Silly Jim is about crash houses, economy and Labor

The energy shock is going to crash houses, the economy and Labor. I can’t put it any more simply than that.

So why is silly Jim Chalmers saying this:

While in opposition, Anthony Albanese called for former prime minister Scott Morrison to pull the trigger on capping gas exports by invoking the Australian Domestic Gas Security Mechanism, which limits producers from exporting when there is a shortfall in local supply.
“There is no simple mechanism that would immediately take this pressure off the gas price,” Dr Chalmers said.

“This spike in the price has a number of causes, and it does not have a single solution. If there was one, somebody would have reached for it.

“There is a whole process and I would not want to pre-empt those discussions, but there is no single solution, whether it is liquid fuels, whether it is the gas price, the electricity price – each of these are concerning on their own, but together, potentially extremely challenging to the Australian economy.

“I will discuss with the regulators and with Chris Bowen and Madeleine King in resources to make sure that we are managing this the best that we can and that we are monitoring developments.”

The answer could not be more simple and Silly Jim better hop to it or he is going to oversee a one-term Labor government blamed for a historic recession.

Yesterday I received a number of phone calls that I have never had before. They fell into two broad categories.

The first were about unprecedented energy price spikes.

The second were about the parlous state of housing markets and how “the big one” is upon us in terms of an unprecedented price bust.

What was most disconcerting was that nobody in either group understood the other.

In short, as things stand, the best house price forecasters I know are saying house prices are about to crash by one quarter to one third as the RBA hikes above a 1% cash rate.

But they had not factored in the local energy market crisis so they had no idea of the kind of inflation and rate hikes that that might entail.

The energy group didn’t understand the broader macro implications of the energy price hikes. That they will corner the RBA into hiking more than Australia’s indebted households can handle and, if left unchecked, will trigger a house prices crash and recession.

Silly Jim Chalmers reminds me of both parties. He appears to have no idea whatsoever about the juggernaut hurtling towards the economy and government.

So, here’s your heads-up, Silly Jim.

  • Pull the trigger on the ADGSM and force gas prices below $10Gj (recalling that the policy is bipartisan and can be altered any way the government likes).
  • Extend domestic reservation to coal as well using an export levy and rebate system to motivate sellers.

Taking on a  fight with miners may be your worst nightmare but the alternative is worse.

The energy shock is going to crash houses, the economy and Labor. I can’t put it any more simply than that.

Houses and Holes

Comments

  1. The Travelling PhantomMEMBER

    Well done on your efforts, it’s all over radio stations and msm news papers

    • +1, the article in news.com.au was forward to me by several people who normally would be blithely ignorant.

    • Amazing how this article could have made it to the mainstream press when the vast majority of MB commentary over the years to prevent or diffuse this nonsense was ignored. Must save housing!

  2. Because taxing the ill gotten gains of the gas cartel to subsidise local prices would be deeply unpopular!

    • Because taxing the ill gotten gains of the gas cartel to subsidise local prices would be deeply unpopular!

      It is with the shareholders of gas cartel companies.

      They’re e likely to grassy knoll a politicians, rather than send a sternly worded email.

    • Strange EconomicsMEMBER

      Even the UK Tories right wingers have added a windfall tax on the oil and gas to give to the punter’s bills.
      And that’s the most chaotic government ever (except at organizing non-parties, which no one attended. Oops a photo)
      Time to use the political capital to take on the gas miners.

      Before the punters receive their gas bills of another 2000 a year..

  3. What’s the big deal?
    We need to clear the decks of dead wood.
    MB must have bought a few investment properties.

