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Henry Thornton - Contributors: A discussion of economic, social and political issues Blogs
Financial world at decision point
Date: Tuesday, October 21, 2008
Author: Henry Thornton

The current financial crisis has revealed the astonishing fact that capitalism is not perfect.

Furthermore, progress is in fits and starts, with occasional but costly setbacks.

Sometimes setbacks create a long period of reaction - think the 1890s and the 1930s.

Setbacks also create opportunity and provide platforms for fresh progress.

Will we react constructively or foolishly to the situation in which we find ourselves?

The world is at a decision point.

Critics of capitalism red in tooth and claw are having a field day, despite the fact that for the best part of a century many markets have been heavily regulated and extensive social welfare has softened market outcomes.

For the past 50 years, trade in goods has become freer, many public utilities have been privatised and there has been a complex mix of regulatory change, not all deserving the label 'deregulation'.

President Bush has called a summit to decide what should be done.

Here are Henry's suggestions.

The immediate solution must involve guarantee of bank deposits and bailout (or forced consolidation) of failed banks, central bank provision of virtually unlimited liquidity and judicious easing of monetary and fiscal policies.

Bailouts should involve governments taking shares in the institutions they are required to save and their managers should not be allowed to receive massive compensation for losing their jobs.

The first point gives taxpayers some chance of recovering their involuntary but inescapable investment in global financial stability, and the second will at least reduce the 'moral hazard' involved in the bailouts, to encourage the next generation of financiers to be more prudent.

All this is pretty much what has been done and this is why there should be no global depression following this crisis.

Indeed, inflation is the more likely result.

Central banks should be vigilant and prepared to tighten monetary policy quickly when recovery begins to gather pace.

Fiscal policy should also be reined in as recovery picks up.

It is now being claimed that there are many hedge funds on the brink of collapse.

If at all possible, hedge funds should be allowed to fail. Investments in hedge funds surely are only for 'professional investors' who will not be driven into poverty by losing their investments.  Owners of failed hedge funds surely will cope, even if coping involves a period of driving taxis.

Going forward, there are a number of ways to reform financial regulation.

A start is to make clearer than it has been that there is a difference between 'banks' and other financial institutions.

'Banks' are low risk enterprises whose deposits are guaranteed, whose managers are expected to be cautious and are subject to strong regulation.

Required liquidity ratios of 'banks' might sensibly be required to increase in some way related to the growth of nominal GPP - meaning as real growth or inflation rises there is an automatic 'leaning into the wind'.

(Central banks should be more pro-active in raising cash rates sooner as nominal economic growth accelerates or as credit and asset inflation begins to build).

'Non-bank financial institutions' should, like real estate agents and pawn-brokers, be regarded as high-risk ventures that are not regulated, or regulated only lightly - for example with licences to operate given only to people who have not recently been bankrupt or found guilty of criminal activity.

Where 'investment banks' fit into the risk spectrum between 'banks' and 'pawn-brokers' is for the experts to decide.  Possibly a half-way house in terms of regulation, not allowed to be managed by criminally insane former or potential bankrupts.

The idea, of course, is to remind punters that high risk and high returns are likely to be associated and if you lose money investing in such ventures you should be prepared to accept the consequences.

Conversely, it is important to have an unregulated or lightly regulated financial sector to allow high risk ventures to get funded.

This is in addition to share capital, which ought to be far more subject to strictures of the sort implied by the old Latin phrase 'caveat emptor'.

But this is probably a bridge too far, even for such a robust proponent of capitalism red in tooth and claw as President Bush.

Related contributions.

Australia, New Zealand and the International Economy, by Glenn Stevens

Bailing-out or crowding-out, by Stephen Kirchner

A short history of capitalism, by The Economist


Saturday Sanity Break, 17 October 2015
Date: Saturday, October 17, 2015
Author: Henry Thornton

Housing market to cool, says RBA. Great news, as lots of young people battling to find jobs are also wondering if they will ever be able to buy a house.  There looks like being a real glut of apartments, so at least rentals will be cheaper and some young folk will be able to at least get a foot into the property market.

Serious drought gets increasingly more likely as a dry spring dashes hopes for good wheat crops and limits the extent to which beef farmers can benefit from prices in the stratosphere. Some interest rate gurus say this will give the RBA the excuse to cute rates further.  Cutting rates here just when the USA Fed is dithering about raising rates there will also encourage the Aussie dollar to fall again, after a few weeks of partial and unhelpful recovery.

Mr Turnbull is not rushing to fix Australia's weak budget situation and indeed most of his comments lean on the expansive side of neutral.  This will help support activity for a while, but with the US economy looking toppy, and forecasts of global growth still being revised down, risks of a Banana Republic debacle are rising. 

One hopes that Treasury's fine economists are thinking hard about this issue.  Housing off the boil, farm production being dried as we watch, the much feared recession looks increasingly likely. As Henry's Raff Report has recently pointed out, with large budget deficits everywhere and interest rates low, there is little room for finance ministers and central bankers to move.

The Oz today features some serious analysis of the style of the new government. The theme is that Malcolm Turnbull will pull the Liberal Party toward the centre, and to be safe in the leadership he will need to carry the conservative wing of the party with him. Paul Kelly claims to detect a global swing toward the centralist direction; think Cameron in the UK, Key in NZ and Harper in Canada and looking electorally vulnerable.


Hawthorn blitzed the AFL grand final while Henry was out of range of a TV, and from all accounts it was all over bar the groaning by quarter time, and some say the first 10 minutes. With their fabled Threepeat under their belts, the Hawks are letting go some older players and replacing them with good young blokes, including another Rioli from Tiwi.

