australian property with a distinct ID number, of which this could be referenced when individuals are doing their tax returns. This ID number would specify whether the property was valid for negative gearing or not – based on the original date the title was registered (i.e. after 5-7 years, the property is no longer valid tax purposes).

    Grandfathering changes limits the initial impact to the market – as there will not be a ‘rush to the exits’ by 1.2 million investors looking to cash out at the same time. As per my proposal above, I would suggest that all property ID’s are issued with a negative gearing ‘valid’ status for 5-7 years as a start point. This would give investors significant time to restructure their investments accordingly.

    The concept of limiting negative gearing to ‘new construction’ only makes perfect sense, as this increases housing supply, and creates significant employment in the construction industry in a time when the economy is transitioning away from a one-in-a-generation mining boom. Many residential construction projects in recent years (in particular inner city apartment complexes in Melbourne and Sydney) have been built on the back of international investment predominately from China. Australian history would educate you that waves of investment from a particular country (whether it be Britain, USA, Japan, etc.) are generally short term, and we need to structure our economy in a way that our investments are not reliant on ‘booms’ – but more on domestic demand.

    The main risk I see to limiting negative gearing to ‘new construction only’ is that land supply (both for new greenfield sites on the outskirts of major population center’s, and prime infill development sites) may not keep up. This may create an artificial bubble in new land and property developments – as investment dollars rapidly shift from established housing to new housing. Federal Government would need to actively be involved at a state level to ensure that greedy developers, local councils, and state government development companies (i.e. VicUrban in Victoria) are not trying to drip feed investment opportunities to the market to maximize price.

    This would make it very difficult for people to move from established property to new property, limit the growth of new housing supply, and not create the level of construction jobs that the changes had hoped. The best way to combat this risk is for the federal government to establish a ‘land tax’ for all vacant land zoned for residential – to the value of best available use. At the moment land tax for residential is valued at ‘current use’ meaning there is significant land on the outskirts of capital cities that is owned by development companies, within the urban growth boundary, but currently leased as ‘farms’ to limit the land tax these development companies pay.

    So grandfathering changes makes sense, and the movement to limit negative gearing to new development only makes sense. But only if both the limitations around land titles and land supply can be solved. If these are not addressed, then the new policy could be just as problematic as the old one.

    What are the long term effects of change?

    There are many commentators in the media at the moment running all sorts of scare campaigns in relation to what the changes to negative gearing rules might represent for society. One of the major ones is that if property investors cannot get a deduction for their rental properties – they would have no choice but to ‘raise rents’ for tenants. There are many reasons why this is very unlikely to happen at a level that exceeds inflation each year.

    Firstly, residential rents are not are not a function of property prices, but of the capacity of tenants to pay. If a landlord raises rents, then tenants will look alternative options including share housing, moving in with relatives, more affordable suburbs.

    Secondly, many investors have not paid the current market price for their property – meaning that any changes to property values (even if they dropped 10-20%) will have a smaller impact on them financially. To negatively gear, an investor has to have interest repayments that exceed the rents they receive – so on the surface it looks like an investor would be ‘underwater’ and have no choice but to raise rents. However, in many cases the investor has ‘removed the equity’ in the investment property to obtain negative gearing – and placed this equity into their primary place of residence or other assets. There is no reason why this equity transfer could not be reversed in the short term if the investor was interested in long term returns.

    Thirdly, there is no shortage of housing in Australia. Back in the 1960’s, each dwelling in Australia had nearly 3 occupants. In the last census, each dwelling in Australia had closer to 2 occupants. It is estimated based on records from various water companies (who classify as unoccupied house as one that uses less than 20L of water a day) that there are as many as 900,000 unoccupied houses in Australia. Many of these are ‘holiday houses/apartments’ outside of the major capital cities – but still represent an investor class of people ‘holding’ property assets. On top of this, there is a belief by recent Chinese property investors that someone living in a house is ‘unlucky’ and you maximize resale value of a house if ‘it’s never been lived in’. This means that many of the new houses and apartments constructed by Chinese investors in Australia lay dormant. You only have to walk around the Docklands precinct in Melbourne on any evening during the week and look at the various apartment buildings (and count how many lights are on) to realize that many of these buildings must be at least 50% vacant. If economic times were tougher, and investors desperately needed cash flow – these properties would be on the rental market.

    In closing, the best outcome for society would be for residential property asset values and rental prices to ‘stay static’ for the next 7-10 years – while at the same time there is an uplift in the Consumer Price Index closer to the top of the Reserve Bank’s target band of 2-3%. This would enable wages to catch up to asset prices – delivering a fall in the ‘real’ price of a house, while the nominal value holds true. Given how exposed our society’s finances are (through heavily leveraged households and lenders) any major fall in the nominal value of housing assets has the ability to destablise the economy. By the Reserve Bank of Australia cutting interest rates and driving the Australian Dollar lower – this will put pressure on CPI to rise as many of our essential household goods are now fully imported (or at least benchmarked to international pricing). Lowering interest rates is unlikely to spark enough massive credit boom (as the Australian household is already maxed out on debt), but will lower the exchange rate (increasing the competiveness of our exports), lower bank interest (making it harder to negatively gear), and hopefully drive investment in new housing to stimulate jobs at a time we are transitioning away from the mining boom.

    • RP, you have put much work into that, but NG is self regulating, as we are about to see.
      By promoting investment into assets which do no build or support an economy, eventually the economy fails and the ability of the punters to make payments to the NG investment ceases.
      The whole economy collapses and we start again.
      But the industrial revolution which initially provided the growth to the economy which allowed the NG to be promoted, has passed.
      The future is a financialised economy, where the Feudal system prevails, some have most of the wealth opportunity and the rest beg. NH has been the catalyst for the collapse.
      The future quality of life rests in being one of the “some” .

    • ING Australia’s departing chief Vaughn Richtor says building a good culture has been one of his most important tasks, but the quickest way to do that is to replace his staff with robots. “Robots do not expect big pay rises.” ING Direct in Australia in 1998 has effectively managed to automate more jobs than any other bank. He hasn’t had to sack anyone, however, he just didn’t employ them in the first place.

    • Great argument, RaglanParade, but you need to put this in front of all the people who are listening to MT’s and the whole property lobby’s scare campaign, and that’s quite a challenge. You only have to listen to talkback radio when they discuss negative gearing, and you hear a lot of people saying things like, “I worked hard for my 2, (6, 10) properties and I’m doing a great thing providing rental accommodation, and I’m looking after my future so I won’t be a burden on the govt, and most importantly I’m not rich and I resent the ALP for calling me rich and wanting to take it all away from me.”

      I’m hoping that enough people will see through the whole scare campaign and turn against Turnbull int he election, but I’m not sure it’s going to happen.

    • That’s a lot of words which don’t actually say why negative gearing is a problem.

      • Jason,
        Re-read ‘What is Negative Gearing?’ and ‘Why does Negative Gearing Need to Change?’.
        If you can’t see why, then think about it.
        If you still can’t see why, then re-read it again and think some more.
        With a bit of effort you’ll make it.

      • Nope. Still can’t see any evidence of a problem.

        (The $10b pa cost figure is of course made up).

      • OK then, why do you think that Raglan Parade believes there is a problem with negative gearing?

      • Come on. Give it a shot.
        You’ve normally got an answer for everything negative gearing related.

      • You haven’t asked me about negative gearing, you’ve asked me to read Raglan’s mind.

        Sadly, that’s something beyond even my powers.

      • So, what do you think about negative gearing?
        Should it stay exactly as is?
        Or should it be modified?

      • Sorry missed this.

        No I don’t think NG should be changed. Instead, I think the CGT discount rules should revert to what was in place pre 1999 (CPI indexation and averaging). I also believe that the capital works rules which allow property owners to deduct 2.5% of the cost of the building for 40 years should be abolished as well.

      • Neat.
        How about all of that + NGers not being allowed to offset their losses against another income stream?

      • Only if you don’t tax the income from investments at marginal rates which also take into account other income streams.

    • Negative gearing should be abolished for both existing and new housing. Australia needs a mindset change that is in line with current times. If all we can do is bring people here and build houses and sell them to each other then this country has no future in a very competitive world. This addiction to rent seeking has created problems in virtually every aspect of our economy. All the money going into housing needs to be channeled into new industries where Australia can possibly add value (renewable energy, medical research, farming, etc..). If we don’t do that, we’re doomed as a country..

  6. Finally, Bloomberg tells us the real figures: “Foreigners accounted for 20.9 percent of Australian home sales in the year through June 2015”. How come so many other idiots kept telling us it was two percent?

  7. How about the documents on the NBN debacle now being kept secret under the cloak of Parliamentary privilege?? What is going on??

    What frightens people is the idea that we are constructing machines that will think for themselves. Machines able to keep secrets from us, via the internet of machines, they will use to their own advantage rather than to ours. Their powers would be unprecedented.
    Constructing and enforcing an ethical framework for them would be as difficult as it has been to lay down principles of international law. But it may become every bit as urgent.
    It is hard to miss the warnings. In the race to make computers more intelligent than us, humanity will summon a demon, bring forth the end of days, and code itself into oblivion.

    The doomsday story of an evil AI has been told a thousand times. But our fate at the hands of this generations Wallace and Grommit style evil robots, may in fact be worse – to summon a class of valueless and useless human beings.
    It is universal opinion that many of us will be pushed out of employment by intelligent robots and on to the economic scrap heap. Jobless and aimless, whiling away our days, mad from drugs, with VR headsets strapped to our faces. Welcome to the next revolution.

    The rise of the useless class” ranks as one of the most dire threats of the 21st century.
    Youngsters dont know what path in life to take, because no one knows what skills learned at 20 will be relevant at 40.
    Then, before we all know it, billions are useless, not through chance, but by design.
    These kinds of forecasts have been around for at least 200 years, from the beginning of the Industrial Revolution, but as in the fable of the Boy who cried Wiley, in the end, the Wolf comes.

    It is all being kept secret.

      • That Guardian article on AI making large portions of us ‘useless’ was interesting in that it defined useless from a political and economic view-point, not a moral one.

        ” “I choose this very upsetting term, useless, to highlight the fact that we are talking about useless from the viewpoint of the economic and political system, not from a moral viewpoint,” he says. Modern political and economic structures were built on humans being useful to the state: most notably as workers and soldiers, Harari argues. With those roles taken on by machines, our political and economic systems will simply stop attaching much value to humans, he argues. ”

        He also questions the role of education as it stands:
        “In a nutshell, as artificial intelligence gets smarter, more humans are pushed out of the job market. No one knows what to study at college, because no one knows what skills learned at 20 will be relevant at 40. Before you know it, billions of people are useless, not through chance but by definition.”

        Another article that I read this morning looks at why well educated people are unsatisfied, http://www.theatlantic.com/business/archive/2016/04/why-so-many-smart-people-arent-happy/479832/

        My crass summary of that piece, and many other bits like it is that a lot of us measure our place and our worth in the world by external yard-sticks that only end up causing us frustration. Added to that is the old chest-nut of hedonistic adaptation, we get use to any changes like a pay-rise or a lovely new lover and start to crave for more.