    • restore housing affordability (lower house prices, higher rates means saving for a deposit much easier), getting off the zero-lower bound in rates removes distortions in financial markets, income becomes a source of return once again and hasten the green transition. what’s not to love?

      sure, some people will get hurt a lot, especially the over-levered and property investors, but who cares about them, meanwhile the reason we have a welfare system is to help those on the fringe of society who also get hammered during an economic restructuring. we should have done this restructuring (which mb have advocated for since inception, or at least since i have been following since 2012, what’s changed fellas???) while we could control the pace, but now markets are in control and they don’t care about your feelings

    • The big deal is, if the property market gets absolutely smashed, it brings the whole economy down, because we have progressively hollowed out our economy. Whilst it’s simple to say “it needs it”, the reality would hurt a lot more than most people realise. Even if I do think “it needs it”.

      • All the need to do is keep their jobs. If money is going to be used to bail anything out, then keep wages the same.

        It will ultimately maintain aggregate demand via consumer staples and consumer discretionary spending.

        The indebted just need to pay their obligations, nothing more. The economy doesn’t get smashed.

      • if the property market gets absolutely smashed, it brings the whole economy down, because we have progressively hollowed out our economy

        Hollowed out economies need to be brought down so that solid and robust economies can rise up to fill their place. Unfairly high prices need to be brought down.

        • Exactly this. And I really don’t understand the arguments to the contrary. Australia has been a fool’s paradise for years. You can’t defy gravity forever. Take the medicine already.

  4. happy valleyMEMBER

    Albotross: “No one left behind, no one held back”

    Every one bar the resource companies must be in the above categories now?

    PM-in-waiting Il Dutto must be salivating at the thought of getting occupancy of HIS two houses as early as 2025?

    • I’d say it has a ‘proper’ Labor party.

      McGowan has more in common with say Jeff Kennett, than he does with Albanese.

      The shame was the deposing of Alan Carpenter, to me that government was brilliant. it’s fault was it was so low key and so under the radar, it undersold itself.

  5. BackwardArseCountryMEMBER

    What load of rubbish. No body gives a shit that’s why. Plain and simple. I have a lot of friends (smart bunnys most of them are economists) who work in the energy space who advise the goberment 🙂 and it is not the pollys it is the lobbyists who are trashing the economy. It is all just vested interests and to who you must serve who is your master it is not the Australian populus, to which 80% are asleep to anything apart from what is on the TV, I can tell you that much!

  6. RomulusMEMBER

    Yup it doesn’t get any simpler than the way you put it DLS. Lab need to prepare whatever the need to do on the messaging front to make joe public understand/counter the inevitable gas company ad campaign that will come with it.
    The alternative is super high prices which will be blamed purely on Lab (see Biden’s experience).

    At least this one is simpler where Lab can say they are trying to reduce gas bills than some esoteric carbon tax/emission trading scheme which the public doesn’t understand.

  7. Arthur Schopenhauer

    From Wikipedia:

    From 1999 to 2001, Chalmers worked under Queensland premier Peter Beattie as a research officer in the Department of Premier and Cabinet. He was the ALP’s national research manager from 2002 to 2004, media adviser to Shadow Treasurer Wayne Swan from 2005 to 2006, deputy chief of staff to Opposition Leader Kim Beazley in 2006, and a senior adviser to New South Wales premier Morris Iemma from 2006 to 2007. After Labor won the 2007 federal election, Chalmers returned to work for Wayne Swan in the Department of the Treasury, as deputy chief of staff and principal adviser (2007–2010) and then as chief of staff (2010–2013).[3] He briefly served as the executive director of the Chifley Research Centre in 2013.[8] In the same year he published Glory Daze, a book about the disconnect between Australia’s strong economic performance and popular discontent with government.</From 1999 to 2001, Chalmers worked under Queensland premier Peter Beattie as a research officer in the Department of Premier and Cabinet. He was the ALP's national research manager from 2002 to 2004, media adviser to Shadow Treasurer Wayne Swan from 2005 to 2006, deputy chief of staff to Opposition Leader Kim Beazley in 2006, and a senior adviser to New South Wales premier Morris Iemma from 2006 to 2007. After Labor won the 2007 federal election, Chalmers returned to work for Wayne Swan in the Department of the Treasury, as deputy chief of staff and principal adviser (2007–2010) and then as chief of staff (2010–2013).[3] He briefly served as the executive director of the Chifley Research Centre in 2013.[8] In the same year he published Glory Daze, a book about the disconnect between Australia's strong economic performance and popular discontent with government.