Caaaarlton!, however, seems not to be recruiting and sending Lachie Henderson to Geelong, (or is it Brisbane?), and Yarran to Richmond, to continue a player-selling debacle that has lasted for well over a decade now. Henry is beginning to wonder if he will last long enough to see another flag hoisted at Princess Park, or is it Jelly bean Oval or some similar sponsor's haven these days? Perhaps the once mighty blues need a funeral chain as a sponsor. 'White Lady will bury your loved ones faster than Carlton can bury a season of footy' could be the catch cry, with a 10 % discount for season ticket holders.

Meanwhile Henry is following the Rugby, where the home team seems capable of pulling off an unexpected trophy.  The effort to beat Wales with players sin-binned or injured, was prodigous. Scotland will provide another stern test but if our boys survive monday morning's game the real fun might commence, with an aging All Black team to face in the final.

Cricket is also underway.  Here the test team will be just about all new (I exaggerate only a bit) and will face the dangers of a pink ball with almost no game time. Still, all should be well if Smithy is in good form, and the battle for places is real - as it seems to be in Michael Cheika's Wallabies. Here is more on the super-coach's career.

Jarryd Hayne's unlikely journey to a member of an American football team is told here by Will Swanton.


Fiona Prior sees Ariel Dorfman's Death and the Maiden performed at Sydney’s Wharf Theatre. A seriously intense way to focus your thoughts about justice and violence.

Image of the week

Courtesy The Oz

US rate hikes; politics of envy
Date: Friday, October 16, 2015
Author: Henry Thornton

The Raff has been enjoying a serious conversation with a former Canadian, now an Aussie.  Here is his concluding paragraph: ''Governments have made such a mess of most economies that all degrees of freedom have been exhausted. Interest rates can’t be lowered or expenditures increased by any significant degree. Any contrary ideas to those enshrined as religion are howled down, debased and whenever possible are hidden from headlines.

Read on here.

If you were surprised by the US Fed's failure to raise rates, and now the gurus' views this might not now occur this year, you must have missed Henry's last but one Raff Report: 'Although a hike in rates would be more beneficial than not, to the Raff’s knowledge rates have never been lifted at the peak of the business cycle. It is perfectly normal for interest rates to rise as the next cycle takes off, perhaps mid-2016. There is a desperate need for developed countries to raise taxes or increase borrowings. We might ponder at what stage various central banks “crowd the market out”, increasing interest rates at an ever increasing pace to sell government paper!'

Read the full report here.

The politics of envy

The AFR has poured scorn on Labor's attack on Malcolm Turnbull's financial success.

'Today, encouraging enterprising Australians into technology start-ups necessarily brings with it the possibility of similar great individual fortune. But, as Paul Keating has bemoaned, Labor created an aspirational class, then failed to move with them. The Hawke-Keating Labor legacy means few Australians can say that not a cent of their super goes through fund managers with some connection with the Cayman Islands. And like Mr Turnbull, the better they do, the more they pay what's due to the Australian Tax Office'.

Also, 'it is reassuring that even Labor-aligned pollsters reckon that this attack on aspiration no longer resonates in a nation that simply wants to give its children more of a chance to succeed through their own initiative and enterprise'.  Read on here.

Yesterday we learned that the Turnbull government has indicated it is not beyond taxing pensions.  Fair enough, comrades, so long as pensions of politicians and public officials are taxed at the same rate.  The socialists among us say that someone with a super fund of $2.5 million is 'rich'.  Work out the implied asset backing of a head of the RBA, or Treasury, or the PM and you will see who is 'rich'. Not a poor sod with a self-managed super fund with $2.5 million.  This could in a heart beat be 1.25 million if the US Fed buggers up the return to 'normal' monetary policy, meaning a pension of exactly one half of what it was.  The pensions of Heads of Treasury, the RBA or the PM (and more junior examples of similar beasts) will be unchanged.

Is there an acturary in Australia willing to comment on this largely hidden rort of those on defined benefit pensions? Henry advises readers not to hold your breath.

Saturday Sanity Break, 10 October 2015
Date: Saturday, October 10, 2015
Author: Henry Thornton

Henry is in the midst of catching up with the news as he waits with Mrs T to catch the 12.45 AM plane to Sydney and then on to Melbourne.

Niki Savva said last week that Malcolm Turnbull has made a good start.  That is a common view, as reflected in the published opinion polls.  But, as one wise old owl said to Henry recently: 'The optics are far better, but will the officials have the grunt to make Turnbull's far more expansive approach work?

Henry's chief political writer, Gary Scarrabelotti, reports from the Ukraine.  He says Tony Abbott should not rush to decide his future.

'Australian political life has become fragile, uncertain, and crisis prone. My hunch is that there will be opportunities ahead, as future governments break down, and as political leaders crack up under the weight of our common flawed humanity, the empty promises of our ideologies, and the deluge of events.

'One day, maybe not so far away, Australia will need a leader of determination, courage and wisdom.

Abbott has the determination and the courage. May he now set about the getting of wisdom'.

Read on here.

And proponants of serious economic reform, especially IR reform, should read and ponder Grace Collier's column today.


On the economy, we need go not further than the latest Raff Report. The Raff has three key messages:


* 'US IP will be lower in nine months after the peak in orders, adding to downward pressure on many commodity prices. This is economics 101 something not understood by pretty well all the commentators on the ABC and Macquarie Radio.

* 'The other key aspect not understood is the excess capacity that haunts almost every manufacture and mine'.

Here is the Raff's full story, including important comments about the Chinese economy.

Do not miss Julian McCrann's trenchant comments below the Raff's contribution. Or Julian's dad's column in the Weekend Oz. Here is a quote.

'If the Fed does take us into 2016 without lifting its rate, we are headed into extremely dangerous and turbulant times'.