        It would seem that education can go some way to improving this situation by including things that are known to work in improving resilience and self-awareness. There are many known tricks from the likes of the Stoics and the Buddhist schools that are not tied to anything mystical or supernatural. As an example, here is a philosopher of science talking about his stoic practice on a podcast devoted to Secular Buddhism. http://secularbuddhism.org/2015/03/21/episode-220-massimo-pigliucci-secular-buddhism-and-neo-stoicism/

        Mihaly Csikszentmihalyi’s work on ‘Flow’ and how to find it, and his work on positive psychology, also provides insights into how we function and what we should pursue in order to enjoy life, not just to be perceived as successful.

        A lot can be gained from a changing of our reference points, and it possible to be aware of them before the classic mid-life-crisis. If AI is as socially destructive as predicted above then it would be beneficial for those who are growing up in such uncertain times to have skills that allow them to cope with the unknown.

  8. The Traveling Wilbur

    Sometimes, it’s hard to reflect the mood of an artist’s work when applying it in a different context. And sometimes it isn’t. Apologies to the great and hugely multi-talented one, and my condolences to all of his other fans out there.

    “Raspberry Doughnut Print”

    I was working part time in the five-and-dime RBA
    My boss was Mr. McGee
    He told me several times that he didn’t like my kind
    ‘Cause I thought money should be free

    Seems that I was busy doing something close to nothing
    But different than the day before
    That’s when I saw her, Ooh, I saw her
    She walked in through the out door, out door

    She wore a raspberry doughnut print
    The kind you find in a central bank store
    Raspberry doughnut print
    And if cash rates were hot she wouldn’t wear much more
    Raspberry doughnut print
    I think I love her

    Built like she was
    She had the nerve to ask me
    If I planned to do her any harm
    So, look here
    I put old yeller on the back of my bike
    And we went riding
    Down by old man Johnson’s farm

    I said now, rainy days never turned me on
    But something about the forecasts and her spending mixed
    She wasn’t to bright
    But I could tell when she stapled my coupon
    She knew how to get her kicks

    She wore a raspberry doughnut print
    The kind you find in a second hand store
    Raspberry doughnut print
    And if cash rates were hot she wouldn’t wear much more
    Raspberry doughnut print
    I think I love her

    The dollars sound so cool when they land on the roofs
    And the scared horses wonder who you are
    Thunder drowns out what the lightning sees
    You feel like a movie star’s stand-in

    Listen
    They say the first cut is the deepest
    But I tell ya
    If I had the chance to do it all again

    I wouldn’t change a stroke
    ‘Cause baby I’m most inflated
    With a girl as fine as she was then

    ( Raspberry doughnut print )
    The kind you find (The kind you find)
    The kind you find (In a central bank store)
    Oh no no
    ( Raspberry doughnut print )
    (And if it was warm)
    Where have all the raspberry women gone? (She wouldn’t wear much more)
    Yeah ( Raspberry doughnut print )

    I think I… I think I… I think I love her

    ( Raspberry doughnut print )
    No No No
    No No No (The kind you find)
    (In a central bank store)
    ( Raspberry doughnut print )
    Tell me
    Where have all the raspberry women gone? (And if it was warm she)
    (Wouldn’t wear much more)
    ( Raspberry doughnut print )
    I think I love.

    • “Twenty years ago, at the height of his battle for control over his musical career, Prince posted an unusually candid and direct letter to his fans, including an explanation of his name change.”

      “I would never be able to leave the legacy of my music to my family, my future children or anyone, because “Prince” did not own the Masters—I did not, and still do not, own my Art.”

      https://medium.com/@anildash/message-from-the-artist-c611535da21c#.yc6g2da98

  9. Stephen Morris

    Wow!! Can this really be true?

    See the story above (“Buy-to-let to become rich person’s game”):

    http://www.telegraph.co.uk/personal-banking/mortgages/buy-to-let-to-become-rich-persons-game-as-another-lender-introdu/

    “From 2020, landlords will no longer be able to deduct the cost of their mortgage interest from their rental income when they calculate the tax due. So tax will be paid on turnover rather than profit, meaning tax could be due on non-existent income.”

    And Australians complain about a possible end to negative gearing!!

    • I seem to recall that when I left London in the late Dark Ages I was levied withholding tax on the gross rental income of my house there at the top marginal rate as I was no longer a resident for tax purposes. Perhaps they are just extending something similar to residents now.

    • Considering we are not sitting on any major fault line that is a big earthquake. But tectonic plates are constantly moving and new ones can be created. Geologist still don’t fully understand the workings of the earth’s interior.

      • But But But, We are about to build an underground N waste dump there as the joint is geologically stable??

      • The center of Australia is the crater to the largest extinct volcano on the planet… the rim of which is heavy with precious metals and ores….

      • GOLD:Gold was first discovered in the area by 2 partners William Charles Weaber and Malachy Jack Noble.
        Both of them were experienced prospectors when the lure of Australia’s last gold rush drew them to the area. Weaber had lost his sight in a mustering accident before coming to Tennant Creek and Noble had only one eye. Jack would describe specimens to William who would “see” with his fingers.
        The partners found gold in an area they called “The Rising Sun “ In November 1933 the syndicate pegged four gold mining leases covering the area. A mine was established called “Rising Sun”.

        In 1934 the syndicate commenced sinking a mine shaft into the almost impenetrable ironstone that formed Nobles Nob. The shaft was abandoned at 50 feet due to the poor grade of the gold ore.
        As luck would have it just after Jack Noble sold his share, work recommenced on the Nob Mine, and rich ore was struck at 54 feet.
        The new owners luck changed when in 1948, at 135 feet below the surface, ore averaging 46 oz per tonne was found. “Like gold lying about a Jewelers shop” The mine continued to produce rich ore until August 1967 when the Crown Pillar of the mine collapsed.
        The mine had produced 828,000 ounces of gold from 528,000 tonnes of ore.
        A total of $12.8 million was paid to the company’s share holders during this period.
        Production recommenced in January 1969, and the last ore extracted from the open cut in January 1985 and treated in October that year. The mine had produced a total of 1,170,000 ounces (34 tonnes ) of Gold from 2,100,000 tonnes of rock.

        Jack Noble is probably the most famous miner of Tennant Creek.
        The one-eyed Jack, together with his mate, blind William Weaber, are said to have pegged some of the richest mines in the region: Nobles Knob, Weabers Find, Kimberly Kids and Rising Sun – all on the same day.
        A larrikin, legendary drinker and a skilled bushman, Jack Noble discoved some of the most valuable mines in the region. His fame lives on, though, in the stories of Tennant Creek today.

        TENNANT CREEK. May ‘2. 1950 Malachi (‘Jack’) Noble, .a 60-year-old prospector and miner, the discoverer at Noble’s, now the biggest gold producer on the field left Tennant Creek tonight alone to travel 300 miles overland in a motor truck to the Granites.
        He intends to travel along the 20th parallel, due. West, for about 300 miles.
        There are no tracks or known water in the area.-
        He has 100 gallons of- water and 100 gallons of petrol, and intends to leave water every 15miles or so to enable him to retrace his tracks. ‘He expects to take five weeks to reach the Granites.
        Noble is said to have founded Tennant Creek when he discovered the Wheel Doria mine, whose ore’ crushed 50 oz.of gold to the ton.

      • @skippy and ww

        If we are dealing with such size volcano then we are talking Super Volcano like Yellow Stone. I did study Geology many years ago but I can’t recall any mentioning of super volcano in central Aus. Again that was many years ago and now I am wrestling with spreadsheets and human emotions (sales people) so things get forgotten. However, supper volcanoes can stay dormant for millions of years at time but when they go off they do trigger global changes in terms of climate and these days can cause major economic impacts.
        Earthquakes around super volcanoes or any volcanoes for that matter are not good signs. Generally means an eruption is imminent. However, we will have to also detect lot of small tremors as the magma build in the volcano chamber. So I am not spelling gloom and doom. This could be one of thingy that some large empty chamber collapsed. Hopefully this not a some sot of shift in the asthenosphere and lower mantle than can allow new flow of deep magma to start to push towards the crust.
        Also Tanami Gold had lot of exploration licences in that area and from memory they may even opened a gold mine. Used to hold shares in that company. They had high cost of production but I was attracted to the potential of their exploration licences as they had covered massive areas in central Aus.
        While I was following them they did not strike anything major.

      • Its extinct and has been for a long time, were still the most stable continent on the planet.

    • I was staying in Gunnedah NSW over the Queens birthday long-weekend during 2012 when an earthquake hit. I remember laying on the bed watching Friday night footy in the motel room with the wife after returning from a Thai dinner when the whole motel room started violently shaking. TV, table, chair, bed, kettle, walls and windows.

      At the time, I remember thinking there must have been a rail line outside the motel room window and a fully loaded freight train was passing through town at 100km/hr. That’s what it sounded like for 10-20 seconds. It woke up the wildlife with native birds not shutting-up for nearly half-an-hour.

      It was a 4.2 with no/minimal damage which was good.

      • I honestly thought there was a rail line not 5m from where I was lying with a fully loaded freight train on it going full-pelt. Most the motel room vibration noise was the rattle from the windows. It sounded similar to a jet-engine or loud crackling sounds like white-noise turned right up..

      • GunnamattaMEMBER

        In October 2011 I was in Yerevan in Armenia on weekend when I had had a night on the turps with some locals and slept in late in a local place. The place I was staying in brought up some breakfast no worries and I was sitting there after a shower with clothes on gulping down coffee and eggs on toast when the whole building began to shimmy – maybe lunchtime. At first I thought it might have been a truck or something, then I started thinking ‘f*ck, this place is prone to earthquakes’ (the mind turns on sometimes) headed out of my room down a flight of stairs, thinking I would head out onto the street if need be. The walls were definitely shaking, I could feel myself shuddering and was pretty sure the local architecture wasnt up to much. In an accompanying room was a Russian cameraman I was with. I got to the foyer and when I asked the staff what was going on they looked at me as though I was from another planet, and replied calmly ‘that was an earthquake’. The cameraman was out about the same time and screamed out the same question ‘what is that?!!’. I said to the manager ‘there will be more shocks? – that was quite big’ and asked if we were supposed to head outside, when all of a sudden another series of shakes seemed to pass through. The staff thought we were hilarious – they knew the quake was big but also (rightly) knew it was a fair way away. It turned out out was about 250 klm away in Turkey – and it was only about 7 or so on the Richter scale. But the shaking was very serious (for me – though the locals explained it could get much much bigger in Armenia and the Caucasus). I would have thought anything more serious and I would have fallen over.

      • Gunna in a big one you have no time to run outside so you have two options… 1. stand in nearest door way because of the structural integrity… 2. put pillows over face and groin as flying glass injures more people than any thing else.

        Disheveled Marsupial… wait till you wake up next to built in closets with mirrors on the doors and you watch them ripple like water….