    And:

    In March 2013 Chalmers married Laura Anderson, a journalist and writer who worked as a staffer to Penny Wong and Julia Gillard. The couple have three children. Their wedding, attended by Gillard and Wayne Swan among others, occurred two days after an ALP leadership spill. While in attendance Gillard “convened a council of war in a specially set-aside room to frame a new ministry”.

    The living embodiment of the platonic ideal of a political stooge.

    Be Independent. Vote Independent.

  8. All this is government-originated problems: lockdowns, and now the Ukraine War, plus letting Wall St speculate on and hoard commodities…so just jump in and fix government problems; they’re not market problems!! So intervene governmentally!

    The ALP can win so many Aussie patriot hearts by pulling the ADGSM trigger, and turning some coal back to domestic usage – honestly, they will win so many hearts and minds. The domestic political capital is there, waiting to be taken. Gosh, just do it. Some of the hard-right patriots will even vote ALP next time. Do it.

    • Make fossil energy cheaper! But what about the environment. Think of the children would you.

    • The ALP can win so many Aussie patriot hearts by pulling the ADGSM trigger

      Yes, but the problem is this is generally spawned by having a genuine desire to see improvements to the lives of Australians.

      When you wake up each morning and regard most Australian guilty of a sin, you will never move to offer something that lifts them up. You’re only motivated to inflict harm upon them.

    • While you may be right, Labor is blinded by their perceived reaction of business and the murdoch press, and how they think voters will respond to their howling.

      It’s obvious to me that it doesn’t matter how high a persons intelligence my be, they can still be bullied and scared into behaviour their bloody intelligence should tell them is not correct. Voters ignored the murdoch editorials and handed the LNP a bloody nose, it doesn’t matter that Labor wasn’t a proportional winner on this, all that matters is that voters ignored murdoch.

      The perceived influence of large slabs of rw media such as the murdoch press, Skynews, 2GB and their individual mouth pieces such as Jones, Laws, Fordham etc, is grossly over estimated and feared for no good reason.

      • Ah, so it’s all evil Murdoch’s fault that Labor can’t/won’t address the east coast gas crisis?

        And what happens when this spirals into a full-blown economic and cost of living crisis? Do you think the Murdoch media will give Labor a free pass on that? Wouldn’t it be smarter to tackle this now rather than let it fester and give Murdoch more ammo?

        Murdoch Derangement Syndrome often clouds otherwise rational people’s judgement. Despite the false assertions of the bitter and twisted K-Rudd, Murdoch hardly has a media monopoly in this country. Not even close really. The various wings of Nine/Fairfax as well as our national broadcaster, the ABC, are all fairly pro-Labor.

        • drsmithyMEMBER

          The various wings of Nine/Fairfax as well as our national broadcaster, the ABC, are all fairly pro-Labor.

          Sublime. I LOLed.

        • AFR is Fairfax. And yes the Murdoch press has had a perceived impact since forever. Why does that old [email protected]@@ maintain his investment in it for little to no return? Power and influence for his other interests.

          Edit: The ABC is hardly one-sided these days.

          • drsmithyMEMBER

            Edit: The ABC is hardly one-sided these days.

            It is, just not in the way suggested. 😉

  9. RomulusMEMBER

    @bcnich – have your views changes that inflation/interest rates have peaked?

  10. Looks worryingly like Mr Albanese aspires to be Australia’s Mr Biden ( nothing fundamental will change )………..sucks to have to be a man of destiny when you just want a quiet life. This guy from the IEA gets it……worse than the 70’s and will last longer……..the longer you wait the further you have to move. Neither Eurasia nor 5 eyes plus the EU can afford to back down from this face-off

    https://www.reuters.com/business/energy/summer-fuel-shortages-looming-over-europe-iea-chief-tells-spiegel-2022-05-31/

    • Arthur Schopenhauer

      Our neighborhood is starting the process of finding a qualified Teal candidate for our safe labor seat.