The RBA kept interest rates unchanged this week and continues to say the economy is travelling well. The strong jobs performance is certainly to be welcomed but is largely in the non-traded service industries. One big question is whether this will help fix what is a very large current account deficit.  Such a deficit was the main reason for Paul Keating's Banana Republic call to arms.  Then there was strong remedial action, including a swing from budget deficit to budget surplus, but even so the remediation was only temporary. Remember the recession we had to have? 

Lending for housing is going at a powerful clip - 12.5 % annual in one source -  and one suspects that the new direct controls (by changing asset ratios) over the housing market are already failing.  More on this issue from Alan Kohler today.

Out and about

Henry's visit to the great North-west frontier has come to an end at Darwin Airport.  Last Saturday's Sanity Break summarised time at Broome International (sic?) Airport followed by some snippets from life on a wonderful cruise ship that carried Henry and Mrs T from Broome to Darwin.

Previous experiences on the Gibb River Road and return via the Great Northern Highway are available as follows.

The start - political bombshell from Oz

Too many gorges

Genteel bush punch-up

In the Bungle Bungles


Fiona Prior celebrates Spring by visiting Primavera 2015 at the MCA

Image of the week - Janet Yellen and the mob

Ideas relevant to this painting may be found here - will she, or won't she, raise interest rates any time soon and (either way) will it scare the mob?

Henry's editor's postmodern paintings - all with an economic theme - are available here. Two of them will be displayed (and offered for sale) in the forthcoming Toorak Art Show featuring many art works distributed in the shops of Toorak.

Saturday Sanity Break, 3 October 2015
Date: Saturday, October 03, 2015
Author: Henry Thornton

Henry has been enjoying the scenery, avoiding crocodiles, looking at great (aboriginal) art while being deprived of newspapers, TV and radio, internet or phone access to the rest of the known universe. Hence there is no chance of the usual commentary on the news economic, political or sporting. Instead today we offer two stories.  The first tells of challenges at Broome International (Ahem) airport. The second provides hints about life on the Coral Princess during the cruise of a lifetime. 

Fasten your seatbelts, sit back and relax.

Broome International Airport (BIA)

Henry and Mrs T survived 13 days on the road with a battle wagon kindly provided by Avis. Returning it proved difficult as there were no signs (or in one case a misleading sign) to the airport. Finally, after circling the airport like an aeroplane that arrived early, Mrs T asked a fellow female in a shopping centre carport how to find the airport. ‘Follow me’ said the nice lady and took off like a regular Broomie at high speed. We struggled to keep up but noticed when the nice lady pointed over her car roof to the road labelled ‘Heliport’.  

 We returned the battle wagon on time, dusty but otherwise undamaged and wheeled our (excessive) luggage into BIA. As we did so, Mrs T remarked brightly that we’d be able to check into the lounge. ‘Not bloody likely’ was the brusque reply, ‘there’s no Chairman’s lounge here, you’ll be lucky to find a loo’. Henry next asked a security person if we could leave our luggage in a particular spot while we awaited the taxi to deliver us to the Coral Princess, the luxury ship that was to take us to Darwin, with exciting things to do on the way – examining rock art, swimming with crocodiles, riding a rubber duck through a narrow opening in a rock wall at a time of tidal water flow, bush BBQs, etc, etc.

‘I am afraid not sir’, said the security person, ‘I’m about to lock this facility until 5 PM’. ‘Fair go’ Henry expostulated, ‘We paid a lot of money to get here, and we’ve spent even more visiting gorges and other geographic highlights’. ‘Sorry, sir’, replied the security person, ‘them’s the rules’.  We wheeled the luggage outside.  There was one place with chairs in the shade.  It was sign-posted ‘Smoking area’ and ‘Consumption of Alcohol Prohibited in this Area’.  No doubt warning a particular minority group how to behave, probably the same group that cannot be trusted to enter the terminal area when  the staff have gone to their homes for their lunchtime siesta.  We settled down to our humble lunch of ryvita biscuits, cheddar cheese and vegemite. Simply delicious.

We were in luck.  It was a coolish day, only 35 degrees and there was a nice breeze blowing across the designated smoking area. We had spent the previous evening having a beer with Duncan, correction Doug, whom with his wife, that old mate of Mrs T previously mentioned, had just farewelled their older son from BIA.  The boy was off to Tokyo with a group from his school. ‘It’s called Broome International Airport’ explained Mrs T’s old mate, ‘but Gary has to fly to Perth to get on the plane to Singapore, then on to Tokyo’. ‘It’s only 1 and a half hours to Bali from Broome, but we still have to fly first to Perth', father Doug explained.

 Perhaps Kingsford Smith once landed at Broom.  Or it might have been the savage and unprovoked bombing of Broome in 1942 by Japan, now our second closest ally and trading partner, that gave the airport its ‘international’ status, but one wonders how it would handle a flood of foreign tourists arriving by air.

Our drink took place in the beer garden of the Mangrove Hotel. We arrived at 5 pm to find ten or twelve long, slow-moving queues of patrons buying drinks, and a massive crowd sitting about watching the sun go down. Never has Henry seen such a variety of female costumes, some dazzlingly provocative, all designed to catch the eye. Or so many men with cowboy boots, jeans, checked shirts and large jaws drinking yard-high beers in just a few short seconds. The ethnic groups seemed to mingle well but our attention was drawn to a small group sitting around a fire about 500 metres away.  ‘It’s on’ someone called, and the kids, and some adults, went to the edge of the hotel grounds to watch the fight in the campsite.  ‘That’s a woman bashing a bloke’ Doug explained. ‘It’s the way of it here’.

And to think we had to visit Broome to see the new world of female dominance close up and serious.

Enjoy a few of Henry and Mrs T's snapshots below before continuing with their cruise adventures ...

