A combination of work, travel and my book commitment means that blogging here will be light for the next few months. I plan to post excerpts from the book in progress, and I’ll try to put up open threads from time to time.
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John Quiggin 
I hope all three go well JQ. Head down…
I would also like to say here that the timing couldnt be better for a book….
Rupert has taken a king hit in earnings (Yay! Yay! Hurray!) and he is thinking of charging for online news – good luck with that one Rupe…. his news is biased and boring.
People are looking for something intelligent to read JQ and Rupe has been letting all of us down.
To free up a bit more time for yourself you should pass the whip to Alice for a while.
@Salient Green
Ok Salient – I get the message. Ill stop whipping people and lie low for a while….you do it!
No Alice, JQ permitting, whip or no whip you lead the way. Give it to us sister.
Not me Alice, you. Just imagine the power. Obtuse denialism from Andy, bzzz, gone, stubborn responses from MOSH, bzzz, gone, AUSSAT (over our heads) comments from Ernestine, bzzz, gone, conservative ideology from SATP, bzzz, gone. I can just see your Avatar in leathers and whip prowling the virtual world of posts for nonsense to censor.
Hopefully in your book, you’ll admit you got things wrong regarding the financial crisis, just as Brad de Long has. That would indeed be a gracious concession to those who actually foresaw (in quite specific detail) the contours of the current economic mess.
@Salient Green
Salient – despite Andy’s “banking problems – what banking problems?” denialism and Ernestine’s over our (well, mine at least) heads theory comments – I like them both! Besides, they are still here arent they?
Who is SATP? Lead the way Salient!
@Alice
SATP is Steve at the Pub; I think he runs a pub. He employs a number of staff and it would be fair to say SATP naturally enough has a (small) employer’s view of workplace relations laws. No insult intended to SATP if I’ve got that wrong.
The difficulty now facing Australia is that we have had a second series of reductions in rates – to record lows – and this creates the risk of a second housing bubble, for much the same reasons that the first one occurred. The first one didn’t deflate far enough in my opinion. The combination of high immigration, tight land control, housing grants, negative gearing on investment houses, and low interest rates, makes further deflation of the first housing bubble virtually impossible now, and furthermore sets up the next housing bubble. Should a second hard credit crunch occur a year or two from now, it will be messier than this time round.
Nose to the grindstone John, but don’t let it grind you down!
Happy writing.
Oh that SATP Don!!….hes only worried about the pokie taxes mainly and beating up on workplace laws…sounds like a normal publican to me. Seriously its Moshie Im most worried about. I secretly suspect there is a branch of NSW Labor at Summer Hill somewhere and Moshie is either their pr guy or he keeps the minutes of every meeting…he knows a suspicious lot of new release “mates state” spin doesnt he?
Salient – as for my Avatar in leather and a whip prowling the internet for nonsense to censor…. what an enticing idea … so much better than wearing heavy duty brown stockings, othorpaedic shoes, a cardy or two over a sensible tweed skirt, grey set hair, carrying a dangerous handbag in one hand and an even more lethal walking stick in the other..
@Sukrit, since I didn’t agree with De Long on the point on which he is conceding error, and did correctly conclude that we would not get the kind of financial regulation we needed until there was a crisis in the US, which, I was confident, would happen in due course, I see no need to concede error.
If you can point to someone whose detailed predictions included (i) calling and dating the crisis before 2007 (ii) not having previously and prematurely predicted a crisis that didn’t happen, I’ll happily concede their predictive powers are better than mine.
I want to take back something I said earlier about Ernestine. Ernestine is not way over my head…only half way over my head Salient. Im trying to keep my head up (trying) because Ernestine does make sense Salient…
JQ, my comments in another thread were not directed at you personally.
I wish you well and look forward to catching up on the huge didactic component of your blog in your absence.
Expect the impending ETS to start causing blackouts in Victoria. The brown coal power stations are giving up on maintenance because their assets are going to become unviable long term and who spends money maintaining an asset with no long term value.
http://www.abc.net.au/news/stories/2009/07/12/2623385.htm
And without maintenance on power plants you get more frequent blackouts. I suppose business can always relocate to NSW or New Zealand.
@TerjeP (say tay-a)
Terje – I dont think thats the impending ETS thats making them cut on maintenance expenditure. After privatisation private firms often cut maintenance expendeditures to the bone anyway (ETS or no ETS). This is just a lobby against it. Its only when the service (be it rail or electricity or too roads etc) threatens to turn belly up due to inadequate maintenance or over optimistic business plans that they run back to the government saying “give us money – any money – contingent liability money or a subsidy – its a vital infrastructure service.”
