Archive for the ‘Economic Conditions’ Category

What recovery was that then?
September 20, 2011

Chronic failure of analysis is the primary characteristic of allegedly expert and political scrutiny of recent economic experience. The Australian today reveals this yet again under this headline: “Global recovery stalled, says IMF, but Australia well-placed to weather economic turmoil”. Then:

THE recovery from the global financial crisis has stalled and the world economy faces increasing danger of turmoil and recession, the International Monetary Fund has warned.

But the Australian economy has more scope to adjust than most countries, with the ability to slow its return to budget surplus if conditions get worse, and it will be buttressed by the continuing strength in Asia, the fund says.

If the reporter cannot distinguish between the Australian economy in general and the budget of the federal government in particular, then it is indeed too much to expect anything more than this repetitive wailing by alleged experts, however mighty their position.

What all analysis known to me—not all available by any means—fails to note is that bondholders and others do not provide mark to market values of their holdings. That is, measures of institutional or individual worth have failed to acknowledge the serious loss of value of those holdings in the wake of the collapse of the US and other housing markets. It means that loans based upon real estate and other values in 2007 must logically be worth much less now.

Contrary to the parroted scribblings and preaching from  economists, politicians and other commentators, no economic recovery has evolved in the wake of the GFC. GPD figures used to convey such an concept are inherently false. Borrowings by governments, not only to rescue financial systems and, allegedly, to stimulate economic activity, only accumulate as debt. Some do very well out of it and for governments the further attraction of using such “stimulus” as electoral bribes is wonderful: the perfect combination of economic theory and electoral usufruct. And in Australia, just to deflect any potential criticism (particular after Rudd’s $900 giveaway to some), government dressed its stimulus as an “education revolution”.

And now it’s over. Only the bills remain. And they have teeth, very sharp teeth which will cut the ground from under many conceits over the next twenty or thirty years.

Intellectuals or persons imitating intellectuals have a great deal to answer for. Chronic lying, whether as self-deceit or deceiving others is bringing severe punishment upon countless millions utterly defenceless in the onslaught of intellectual and political treachery. And that’s without mentioning the big scam of climate change (apd)! Nor the slime-based popular culture that the australian government wishes to make immediate by spending in excess of $40bn on high speed broadband (the fly in the ointment is the price but let that pass for the moment).

The outlook, from various points of view is truly dreadful. At its heart lie a variety of interwoven deceits. Daily and other media do their utmost to ensure they remain hidden from view. The public is ever less impressed even if its responses thus far are inchoate. For Australia the hatred of the Prime Minister centres on one act of deception. Gradually that expands and deepens as it does elsewhere. The future has just begun.

Edmund Burke once remarked: “You can never plan the future by the past”. Yet have any governments based their economic policies on other than the past? No. And because of that corruption the future is cast. Hence the farce of the IMF today (and of the risible Wayne Swan)—and tragedy.

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Fiscal Austerity
August 11, 2011

Ever wondered what the term means? typed into Google it gives “About 1,400,00 results” in 0.35 seconds.

Top of the list is Wikipedia:

In economics, austerity is a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to reduce their deficit spending while sometimes coupled with increases in taxes to pay back creditors to reduce debt. “Austerity” was named the word of the year by Merriam-Webster in 2010.

There is much else besides, some interesting, some incomprehensible, some foolish. Of the latter, this gem is perhaps without peer:

some European experts have argued that, due to budgetary shortcomings, the year 2011 could mark the end of an era of government engagement in the economy started with the New Deal in 1933 that saw a massive deployment of public resources and the advancement of state ownership across (formerly private) industries and infrastructures throughout the Western world. . . .

If the American or British instances are any guide, shrinking government is a non-starter. Greece, Portugal and Ireland have begun to shrink but only under the duress of the EU financial authorities. Only Ireland has much chance of financial integrity and that owing to its unusual array of exports, particularly pharmaceutical products, as well as recently reduced interest rate on its loans from the EU.

In the British instance borrowing continues at around £3bn per week. The Australian government, overseeing an unemployment rate of (now) 5.1 per cent continues to borrow at a rate of $Aus50bn for the current financial year (1911–12).

Geoff Riley, some time Head of Economics at Eton College, on An A Level Economics Blog, tuto2u, writes:

Fiscal austerity is a term in common use in the media at the moment. It refers to decisions by a government to reduce the amount of government borrowing (i.e. cut the size of a fiscal deficit) over a period of years. Fiscal austerity normally involves a combination of measures including increases in the overall burden of taxation and cuts in either the real level or growth of government spending on state-provided goods and services.

He then offers several arguments for and against current UK policy, for some invoking the sacred name, Keynes.