Gwion painting


Dry waterfall (*note almost invisable two men on ledge near the water)

 Ancient Gwion painting

 Gorge at King George River

On the Coral Princess (Bootcamp for Oldfolk)

The bus arrived on time and with another couple we had met in the shady smoking area we had our luggage tagged and loaded. We were slightly shocked at being the youngest people on the bus, and again when the bus driver explained that we should look at fellow travellers carefully as there would be opportunities for spouse swapping. A joke we assumed, but perhaps we were to be tempted to relive the sixties, albeit without the drugs and rock’n’roll.

We were efficiently driven to Boome’s International Port (BIP) and along the wharf to the Coral Princess. We were shown to our stateroom, small but perfectly designed for two oldfolk.  Twin beds, a lot of hooks for towels and clothes, space under the beds for cases, rails in the shower and tiny bathroom for oldfolk to hang onto should the water be rough. Shortly our luggage arrived and we unpacked and headed to the dining room for a welcome speech, a safety briefing and an early dinner. We eyed our fellow travellers carefully.

There were a few singles of both genders, many couples, a lady who made Henry look slim, some clearly feeble and the average age perhaps a decade ahead of the ever youthful Thorntons. We had pinned the name tags to our shirts and introduced ourselves to others as we mingled before dinner. There were retired or semi-retired folk of many varieties.  A butcher named Joe and his wife Pat, both great wits; a couple from Geelong, Peter a retired lawyer and Felicity, an active artist with most interesting ideas best described as ‘fusion’; Martin and Judy, a dynamic entrepreneurial couple;  … . One of the most interesting person we met was a former SAS Commander, Geoff, who had lead his team in three one year ventures into Vietnam and who was now fighting for a system for rehabilitating soldiers who returned with what he calls ‘dents in their souls’ and an inability to fit again into normal society.

The staff numbered fourteen and all were fit mostly very young people who we learned to think warmly of for seamless organisation, dealing without fuss with household chores and willing ability to help we oldfolk while we were out and about in the often challenging Kimberly landscape. The most challenging was the climb up a near-vertical cliff with the help of a rope to hang on to and staff at the really hard spots.  Terry, aged 90, went both up and down without accident, although at some cost to the skin on his legs.  The old soldier told Henry he was 'too heavy' to climb the wall, but that only served to ensure he did.

There were well-presented talks most evenings, for which we were grateful to Chris and Mark, and one night a showing of the film Red Dog

Each evening was the time we were told of the events of the following day. As implied by the subheading of this article, the organisation was run like a military operation, one highly dependent of the state of the tides. In fact we were lucky to be there with a full moon and thus exceptionally high and low tides. Our time was immediately put onto Darwin time, so we lost an hour and a half sleep immediately. The first full day on the ship began at 8 AM with a hot breakfast. Subsequent starts were to be at 7.30 (twice), 6.30, 6.15 and ….

Each day there were two expeditions in the Explorer, a large tin boat expertly driven by Jo. We were to learn a few days later just how expert as she successfully got us back to the mother ship in large waves and on the second attempt pulled off what someone called a ‘kamikaze’ docking. On some occasions we left the tinny for one of two zodiacs, driven with great flair by two young men; well, one young man and an older, highly skilled bloke with kamikaze tendencies of his own. We used these boats to explore Montgomery Reef which at low tide gives up its water in massive cascades which one watches from about five metres below the highest point of the reef.  At high tide, that high point is five metres below the water.

But the greatest fun with high speed boating came at the ‘horizontal waterfall'. At high tide the water in the furtherest pool begins to drain out at increasing velocity. There are two narrows, the first very narrow, with water bucketing out so fast the zodiacs could not get through. (We watched a high powered luxury speed boat rocket through, and it was an awesome sight.) The second narrow is a bit wider, and the zodiac was able to go through in both directions. The ride is pretty wild, and the large tinny waited near the entrance as we went through ‘just in case something horrible happens’.  The water was running hard in an intuitively wrong direction as we waited, and I gained a very distinct impression that it was a large land buttress that was moving both in relation to the boat and the buttress further away. No, Henry had not been inhaling illegal substances, dear reader. Another passenger said she had experienced the same illusion. This was worth the cost of the whole trip if you really want to know.

Throughout the trip one is presented with superb sunsets and sunrises, stupendous scenery, wonderful treats including some extraordinary rock art, not to mention the culinary delights prepared by the extremely tall chef named Travis. And reprising our earlier experience on the Gibb River Road, there was even a gorge walk that began with a 30 metre climb up a rock face with the help of a strong knotted rope and staff at the difficult spots coaching and helping and ended with a swim in a magnificent pool below the Ruby Falls, named for the deep red rock shelf the water flowed over to enter the pool.

The walking, climbing, reaching exotic places and in fact many of the expeditions in temperatures exceeding 40 degrees taxed Henry close to his limit, and was challenging for many of the oldfolk present. But the clear message was that normal limits can be overcome even by people in their twilight years if the prize is worthwhile and the assistance well planned, professional and unstinting. I cannot praise Coral Expeditions too highly for their provision of a stunning program, which received high praise from all who travelled with Henry and Mrs T in September-October 2015.

The biggest negative was lack of internet and mobile phone connectivity.  What has Malcolm Turnbull been up to in his previous portfolio, dear readers?


Sunset in the Kimberly



Saturday Sanity Break, 26 September 2015
Date: Saturday, September 26, 2015
Author: Henry Thornton

Saturday Sanity Break, 26 September 2015

Malcolm Turnbull has settled into the top job as if to the manner born. So far so good but Mrs T is still grumpy and seeking support for a National Party branch in the leafy electorate of Kooyong.  In fact, she is hoping for a series of political earthquakes.  Group one, Greens plus left wing of the Labor. Group 2, right wing of Labor with ‘Liberal’ wing of the Libs. Group three, conservative Libs plus Nats. If group three is ever formed, Mrs T is prepared to run against Josh Frydenberg, although without great expectations of victory.   Henry is thinking of a Senate challenge with the slogan ‘Don’t touch our super’.

