Weekend reflections

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

16 thoughts on “Weekend reflections

  1. predictions – djia down to 4000, recover and stabilize on 5000.
    The question is – short & sweet or long & bitter?

  2. Here’s an interesting idea: world income has peaked in the sense total goods and services will never recapture 2008 levels. Of course some will say it doesn’t matter since there are more cures for cancer or flush toilets installed. Maybe the Malthusians were right just the mechanism was a surprise.

  3. Some rain here today,unlike the Murray lakes,I would suggest! As much as it is pleasing to see the new GG show an interest in such matters,her role doesn’t suggest a great influence,unless she herself is influential in a manner of her own character rather than Office.And there is no indication the GG gets a general conversation about matters with the PM. as a matter of course,in terms of even regulation making!So I wonder why it is The Greens think ,her highly publicised trip means a possible change in direction by the ALP!? The answer really in the longer term,requires using sea water that has been filtered,by as many passive means as possibly then aerating it with compressed and cold air.The startling thing for me ,in all this,is the either this or that,of the various Parties all being right and wrong at the same time,more like a exercise in “I am more reasonable than you”, which, is a continuation of attitudes already present in the management of the Murray-Darling.Even the buying back of fresh water along the rivers,is sort of a silly priority,in that it is short term costly and doesn’t change the circumstances that greatly,and it is more than likely the more efficient and dynamic growers have been well and truly hurt by now,and could of exited.Whereas, if you are impressed by the transactional matter of buying water for water means,that is where you will stay.There seems to be a reluctance to take the experimental mode,based on the scientific criteria ,at hand,and translate it by environmental engineering,trying to meet the ecological dynamics.Its strange,very strange to me,endless awards for environmental solutions involving engineering,have generally raised the expectations of softer impacts on the continent island of Australia,and even a newspaper from South Australia ,which emphasized matter of all this presenting award winners was nationally distributed.But every year,the Lakes and the rivers ,a Major part of our living industrial culture, seems to get the mean treatment re the potential for environmental engineering solutions.I think the burn-out here is essentially political,which includes the Greens.Because ,after all, if the engineering solutions were trying their utmost to be ecologically derived and,permanently under the supervision of eco-scientists,what would be the matte!? From time to time an idea is put forward to insure either rivers,or parts of rivers have larger flows,how odd it is the Murray for example,hasn’t really won this interest.Either upstream by attempts to increase flow from peak snow melt,or down stream from the Lakes back up as far as possible,and if possible includes the number one priority for ocean and all its inhabitants as well as the Murray itself! Then the Darling! Its ludicrous ,how one particular place Cubby Station an artificial water body whose main purpose has been cotton growing has controlled outcomes even for Queensland farms.Without one person in the research areas tackling the problem, does cotton at the Cubby have to be grown like it has,and then need this massive amount of water!?I’ll bet if you look that question hasn’t been looked at,thus even the Cubby Station scenario has just been another excuse for State Rights and blame games as a diversionary tactic,whilst ,everyone rubs their hands with glee of the money almost extorted from growers and the public at large.The whole Management system needs a good boot up the ,coarse language- plan B,and only then will the solutions take place,the rest is trophisms.Your trophy or mine!? So add another paid servant to the dithering,the GG,and now her trophy of perpetuation!

  4. It seems that what we have at present is a crisis of distrust between the banks, who are afraid to lend to each other.
    One permanent feature of the post-subprime era should be a government agency responsible directly to parliament which is empowered to verify, or at least audit, the assertions made by banks about their credit worthiness. That would require access to full information lodged with the agency by the banks and held under absolute security.
    Immediate public disclosure of dishonest practices (such as misreprentation to the agency or to prospective lenders) would result in appropriate and sufficient consequences.
    Given the global nature of banking, some international brokering mechanism would be needed to share information and so avoid nationalist isolationism.
    None of this requires government ownership of banks, so bipartisan support is possible.

  5. I liked a little cartoon today. It was the Five Horsemen of the Apocolypse; “Death, War, Famine, Pestilence and their Stockbroker.”

    Sums it up well. We are going to need a lot of black humour to get through this.

  6. Paulus, one of the first tasks for your super subtle government bank monitoring agency, IMHO, would be to ask why all four dropped their home loan rates 80 points after the RBA went 100 points in it’s Wednesday rate cut. Sounds like collusion to me. Graeme Samuels (ACCC) where are you?