Nouriel Roubini in The Financial Times, remarked a few days ago:

Until last year policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery. Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions – all have been tried. But now we have run out of rabbits to reveal.

Roubini declined the self-evident invitation to say that not only had “all been tried” but that all had failed. That, evidently, was a logic too far. On the contrary, he argues:

The best bet is for those countries that have not lost market access – the US, UK, Japan, and Germany – to introduce new short-term fiscal stimulus while committing to medium-term fiscal austerity.

The definition of insanity for Albert Einstein was this: “doing the same thing over and over again and expecting different results.” Groucho Marx once remarked: “I have learned from my mistakes. Now I can repeat them perfectly.”

So it is with economists, journalists, commentators and the governments that have bought the Keynesian fantasy of seeming to produce something from nothing. The only austerity about all of them, a handful of honorable persons excepted, is their economy with the truth.

Someone once remarked that the truth with set you free. Yeah, right. Electoral disaster more like.

 

Poms fouled their own nest
August 10, 2011

The nearest to illuminating comment on the British “riots” (risible notion, also here) is from EU Referendum (longer post here). It helps reveal some of the cant and humbug flowing freely the greatly disturbed. Simon Jenkins in the Guardian conveniently overlooks one of the very real powers of local government authorities to wreck families in legal and public silence, something Christopher Booker has endeavoured to report over many years (see here, here, and here for just the most recent examples).

There was also somewhere, possibly from Ambrose, the proper complaint that the excitements found in various parts (then of London, latterly beyond the capital) were very small beer compared with the (probably irredeemable) irresponsibility of EU  and EMU authorities playing God with the lives of many, many millions of folk in the name of a totalitarian ideology.

Perhaps it’s the raw though hardly naive combination of open hostility and cavernous candor, hiding nothing, deceiving no-one, that draws us towards the heart of this darkness. It makes for stark contrast with the perpetual lying propaganda of political and governmental authorities and media. Stock markets in recent days, for example, have fallen rapidly for good reason. A ‘rumour’ —

Fund managers say the dramatic mid-afternoon rally was sparked by a rumour that the US Federal Reserve will announce another round of quantitative easing when it meets tonight in a bid to stop the financial market slide turning into an economic slump —

in the Oz instance reverses that. Absurd.

And that absurdity deepens with the bulk of news reporting, not least from the ABC. “Conservative” practice and “conservatives” as persons warrant only condemnation. I heard Malcolm Turnbull the other day effectively  spitting the term in regard to consumer caution. (Comparable with Hugh MacKay’s condemnation of irrational consumers on Radio National the previous week.) And, only “conservatives” have caused the US a problem of fiscal deficit. Better, like British social workers and family destruction, to have silence on the matter.

Hooligans won’t rule. Yet the all too typically unhelpful definition (per COD), “a young ruffian, esp. a member of a gang” points in the right direction. Thus “ruffian”: “violent, lawless person”. That’s better and brings us closer to the modern, softly (and often not so softly) despotic and parasitic state, democratic in name only.

 

 

The future has begun
August 3, 2011

At lat, a mainstream news organisatin that gets US debt levels right. AFP reports:

US debt shot up $238 billion to reach 100 percent of gross domestic project after the government’s debt ceiling was lifted, Treasury figures showed Wednesday.

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country’s spending commitments reached a breaking point and it threatened to default on its debt.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.

Public debt subject to the official debt limit — a slightly tighter definition — was $14.53 trillion as of the end of Tuesday, rising from the previous official cap of $14.29 trillion a day earlier.

Add to that Ambrose’s less than cheery outlook:

The West’s horrible fiscal choice

The US, Britain, and Europe are together embarking on a sudden and severe tightening of fiscal policy, in unison, before economic recovery has reached safe take-off speed. The experiment was last tried in the 1930s.

Yet somewhat contrary to A E-P’s consistently presented argument (which has continued for many months), he overlooks the unattractive reality of no less persistent bad governance. Neo-Keynesian deficit spending has, unremarkably, failed. And as Albert Einstein once remarked:

“Insanity: doing the same thing over and over again and expecting different results.”

The outlook is, frankly, dreadful. (Forget China.) To date I have been surprised by the relative passivity of the southern European publics at the straits into which governments aided by a ludicrous media have led them. The analysis offered, at least in part in Kenneth Minogue’s  The Servile Mind: How Democracy Erodes the Moral Life, is discouraging. Debt and much else has proven to be a truly faustian bargain.  How the West Was Lost: Fifty Years of Economic Folly–and the Stark Choices Ahead, by Dambisa Moyo barely scrapes the surface. The essential argument is right but the means chosen to prove it are most unsatisfactory. Add to these a widespread culture of death and the great scam of climate change (apd). Messy.