Enough already. The global news is far more fun.  The Pope telling the US pollies to remember humanitarian values. Sep Blatter about to become Sep Splatter, and about time too. The annual stampede at the annual Haj, and the old boy who said ‘This was the fault of disobedient pilgrims.’ Imagine a stampede at the ‘G’ as the Eagles hit the front with 30 seconds to go next Saturday. Would the AFL blame disobedient fans and expect the press not to object?

To segue to another topic, what are the rich leaders of the Middle East doing about the tide of refugees currently swamping Europe? We understand they give money (congealed oil), but do they take refugees, and if not, why not?  And why does the global press not demand an answer to this question?

The scandal engulfing Veedub Inc raises more questions.  We bet every car company is doing something similar.  The consultants will have been saying: ‘Veedub has established global best practice in pollution control and if you wish to compete you need to follow their lead’. This needs checking by a reputable motoring writer, but we are prepared to bet that ‘world best practice’ is widespread.  If this is correct, enforcing standards used for testing would produce an immediate cut in global motor car emissions.   We note that some Veedub executive said ‘We do not do this in Australia because there are no serious standards in this area’. Another commentator noted that to have such standards would have made locally made vehicles uncompetitive.  Kim Carr, can you confirm or will you deny this all too plausible claim?


Be sure to follow Henry and Mrs T on their excellent adventure: A day in the Bungle Bungles and Genteel Punch-up in the Bush!

Henry on safari in the North-west frontier


We arrived back in Broome, gorged out, but just in time to shop for dinner, check in at the Mercure and turn on the telly to see the ball bounced at the ‘G’. After a fierce start, Freo (aka ‘The Purple Haze’) surrendered their lead and despite brave efforts failed to get their noses in front again. Sadly the contest was besmirched by a man in a purple jumper snotting a female fan who presumably was supporting the Hawks. There was also a lot of booing and a purple haze man pretended to punch an innocent Hawthorn player and luckily (for the fan) it was just a bit of fun.

Tonight the North Melbourne Kangaroos take on the West Coast Eagles. Every expert expects the Eagles to easily progress to the Grand Final, and a loss tonight may well lead to succession of WA. Henry is not allowed to watch this match, as Mrs T has announced her desperate need for a Thai dinner.  With luck we may be back for the last quarter.

Did you see the video report of a Man on a paddle board communicating with two wales? The images were filmed by a drone and loaded onto the World Wide Web.  This is very big news in WA, but Henry’s attempts to find the video via the SEARCH function failed. We tried paddleboard and wales but got several pages of ads for paddleboard lessons interspersed with ads for Wales, or reports involving the progress of Wales in the Rugby World Cup. Please contact Henry if you find the video, dear reader.

Australia started its World Cup campaign with a win over Fiji. Henry caught only the second half when Fiji looked distinctly capable of an upset.  Winning just about every lineout and with large, fast players (mostly related to an Australian player is seems) rampaging about with clever passes we had to applaud the Australian defence. Tonight Australia plays its second game, against Uruguay and is widely expected to win.

Image of the week

Fitzroy River

Sunday Sanity Break, 20 September 2015
Date: Sunday, September 20, 2015
Author: Henry Thornton

What a week it has been. A new Prime Minister, an exciting new cabinet and a new mission statement for our nation.

Paul Kelly's magisterial summary of recent political developments is available here.

Henry and Mrs T debate the political bombshell as they progress from Derby to Bell Gorge.

The big news for the weekend is the new PM's cabinet appointments.

As expected, Scott Morrison, becomes Treasurer, replacing Joe Hockey. The less expected, but highly welcome, decision is the appointment of Kelly O'Dwyer as his assistant with extra responsibilities for small business. Kelly's experience as Peter Costello's Chief of Staff makes her ideally qualified for this role and as a member of Cabinet is a two step, well deserved  promotion.

Marise Payne is Minister for Defence and, with five women in Cabinet, Malcolm Turnbull has moved Australia quite suddenly into the Twenty-first Century.

Arthur Sinadonis also joins Cabinet as Cabinet Secretary, an office that is closely aligned to his role as John Howard's Chief of Staff.  Like Kelly O'Dwyer, he is a proven performer whose talents were not being properly used by Prime Minister Abbott.

Christopher Pyne takes over from Ian Macfarlane as Minister for Industry and Science, with Innovation added.  As Malcolm Turnbull said: 'If we want to remain a prosperous, first-world economy [with] a generous social welfare safety net, we must be more competitive, we must be more productive, above all we must be more innovative'.

I note in passing that this is the simplest one sentence description of Australia's economic mission statement seen for many years. Unlike Paul Keating's 'We must not become a Banana Republic', it is positive rather than negative.

'Welcome to the Twenty-first century, dear readers. It will be an exciting ride and Henry wishes the new PM, the new government team and laa Australians all the best


Fiona Prior takes in an unusual circus as Sydney Symphony Orchestra, trapeze artists, clowns and strong men all do what they do best...Cirque de la Symphonie. Visit here: http://henrythornton.com/article.asp?article_id=6834


Hawthorn smashed Adelaide, North Melbourne got on top of the Swans after a long arm-wrestle and next week Hawthorn travel to Perth to take on the West Coast while the Kangaroos tilt at Freo.

In the biggest upset in world sport Henry can remember, Japan beat the Springboks in a first round of the Rugby world cup. As the Japanese pilot said when announcing the flight to Honoruru: 'They do not know we are coming'. Apologies for the poor joke, dear readers, it just seems to fit.