  10. Ermington Ended up busy during the week. You wrote a good response on Tay
    Answers: How far away do you see the arrival of serious Military AI? China recently announced the establishment of a dedicated cyber unit to hack the intelligence networks of other nations. Its Here!
    Straya just announced the establishment of a secure satellite comms link to the UK from just outside Adelaide
    And at what point of Intelligence do you drop the “Artificial” label?
    Dropped, from now on it is Machine Intelligence

    • What most people dont realize is that there are ways to create low band width comms channels to Transmit data from inside practically any network…yes even high security Air-Gapped networks.
      With the ongoing weaponization of Military AI we have a corresponding raise in advanced techniques to control, monitor, mislead and misdirect these systems. So just as in the 1950s/60s advanced Intelligence gathering techniques gave raise to equally advanced Counter Intel (CI) methods along with the obvious extensions to CCI. Today we have a similar situation where Military AI systems are leading to the creation of methods/systems dedicated to deceiving, controlling and monitoring their opponents AI systems. This creates an interesting conundrum, if these Militarized AI systems are intended to operate in an environment where humans might have trouble reacting quickly or ruthlessly enough, than what oversight is possible if/when the underlying AI system gets corrupted or externally is controlled/manipulated?

      • drsmithyMEMBER

        If we give weaponised AI systems the ability to engage and kill people without oversight, then we may as well just be amoebas.

      • Hmmm ….it’s interesting and telling that you would immediately assume people are the intended targets of these weaponized AI systems.
        Think of it this way, If people are just not that important anymore, than why would I waste the resources of a valuable and expensive Military AI system by targeting these somewhat worthless and very slow moving people?

      • drsmithyMEMBER

        Hmmm ….it’s interesting and telling that you would immediately assume people are the intended targets of these weaponized AI systems.
        Think of it this way, If people are just not that important anymore, than why would I waste the resources of a valuable and expensive Military AI system by targeting these somewhat worthless and very slow moving people?

        Why do we “waste” the resources of valuable and expensive military systems now by targeting people ?

        People tend to be where all the things you want to attack are.
        People control resources of military and economic value and thus need elimination.
        People do reckless things like fight back ‘cuz they don’t want you taking their stuff or destroying their society.
        Etc.

        Humans may not be the only target. They may not even be the primary target. But they will still be targeted.

      • China-Bob…

        From the beginning military sorts have had dramas getting people to kill other people, AI sorts that wee problem out.

      • Yes skip but they also have had issues losing to the other guy with better tech… So…

      • Miguel…

        Rushing out the door to sons JRugby match… sorta like up thread where it was late at night…

        Disheveled Marsupial… and the Moose was loose on the paddock today….

  11. The World’s Largest Solar Plant Just Torched Itself

    Misaligned mirrors are being blamed for a fire that broke out yesterday at the world’s largest solar power plant, leaving the high-tech facility crippled for the time being. It sounds like the plant’s workers suffered through a real hellscape, too

    My comment: Teething problems.

    ——————–

    India sizzles at 51°C, highest ever temperature in country

    The severe heatwave conditions intensified in dry Rajasthan on Thursday with a majority of stations witnessing maximum temperatures above 46 degrees Celsius.

    —————-

    Leaking Las Vegas …. Lake Mead declines to lowest level in history

    The nation’s largest reservoir has broken a record, declining to the lowest level since it was filled in the 1930s. Lake Mead reached the new all-time low on Wednesday night, slipping below a previous record set in June 2015.

    • “My comment: Teething problems.”

      Yep. Most new technologies have them. Plus it’s not like other form of electricity generation haven’t had their fair share of accidents and problems over the years.

    • “The plant, the largest of its kind in the world, features a gross capacity of 392 megawatts, enough to power 140,000 homes.”

      Lets see now. How many homes in California again? Anyone know how much electricity a “home” consumes?

      • In 2014, the average annual electricity consumption for a U.S. residential utility customer was 10,932 kilowatthours (kWh), an average of 911 kWh per month. Louisiana had the highest annual consumption at 15,497 kWh per residential customer, and Hawaii had the lowest at 6,077 kWh per residential customer.
        https://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3

        Ivanpah is a 377 megawatt net solar complex using mirrors to focus the power of the sun on solar receivers atop power towers. The electricity generated by all three Ivanpah plants is enough to serve more than 140,000 homes in California during the peak hours of the day. The complex reduces carbon dioxide (CO2) emissions by more than 400,000 tons per year. Located about five miles from the California-Nevada border on federal land managed by the Bureau of Land Management, it could be replicated many times to feed all of CA.

        CA has 11.5 million households, so you’d need 82 Ivanpah-sized plants with current consumption (which could be cut way back with conservation)

      • What’s your alternative? Stick with fossil fuels? IMO there is no alternative to renewables, despite the setbacks.

    • Good article: A summary.
      Whatever else can be said about Donald Trump, he is fiercely individualistic.
      Trump definitely attacks the current government as “weak,”
      Indeed, a major part of his public appeal comes from the fact that he’s untethered to any movement or party or even financial interests besides himself.
      The Republican establishment hates him.
      He has no affiliated politicians at other levels of government. He runs no party organization or really any political organization with any goal other than promoting himself, personally.
      And his arguments about how to make America great generally rely on his own skills — his prowess at making deals, his personal strength, etc.
      This runs in sharp contrast to tradition, which, while emphasizing cults of personality for leaders, is nonetheless fundamentally concerned with the collective.
      That aspect is foreign not just to Trump but to 21st century American society in general.
      “People are extremely individualistic.
      No one would dream of putting them in identically colored shirts and putting them in regimented youth movements, action squads,”
      Compare (demoracy) with the ways Trump talks about improving America:
      “I will build the finest and most modern veterans hospitals in the world.”
      “This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.”
      “Our highspeed Internet access is only 16th best in the world …
      The World Economic Forum ranks the US infrastructure as only the 12th best in the world.”
      I will build a Wall and Mexico will pay for it

      These parties have a lot in common with Trump. They’re fiercely anti-immigration and particularly critical of IslamThey draw support away from more establishmentarian, business-friendly right-wing parties. They tend to be led by individual, charismatic figures.
      The UK has the UK Independence Party (UKIP);
      France has Marine Le Pen and the Front National;
      Germany has Alternative for Germany (AfD) and the anti-Muslim Pegida movement;
      Sweden has the Sweden Democrats;
      The Netherlands has the Party for Freedom and its leader, Geert Wilders.

    • Only good thing about Trump is he is destroying the Christian reconstruction – dominate wing of the party along with a vast swath of other loon pond sects, that said the guy is a megalomaniac with a criminal past. Not holding my breath to see how many campaign meme he back peddles when he gets past the post.

      Hillacoontoon is just the epitome of graft and a commodity for sale…

      Disheveled Marsupial…. both are woeful examples of human beings…

  12. The Patrician

    Three years yrs ago when Glenn Stevens first cut interest rates to record lows, Chris Joye warned it would dangerously inflate house prices.

    Some here said there was no risk because there would be a crash or a slow melt.

    Chris Joye was right

    Some here were dead wrong

    “House prices are going nuts again. According to RP Data, home values across the five capital cities have expanded 9.8 per cent over the last year with staggering 4 per cent capital gains in the past three months alone. The correction called by so many in late 2015, which this column dismissed, has been superseded by an elongation of one of the biggest, and certainly most dangerous, house price cycles in history. Over the 12 months to mid-May, Sydney and Melbourne prices have leapt by a stunning 12.4 per cent and 12.7 per cent, respectively. The one (Sydney) city boom appraised by pundits, including our central bank, has ineluctably spread like narcotics coursing through an addict’s veins. Dwelling values in Brisbane and Adelaide have increased 7.4 per cent and 5.6 per cent over the last year which, while seemingly modest, is 3.5 and 2.7 times the pace of wages growth. The Reserve Bank of Australia’s decision to further crush the cash rate to another record low of 1.75 per cent in May has compelled an upward revision to my 2016 forecasts. In December our contrarian position was capital gains of one to two times wages in 2016, which translated into nominal appreciation of 2 per cent to 4 per cent.

    Right sort of confidence

    Yet this assumed an unchanged cash rate. Given current yield curve expectations for a second cut in 2016, my central case is house prices run at three to five times wages, which represents capital growth of between 6 per cent and 10 per cent. Following 125 basis points of cuts between November 2011 and June 2012, the RBA’s governor Glenn Stevens cautioned against using interest rate policy to “engineer a return to the [housing] boom”, stressing the economy needed “the right sort of confidence”.

    “The kind of confidence based on nothing more than expectations of ever-increasing housing prices, with the associated willingness to continue increasing leverage, on the assumption that this is a sure way to wealth, would not be the right kind,” he said. Stevens argued that “you don’t have to be a believer in bubbles to think that a return to sizeable price increases and higher household gearing from still reasonably high current levels would be a risky approach”. “It would surely be a false basis for confidence,” the monetary mandarin scolded, comforting us that “the intended effect of recent policy actions is certainly not to pump up speculative demand for assets.” (Yes, I’m laughing right now.)

    Back in mid-2012, Australians were supposed to draw succour from the RBA’s “judgement that the risk of reigniting a boom in borrowing and prices is not very high”, which was a “key consideration in decisions to lower interest rates over the past eight months”.

    Debt at all-time high

    Since that speech, house prices have soared 36 per cent, or 3.7 times faster than inflation. The level of household debt has lifted to a new all-time high of 186 per cent of disposable incomes as at December 2015 (and is even higher today), compared to the 168 per cent ratio that prevailed when Stevens’ proffered these warnings.

    Yet given ex post facto attempts by the banking regulator to slow housing credit creation in 2015 through quantitative controls on growth and a sharp tightening of lending standards (called “macroprudential” tools), is the sustenance of this mammoth housing boom – which neither the RBA nor most experts anticipated – surprising?

    Not if you paid attention to the prescient Glenn Stevens of December 2012.

    “Macroprudential tools will have their place,” Stevens said. “But if the problem is fundamentally one of interest rates being too low for a protracted period, history suggests that the efforts of regulators to constrain balance sheet growth will ultimately not work. “If the incentive to borrow is powerful and persistent enough, people will find a way to do it, even if that means the associated activity migrating beyond the regulatory perimeter. So in the new-found…enthusiasm for such tools, let us be realists.” I could not have said it better myself.

    Matter for concern

    What happened then? Did the RBA revise its position on the undesirability of a rapid reinflation of our expensive bricks and mortar and the associated housing leverage used to buy it to artificially reduce the jobless rate? Not if you take at face value the June 2014 vintage of the governor’s views: “It is stating the obvious that at present, while we may desire to see a faster reduction in the rate of unemployment, further inflating an already elevated level of housing prices seems an unwise route to try to achieve that”. In this more recent missive, Stevens claimed that “were there to be a further big run-up in [house] prices, with past increases leading to overconfident expectations of continuing gains”, and “if this were accompanied by a return to significant increases in household leverage, from already high levels”, that “would be a matter for concern”. Indeed. A “slower pace of growth in dwelling prices” would in Stevens’ opinion “be good, for a range of reasons”. “If the next couple of years saw an unremarkable performance on prices, and construction staying at the higher levels that will clearly be reached over the coming year, it would be an outcome that would contribute to …housing more people at manageable cost.” Cue audience laughter. Of course home values have since legged 19 per cent higher while our world-beating household debt-to-disposable income ratio has climbed from 177 per cent to 186 per cent. Neither shows any signs of abating to what might be considered a maximum sustainable pace around income growth.