  7. I was never a student of finance or economics, other than a very poor one, but it seems to me that trust is fundamental to all exchange interactions. They are, as we can observe, surrounded by rituals and symbols of trust.

    So when the German bank sent millions of Euros to Lehman Bros to find that it was allowed to collapse was one action that burnt more than their fingers. The decision to allow Lehman Bros to fall strikes me as a major mistake, suggesting that “market forces” created the crisis.

  8. I find the threads on state capitalism and social democracy very interesting.

    Social democracy, as I interpret this term, means the empirical reality created by an institutional environment (rules of the game, legal and regulatory framework) which aims to make the philosophical ideal of personal and economic liberty workable, as much as possible, in a social and environmental context. Each individual counts (1 head 1 vote). The evolutionary path of the democratically selected ‘rules of the game’ can only be known retrospectively. Hence a ‘broad spectrum’ of policies has to be allowed for a priori (at the stage of theorising). Most of mainstream economics (as distinct from commerce), as I know it, is compatible with this notion.

    By contrast, ‘economic rationalism’ is much more abstract. Individual human beings within a social and environmental context are not the basic unit of analysis. The basic unit of analysis is ‘the balance sheet’, written by accountants (corporate and national). One of the immediate implications is that corporations, who pay for accountants, are visible, individuals are not. Humans are useful only to the extent that they contribute to bigger numbers in balance sheets. Hence there are now ‘human resource’ departments in corporations. Their job is to implement ‘head count’ decisions made by those in authority, called CEO and CFO, to achieve a ‘healthy’ relationship between the corporation’s balance sheet numbers and their own balance sheet numbers in the name of people, whose real names have been outsourced to other corporations which specialise in shareholder registration services. The objective of this system is to increase the numbers in the balance sheets and this is achieved through writing contracts (otherwise the game would be trivial – anybody can add zeros after a 1 until the biggest computing system crashes). When the activity of chasing real numbers by many players results in incompatible numbers then the balance sheets with incompatible numbers are dissolved or integrated into the balance sheets of agents who are said to have ‘more healthy balance sheets’ . This process ends up at the doorstep of agents, called monetary authorities, who are assumed to have very big numbers to distribute. Their numbers are called ‘liquidity’. Upon the integration of the little balance sheets into a big one, there is ‘state capitalism’.

    Nobody can accuse economic rationalists to be against regulation. On the contrary, there is by now ample evidence that practitioners of this game are obsessed with protocols on ‘transparency’, ‘accountability’, ‘performance matrices’, ‘league tables’, ‘rankings’ ….. . Each of these words comes with reams of papers of instructions to micro-manage human resources down to something akin to an instruction manual on how to do up shoe laces and report on it.

    Oddly, the economic rationalists have not noticed that they have created contracts with non-linear pay-offs (eg risky debt, financial options), which can’t be recorded in their performance tables – the balance sheets (originally a contribution to linear algebra by a late 15th century monk). If the whole show wouldn’t be so serious for real people, it would be funny to observe how ‘liquidity’ runs straight through the hierarchies of balance sheets. People call this process ‘pouring money into a black hole’.

    With due respect for the important work to be done by behavioural economists and psychologists, for the time being I’ve convinced myself that no heavy psychology is required to restore ‘confidence’. What is required is a financial recording system which makes the ‘black hole’ visible. By abuse of (the Keynesian) expression, a ‘liquidity trap’ is required and we need to know how to locate the hole which needs to be closed.

    So, I concur with the conclusion of the thread headed “Are we all socialists?”. There is a reason to be optimistic that social democracy will prevail. Social democracy, as I understand this notion, does not require thinking and reasoning people to become mere ‘human resources’ and it does not require academics to become ‘knowledge workers’.

    PS: SJ please pause for at least 48 hours before you reply. Thank you.