It’s over twenty years since National Interest published Francis Fukuyama’s “The End of History” (see here).

A true global culture has emerged, centering around technologically driven economic growth and the capitalist social relations necessary to produce and sustain it.

Oops. Still, look on the bright side, lots of work for future historians!

 

 

Clarity, anyone?
August 1, 2011

One could ask that of many public questions. The choice here is US government public debt. Why is it that many commentators that one reads or hears claim that it is now around 70 per cent of US GPD?

Wikipedia has much merit even as one must cast a very critical eye over much that appears there. On this subject it seems pretty much accurate (see also here):

As of June 29, 2011, the Total Public Debt Outstanding was $14.46 trillion and was approximately 98.6% of calendar year 2010’s annual gross domestic product (GDP) of $14.66 trillion.

There are those who hold that the US public debt (and this ignores the states and local government, whose own debt threatens, when it has not already realised, bankruptcy) is not a matter of comparison with government debt Greece and the like. I take it they exclude from their calculations:

Intragovernmental Holdings, representing U.S. Treasury securities held in accounts which are administered by the federal government, such as the OASI Trust fund administered by the Social Security Administration . . .

Yet these do not represent, as it were, any form of cash in hand. They are an aspect of government debt.

That said, it also seems that the players in the congressional drama have little or no intention of approaching their nation’s financial problems with any seriousness. For some, various programs are sacrosanct: they might be medicare and social security, or perhaps defence: the one likely to bankrupt them over time, another a sewer of financial irregularity. Some would tax the “rich” more, some appear to ignore anomalies of corporate taxation (GE comes to mind). Whichever it might be, performances appear calculated upon the limits of a deracinated public. Frivolity reigns.

 

 

 

Oakeshott: Robert not Michael
July 25, 2011

Robert Oakeshott, MHR (Lyne, Qld.) continues to put the interests of the government ahead of his fellow citizens. His main concern is to serve parliamentary despotism. He has confidence neither in the ability of his friends to make a case for change, nor for the good sense of the electorate in whom, at least in theory, sovereignty resides.

His namesake, a historian and philosopher, reckoned somewhat differently:

Because all action is conditioned by presuppositions, Oakeshott was inclined to see any attempt to change the world as reliant upon a scale of values which themselves presuppose a context of experience. Even the conservative disposition to maintain the status quo relies upon managing inevitable change, he would later elaborate in his essay On Being Conservative.

We see here in Australia, as elsewhere, governments displaying a rearkable level of contempt for citizens. There is a deepening comparability of various occasions over the last century when stubborn governments basically threw people under a bus. The Great War was just the beginning. As someone remarked recently: “Only Poor People Should Be Allowed To Fail”. In coming years the number of poor may rise exponentially, certainly in the West and among those who have but recently emerged into some level of prosperity. In Australia, false science shrouds a common thread of statism and contempt for the individual person. Elsewhere, Angela Merkel, Chancellor of Germany proclaimed a few days ago: ‘It is our historic task to protect the euro. Europe without the euro is unthinkable.’ All that no matter the cost, no matter the legality of the measures concerned and regardless of public opinion.

It is astonishing that yet again governments and their mates should have fallen for such a self-evident temptation. But as Bertie Wooster once observed, “So it goes on, Jeeves, so it goes on”.* Bertie never seemed to age much, he rarely failed to make ghastly decisions but from it all he did learn. No such capacity from today’s politicians.

 

* P. G. Wodehouse, ‘Jeeves and the Song of Songs’ in Very Good, Jeeves, p. 95.

 

Selling the farm
July 5, 2011

“Great Tully sugar sell-off proves bittersweet,” says The Australian:

China Oil and Food now controls 61.25 per cent of Tully Sugar after US-based agribusiness giant Bunge yesterday agreed to sell its stake.

Elsewhere, we’re told that:

Reserve may cut growth forecasts as rates are put on hold.

The Reserve Bank has flagged that the Australian economy is rapidly losing steam as inflation moderates and cautious consumers save more, indicating interest rates could remain on hold for the next few months.

Unremarkably the author, Scott Murdoch, offers no evidence of increased saving. He doesn’t tell of slower rises in credit card usage either but that seems the more likely reality.

Instead, as has been the case for many years, Australia lives at a higher standard of living than out earnings should permit. Foreign debt, of interest (sometimes) to Her Majesty’s Loyal Opposition, today receives little or no attention. The dollar is strong and a positive trade balances ride on high commodity prices, for the time being.

Selling agricultural industries helps pay for the difference. It’s quite easily done. People of the cities largely hold rural people in contempt. That a Labor government in Canberra should deliberately instigate the cattle ruckus with Indonesia makes that contempt uncommonly vivid.