    Variable rate loans

    During the global financial crisis the RBA was quick to laud the peculiarly potent nature of Australian monetary policy, which has an unusually effective transmission mechanism.

    In many countries like the US, most borrowers use “fixed-rate loans” that price off multi-year bond yields that are only indirectly influenced by a central bank’s overnight cash rate. These long-term yields may not, for example, decline even when the cash rate is chiselled. In Australia around 80 per cent of residential mortgages are “variable-rate” products that generally price off the cash rate. This is why banks typically move loan rates 1:1 with RBA moves. While it has previously acknowledged these differences, Martin Place has systematically underestimated the influence of its policy changes on interest rate sensitive sectors of the economy. Just as it was blindsided by the sharp house price growth over 2009 and 2010, which compelled it to normalise the cash rate from the then-record low of 3 per cent in April 2009 to the 4.75 per cent (jeepers!) level applied in November 2010, it has presumably been shocked by the price action since 2012 (whether it chooses to admit it or not).

    The likely explanation lies in the level of leverage: neither the RBA nor Australians have experienced an economy with this much residential mortgage debt sitting on household balance-sheets. We are, therefore, in completely unchartered territory that means the risk of policymaking errors apropos asset price bubbles is higher than it has been before. So if you are buying a house, you would be well-advised to embed a chunky margin of error in price terms to hedge against such hazards”

    • The only thing worse than being wrong, is being right too early!
      I recall being absolutely certain; certain beyond anything I’d been before or since that UK interest rates would fall from their then 14% and would head down to 8% ( got that end rate bit a bit ‘wrong’!), but someone forgot to send me the note that Sadam was going to invade Kuwait, and the spike in between me taking my position and 8% nearly sent me broke. That’s when I learned , the hard way, that the secret to being wrong ( in any of its forms), is to be able to afford it.
      Personally speaking, was my view that property prices would fall, 6 years ago, wrong? No! Just too early…..

      • The problem we have is that now the housing bubble is all-compassing, that is, that the vast majority of wealth is tied up in one single part of the economy, and that fact that there virtually is no economy without the massive housing bubble, can it be allowed to pop?

        On one hand we have Turnbull and the scaremongers telling us about the armageddon we would face if neg gearing was modified, and on the other we have Shorten assuring us that, in fact, prices wouldn’t fall by much with their policy. In fact, he has even had to defend his neg gearing policy, promising that property prices wouldn’t drop by more than a tiny bit.

        But in the meantime, ever rising prices from an already insane base have become the new norm. What would seem preposterous overseas seems perfectly acceptable in Australia, at least in Melbourne and Sydney. The slightest fall in prices makes them somehow “affordable”, even at previously unimaginable heights.

        So the question is, as it has been for a while now, will the bubble be allowed to pop? Ever?

      • The Patrician

        One thing worse than just getting it wrong is getting it wrong and denying you got it wrong for 3yrs and continuing to attack those who got it right

      • TailorTrashMEMBER

        The language these dicks that write for Domain use says it all ……….”fighting it out “……..”doing battle ” ………..all for a basic necessity of life ….shelter ……..
        ……….the great fair go society is disappearing fast ……….no doubt this dick would call himself a “journalist “…………Advertising copywriter ( very bad one ) would be more apt …….

      • GunnamattaMEMBER

        Last weekend’s boom-like 80 per cent auction clearance rate has experts wondering if it’s set to be repeated this weekend, indicating the boom is back.

        Labor has set a termination date of July 1 next year for the policy that delivers tax breaks to investors. After that, only buyers of new properties will be able to negatively gear.

        Opposition leader Bill Shorten may or may not win the July 2 election – but the mere suggestion that the policy could go is being at least partly blamed for the 30 per cent spike in investor numbers over March.

        And Domain’s chief economist, Andrew Wilson, who has previously predicted home prices to stagnate until a possible spring revival, says stirring up investor activity by giving a deadline may be a game-changer.

        “The possible change to negative gearing is sparking up investors again, and that’s certainly the precursor to prices growth,” Wilson says.

        “We could now see prices growth over the June quarter and accelerating into September.”

        Of course we’ll know in July if Labor has won the election and the status of negative gearing, but by then the damage could well be done: prices may well have taken off again. The latest Domain Group data for the March quarter perhaps gave first home buyers just a glimmer of hope – the psychological barrier of the $1 million median house price was no more with prices dropping 1.5 per cent to $995,804 and apartments slipping 0.7 per cent to $656,166.

        But that could all be set to evaporate as investors move in again.

        Giving an end date to generous concessions in the past has led to sharp increases in property prices as the FOMO (fear of missing out) factor kicks in. Then it was first home buyers who took the carrot.

        all possible to some extent of course. But at the point of mid 2017- with the car industry departing, the iron ore price grovelling, and the clamour for something to be done about housing getting so disturbingly loud that there would certainly be a political dynamic – you would have to wonder what a government (of either political brand) would be looking at to push growth from there.

      • Make sure you get your wife’s uncle to treat you to that bowl of RMB50 noodles he was complaining about a while ago 😉

    • Variable interest rate loans might be more effective at transmitting central bank monetary policy, but they’ll be a bitch to bear if interest rates ever start rising again.

  13. TailorTrashMEMBER

    Nice painting …..never understood modern art …….but my wife paints it … and I have learned it takes a lot of skill to produce such a work ……

    ..nice title “In each other’s eyes .”…….pretty apt given our election mode ……..pity our current Primeminister does not see the world through the eyes of the average Australian ….he seems other worldly ………must be that cloistering in point piper ……….and keeping company with the A list …….his approach to leading the country appears about as shallow as those who make it on to that list ……..oh for a dreamer like Whitlam or Keating ……..big picture men …..that’s what we need now

    “All men dream, but not equally. Those who dream by night in the dusty recesses of their minds, wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act on their dreams with open eyes, to make them possible.” T. E. Lawrence

  14. The political stench around AFP raids this week is getting stronger.

    “Labor anger after NBN employee spread raid photos before files were sealed”

    Labor has complained to the Australian federal police that an NBN staff member disseminated photos taken during Thursday night’s police raid on the former communication minister Stephen Conroy’s office which could have included the party’s broadband policy.

    https://www.theguardian.com/technology/2016/may/20/labor-furious-that-nbn-staff-member-sent-photos-of-police-raid-to-colleagues

    And now it appears, that contrary to the AFP Commissioner saying the government first became aware of the investigation shortly after the commencement of the raids, the Communications Minister was intact aware of the police investigation but didn’t tell the PM. Of course Turdbull dropped his Minister right in it, sorry, supported his Minister by saying “That is a matter of judgment for him,” while twice refusing to say whether anyone in his office had contact with NBN Co about the leaks.

    These fuckers are pure evil.

    http://www.smh.com.au/federal-politics/political-news/mitch-fifield-knew-about-nbn-police-probe-but-did-not-tell-malcolm-turnbull-20160521-gp0gx4.html

      • It doesn’t matter, the only loser is rational discourse… And that was never in danger of coming back from the ashes… Or whatever sporting event is on now…

      • Mig… “rational discourse” wellie that depends on who – quantifies rational – now does it… per say the Austrians and their claims of ownership of the term “rational” and how the cannot quantify it.

        Dishevled Marsupial…. only the perfectly groomed minds once certified by the group think masters… are fit to describe what they call rational… and some wank on about the RCC…. whoops…

      • Fair call skip, I wasn’t going into the esoteria of schools of philosophy, just simple concepts like one thing can’t be in two places at once. Places like, oh I don’t know, appropriate and inappropriate behaviour…

      • Well mig it seems ethical behavior is at a low… so the question is was the information in the NBN leak a matter of ethics which needed airing publicly or poor ethics on the part of those that sought to put sunlight on it…

        Disheveled Marsupial…. then there is the whole confusion over ethics vs morals….

      • My point precisely skip, it’s all poor form, so how both of the parent commenters managed to be offended for the opposing offence at the same time… Well rational discourse etc.

      • Well mig does not that beg the question if it is rational to expect those with immovable stakes, in the ground, to engage in rational discourse – in the first place.

      • No need to beg the question, it’s already been answered

        “And that was never in danger of coming back from the ashes… Or whatever sporting event is on now…”

  15. Of Sun, Rain, and Anti-Utilitarianism: A Review of “Degrowth”

    So the question is not whether capitalism will survive the technological innovations it is spawning. The more interesting question is whether capitalism will be succeeded by something resembling a Matrix dystopia or something much closer to a Star Trek-like society, where machines serve the humans and the humans expend their energies exploring the universe and indulging in long debates about the meaning of life in some ancient-Athenian-like, high-tech agora.

    I think we can afford to be optimistic. But what would it take, what would it look like to have this Star Trek-like utopia, instead of the Matrix-like dystopia?

    — Yanis Varoufakis, December 2015, TED Global, Geneva

    The Greek ex-finance minister’s remarks illustrate quite well, I think, why a book like Degrowth: A Vocabulary for a New Era is both timely and necessary — while also, perhaps, giving a clue to its limitations.

    In our public discourse, the future still mostly involves endless economic growth, automation, gadgets, and a better life for all, with humanity spreading its seed to Mars and, in due course, the stars. The cornucopian vision goes almost unchallenged in the public sphere, even by opponents of global capitalism. Whether they are wall-building reactionary nationalists who love capitalism but hate the ‘global’ bit, progressive internationalists like Yanis and his Diem25 movement, or even progressive nationalists, precious few political figures dare admit openly that the sacred cow of GDP needs to be slaughtered as quickly as possible. And little wonder, when the alternatives to ‘growth for the masses’ are almost invariably presented as dark, apocalyptic, and deeply unappealing.

    This is a good read. Contains the amusing: “there’s an old joke that defines an economist as ‘someone who lies awake wondering whether what works in practice can possibly work in theory’”

    • Some secondary reading: http://time.com/money/4330029/star-trek-robots-jobs/

      “In Star Trek’s hypothetical society — the Federation — poverty, greed and want no longer exist. Most goods are made for free by robots known as replicators. The obligation to work has been abolished. Work has become an exploration of one’s abilities. The people of Star Trek have solved what British economist John Maynard Keynes pithily called “the economic problem,” that is, the necessity for individuals and societies to allocate scarce goods and resources. They live secure in the knowledge that all needs will be fulfilled and free from the tyranny of base economic pursuits.”