    • I remember in the mid 80s there was a massive oil price shock and the value of V8s plummeted. It would be good to see energy prices rise and persist and push many of those monster dual cab utes into oblivion. I know I am dreaming.

      • Because you want one cheap or because you feel like dictating what other people can drive?

        • Oh, I like ‘em, it’s just that they are inappropriate for urban environments- they clag up the roads and especially car parks where spaces are getting narrower but most of all, it’s the DHs who don’t need them but drive them are aggressive sh!ts on the road.

          • A hi-viz vest is a licence to drive like total maniac as far as I can tell. Also highly correlated to littering Mcdonalds take away straight out the window.

    • It never ceases to amaze me that you can become the leader of the Labor Party, so you’re no soft @@@@, yet still look like a ‘rabbit in the headlights’ when it comes to standing up to blatant gouging of the country. It’s like some country tuffs threatening father & son Tszyu at the pub, both parties should know who holds the power, but it appears the Lab gov doesn’t!

  11. According to Labor narrative, Gillard’s historic and treacherous sellout to pampered miners simply never happened.

    That’s why it’s possible Chalmers and Bowen might do it all over again.

    • No, she “consulted extensively” with industry in designing new tax arrangements.

    • agree, again. I know that I will get hostile reactions whenever I slam Gillard’s treason. Most are simply naive, some are play the misplaced gender card as well as naive. Of those that actually listen and comprehend the litany of “crimes” , all are shocked to the core. She had form prior to politics too.

  12. Jim Chalmers is an expert. He is an expert vote collector. He is an expert on doing just enough to collect just enough votes from the dumb Australian public.

    As you can see. He is very successful in what he does.

    A vote-collecting expert would generally be clueless about energy or any technical subject. I’m not surprised by the garbage coming from his mouth.

    Don’t vote for him next time.

    • Like any good career politician, he reads the talking points provided to him, by whom they are indirectly written is the only interesting data point.

      • 1) number wasn’t that low
        2) Libs got less votes
        3) long live preferential voting

        • Election results – https://www.abc.net.au/news/elections/federal/2022/results/party-totals

          Coalition – 4,921,292 (34.17%)
          Labor – 4,465,318 (31.01%)
          Green – 1,631,674 (11.33%)
          ON – 669,796 (4.65%)
          UAP – 558,227 (3.88%)
          Independent/Other – 1,412,547 (9.81%)

          Formal votes – 13,658,854 (94.85%)
          Informal votes – 742,456 (5.15%)

          He says 7/10 didn’t vote for Labor … when in reality 6.9/10 didn’t vote for Labor.

          You sure made him look foolish.

        • Nope, the Coalition got a higher primary vote than Labor. Labor’s primary was the lowest in 90 years.

          Both major parties suffered a huge drop in their primary vote. I, for one, happen to think that this is a good thing. The duopoly is failing Australia and needs to be shaken up.

          In any case, the key point is that the incoming government has a weak mandate and doesn’t have a huge deal of support out there in the electorate. Don’t expect much of a honeymoon.

          • What I find interesting about the preferencing system is that even though Labour’s primary vote was so low they were still the majority’s least worst choice. Hardly a mandate for all things Labour though. More a mandate for the middle ground of TeaLabour

      • No, not directly, but indirectly the results show that given a choice between the two, it was labor over LNP. Get over it.

    • Yes, but the alternative are the incompetent desk-wankers who put us in this position to start with.

  13. So, here’s your heads-up, Silly Jim….Pull the trigger on the ADGSM
    Or don’t, ffs just let it burn!
    Let it burn …Let it burn …Let it burn.

