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Weekend reflections

May 22nd, 2009

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.

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  1. Alice
    May 23rd, 2009 at 10:02 | #1

    Some execs on the RBA would also appear to have interests in a currency printing input firm (some polymer used in printing money). As well there are hints of AWB kickbacks style of business in those countries where…its who you know that counts, not what you sell. Let me guess? Those RBA execs were appointed by??….

    This could give those who dont like central bank interventions something to get hot under the collar about.

  2. philip travers
    May 24th, 2009 at 12:12 | #2

    I could have reason to be more than hot under the collar about this RBA. matter,although no-one who visits here,if they had the inside gossip of why,would own up on my behalf!?

  3. BilB
    May 24th, 2009 at 14:04 | #3

    An important report/discussion

    http://www.theoildrum.com/node/5382#more

  4. May 24th, 2009 at 14:55 | #4

    Conservative opportunism and Labor timidity in the face of economic meltdown

    Recent polls suggest an increase of support for the conservatives in Australia under Malcolm Turbull. In particular, the conservative parties have been putting on the ‘hard sell’: that Labor is an irresponsible economic manager, and that deficits and debt finance are unsustainable.

    Yet despite this, the conservatives have made little point of differentiation between themselves and Rudd Labor’s 2009-2010 Federal Budget. Instead, there is an opportunist war of perception – playing upon ingrained prejudices. Turnbull has decided to oppose progressive changes to the Private Health Insurance rebate which would see benefits cut for higher income earners – with some of this redirected towards needy pensioners…

    For more read:

    http://leftfocus.blogspot.com/2009/05/conservative-opportunism-and-labor.html

  5. carbonsink
    May 24th, 2009 at 17:53 | #5

    I went to a shopping mall today. It was packed, long queues at checkouts (for discretionary items). People weren’t browsing, they were buying.

    Meanwhile I read about US shopping malls turning into ghost towns.

    How has Australia achieved this economic miracle?

    We don’t make anything, we don’t save, private debt is off the scale, our houses are overpriced, and the Chinese want a 45% pay cut for our dirt.

  6. plaasmatron
    May 24th, 2009 at 19:22 | #6

    #5 Carbon sink

    You know Denial, Dat river in Egypt. Australians are swimming in it. Australia’s economy has about a 12 month phase lag on the world, although the effects of climate change seem to be hitting there earlier than other regions. I’m still astounded by Swan reckoning that there will be 4.5% growth in FY10/11. I’d bet my house against that … if I had one.

  7. May 24th, 2009 at 21:00 | #7

    ‘Shock Doctrine’ style public asset fire-sale threatened in Queensland

    I note that the Queensland Government, exactly in the style that has been chronicled in Naomi Klein’s “The Shock Doctrine” have seized upon the recent catastrophic floods in South East Queensland as an excuse to announce a fire sale of yet more publicly owned assets. See Sunday Mail Story “Floods, storms spark State Government fire sale”.

    Once again assets are to be flogged without the owners of these assets being consulted.

    Before the state elections were announced, I asked Queensland Premier Anna Bligh and Treasurer to inform the public if they had any plans to flog off any more assets, but was ignored.

    I also challenged them (as well as Lawrence Springborg) to publicly debate either with myself or any other candidate opposed to privatisation the case for privatisation, but was ignored.

    I also tried in vain to force the newsmedia to raise this as an election issue, but was ignored.

    If they were so sure of the case for privatision, why did they refuse to openly discuss it during the election campaign?

    Whatever the reasons, they have no more obtained a mandate to privatise Queensland Rail, our electricity generators, the Port of Brisbane Authority, etc, than they did to privatise the SGIO, the Dalrymple Bay Coal Loader, the Gladstone Power station, TAB, the Golden Casket, Ergon, the retail arm of Energex, Cairns, Mackay and Brisbane airports.

  8. May 25th, 2009 at 02:14 | #8

    # carbonsink Says: May 24th, 2009 at 5:53 pm

    I went to a shopping mall today. It was packed, long queues at checkouts (for discretionary items). People weren’t browsing, they were buying.

    Meanwhile I read about US shopping malls turning into ghost towns.

    How has Australia achieved this economic miracle?

    We don’t make anything, we don’t save, private debt is off the scale, our houses are overpriced, and the Chinese want a 45% pay cut for our dirt.