Australia’s media happily encourages her politicians to sell their souls—if they had any—or their grandmothers for electoral advantage and ever more airborne standards of living. Hence, too, the lies regarding climate change (apd). The same media and political class live by the same contempt for the ordinary citizen. Pity their conundrums for they need the public to maintain them in office. It’s one continuous tautology, for the time being. Or, if you prefer: Quis custodes custodiet?

 

 

And so it goes . . . name your poison
July 4, 2011

1.  “New Jakarta ban shuts down live cattle trade.”

The price of utter amateurism:

Indonesia has slapped its own ban on live cattle imports, citing the Australian government’s export embargo that has paralysed the northern cattle industry.

No real surprise there. Australian governments have for long seemed to enjoy boasting or their (assumed) superiority over neighbouring states. Now the tables seem to have reversed. Who pays the price? Not government, that’s for sure. The cattle industry most immediately. And taxpayers, as always.

Unremarkably, government denies responsibility for the mess:

A spokeswoman for Agriculture Minister Joe Ludwig said last night . . . the government would continue to work with the Indonesian government to resume trade as quickly as possible.

As though the fault lay with the Indonesians.

 

2.  “RBA is facing a tough inflation challenge.”

When you look at the problems facing many economies around the world, you would think it should all be beer and skittles in Australia.

This is reportage, Australian-style. Who knew that economies are interconnected. I never cease to be amazed by the number of people I meet who anticipate excellent economic conditions over the next several years. But with comments like that, added, say. to the remarks of Jamie Dimon, global chief executive of J. P.Morgan, last week, perhaps I should not be. In a somewhat simple sense Dimon was right. It’s just that the likelihood of the US ‘shaking off the gloom’ is very slight indeed.

 

3.  “Kevin Rudd says Middle East turmoil forced Labor’s intervention in TV tender bid.”

Kevin Rudd says growing tensions in the Middle East forced the federal government to redraft its tender for the Australia Network, which had appeared set to be won by Sky News over the ABC.

His subsequent regarding ABC correspondents in the Middle East is, frankly, self-serving (and, at least in part, unclear) and denies the actual quality of reporting that characterises them. Wishful thinking on the partof ME correspondents is not confined to the ABC by any means but to suggest that we, the public, depend on them for pertinent analysis and reportage is nonsense.

A larger question regards the tender and appointment processes generally that have operated under Labor in the last couple of years. Rules seem to change at the last minute to serve not the public but ministers’ (usually ideological) convenience.

 

4.  “NBN deal ‘absurd, wasteful’.”

The Gillard government faces demands to abandon proposals to pay Telstra to maintain its ageing copper network in the bush where the NBN Co will also roll out a taxpayer-subsidised network.

The critics say nothing about price. No surprise there even as one might expect that demand for telecommunications services will, as with any other product, be price-dependent. As it is, the monthly price for NBN services from Internode is a few cents shy of $140 per month. Given the monopoly status of the NBN that is unlikely to fall. Price will, in all likelihood, force many users away from the internet. So the complaint about maintenance of the copper network is somewhat peculiar. It suggest that critics of the Telstra deal anticipate that people will continue to use the internet regardless of cost. Time will tell, but I doubt they’ll be proven right.

 

 

No Surprises here
May 31, 2011

NBN cost blowouts? And all in the name of monopoly, dated technology and, as time will show, censorship.

Heath risks of mobile phone technology. More time is clearly required for properly grounded data becomes available for truly meaningful conclusions. See here for long-standing interest in this question. ‘Prolonged usage’ seems to provide most cause for concern (heavy users’ reported average: 30 minutes per day over a 10‐year period). By rights authorities, not least parents and schools, should discourage children from using mobile phones. Using a hands-free headset minimises risks. (Update: Even more cause for caution!)

Recession: only a matter of time. The Australian economy has been in recession for several years. The only excuse authorities have for claiming otherwise is deliberately engineered indebtedness–all to be the responsibility of another generation. And add new taxes to complete the mix.

And the big scam of climate change (apd): note how difficult it is to find on <www.abc.net.au/news> reports heard on ABC radio. They differ in significant ways. Regular listeners hear, not least from spokespersons of the Australian Conservation Foundation, that green jobs simply await the starter’s gun, so to speak: the same shot that then destroys two or more jobs for every one, ahem, created by government. The mobile phone stories were different too, radio news seeming to belittle hands-free headsets. Meanwhile, Paul Kelly contributes more fatuity, looking after friends and trying to appear unbiased (that is, ineffectually concealing prejudices) and concluding in typically trite manner.

apd = as presently defined.