A noble loss last night by Lleyton Hewitt and Sam Groth against the Murray Bros in Edinburgh was a great shame and probably means Australia will bow out in the semi-finals of the Davis Cup.  But if Bernard Tomic can rise above his ranking and Hewitt is allowed to have a go at the other Murray, anything could happen.

Image of the week

image: A European Union for All? courtesy of Sampsonia Way



Sunday Sanity Break, 13 September 2015
Date: Sunday, September 13, 2015
Author: Henry Thornton

Greetings dear readers from Broome, pearl fishing  capital of the great North-Western frontier, glorious Cable beach and much, much more. He remembers an awkward moment on Cable beach involving a German visitor with the curious name of Max Danglemeyer. If you are reading this in a cool/wet German autumn day, Max, it is over 30 degrees here with a gentle breeze and lots of lovely girls like those we gazed at with longing all those years ago. Said dusky beauties were sunbaking as naked as the day they were born, sadly each flanked on both sides by a large and presumably savage dog.

Getting here was easy enough. Qantas to Perth, a 50 minute break and then the Qantas regional 717 to Broome, all done with frequent flyer points plus the $30 tax collected by Brother Joyce to help restore the company's profits and his bonus. Cabin staff working navvies but mostly pleasent, though Heney was barked at by one old dear for not knowing exactly where to stand so the old dear could pass with the drinks trolley.

Broome is just how Henry remembers it, except there are far more police out and about and the Mercure is guarded by high walls and a gate requiring a room key to open.  Ideally even cars need to be parked behind the wall and clearly law'n'order is a big issue here.

Another good employment number, and some improvement in some confidence surveys, supports the official view that our economy may be improving, albeit a low productivity recovery. This provides some hope that our income recession may be bottoming. Fingers should be crossed as often as possible, dear readers. Henry's editor has just finished a year of (unpaid) hard yakka to get a new Innovative Manufacturing Cooperative Research Centre (CRC) off the ground.  The set-up has created a  new record for speed and the potential is immense.  Sadly, this entity was created by smashing two competing bids together and the Interim board, selected to deal with the factions left over from the initial big bang, fought the factions and advised participants that promises made by one or other faction were just not viable.

In an atmosphere reminiscent of an old-fashioned Labor Party preselection, with attempted branch stacking, lies, slanders and general misinformation being spread by one or other faction, Henry and two other members of the Interim board, who got the beast off the ground, received too few votes to become members of the ongoing board. Fair enough, I hear you say, Australia is a healthy democracy.The problem is members elected a board with strong factional elements, providing real risks of failure.  What fun!

National politics is no better.  Today's storm in a teacup concerns an admittedly poor joke by the Minister for Immigration.  Mr Shorten is thundering on national media, 'This minister must be sacked'. The lefties that mostly populate our universities no doubt model their behaviours on the Labor opposition, an opposition that has achieved new lows of dishonest and divisive behaviour. Mr Abbott has had one of his best weeks in government, joining the crusade to eliminate the head-lopping, child-raping, women-supressing Islamists (IRs) and also declaring that Australia will take 12,000 Syrian refugee kids, women and families from the minority groups that are most targeted by the IRs. But even his friends in the Conservative press say he has to do far better, a brilliant insight that seems to have some support from the polls.


Fiona Prior visits one of the hottest tickets in Sydney last week, Sydney Contemporary Art; an exhibition that has taken over Sydney’s Carriageworks and is presenting the art of over 300 artists and 90 galleries, both domestic and international. Please visit: http://henrythornton.com/article.asp?article_id=6830


It's looking like a corker final season in the AFL. West Coast accounted for Hawthorn on Friday night, meaning the chances of a 'Threepeat' for the Hawks is now small. Freo held off Sydney (minus Buddy) by a goal and change. Adelaide beat the Bulldogs by about the same margin, thanks to a 5 goal blitz by former Caaaarlton! superstar, you got it, Eddie Betts. Today Richmond meets the Kangaroos at the 'G' and should win. We shall be watching the rest of the season with keen anticipation.

Henry's reraders report that the Rugby League finals were equally exciting. Well done to our Futball team, beating teams from countries with unpronounceable names. Soon the Rugby World Cup will provide exciting diversion.

Ms Panetta, the gal who put Australia's Sam Stouser out of the US Open, won the title, her first at grand slam level, and with great good sense immediately announced her retirement. Pity that Serena did not set another record for 4 Slams in one year, but she's a rold-gold superstar and will presumably try again next year. Henry's favourite tennis bloke, Roger Federer,is reported to be sleeping more and thus regaining the speed and agility of his youth. Good thinking, Roger, and good luck tonight - or do I mean last night?

Image of the week




Saturday Sanity Break. 5 September 2015
Date: Saturday, September 05, 2015
Author: Henry Thornton

IMF again warns of slower global growth, with worries about China's performance well to the fore. The eminent consulting group McKinsey says: 'At the National People’s Congress in Beijing in March 2015, China’s Premier Li Keqiang announced a growth target of 7 percent, acknowledging that “deep-seated problems in the country’s economy are becoming more obvious.” Three months later and thousands of miles away in Washington, the World Bank lowered its growth forecasts across the board and asked the US Federal Reserve Bank to delay any contemplated rate hikes. The World Bank’s chief economist said that it had “just switched on the seat belt sign. We are advising nations, especially emerging economies, to fasten their seat belts.” So it’s going to be a bumpy ride? How bumpy? And for how long?'

Read on here for a private sector view of the many complex, difficult-to-understand currents afflicting the global economy. Henry's view is simple.  After the heady days of double-digit growth in China and the debt-fuelled asset price boom in developed nations, both decades long, a major reaction was inevitable. Massive monetary and fiscal stimulus postponed the inevitable and may mean adjustment may be a long period of dismal growth rather than global depression. Either way life will be much tougher for battlers and far less euphoric by former masters of the universe. Governments, like ours, will be lambasted for consistently saying 'It's all good punters; borrow and spend'.