  9. It is Sunday,and the first thing to disturb me today was Occam’s Razor,and a Canadain motor-mouth about water. I have already felt the embodiment of a Canadain Suzuki use some of my efforts to poke his face forever more in Australia as work ,no doubt,for the World environment,and I remained unemployed all that length of time.Suzuki once said more or less his car was a limited necessity,and I was told I was an impractical activist at FOE in Melbourne once,for not owning a car! So this woman speaking at Sydney University, immediately got my full attention,as a so called water expert.Plenty to say,but,not much that appealed to me.I believe there is hardly any research or will at Research Institutes to be interested in passive desalinating on a large scale and land based use for the salt collected.Plastics maybe a problem floating around everywhere,but salt can almost form as a binding agent with almost anything,and therefore salt should be seen as a asset,that must be researched, in coming to terms with many environmental problems – rather than being a problem.There is something very sad about this country that the overseas expert gets the first nod of acceptance,whilst Australians languish.For example a use for salt maybe using it along the banks of the Murray as a permanent finish so the sides dont erode from heat water and age as much.Salt has always been used as a preservative,mudbricks and other material surfaces are traditionally tarnished by salt.Seeing salt is such a abundant resource,its uses,probably out rate it against thinking it is a liability as waste.And,well when it comes to this Canadain motor mouth,I must again insist carbon dioxide isn’t valued much..it is being seen as a liability…a waste.And all the possible practical uses for it are not being tendered as civil engineering.A inventor in the U.S.A. has developed a means to use sea-water as fuel.The yellow flame is in fact sodium seen in the videos of his experiments.Throwing a hand full of salt into a wood fired stove will blow the hard carbon deposits off the chimney or pipes,this obviously shows how hard salt can work once put under heated conditions.A proper long term appraisal utilising what we ,as humans know about salt in various conditions will certainly establish sea salt as a useful material that should be considered innovatively as a possible problem solver..in all fields of civil engineering.I lack a site to proffer this insight about underground coal mines,as places to grow soil improving materials like mushrooms,and soil micro-organisms,to insure our land is never going to find itself soil-less because of wind or harvesting of food fibre and animal husbandry and eco-disasters.I felt Brooks on Climate Change had become conditioned to gloom,whereas,I like sticking my neck out,and letting the academics think about it.Why have extensive engineered realities like abandoned coal mines underground doing nothing,when they maybe vast enough to create the right conditions for bulk soil improving mushrooms micro-organism and compostable materials including char matters!? Slowly built,with limited monies getting it right so the end result will be a totally productive end.Hope some students and unemployed tradespeople,or indeed employed people do some research and push.And article on BanglaDesh got me also going SMH On line,salt and carbon dioxide could be very helpful for that country,but Australians remain like footballers in the one team.All playing the game and separated by the media emphasis on the stars,so even when we have won the game,we just dont know it.And then they the media invite a Canadain to say we played,but didn’t act like a winning side.We have been interviewed out of existence,so I couldn’t relate to her we wees at at all.

  10. A weekend round up of various non mainstream sites produced for me a disturbing picture of America on the brink,an extremely anxious left and increasingly rabid and unhinged right, in short as close to outright incoherent anger with sheer panic and enveloping despair as you could find, financial or political. Intelligent people appear to be bracing themselves for the ‘death of the republic’ and very difficult, dangerous and troubled times politically and economically and Obama is no FDR. Forget the financial world start watching closely the political realm.

  11. The analysis in comment #8 caught my interest. Nicely written E.G. if you don’t mind my gratuitous praise. It is a safe assumption, I think, that “economic rationalism” is used in the sense that Pusey used it in his excellent book, “Economic Rationalism in Canberra.”

    This economic rationalism seems to revolve around keeping the corporate balance sheets “rational” no matter what the wider social cost. The internal “rationality” of the balance sheet world seems dubious also as your post makes clear.

    I don’t quite understand the “black hole” concept you mention. I don’t disagree, I simply don’t understand. My instinct is to agree there is a “black hole” into which state money is pouring at the moment.

    Could that “black hole” be created by the vast mass or accumulation of inflated assets and dubious financial instruments; the asset bubble in fact. (To mix metaphors and call a black hole a bubble.) So the excessive availability of credit would be a key cause.

    Even a bubble might be the wrong metaphor. Metaphors are of limited value in any case but I will hazard another. Since we are dealing with flows (of money) we have to ask whether the growth of the “malignant mass” of speculation itself with ever more conduits and reservoirs (derivatives of derivatives) is the black hole that soaks up the flows.

    Perhaps you were saying this or perhaps you were saying something else.

    It seems to me (in my naievity as a senile enfant terrible on matters economic) that only sufficient money ought to be created to match the real values in the economy and the needs for adequate flows and productive investment. Simple to propose, hard to do no doubt.

    An interesting start would be to only allow lending for productive investment and to disallow lending for consumption. Furthermore, the interest on business borrowing would not be a legitimate business expense. Otherwise (in respect of the latter) the government is paying part of business’s interest bill and frankly why the heck should government do so? The quid pro qou would be a reduction in taxes across the board. Taxing and then subsidising is churning.