      Sadly I suspect those that seek power and control will find new and innovative ways to capture and hoard wealth and power. As much as I love the old Trek, it was a little too positive about human nature (arguably so was Kaynes).

    • interested party

      Time for the pessimist….ahem..realist in me to say that humans… or rather the top 10% of the global population who emit the vast majority of carbon ( that’s us in Aust included here) cannot and will not de-grow by any meaningful amount that can turn this around. We are stuffed…. no doubt in my mind.

      The folk who can make the necessary changes to lifestyle/habits just will not act……… they fully intend to buy their way out of it, but that is just ridiculous.

      The climate does not recognise dollar amounts or size of ego.

      • We are stuffed…. no doubt in my mind.

        I’m planning as if this is true. I tend to agree with you…

  16. Malcolm is revisiting mistakes of the early 5th century according to this source !

    ”The early 5th century Christian priest Salvian of Marseille wrote an account of why the Roman state was collapsing in the West — he was writing from France (Gaul). Salvian says that the Roman state is collapsing because it deserves collapse; because it had denied the first premise of good government, which is justice to the people.

    By justice he meant a just system of taxation. ”

    https://mises.org/library/inflation-and-fall-roman-empire

    • Von Mises institute…. ahhh…. yes…. the Lippmann posses starter kit for neoliberalism….

      They seem to follow the maxim “If you can’t dazzle them with brilliance, baffle them with bullshit.” If you couldn’t wade through all their econo-speak and arbitrary redefinitions of commonly used terms, however, they literally do the work for you and come straight out and say they just made everything up. Ludwig von Mises himself wrote of his theory:

      “”Its statements and propositions are not derived from experience… They are not subject to verification or falsification on the ground of experience and facts.”

      This should help…. http://rationalwiki.org/wiki/Fun:Austrian_school

      Disheveled Marsupial…. or as Bill Black puts it “Theoclassical economics” because you have to – believe – in it…

    • Expect James Packer the be on board as well via his Las Vegas links
      But
      I need to know about that Central Australian Volcano, where did you hear of it??

      • Its Mesozoic and Paleozoic age stuff which occurred in the formation of the land mass that makes up the continent before separation e.g. time has weathered all traces away.

  17. The David Feeney case is pretty funny. Because he has said that he is intending to move into the property, he isn’t really entitled to negatively gear it in the meantime as he will never be in a position where he will earn more income than expenses.

    • Mining BoganMEMBER

      Is that right? Jail him or something. Labor would be a lot better without the likes of him, Fitzibbon, Conroy, Bowen.

      Clear the decks of dross.

  18. GunnamattaMEMBER

    everyone should read this from a former Canadian bureaucrat………

    It is an absolute epic which I have cut and paste some of the key parts. I would heartily recommend going to the link and reading the lot. I would guess that Vancouver has essentially the same problem as Melbourne and Sydney, and that precisely the same issues and interest groups are in play.

    Martyn Brown: An essay on B.C.’s housing crisis and what to do about it

    http://www.straight.com/news/702206/martyn-brown-essay-bcs-housing-crisis-and-what-do-about-it

    At the same time, our federal and provincial governments say they are not persuaded that foreign ownership is really that much of a problem, since they have failed to collect any reliable data on the nature of those foreign investors. As if that proves their point.

    and

    Anyway, the supply-side hawks argue, it is mostly a problem of too little supply outstripping demand. As if the only answer is to address the first half of that equation, rather than taking the more emphatic and politically precarious course of also limiting unwanted demand.

    True enough, all governments have done too little to stimulate and expedite the supply of more affordable housing.

    Zoning restrictions, permitting processes, density barriers, development cost charges, and a lack of readily developable government-owned land have all depressed the supply of affordable homes.

    Onerous property transfer taxes, rapidly rising property taxes, inadequate government investments in social and rental housing, and ridiculously low income assistance rates and financial aid for B.C.’s most vulnerable families have also hurt affordability and housing investments.

    Each level of government blames the others for failing to address the supply problem.

    and

    Most homeowners want to stop the worst abuses and negative side effects of unwanted foreign investment, but only to the extent that it does not reduce the new market value of their most valuable investment.

    Rebalancing Supply And Demand

    First, we might ask ourselves, for whom do we hope to add new supply?

    For people from abroad who do not plan to live and work in our country, or even necessarily occupy those new dwellings?

    For foreign investors who use every trick in the book to avoid paying taxes that are imposed on our citizens? How are they any different than those we are so quick to pillory who have been exposed by the Panama Papers?

    For foreign investors whose primary aim is move their money out of China and evade their own laws that restrict the outflow of capital?

    For those in the real estate and development sectors who are unfairly hurting British Columbians by driving those types of new demand?

    If you agree with me that the answer to those questions is “no,” it follows that we should also ask ourselves whether our governments should act to deliberately suppress that added foreign demand, no matter how incremental it might be in further aggravating our housing affordability crisis.

    That unwanted demand, it must be noted, is also largely driving certain new supplies of new housing that is being built primarily to attract those wealthy foreign buyers and the higher prices their investments leverage.

    It is also hiving off huge portions of our existing housing supply to sell to those wealthy foreign buyers, who are typically wealthier than most Canadians and who enjoy a competitive edge over all domestic buyers by dint of the substantial premium they gain on our struggling currency.

    Contrary to what the Clark government maintains, we do need to address the demand side of the housing crisis. Because that unquenchable demand is arguably doing more harm than good.

    and

    British Columbians are being inundated with story after story that rightly makes their blood boil.

    Stories about coercive pressure tactics, deceptive sales pitches, dishonest brokerage practices, and even threats of personal violence that paint an ugly picture of a Wild West real estate industry that is hurting British Columbian sellers and buyers.

    Stories about Canadian banks and brokers that appear to have been actively aiding Chinese money laundering in facilitating financing arrangements for nefarious real estate investments.

    The federal Financial Transactions and Reports Analysis Centre (FINTRAC) has amplified those suspicions and concerns with its recent report that found “significant” or “very significant” deficiencies within dozens of brokerage firms that it is investigating.

    British Columbia can live without that type of corrupt foreign demand, thank you very much.

    Economists from the National Bank of Canada recently hypothesized that Chinese buyers likely accounted for a third of all Vancouver property sales last year, representing an aggregate value of almost $12 billion.

    Much of that real estate investment is being made in ways that are deliberately aimed at avoiding normally applicable taxes.

    and finally

    Frankly, I am sick and tired of walking on eggshells on this critically important issue.

    It should be possible in this country, of all countries, to have a respectful, intelligent debate that is grounded in the principles of mutual tolerance and respect, which most of us consider defining hallmarks of Canada.

    We should talk about this issue openly and honestly, without fear of recrimination or being branded as “racists”.

    Sadly, it is a virtual certainty that anyone who dares to broach this subject does so at their own peril. I have no delusions about how my views will be characterized by those who are worried that the public debate that I and others are hoping to advance will gather steam.

    No matter how clear or well-intended my words might be, like all the others before me who dared to broach this subject, I will no doubt be vilified with stinging words that are designed to hurt.

    In this age of Donald Trump and the intolerance he has fostered and exploited for political gain, it is too easy to gain cheap political points by branding anyone who even whispers about restricting foreign property ownership as “racist” or “intolerant”.

    It is easier still to maliciously imply they are secretly “anti-immigration” and “anti-Chinese”.

    So be it. The issue is too important to be cowed into silence by those who are at least as intolerant as the people they live to lash.

    Citizenship and permanent residency status carries with it certain privileges in Canada, be it entitlement to social programs, voting rights, or other rights and privileges.

    I submit they should also include the right to be eligible to buy and own certain forms of real property in the land on which we all live and call home, broadly speaking.

    My concern is about the pace and degree to which we are selling out our private lands and properties to foreign nationals and their proxies, who are neither citizens of Canada nor permanent residents of our country.

    It is about the way we are allowing the dictates of the unrestricted free market to unintentionally rob us of our collective ability as British Columbians to own and control our province’s precious and limited stock of privately held residential and agricultural properties. Our collective “home and native land,” as it were.

    The origin of that foreign investment and the nationality of those making it and owning those properties is not terribly material to me. Other than to the extent to which Canadians’ foreign investments in residential and agricultural property are reciprocally welcomed and allowed by those foreign investors’ own nations.

    The problems that are being created by overheated demand and unchecked foreign investment are demonstrable.

    They are vital to the issue of affordable housing, to the nature of our communities and to our capacity to own and control our own limited stock of privately held residential and agricultural lands and the real property “improvements” they support.

    They cry out for bold, immediate action that should include giving all British Columbians a direct say on the steps we should take to arrest them.

    We should ask all British Columbians whether it is time to impose new restrictions on foreign ownership, similar to the provisions that many other countries have put in place to protect their public and their private lands for their citizens.

    It is time to openly discuss the vision we hold as a society for the land beneath our feet and who should own it.

    If anything, we need to deal directly with that “elephant in the room” before it crushes Canadians’ welcoming attitudes towards immigration and much-needed foreign investment.

    Otherwise, I submit, public resentment and anger will build in ways that are anathema to Canada and to our multicultural society.

    To be clear, my concern is not about China, per se, or about Chinese nationals who we should heartily welcome to live, work, and study in Canada as residents and new citizens.

    Rather, it is about the deleterious effects of those nonresident foreign investors who are buying up B.C. properties without any real regard for our province, for our culture, or for our working families—and what we might do about that.

    My hunch is that many, many British Columbians and other Canadians share that concern and would welcome the chance to discuss it in the spirit of tolerance that our multicultural nation should afford.

    • Ronin8317MEMBER

      Very well put. More people need to vote on housing affordability rather than fake issues like ‘terrorism’,’stop the boat’ and LBGT.

      • People need to think about what kinda job market they will have in the future before anything else….

        Disheveled Marsupial…. otherwise they will end up just like the MMillions that went underwater in the GFC or have been treading water since…

    • The question in my view is about the HOW rather than the WHAT, the democratic model is broken under the weight of avarice and corruption.

      Saw a story about a new political group that will have a voting app where members can vote on every issue and the idea is that the elected members are bound to follow the will of the majority.

      Nice idea and a disruptive technology if ever there was one !

      • Ronin8317MEMBER

        But unless eveeyone votes on every issue, we can end up where a minority decides every ship in the country will be renamed ‘Boaty McBoatface XXX’.

      • yes its disruptive, moving from a position where lobbyists and donors (may not be entitled to vote?) dictating policy, back to the people.

        All parties would have to adapt and damn quickly too.

      • One would think with all the fraud in electronic voting going with apps would be apparently the most ridiculous thing ever.

    • Very much applicable to what’s happening in Melbourne and Sydney. I’m afraid that the notion of being a citizen in a country and its associated benefits are being eroded with a new world order where how much money you have is the only thing that matters regardless of your citizenship status. On top of that, most home owners and Melbourne and Sydney want to see their house values appreciate forever and if more dudgy overseas investors is the way, then be it. As I pointed out before, we’re not Switzerland.. We lack the intellectual depth needed to implement what the author of the piece suggests. We’re more like a third world country disguised as a first world country.