The sad state of the labor market, especially for young people, is becoming clearer almost by the day. Roy Morgan Research's measure of 'True Unemployment' has been falling, admittedly from double-digit levels. Now 'Australian August real unemployment 9.2% – up for first time in 6 months'.  Here is the link, and check the the image of the week below.

Gary Morgan said: “Roy Morgan unemployment data shows that as the number of jobs increases more people begin looking for work. This clearly shows the pent-up demand for employment and the extent to which Australia’s labour market is under-estimated by the ABS.

“Today’s estimates mean total Australian unemployment and under-employment has increased to 2.12 million (16.6% of the workforce). Australian unemployment and under-employment has now been above 2 million Australians for 45 straight months – nearly four years!'

Europe's refugee crisis

Refugees have caused a massive political ruckus in Australia.  But with ocean all round us, and cooperation from some if not all nations of South-East Asia, we have just about stopped the flow. Pity the citizens of the Eurozone who face a far larger problem and the far greater misery of most regugees.  Ironically, Germany seems to be the most compassionate and constructive.

'ANGELA MERKEL may be the most powerful politician in Europe, but she has rarely shown much inclination for bold leadership. Both in domestic politics and, especially, during the euro crisis, the German chancellor’s style has been one of cautious incrementalism. She has eschewed sweeping visions, put off decisions whenever possible and usually reflected, rather than shaped, public opinion. The European Union has paid a heavy price for her small-bore instincts, not least because they made the euro-zone crisis deeper and more protracted than it needed to be.

'Against that background, Mrs Merkel’s approach to Europe’s migrant crisis is remarkable. As throngs of Africans and Arabs turn Italian and Greek islands, and eastern European railway stations, into refugee camps (and are found dead in Austrian lorries), the chancellor has taken a brave stand. She has denounced xenophobes, signalled Germany’s readiness to take more Syrian refugees and set out a European solution to a politically explosive problem'.

These quotes are from the latest edition of The Economist.


Fiona Prior sees the films Iris and The Man from U.N.C.L.E. Both great fun is her verdict.

Horse Racing'n'Footy'n'cricket'n'stuff

This week Australia, Henry Thornton and TP Maher celebrate the life of Bart Cummings, a master of his chosen sport and a wonderful horse whisperer. May he rest in peace. More here from Terry Maher.  You will find also some engaging history, some reporting on the form of a horse named Boban and even some discussion of Heisenberg's uncertainty principle.

Its the fag end of the (winter) cricket season.

The Aussie sheilas won their Ashes series of games of different length, while the blokes lost a T20 game and won a one day game.  Who cares - better to give the blokes a few weeks off to recover from what seems like an endless season.

Its coming to the business end of the footy season. the Tiges disposed of the North Melbourne seconds, who it must be said fought well for three quarters.  If the Kangas do not want him, Caaaarlton! would take Majik Daws to be a big marking forward asnd occasional ruck relief for Kruezer, if indeed our best player is still at Optus Oval next year.

Caaaarlton! play Hawthorn tonight and should be blown away. Henry's brother offered a bet at 200 to one, enticing odds but not acceptable.

Jarryd Hayne has now played brilliantly in his fourth NFL trial game and has, it seems, attracted a small but loyal fan base all on his own.  He possibly cemented his place in the final team with a classic shoulder charge.  If his NFL team turn him down, Optus Oval beckons.

Little LLeyton Hewitt bowed out of the US open in five hard fought sets, beaten by superbrat Bernard Tomic.  Lleyton has had plaudits piled on him from the tennis world, including his one-time doubles partner, Roger Federer. Hear is a link that brought tears to Henry's eyes.

Image of the week

Animal Spirits, Competitiveness
Date: Monday, August 31, 2015
Author: Henry Thornton

'Economists unsure why growth is stuck in the slow lane' reports David Uren. Well, glory be, comrades, economists 'unsure'?   At least this beats the usual mindset which is best described by the old crack about Treasury: 'Often wrong but never in doubt'.

What is wrong, dear readers, with this summary from our weekend epistle of 22 August?

'Supposedly "weakness of the Chinese economy" is the precipitating factor, but there are plenty of other reasons for gloomy global Animal Spirits.  Here is a list: sluggish Eurozone activity, evidence of slowing US activity, clear signs of global deflation, caution due to unsustainable levels of household, business and government debt everywhere, deep uncertainty about the eventual outcome of global currency wars and when and how the US Fed will begin to raise interest rates'.

In Australia's case, slowing of population growth is an additional factor, but this is as much a consequence of more basic matters as an independent initiating factor.  But of course all the initiating factors listed in the paragraph above are interdependent.  'Poor Animal Spirits' is not a bad overall summary, but economists have achieved no basic agreement about determinants of Animal spirits. But clearly sluggish economic activity, unsustainably high debt levels, global currency wars, concern at mooted interest rate hikes are all factors likely to make people and companies bunker down.  When leaders are saying 'borrow and spend', as has been the case in Australia recently, then people and companies are likely to add 'confusion about government policies' to their list of things to keep them in the bunker.

Here is a call to economists. Construct a credible index of 'Animal Spirits' and then systematically relate changes in this index to the factors noted above as well as wars, terrorist attacks, global climate change (however caused) and other geopolitical developments.  Fame and fortune may come your way.

We thank David Uren for raising this vital question, and indeed much of his stimulating article discusses the interaction among the various factors that indicate poor Animal Spirits.  These factors will make up what will be labelled the 'Animal Spirits multiplier' when the analysis outlined above is finally nailed.

Competitiveness and Innovation

Highly competitive nations will find strong innovation helps overcome entrenched depression. Successful innovation is a positive factor for the 'Animal spirits multiplier'.