    There’s no moderate pathway back to sensible house prices, none of the involved parties will let this happen, so what has to happen is something catastrophic, something uncontrollable, something devastating .
    With gas prices we have just that thing happening. It’s wild, it’s out of control and it’s ripping our economy a new one.
    I say: Let it burn.

  14. kierans777MEMBER

    Taking on a fight with miners may be your worst nightmare but the alternative is worse.

    Now is the time to take on that fight. While we’re still in the honeymoon phase from getting rid of Scotty. Ride out the whinges from vested interests and reap the political rewards later.

    Maybe contact the Teals and see if they will listen. Or the Greens. Or anybody who is not going to throw this opportunity away.

  15. It now seems certain western governments (and bureaucracies) around the world want high fossil fuel energy prices. I reckon the thought is that the higher and longer they can drive these prices up the more likely they’ll be a rush into “green” alternatives. Maybe they’ll personally benefit from such a move.

    Of course, the 80% of the population whose lives will be destroyed during this transition (that the economy, infrastructure and manufacturing base is not setup for), well, they can just eat cake right.

    • Or go for the simple answer – fossil fuel donates a LOT to political coffers. They are also making tremendous profits now due to the ‘uncertainty’ in energy markets, whilst politicians sit on their hands and vacillate like Chalmers and the ALP.

      No need for the CT stuff when good old fashioned greed explains it better.

  16. JoeJackMEMBER

    I see in “The Age” today that Chalmers says “There is no quick fix”.
    That doesn’t inspire any confidence from me.

    • This problem has been developing for years. Surely someone in Labor had time to develop a set of immediate reform options?

      • So the Libs can spend a decade letting the wheels fall off, but it’s Labor’s fault for not fronting up with a set of spares two weeks into it?

  17. But if he does something about it, that may cause profits for the gas cartels to go down, and worse yet, endanger a nice sinecure after he leaves pubic office.

  18. Curtis Island will be trembling with fear as Silly Jim holds his hand on the Domgas Reservation Lever – LOL! Jim WILL NEVER HAVE the BALLS to pull it

  19. Leroy Huggins

    This is why articles like “the Liberals are doomed unless they embrace change” are completely wrong. As soon as Labor reminds people what it is truly like in government, sufficient people will rush back to gift the Liberals multiple new terms.

  20. Australia is facing a number of serious challenges. But what has the new Labor government been talking about this week? Enshrining a racially discriminatory ‘voice’ in the constitution.

    It’s going to be a wild three years.

      • Don’t bank on it. If people’s power bills go through the roof whilst ALP waffles self-congratulations about having lots of chicks in parliament, they could very well be a one term government. Especially if that roof over punters heads suddenly becomes unaffordable due to “normal” interest rates, say 7-8%, which so many punters have never experienced before.

        At that point I’d say all Dutton would have to do is shut his mouth and pretend he’s a human.

  21. The Grey RiderMEMBER

    Australians are about to get a hard lesson that every unit of economic production is underpinned by an equivalent unit of energy…not cheap debt, and astronomical house prices.

    • Umm, haven’t you heard? We don’t even need gas anymore as the Greens have a plan for 100 percent renewables by 2030. Green, clean, abundant, reliable, cheap energy for all!

  22. My shed is currently being installed, when it is complete 30kw/h of panels and 60kw/h of batteries will be installed (bought and paid for last year before the price rises). Right now, feeling a bit like Nostradamus.

    Anyone who thinks power prices are going backwards in the next 10yrs has rocks in their head. More people, more resources needed. Finite supply and a rigged game (OPEC/Gas Cartel/Corrupt Gov) means higher prices.

  23. Charles MartinMEMBER

    I’m gunna miss the Scomo schit hat, but the Chalmers propeller hat is a worthy alternative.

  24. Well whoocoudanode.
    I would love it if they start handing out energy subsidies to the poor as part of centrelink payments that feeds into every higher inflation to then head straight into house prices.