  19. The Australian economy is facing hazards not seen in more than 20 years, and is starting from a position of income weakness.
    Rates of personal income are the lowest in 18 years, and bank interest rates are the lowest in 140 years.
    So what does this mean:
    If income is low, Spending is low
    If spending is low. business and jobs are at risk
    If jobs are reduced the punters cant make the repayments
    No repayments housing collapses.
    Add to this the call for a lower value of the AUD
    Dollar goes down.Cost of goods goes up
    Consumers stop spending, Jobs are at risk
    Payment cease, Housing falls over
    The Nation goes broke!

    • Exactly WW, I see debt as having a double barreled effect the first is making consumption extremely fragile, with its obvious impact on jobs (recent hours lost) and second the speed that leakage from a micro-economy when debt interest is a greater (GDP) slice.

      In my local economy the money gets spent once then back to Sydney and Canberra, doesn’t get time to bounce around providing jobs. (I think)

      • David Stockman
        “So something doesn’t parse, and that’s to put it charitably. The truth is, the Fed’s entire radical regime of ZIRP and QE constitutes a monumental monetary fraud.

        It has not “stimulated” a wit the struggling main street economy of flyover America. Instead, it has showered Wall Street speculators with trillions of windfall gains and gifted the bicoastal elites with a false prosperity derived from financial inflation and government expansion.”

        In our case it is teh Sydney/Canberra/Melbourne/Brisbane Central axis that has got all the benefit. I guess most people live there so why give a RA about anyone who lives anywhere else?

      • http://davidstockmanscontracorner.com/why-the-flyover-zone-is-hurting-bubble-finance-is-strictly-for-the-bicoastal-elites/
        Further from Stockman
        “But we do not think the standard CPI accurately measures the true cost of living, and especially not the 25% weighting given to the phony OER (owners equivalent rent). And that’s to say nothing of all the other tricks embedded in the numbers such as hedonics, which implies that bureaucrats have the capacity to assess the subtleties of product quality and consumer utility.

        “Accordingly, we think that BLS sub-index for total consumer services is more representative of living costs because it puts a heavier weight on medical care, education, child care, transportation, housing rents and other services which households must contend with week-in-and-week-out.”

        Absobloodyloodle!!!

        Note the ABS only accounts for hedonic adjustments that reduce the CPI. No attempt is made to assess the decline in product and food quality.

    • And on top of all that we need to bring our wages further down if we are to be competitive in this region.

  20. GunnamattaMEMBER

    I think foreign sourced donations to Australian political parties should be illegal, and I think all political parties should be forced to publish accounts which prove the provenance of their funds every quarter. We have corrupt foreign funds buying outcomes in our political process.

    Chinese interests play increasing role in Australian political donations

    http://www.theage.com.au/federal-politics/political-news/chinese-interests-play-an-increasing-role-in-australian-and-political-donations-20160517-goxl8b.html#ixzz49KSTCKTc

    A Chinese government-backed propaganda unit and a swag of companies that stand to gain from the China Australia Free Trade Agreement have made more than half a million dollars of political donations in Victoria, raising concerns about the influence of foreign donors.

    Companies linked to Chinese conglomerate Yuhu Group made a donation to then trade minister Andrew Robb’s fundraising entity the day the trade deal was clinched.

    Chinese money has become so important to Australian political parties that, at a recent glitzy fundraiser, Victorian Liberal president Michael Kroger made sure there was an interpreter to translate the auction.

    Donors with strong links to China contributed $555,000 to the two major parties and fundraising entities in Victoria, a Fairfax Media analysis of Australian Electoral Commission data for 2014-15 reveals.
    At least three donors failed to disclose their contributions to the Australian Electoral Commission.

    Bayside Forum, which supports the federal Liberal candidate in the seat of Goldstein (where Mr Robb is set to be succeeded by former Human Rights Commissioner Tim Wilson at the July 2 federal election), accepted $100,000 in donations from executives of Chinese agriculture, property development and infrastructure company Yuhu Group.

    At the time, Mr Robb was negotiating both ChAFTA and the 12-country Trans-Pacific Partnership.
    Mr Robb has a long relationship with Yuhu and its chief Xiangmo Huang. He met with Mr Huang and other senior company executives in Hong Kong in March 2014 to discuss trade and economic co-operation, and to hear Mr Huang’s view on the obstacles to Chinese enterprises in Australia, such as working visas and foreign investment restrictions.

    Mr Robb also endorsed Yuhu’s $2 billion investment in Australian agriculture in a joint-venture with a Chinese state-owned enterprise at its launch on September 15, 2014.

    According to AEC disclosures, Chaoshan No 1 Trust (of which Mr Huang is a director) made a $50,000 donation to Bayside Forum two months later, on the same day ChAFTA was finalised and details announced by Mr Robb and then prime minister Tony Abbott.

    Another $50,000 donation to Bayside Forum, this time by Fu Ocean Pty Ltd (whose director Zhaokai Su is reportedly Yuhu’s office manager), was undated. And two months after the Hong Kong meeting, $30,000 was donated to the New South Wales division of the Liberal Party. It is illegal for property developers to donate to the NSW branch, but a loophole permits it if the funds are intended to contribute to a federal campaign.

    The free trade agreement, which came into force on December 20, 2015, has been criticised by the opposition and unions for threatening Australian jobs – particularly a provision that allows Australian-registered companies with 50 per cent Chinese ownership to bring in Chinese labour to work on infrastructure projects of $150 million or more.

    Mr Huang and his associates have donated millions of dollars to the Labor and Liberal parties over recent years, and in 2015 stepped in to pay a legal bill on behalf of NSW Labor reformist and fixer, Senator Sam Dastyari.

    Mr Robb was Mr Huang’s guest at the Melbourne Cup in 2013, when Mr Huang also presented the trophy. Mr Robb reportedly attended Mr Huang’s daughter Carina’s wedding in Sydney in January 2016, as did Opposition Leader Bill Shorten.

    As trade minister, Mr Robb also attended the “Yuhu 2015 Giving Day” on February 6, 2015, held in part to celebrate Mr Huang’s election as President of the Australian Council for the Promotion of Peaceful Reunification of China. That organisation’s activities include hosting Chinese government officials in Australia and lobbying against independence movements in Taiwan, Hong Kong and Tibet.

    At the time of the donation, Mr Robb was still negotiating the Trans-Pacific Partnership – a 12-country trade deal which does not include China or Taiwan, but that Taiwan had sought to join.

    On February 1, the NSW branch of the ALP revealed its biggest donor, Eng Joo Ang, had given $110,000. The next day Mr Eng told media he couldn’t recall it and later that he had not made the donation. On February 12, a late return was quietly published on the AEC periodic disclosures as an “update”.

    Mr Eng is executive vice chairman of the Australian Council for the Promotion of Peaceful Reunification of China.

    Mr Robb declined to answer Fairfax Media questions about Bayside Forum’s protocols for handling potential conflicts between fundraising sources and his responsibilities as a minister.

    “There were absolutely no conflicts of interest,” he said.

    Mr Huang was contacted for comment but did not respond.

    Meanwhile, the Victorian Liberals received $15,000 from the China Australia Media Group, believed to be an arm of the Chinese government. The group has twice been outed for hiring Western journalists at news conferences to ask soft questions of government ministers and officials with the aim of spreading Chinese propaganda.

    Chinese property developers have also emerged as generous supporters of political parties. In 2013-14, a pair of Brighton property investors with import-export interests Jianping Fu and Min Zhang, donated $200,000 to the Victorian Labor party. Melbourne-based property developer the Ever Bright Group donated $200,000 to the federal Liberal party and Glen Waverley developer Jiandong Huang donated another $100,000.

    Richard Gu’s AXF Group, whose development projects include a massive 5500-home project in the city’s west, donated $150,000 to the Victorian Labor party. ZJF Investments, a company owned by property developer Zheng Jiefu (who sought refuge in Melbourne after facing embezzlement charges in China), donated $20,000 to Labor’s state branch.

    Both AXF Group and ZJF failed to make their own donations disclosures to the AEC. Fu Ocean disclosed its $30,000 contribution to the NSW Liberals, but failed to disclose the $50,000 Bayside Forum donation.

    The AEC said it was following up outstanding returns.

    Governance expert Ken Coghill says foreign donations to Australian political parties should be illegal, as they are in many countries including the United States and Britain.

    “The Australian political process ought to be something that is not manipulated or distorted by foreign interests,” says the former state Labor MP, now director of the Parliamentary Studies Unit at Monash University.

    • In the end Labor will be the only serious political party remaining as the Unions will always be allowed to channel the funds of members (whether they support or oppose Labor) and blackmailed companies to political purposes. Liberals and others will only be allowed to get the odd $100 from members.
      The hypocrisy in these funding debates on MB is astounding.

      • but the right has become so short term that it is seriously dangerous, left has moved but less so and will move back quickly as demanded by REALITY !

      • drsmithyMEMBER

        It’d be more honest if you just wrote “boogeyman” rather than “Labor”.

      • But flawse, the issue is that foreign interests, and likley crime cash from China, donating huge sums to both parties – don’t you see that as a problem? Sort of like rent a politician.
        Insofar as Union donations to the ALP are concerned, the corporate sector donate to the LNP so I can’t see your point. In fact, in this digital age, one could argue the huge sums of cash are not required and that the future fund provide 1M to each of the 3 partiesso that donations to political parties are made illegal. This would level the playing field and prevent campaign corruption …….. oh and make those thinly veiled party adverts which governments tend to put out just before an election is announced illegal also.

      • drsmithyMEMBER

        In fact, in this digital age, one could argue the huge sums of cash are not required and that the future fund provide 1M to each of the 3 partiesso that donations to political parties are made illegal. This would level the playing field and prevent campaign corruption ……..

        In reality it seems that huge sums of cash are nearly mandatory to saturate the various forms of media.

        The problem with only publicly funding is it locks in the party system and completely closes the door to any possibility of policy that falls outside of their approved messages (except possibly for those pushed by wealthy independent candidates).

        A fairer system would be to limit political donations to natural persons only and to a fairly low amount per year achievable by most, either in cash or time equivalent. Say, the equivalent of 3-4 weeks worth of full-time minimum wage. That way someone who can garner genuine popular support will have a voice.

      • drsmithy….

        Therein lies the rub, natural citizens = “Citizens United” in America…. home of freedom and liberty…

      • “natural persons” smithy wrote, not citizens. Still problematic as lawyers are wont to define these things any which way but north… You have to realise the most powerful vote comes from your interactions and ability to influence people. This is why PR agents are front and centre of every single communique we are exposed to. Ask yourself first and foremost “why do I want to agree/disagree with proposition x/y/z, is it wrapped in suggestion’

        NLP was a cult

      • Miguel…

        Correct, typo, its what happens when your highest court in the land becomes a stocked pond to forward and ideological agenda.