    We are a nice place to study and live whilst we make hay in the shining sun. Thats more than enough for most financiers to take a bet.

    The US has gone on a half-decade long orgy of commercial and residential property development. But it does not have sufficient people with sufficient useful human capital to service the loans taken out to build all these White Elephants. No wonder the PRC is getting antsy.

    Bush’s weird combination of Right-liberalism and Left-liberalism brought the US to its knees. Basically Bush urged the “Masters of the Universe” bankers to take on the sub-prime “Greater Fools” borrowers, literally for more than they were worth. Uncle Sam has made up the difference. Its worth quoting the impeccably liberal NYT on the viability of, what I call, Bush’s “debtquity and diversity” play:

    From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

    He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

    The Strocchi theory of AUS’s continued economic good fortune, endlessly harped on over the past six months, is that we are the mirror image of the US in having higher quality of loan-providers and loan-servicers.

    Our bankers are providing their loans subject to stricter prudential regulation by APRA. And many of our borrowers are servicing their loans, one way or another, by a massive intake of high-IQ immigrants. This created a housing shortage, pushing up rents, propping up property prices pre-emptively solving bank credit crises.

    The Quiggin theory of AUS’s continued economic good fortune, tirelessly propounded over the past 15 years, is that it has mostly been due to an astounding run of “good luck”. Next to none of it has been due to “good management” by either the neo-liberal Keating or neo-corporal Costello administrations. To quote Pr Q quoting himself:

    In 1964, Donald Horne described Australia as ‘a lucky country, run by second-rate people who share its luck’. This epigram could be applied, with equal or greater justice, to the Howard government and its term in office, particularly as regards economic policy. Sooner or later, however, this kind of luck will run out.

    It hasn’t run out yet, though.

    Pr Q is surely right that “good luck” does come into it in more ways than one. The NE Asian economic juggernaut has showered a multitude of blessings on our humble soil. And ones that several AUS economic administrations can take little credit for. All the immigration in the world could not sustain AUS metro property prices for a moment longer if we were unable to:

    – borrow capital at ridiculously low interest rates from thrify NE Asians.

    – flog our minerals at lucratively high rates to industrious NE Asians.

    Not to mention the aforementioned swotty NE Asians flooding into our crowded unis and empty nests, easing their liquidity crises.

    But its churlish to deny Keating and Costello credit for their “good management” in continually cultivating the NE Asian economic relationship. And liberalising AUS’s economic relations with same.

    The property boom has been a way of capitalising on this relationship in a fairly populist way. So far we have gotten away with astronomical levels of debt because debt-servicing has not hit the skids.

    So long as both interest rates and unemployment rates stay below 10% (a fairly sure bet in my long-held view) I bet the run of well-managed good luck will continue.

    Any takers?

  9. nanks
    May 25th, 2009 at 07:48 | #9

    Has anyone else noticed just how often there is an advertisement for how great Qld/Australia is? The kids started noticing it after we came back from living in England/Europe for a while. Billboards, radio, TV, there is a consistent barrage of propaganda that we didn’t notice when away.

  10. May 25th, 2009 at 10:24 | #10

    Now we have Revolt by unions on work to 67 by Matthew Franklin, Chief political correspondent, at the Australian</A.

  11. carbonsink
    May 25th, 2009 at 10:52 | #11

    So long as both interest rates and unemployment rates stay below 10% (a fairly sure bet in my long-held view) I bet the run of well-managed good luck will continue

    Chances are it will. The world has already given us a 25% pay rise since March for owning a lot of valuable dirt, and keeping our interest rates 3% higher than anywhere else.

    The risks are the Chinese have stockpiled our dirt because they’re going to play hardball at contract negotiations and/or they intend to secure resources by acquiring distressed Aussie miners.

    On balance though, Australia is far better placed than just about anywhere. We would be in far, far worse shape if we actually made stuff. Look at Japan and Germany.

  12. May 25th, 2009 at 23:23 | #12

    Carbonsink wrote,

    “We would be in far, far worse shape if we actually made stuff. Look at Japan and Germany.”

    Could you please explain how having nearly everything made overseas is in our best interests?

    How do you think this country would have fared in 1942 if didn’t “actually make sutff”?

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