Time and time again Terje, the govt thinks it can save itself money through privatisation and time and time again consumers and taxpayers end up paying more for less.
Alice thanks for taking my avatar vision so well, I was a bit worried that it was being a bit too familiar. You’re a fun person and very intelligent because Ernestine goes entirely over my head.
@Alice
I agree with you Alice. As an example of the mess that privatisation can create, if not managed carefully:
How’s the cross-city tunnel going in Sydney? Are we up to the promised traffic per day figures yet? You know, the ones that were about 3 times too high? Is the funneling of traffic – side streets were closed or narrowed – working well?
My guess, even though I haven’t lived in Sydney for nearly three years, is that the cross-city tunnel isn’t living up to the original claims.
Some privatisations work because they are well thought through, but so many others fail to consider the risks on the downside – perhaps through lack of training of those tasked with making it happen, or through the mentality that no-one got sacked for privatising a government function/service, or through the tender conditions applying too much weight to the $aving$ without examining the assumptions behind the $aving$.
Regards,
Don.
PS: MoSH doesn’t seem convinced of the “fakeness” of the Grech-email; what does it take to persuade the guy? 🙂
@Donald Oats
Don,
Im with you on that…then there is the Lane Cove Tunnel..emissions all over Lane Cove..issues over filters…again, loss of public roads…congestion on epping road as a result and people not wanting to pay tolls for a mere few kilometres really (thats about all it is). The company went bust, the construction badly fractured an entire unit block. Its just stupid to try to cull out the “can afford tolls” for a few kilometres by piling everyone else in a traffic jam. This one added to the States woes.
But it gets worse Don. My sister has been a pretty dedicated public servant since she left school at 18. She is now quite senior. She has been advised her department (across the country) is being privatised. She has no choice to take her super with her if she transfers to the private enterprise. Its just NO. You cant take it. She is just 50. She will receive three job offers if she elects to stay with the public service (if she doesnt she will lose all her super). Those jobs could be in Bourke or anywhere across the country. There is no guarantee her salary will stay the same. If she declines those three offers she has no job and has one year or so whereupon her long service leave runs out. She doesnt think her chances of getting a job in the private sector are so great at her age and after an entire life of being a public servant.
There are hundreds of people’s employment affected across the country and hundreds of firms that had her department as a client (part of Dept of Health).
State Govt just keep privatising, but not thinking of the consequences for employment (which is pretty bad already – and worst of all in NSW).
Given that the cross city tunnel was not paid for with taxpayers money the amount of traffic going through it isn’t really a major public policy concern. What is of more public policy concern is the reduction of traffic into the CBD. A much better example would be the Sydney airport rail link which was bought out using taxpayers money. However this was not privatisation wasting taxpayers money but nationalisation (or the state equivalent).
Presumably electricity retailers should consider shifting a greater proportion of the energy supply contract away from energy tariffs and towards reliability indicators. Both on the retail side of their contracts and on the wholesale side. And on the retail side they should have more capability to be selective about who gets switched off when power is scarce.
In any case the idea that an ETS will reduce the long term value of a coal fired power station and hence the incentive for long term preventative maintenance is hardly radical.
@Salient Green
Salient…are you mad? I liked your avatar vision better than mine (much much)! Me… get around in leather and high heels??…you made me think…I could be so soooo hot!
Anyone have any thoughts on this…?
#23 Alice,
Governments have outsourced control of the financial system and in particular the control of the money supply to banks. When you want advice on the financial system you go to the people who you think know the most about it.
Of course there will be massive conflicts of interest and it is probably worse in Australia because it is not quite so public as in the USA. It is the same attitude that is expressed in the now well out date saying “what is good for GM is good for the USA”. The attitude in Australia and the USA is now “what is good for the banks is good for the country”.
Paulson is probably a genuinely committed man who believed he had the public interest foremost in his mind. The problem is that the only way he knows is to use the same “solutions” that got us into the mess in the first place as he is too old a dog to learn new tricks. The reality is that the main tasks of banks – namely the allocation of capital and the provision of liquidity for trade – will continue to be framed around what is good for the banks (in particular their top executives and advisors) and not good for the whole community.