        Disheveled Marsupial…. or when politics becomes pay to pay and everything is a market…

      • ErmingtonPlumbingMEMBER

        Ridiculous Flawse!, Union Membership has been in a fatal decline for decades now, they command an ever decreasing supply of “funds”,a miniscule amount compared to Corporate funded think tanks and industry bodies.

        I suppose your still concerned about the influence of the CCCP over the political process also,….come on mate!

      • drsmithyMEMBER

        Therein lies the rub, natural citizens = “Citizens United” in America…. home of freedom and liberty…

        That’s even more opaque than usual. What do you mean ?

      • drsmithy….

        Pardon me for assuming your knowlage about this subject I thought you were aware of the history surrounding the Citizens United SCOTUS decision.

        The Elephants in the Room: Citizens United, Trade and Corporate Ownership of Our Natural Resources

        http://www.nakedcapitalism.com/2013/04/the-elephants-in-the-room-citizens-united-trade-and-corporate-ownership-of-our-natural-resources.html

        http://www.nakedcapitalism.com/2013/04/manufacturing-consent-25-years-later.html

      • drsmithyMEMBER

        Pardon me for assuming your knowlage about this subject I thought you were aware of the history surrounding the Citizens United SCOTUS decision.

        I am.

        Still struggling with your point, however.

      • What is there to understand drsmithy…. Corporations are people and money is a vote, hence a Corporation or Industry can bet both ways and delve into international politics as well, money well spent rather than wasting on R&D, wage increases, socially productive activities. All while the citizen gets one paltry vote or splash a few bob on their favorite pony….

      • drsmithyMEMBER

        What is there to understand drsmithy…. Corporations are people and money is a vote, hence a Corporation or Industry can bet both ways and delve into international politics as well, money well spent rather than wasting on R&D, wage increases, socially productive activities. All while the citizen gets one paltry vote or splash a few bob on their favorite pony….

        Er, yes ?

        Hence the reason political donations should be restricted to _natural_ persons only.

  21. In the past when times turned tough, the bet was to move to industries making alcohol or tobacco.
    But now the bet is credit. Read on: What applies for the Yanks is good for us too.

    A poll conducted by the Harvard Institute of Politics found something startling:
    Only 19% of Americans ages 18 to 29 identified themselves as “capitalists.”
    In the richest and most market-oriented country in the world, only 42% of that group said they “supported capitalism.”
    The numbers were higher among older people; still, only 26% considered themselves capitalists.
    A little over half supported the system as a whole.
    This represents more than just youngsters not caring being labeled “socialist” or disaffected middle-aged Americans tiring of an anemic recovery.
    This is a majority of citizens being uncomfortable with the country’s economic foundation—
    a system that over hundreds of years turned a Pilgrim society of farmers and prospectors into the most prosperous nation in history.
    Who, is the system working for and against, as well as why 8 years and several trillions of dollars of stimulus on from the financial crisis, the economy is still on the ropes.
    The U.S. system of capitalism is broken.
    To understand how we got here, you have to understand the relationship between capital markets—ie the financial system—and businesses.
    From the late 1790s to the early 1970s, finance took individual and corporate savings and funneled them into innovative productive enterprises, creating new jobs, new wealth and, economic growth.
    Recently ,>>Finance has become innovative itself and turned away from this traditional role.
    Today a fraction only of all the money washing around the financial markets makes it to Main Street businesses. Maybe 15% of capital coming from financial institutions is used to fund business investments, whereas it would have been the majority of banks efforts 20 years ago. Most of the money in the system is being used for lending against existing low to nil nation building assets such as housing, stocks and bonds.

    To visualize the impact of this shift, consider that the financial sector now represents around 7% of the U.S. economy, up from about 4% in 1980. BUT despite currently taking around 25% of all corporate profits, it creates only 4% of all jobs. U.S. finance, insurance and real estate (FIRE) sector now accounts for 20 % of GDP — compared with only 10% in 1947.
    “When finance gets that big, it sucks the economic air out of the room.”
    Most of the world’s economies are grappling with the situation which is causing increasing rates of low productivity.
    So why doesn’t our economy manage companies, workers and consumers better than it does.
    Finance was at the top of the economic hierarchy, the most aspirational part of an advanced service economy that climbed the stairs from agriculture to manufacturing, BUT, the unintended, consequences of this worship have endangered the very system America has prided itself on. This illness is : financialization.
    Financialization desribes how Wall Street and its methods have come to reign supreme in America, permeating the financial industry and much of American business.
    Financialization. Leads to:
    The rise of debt-fueled speculation over productive lending;
    The ascendancy of shareholder value as the sole model for corporate governance;
    The proliferation of risky, selfish thinking in both the private and public sectors;
    The increasing political power of financiers and the CEOs they enrich;
    The way in which a “markets know best” ideology remains the status quo.

    But, it was facilitated by shifts in public policy, from both sides of the aisle, and crafted by the government leaders, policymakers and regulators entrusted with keeping markets operating smoothly. Both the elite, Governments and the Punters lapped it up!

    With this euphoria politicians were able to pass their responsibility of govt regulation to the financial markets, and the Punters. The animals were given the keys to the Zoo. They opened the cage to a spate of financial “innovations” and a shift in bank function from lending, to (innovative) trading.
    Loose monetary policy created an environment in which easy money papered over underlying economic problems so that many economies are now dependent on negative or near-zero interest rates to keep from falling back into recession. ( no mention of how the debt will be repaid)

    The unintended consequences have resulted in:
    A tax code that favors debt over equity.
    A housing market that is bifurcated and dependent on government life support,
    A once productive sector of the economy now overlooked for a FIRE sector,
    A rising level of unemployment, especially for the youngsters.
    A trend to machine intelligence to provide for future businesses and industries
    A dejected, lost and isolated portion of the population
    A retirement system that has left millions insecure in their old age
    A economic and political outcome which will require revolution to get it back on track

    The financial system has stopped serving the real economy and now serves itself. Debt-fueled finance has become a saccharine substitute for the real thing, an addiction that just gets worse. Credit has become a palliative to address the deeper anxieties of downward mobility in the middle class. .

    Original link : http://time.com/4327419/american-capitalisms-great-crisis/

    • ”Credit has become a palliative” So so true, death will be painless but after death its going to be hell !

    • There has been no stimulus, Congress has not provided any. All actions taken so far have been to prop up the payment system because if it goes down the trade shock will throw the entire world into a depression of biblical proportions. Why – ???? – because of the dominate economic ideology and capture of governments and international institutions staffed with power brokers who subscribe to Theoclassical [Austrian or Neoclassical] economics. Which at the end of the day is more about political – social organization than it is about empiric economics.

      • if when it goes down the trade shock will throw the entire world into a depression of biblical proportions.”
        It can be nothing but ‘when’ in a productivity-based system that is in contraction. The 10’s or 100’s of millions of people who suffered directly or indirectly from the ’08 GFC won’t forget what happened and how near to financial death they came. In those circumstances they won’t needlessly spend whatever liquidity they have/are given, they will save it or repay debt or ,worse, speculate with it. Be productive? No way! and that is why it will be ‘when’.

      • Gezz WW…. does the lure of some shiny metal do your head in much… see comment above thread…

    • WW,

      This reads a lot like a more palatable version of what Michael Hudson says in ‘Killing the Host’.
      The idea that not all money is equal and not all profits are good profits is starting to gain currency because people are seeing the destruction that a FIRE industry that makes its own rules can do. I’m not sure if Time Magazine still has any heft, but that an article like this one appeared provides a little bit of hope that the idea is moving in from the fringes.

  22. pingupenguinMEMBER

    What the hell….
    http://www.domain.com.au/news/bullish-buyers-and-strong-auction-results-indicate-sydney-prices-are-set-to-rise-20160521-gp0mm0/

    Unrenovated bungalow in West Ryde sells for $3.1m

    “If clearance rates hold at these levels it would be a surprise if prices didn’t rise,” Dr Wilson said.
    “It is more evidence that investors are being attracted to Sydney again with the prospect of a change to negative gearing if we get a change of government,” he said.

    • QuentinMEMBER

      I always enjoy the Sydney property stories where the amount it fetches over the reserve is about what you think the value should be altogether.

      • pingupenguinMEMBER

        Except I don’t think that place is even worth a million, let alone 3!!!

    • Original John

      I read the link and also another from above where Shorten is defending his NG policies saying that they will only result in a small adjustment in prices. I have also looked at the numerous articles from Oz press and a few comments from Weibo/WeChat on selling off the plan prior to settlement due to the changes in lending and capital flow restrictions.

      So I don’t NG, we own our properties outright in Sydney. From my reading, the money to be made is through capital appreciation at a good clip to outweigh the expenditure in taxes, interest, repairs etc and the small tax reclamation (spend a dollar to save 38 cents on tax). So the labour policy will grandfather in NG for existing and only allow it for new builds as it has been explained to me. So why would I rush out and overpay for an “asset” to lock in a deduction ahead of a potential law change when said change will result in a decline in value of said asset thus eliminating any potential profit I could have made from capital gains? Wouldn’t it be more prudent to buy up the assets that will eligible under the new rules such as the new land release in the ACT? Seems to me that ACT buyers have this correct and Sydney buyers will need to demolish to get any capital gains on their overpriced blocks.

      Always get sick when I go to China, bad flu again.

      • OJ, you have to remember that quote is from Doc Ando Wilson. So all logic goes out the window.

        I am still interested to see what gibberish he has written in his Phd thesis at RMIT in 2003.

      • OJ, it would seem that the buyer frenzies referred to in this article didn’t have a lot to do with negative gearing. Most of these properties were homes people were buying to live in, or to pull down and build a single residence.

        “So why would I rush out and overpay for an “asset” to lock in a deduction ahead of a potential law change when said change will result in a decline in value…?”

        Even though the prices in Sydney are beyond ridiculous, and even though the author brought neg gearing into the article, it wouldn’t seem to apply in these examples. I’m assuming these buyers still think there is plenty of money to be made further down the track with these properties. And maybe they’re right, if we keep going on the same trajectory, at least for owner-occupied places.

      • Original John

        MD you have nailed the issue I was struggling with. The arguments presented by the articles author do not make any sense when you consider the broader context of the changes he claims to be driving the behaviour. It also does not seem to align with the case examples he defined (West Ryde as an example where buyer plans to knock down to build a new place for himself to live in). It actually smells more like cashed up buyers who have sold earlier seeing a market not collapsing and getting a whiff of extra hopium from lower rates deciding that the worst is now behind them and the next move will be up. Time to buy the dream house to live in before the next rate cut sends prices even higher. And it really does appear that there is a shortage of house stock in Sydney in the closer in suburbs. My observation is that a bifurcated market seems to be starting to form in Sydney/Melbourne, not just along proximity (greater west in Sydney vs eastern/north shore) but along dwelling type (houses vs apartments). If this is happening, then I am scared, this happened in Raleigh NC just after the Lehmann moment. We had a large drop in apartment prices as the number of new stock on market swelled. House prices rocketed up as supply became constrained. It really did feel at the time like if you did not buy something on a decent block soon, you may wait years to get into the market with the increases we saw. Well we all know what happened, 50-60% drop in prices, houses took years to sell and some are still well below the peaks 6 years+ later. Oh well, Australia is different, nothing like anywhere else in the world so I guess the time is now to buy before prices double in the next 4 years.