    The main problem under this scheme would be the inability to borrow to build a private dwelling. The solution might be to allow such borrowing as it produces a “generational asset” (one which lasts 20 years or more) and not a “consumption asset” which lasts less than 20 years. Under this definition a tin of baked beans in my cupboard is a consumption asset. Under this scheme you could borrow to build a house but not to buy a tine of baked beans or a car. Automobiles would be expressly regarded as consumption items.

    Such a system, which pares back our consumption habits, is necessary in any case as resource depletion stares us in the face.

  12. I would like to suggest that not all credit is bad just excessive credit is. Making it impossible to borrow to buy cars will place a burden on those in the outter suburbs, working in industries that aren’t located in the CBD (ie those working in industrial parks) and those ho work unusual hours. They don’t need to be driving HSV’s but they probbale can’t rely on any improvement in public transport in the short term.

  13. Weaning the economy off consumption credit would take a generation. The financial economy and the real economy would need that time to adjust.

    Excessive consumption is one of the main problems we face now. It is driving climate change and environmental destruction. To continue to advertise and make credit available to boost consumption is maladapative when we are about to hit all sorts of environmental and resource supply limits.

  14. Words that start with “P”:


    Paranoia is an unfounded or exaggerated distrust of others, sometimes reaching delusional proportions. Paranoid individuals constantly suspect the motives of those around them, and believe that certain individuals, or people in general, are “out to get them.”


    Foolish or futile talk or ideas; nonsense.

  15. Given the “Great Deleveraging” in progress, what happens now to our universities? Presumably the relentless commercialisation of the university service exposes the universities to demand contraction? Not to mention HECS receipts via ATO collection, joint “research” with commercial partners drying up, and government toecutter gangs looking for politically saleable budget cuts. Might be a bad time to be a contract lecturer/tutor in a university department.

    Several classic fields of scholarship and research have already withered under the relentless intrusion of “provide$$ or perish.” Ironic isn’t it, that just as fast internet has really accelerated in penetrating Aussie homes, the online access of scholarly articles is being ring-fenced by paywalls. Open wallets grant open access and none other shall pass. Some academics still provide open access to their research (thanks JQ and many others); maybe one day an argument of public good over commercial interests will prevail.

    What about libraries, both university and public libraries? Do they still win points for providing a cultural and social function? For example, the Murray Bridge library is heavily patronised and clearly provides a great community function. But I suspect such easy targests’ funding will be threatened.

    Perhaps if at least some of the more crass commercial funding connections to universities were unwound, the public at large might eventually lose their cynicism towards academics. I’m thinking here of how academics were once seen to be independent, indeed they often went the extra mile to avoid conflict of interest, but now are tarred with the same brush as the commercially funded researchers.

    Commercial realites have subjugated once proudly independent research departments. Now, joint research is often done with the commercial intent of promoting the product of one company at the expense of a competitor’s product. It is usually subtle in that a single article may appear inocuous…or two…or three, but once the web of publications and their media releases are brought together the strategy of the commercial funder is quite apparent. Sadly, this is too common where new pharmaceutical products are at premarket phase.

  16. Re # 11. Ikonoclast, I don’t know whether or not my characterisation of economic rationalism (ER) is consistent with Michael Pusey’s because I haven’t read his books. I am grateful to you pointing me to Professor Pusey’s work. I arrived at my characterisation by comparing economic rationalists’ talk about ‘markets’, ‘competitiveness’, etc, and their actions with theoretical models of competitive private ownership economies. It became obvious that ER considers at most 1 (out of at least 4) conditions in the definition of an equilibrium (solution concept) in a model where a one period ‘financial resource constraint’ can be interpreted as a ‘balance sheet’ as understood in accounting.

    Black hole. I fully concur that analogies and metaphors are always ‘wrong’ in some sense. My usage of the term ‘black hole’ is a label for the deflation (destruction) of asset values during the unwinding of a debt driven asset bubble (inflation or creation of asset values). My main point is that the balance sheet approach is an inadequate recording system for tracing the creation and destruction of monetary asset values involving risky debt, including derivatives and synthetic securities. Hence making ‘liquidity’ (free of default risk, except in the state of national bankruptcy) available to the financial system doesn’t mean very much because one can’t tell from the balance sheets where it ends up and hence what the likely consequences are.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s