In terms of financial stability I’d argue that a key problem is that currency isn’t created by the private sector. It ought to be. In Australia it mostly was prior to 1910. In Hong Kong a significant proportion still is in the form of readily circulating private bank bearer bonds. We should float interest rates, move to private bearer bonds for day to day currency and fix the unit of account to a natural commodity. eg Gold.
@Alice
The Lane Cove construction was mighty annoying even before the toll road opened. One of my friends decided on the spot to never use the toll but to find “detours” around it. As you would be aware, the natural geography doesn’t leave much in the way of alternatives. The congestion on Epping Road was to be expected.
Back in 2001 when I was considering the move to Sydney, friends warned me about the traffic. Now back then I’d sold my car – wreck – and planned to use public transport. I bought a Gregory’s street map of Sydney and was reassured to see on the back cover a rail network diagram, complete with a Chatswood to Epping rail. It didn’t enter my attention that the C-to-E line was a dashed line…
Well I did find out about it being a proposed line and was none too happy to hear it.
Damn shame about your sister; I am aware of how the public service super works, up to a point. Odd how the potential loss of a few log-chopper jobs somewhere can stir up emotions yet loss of public servant jobs brings a reaction of “Good!”.
holy crap! you guys just reminded me, a few days ago I took the gateway bridge (now without any physical way of paying), and I just remembered the seeing a sign that said “3 days to pay”, and “govia.com.au”. if not for your passing reference, I would have completely forgotten and probably been slugged with some ridiculous fine.
well, off to the “go via” page to figure out how the buggery I’m meant to pay my $3, given that I don’t have a credit card….
Exactly Don,
re my sister…what really amazes me is that they want to privatise an entire department and yet they offer the public servant to go to the private organisation but cant take their super with them. Of course she cant do that. There is no security once you transfer. They could chuck you out immediately (and they lose thirty years of super as in my sisters case – why would public servants transfer??. They wont, of course they wont….). It effectively means, if she doesnt accept public service offers 1,2 and 3 (anywhere across the country) she is unemployed once the LSL runs out.
Great initiative. Hundreds out of work. As for the loggers being out of work, of course there is usually a private sector timber corporation putting pressure on Govts isnt there (funding lobby groups)?.
As for the people that say “good” when public service jobs are lost – they wont be saying “good” forever Don. Public servants spend money too.
Alice, regards your sister. A Faustian choice it may be but if my two bob’s worth is of any use I recommend she take the bush option. I did it some years ago and the far west of NSW has many pleasant memories. I was a bit younger than your sis but if she can manage her affairs – a very big ask I know – she will enjoy the change.
Pablo – thanks for the advice…Ill pass it on. She elected many years ago to retire at 55 anyway…so it would cover the gap…except for relocation expenses and Im not sure that would be in the deal. It would be a shame if she wanted to work longer though. However, if she retires before that and doesnt take a Bourke option, she cannot get her super and must run down other savings before she would be eligible for unemployment benefits etc. So there is a potential two year gap as it stands…
TerjeP at 16: Do you want to buy shares in the Harbour Bridge? If you seriously believe the TRUenergy claim that it will not do any maintenance and risk losing consierable income in the event of a station failure (an eventual result of not doing maintenance), then you swallow uncritically any propaganda by a company. And that’s even excluding the fact that a utility that threatens it will not do any maintenance does not deserve to be in the business. The threat reminds me of the claims when the Whitlam Government tariffs in the 1970s and local clothing manufacturers and unions claimed it would cost more jobs than the industries actually employed. A reality check in always in order.
In the previous post, “consideable income” should, of course, by considerable income and the sentence beginning “The threat..” should read when the Whitlam Government cut tariffs in the 1970s… My apologies.
@Paul Walter. Thanks for that. To all commenters, please note that I have to come down hard sometimes to keep this blog a useful forum for discussion. My judgements aren’t always right, any more than those of the ref who denies an obvious free kick for your side, but it doesn’t help to argue with the ref, so I’m grateful to those who take a time-out or other call with good grace, rather than arguing back.
I’m travelling with v limited Internet access at present, but I hope to post something from the book before too long.
Retiring at 55 years of age would be good! seeing I am 55 years of age,and am dagging around for my next assignment in the paddock with fireweed,there is so much justice in Australia,I might as well have a holiday with Ostrich Airlines and join all the other worshippers of sun and sand!Where’s the sun!Wears the sand?
TerjeP, you “argue that a key problem is that currency isn’t created by the private sector. It ought to be. In Australia it mostly was prior to 1910.”
Well exactly. Look how well we sailed through the 1890s depression with nary a problem…