        @pop – hate the RMB50 noodles – tried them. Wife in Nanjing today, so I am off to try some local Sichuan food at a friends place. Need to expand my Chinese vocabulary 🙁

      • OJ

        You are reminding me of the Niels Bohr quote
        “You’re not thinking; you’re just being logical” You have to assume a lot of people are not logical. It’s like spending a lot of money in June to save tax!!!

    • proofreadersMEMBER

      All good – – those alert cops at the RBA and APRA have everything under control? No galloping inflation in Straya – just raging deflation. Just as well some foreigners are a bit stymied by having to get FIRB clearance (rubber stamp?) to bid at property auctions, otherwise this property market could be a wee bit toppy?

    • Developers just distort this whole conversation.
      There is reverse correlation between land release/development and prices. Not because of land banking or anything else, but because prices are driven by a bubble. The bubble by definition has nothing to do with supply, however counterintuitively it encourages local governments to overzone and rush through developments to capture revenue.
      So reverse the standard developer lobby line that prices are driven higher by restrictive zoning and you get the truth.
      Prices are driven higher by irrational demand, higher prices lead to over zoning.

      • Concur….

        Then whack some control fraud on top of it and presto…. a thousand butterfly’s take wing…

      • TL;DR inelastic market with outrageous regulatory *cough* vested interest *cough* manipulation.

        Plus banks

      • mig… the “regulatory” dramas are a direct result of capture by the private sector as well as the banks… all aided and abetted by econnomic shaman [see below link].

        Disheveled Marsupial…. I mean Greensplain…. come on…

  23. Looks about right!

    One of the weirdest oddities yet is the advent of the 50 year, or even 100 year, government bond……Once upon a time, it would have been thought a sign of madness even to suggest a security of such extraordinarily long maturity. But that was before seemingly never ending zero interest rates and ultra-low inflation set in….. investors have simply made up their minds that Europe has become Japan, and is therefore destined for a decades long deflation……In their conceit, governments like to think that appetite for such long term bond issues is a mark of confidence in their own economic brilliance. In fact it is precisely the reverse; it is a sign that investors have lost their appetite for risk, and rightly or wrongly, resigned themselves to a world of nil growth for a decades to come.

    http://www.telegraph.co.uk/business/2016/05/21/europes-fifty-year-bonds-signal-decades-long-slump/

  24. Little Iceland is leading the way with renewable energy.. while we’re busy here bidding house prices up.
    http://www.renewableenergyworld.com/articles/2016/05/how-iceland-s-energy-start-ups-and-innovations-make-it-a-developer-s-dream-location.html

    Enterprises are looking to countries like Iceland and its stable grid, low-cost power and renewable resources to support their storage needs.
    As a co-founder of Startup Energy Reykjavik, Landsvirkjun teamed up with Arion Bank, GEORG and Innovation Center Iceland to develop a mentorship-driven, 10-week seed stage start-up accelerator and investment program, Startup Energy Reykjavik. The program focuses on energy-related business projects and provides start-ups with the funding and platform to get in front of those critical investors that have the potential to sink or swim their entrepreneurial boat. The competitive program offers free hosting and services, a creative work space and instrumental mentorship with immeasurable value and guidance to entrepreneurs to get their companies off the ground.

    • Andrew LeesMEMBER

      Iceland is rather a special case wrt renewable energy – it has limitless geothermal on tap. There is an enterprising farmer in the north of the island growing bananas for export to the EU. How does he do it? Private geothermal combined heat and power station. You can do anything with limitless energy. Having said that they are a fiercely independent, pragmatic and resourceful people, so yes, it is a no doubt a good place to start up an energy related business for export.

      • ErmingtonPlumbingMEMBER

        Let us hope that the same geology that makes such enterprise possible, doesn’t also “burn” them.

        Iceland has a high concentration of active volcanoes due to its location on the mid-Atlantic Ridge, a divergent tectonic plate boundary, and also due to its location over a hot spot. The island has 30 active volcanic systems, of which 13 have erupted since the settlement of Iceland in AD 874.[1]

        Over the past 500 years, Iceland’s volcanoes have erupted a third of the total global lava output.[3]

        The Lakagígar system erupted over an eight-month period between 1783 and 1784 from the Laki fissure and the adjoining Grímsvötn volcano, pouring out an estimated 14 km3 (3.4 cu mi) of basalt lava and clouds of poisonous hydrofluoric acid and sulfur dioxide compounds that killed over 50% of Iceland’s livestock population, leading to a famine which then killed approximately 25% of the island’s human population.[4]

  25. GunnamattaMEMBER

    worth a read…….

    Why the major parties fear a policy program

    https://www.thesaturdaypaper.com.au/opinion/topic/2016/05/21/why-the-major-parties-fear-policy-program/14637528003270

    Particularly

    Labor has moved recognisably leftward from past years, with its proposal to reconfigure negative gearing, but its offerings on affordable housing and education opportunity remain limited.

    At the moment I can see them getting up (though PMT surviving mortally injured wouldnt surprise me either) and bitterly disappointing on the subjects of housing reform/affordability and education justice.

  26. “Yves here. We’ve written from time to time that the notion that companies exist to maximize shareholder value was made up by Milton Friedman in 1970 in an intellectually incoherent New York Times op ed. It started to get traction in the 1980s as the leveraged buyout boom made people like Henry Kravis extremely rich and those who wanted in on the act were in need of intellectual air cover.

    One minor quibble with this piece: Lynn Stout makes it sound as if the new “maximize shareholder value” has become a duty. If you read any guide for board members, you won’t see it listed among the things they have to worry about. It is more accurate to say that it has become so widely accepted from the standpoint of business practice that CEOs have succeeded in institutionalizing it. It’s considered to be good practice to have share-price linked pay schemes even the author of the theory that executives should be paid like entrepreneurs, Harvard Business School’s Michael Jensen, has repudiated his earlier work. Similarly, compliant compensation consultants and board regularly find ways to justify paying CEOs for non-performance (making excuses for moving the goalposts) and overpaying for what performance there arguably was (when high CEO pay is negatively correlated with performance). In other words, the “maximize shareholder value” regime has served as an excuse for greatly increasing the level of executive pay relative to average worker compensation. often with destructive results.” – snip

    http://www.nakedcapitalism.com/2016/05/how-the-maximize-shareholder-value-myth-weakens-companies-and-economic-systems.html

    Disheveled Marsupial… One of the biggest dramas out of this whole episode is having to de-tangle the web of lies and half truths used to justify unsound economic and political activity’s…

    • Top comment to go with it…

      “There’s no better example of corporate predators than activist hedge funds. . .

      Flesh eating disease would be a better analogy than cancer for hedge funds attacking corporations.

      Bill Clinton can be thanked for the twist of rules to allow hedge funds to grow exponentially. The seeds of this form of destruction were sown roughly 20 years ago when the maximum of 99 clients per hedge fund was changed to an unlimited number. Again we see the results when narcissist politicians surrounded by psychopaths do the deeds that benefit the psychopaths at the expense of the peasants.

      These different elements work together over time to produce a number of important social benefits, including not only dividends and share price appreciation for stockholders, but also interest payments to bondholders, salaries for employees and executives, useful goods and services for consumers, tax revenues for taxing governments, and technological innovations for future generations.

      Irony. The pension funds of government employees are used by hedge funds to destroy the companies that supposedly make a taxable profit. The result is skilled hedge fund managers making a million dollars per hour, while the corporate hulk left behind that was eaten alive, never pays a dollar of tax again.

      The employees of the destroyed corporations lose their pensions, yet are expected to top up the pensions of the public sector employees that invested alongside the hedge funds and didn’t make as much as expected. That fault lies not with the public sector employees. It’s the managers of the pension fund that align themselves with the flesh eating predators, and personally either gain from that alignment or are not harmed.

      The first and absolutely necessary step is to recognize that the business sector is indeed a system. If we want it to work well, we need to treat it as such. That includes looking out for potential problems like decreasing diversity, lack of resilience, runaway feedback loops, and so forth. Ironically, one of the most dangerous feedback loops is the ability of wealthy individuals and institutions to buy the legislation and regulation they want through campaign contributions and lobbying.

      The system is in control by the predators. How does a peasant survive, not be eaten and fight back?

      It’s a David and Goliath fight, and David has loaded his slingshot with a rock named Bernie Sanders. It’s a long shot and if it doesn’t hit Goliath square in the forehead, Goliath eats us all.” – cnchal

  27. DarkMatterMEMBER

    Oculus VR Goggles – this will change everything! Back 3 years ago I kickstarted the Oculus project – because it seemed like a really good design. Well, as you know they were bought for several $B by facebook and now have engineers like John Carmack who is the best of the best. So they sent all the original backers a free version of their new consumer VR goggles.

    So, last night we connected it up and watched some demos. One demo is of a rocky landscape with an alien poking his head in your face, another is in a museum where a T Rex see you and comes over and does scary stuff. The effect is stunning. Until you see it, you will not be able to estimate how powerful this is. Lucid dreaming. Alternate reality. With the head tracking you brain simply accepts that what you see is real.

    I am even more convinced now that much human activity will move into virtual worlds and that means the basic rules of society and economies will change in a fundamental way. We are heading towards a sort of socioeconomic singularity which cannot be understood using conventional thinking. All the signs are there that we are circling the plughole, which is a bit like the way black holes work. There are a number of fundamental changes that just don’t seem to have any rational explanation in conventional thinking –

    The idea of objects being unique and having value is failing. Designs can float around on the internet and you can 3D print as many as you want. This is like when the Record Industry discovered that people didn’t want their plastic CDs, they just wanted the songs which were just data.

    Human labour is no longer the universal currency. Most things can be automated, so work has less value. How can that support a consumer growth economy?

    Energy can be obtained from sunlight and probably anything can be made from carbon (graphene). That is the same model as plants – which have been making stuff out of thin air for about a billion years. That cycle is logically an end point for all manufacturing. Again, this doesn’t fit the consumer growth model.

    Finally, as we move to virtual worlds, it is important to note that the rules of a virtual world are somewhat arbitrary. There are no laws of exponential growth or constraints. The laws of physics can be changed anyway you want. The human experience will be radically different in virtual worlds, with unpredictable results.

    • “The human experience will be radically different in virtual worlds, with unpredictable results.”

      So like psychedelics then? We’re going to mass dose an unwitting public… Again…

      • Concur mig…

        Already kids are showing up in physio after school breaks for head, neck and back issues due to excessive use of electronic devices, not to mention dramas with natural depth perception.

        Disheveled Marsupial…. ummm… sorta like the sugar experiment methinks…

    • Mining BoganMEMBER

      Will I still be able to go outside and talk to people? That’s kinda important. Healthy too.