Minister for Industry and Science, Ian Macfarlane, has today explained his government's focus on innovation and competitiveness.

'A key priority of the government is to boost Australia’s success in ­innovation and in transforming its great ideas into a commercial ­reality.

'Like other advanced nations, our economy is undergoing a ­significant transition in which ­traditional industries are evolving and new opportunities are ­emerging.

'It’s essential Australia embraces these opportunities to improve our global competitiveness. Through our Industry Innovation and Competitiveness Agenda we are working to revitalise Australia’s business and entrepreneurial drive to equip our economy for the challenges ahead. We understand that business is the backbone of our economy, and in the 21st century we must continue to be innovative to strengthen our competitiveness — which is the key to our future prosperity'.


'The path to this goal requires collaboration across industries and stronger links between industry and science, to better harness leading-edge research and ensure scientific breakthroughs are commercialised.

'By tapping into the expertise of our Co-operative Research Centres (CRCs), Australian businesses can build and develop through innovative research in areas as diverse as hearing, healthcare, pest management, bushfire and natural hazards management, financial markets security and the aerospace industry.

'As well as commercialising leading-edge research that takes place in our universities and research institutions, CRCs are producing graduates with hands-on industry experience. This is helping to create a highly skilled and innovative workforce.

'We are investing more than $731m in CRCs over five years to ensure small and medium enterprises have the support to overcome the initial barriers and risks associated with introducing new concepts and technologies, leading to improved competitive advantage'.

Minister Macfarlane's full article is linked here.

Disclosure; Henry has had a long association with Australia's CRCs, including 5 years as head of the committee overseeing the Commonwealth government's CRC program

Saturday Sanity Break, 29 August 2015
Date: Saturday, August 29, 2015
Author: Henry Thornton

By week's end the global markets had rallied, though in Australia equity markets were still well below the previous peak. Overnight, however, US markets suffered another downturn and the Chinese central bank reportedly threw a lot of money into equity markets. So we can expect another week of turbulance and volatility. In times such as this one needs the comfort of trusted advisors, and Henry's favourite fund manager has come through with the view, appropriately hedged, that current events add up to a correction, not a bear market.

'There is a sense that we have been overdue for a correction in equity markets and we know that corrections are both a necessary and healthy phenomenon that washes out the weak holders of shares and presents opportunity for those with the nerve to commit.

'This correction, which we define as a decline in the index of more than 10%, has been a long time coming. In the US, for example it has been nearly 4 years since the S & P 500 has declined more than 10%. This correction was well overdue……….

'Yet we live in the moment, not in the text books of history. And no matter how hard we strive to remain objective thinkers, no matter how overdue a correction was, we cannot but help let that subjective part of our minds wander into the realm of fear and ask “This is just a correction right?”

Despite Henry's faith in the team that manages his Australian equities, (thankfully a lot fewer than they were at the onset of the GFC, that's the equities, not the managers), readers may follow the logic here. Of course we must advise you not to act on these views unless you are a fully adult person who takes advice from an ASIC-approved financial planner.

(Some people believe that  sacrificing a virgin sheep under the light of a full moon would be more useful, but we cannot possibly comment on that.).

Economic reform

The Great and the Good have spoken about the need for thorough-going economic reform.  The newspapers that sponsored the talkfest  provided a blitz of fact and opinion,

Today's Image of the week provides a fair comment on the effectiveness of the flow of (highly sensible) advice.  The only new thought comes from Judith Sloan under the enticing headline of 'Why the economy is going to hell in as handbasket'.

'It’s easy to blame shortsighted, feckless politicians whose main experiences in life have been school, university, a short stint in legal practice, working as a trade union official (Labor only) and the inside of a politician’s office working as a staff member. This is the “real” world experience of far too many politicians.

'The process of setting up a business, negotiating the regulatory maze, selling to willing customers to make a profit, making payroll: this is simply foreign territory to all but a handful of politicians.

'It’s also too easy to blame an obstructive Senate ...

'The reality is that the quality of the advice our gormless politicians receive from our key economic institutions has declined dramatically during the past decade or so. ...

'It’s not because bureaucrats are unwilling to speak the truth to their political masters. It’s rather that far too many of them share the delusions of their political masters; indeed, some of them are only too willing to join the political game, admittedly from the protected precinct of the public service. Take Treasury. The rot really started when the so-called Wellbeing Framework was adopted as an organising principle to be followed by all Treasury staff. Apart from the fact many Treasury officials never understood the purpose of the framework — this much has been acknowledged by Treasury itself — the real impact has been to downplay the importance of (per capita) economic growth and to emphasise issues such as fairness and sustainability'.

Henry's opinion was provided two years ago when we spoke of the coming 'grim recession' and powerbrokers 'walking unknowingly into a new economic crisis'.

'Warnings have been sounded, and not just by this writer, and the only excuse for the steady tramp into recession is the insularity and self-congratulatory hubris of successive ministers and officials, especially those in Treasury.

'Where is the Westminster tradition of strong, independent advice? Treasury (and the Reserve Bank) has many excellent and dedicated economists. Have relevant warnings been ignored, or have the fine economists effectively been nobbled? Fear that the messenger will be shot is a powerful nobbling device'.

Shared delusions or nobbled officials, perhaps it is a bit of both. Whatever the cause, Australia's compromised 'Washminster' system is in urgent need of reform.  We need to go back to the Westminster tradition of strong independent officials, perhaps poorly paid but showered with honours when they retire.  Or move onto the Washington tradition that each new administration fires the last lot and appoints its ideological friends.  To work properly, five year terms for parliament and a new tradition of negotiating with the upper house when necessary would be desirable, but being far clearer about the position of advisors would be highly desirable also. And there is the side benefit of advisors from the previous administration giving honest, hard-hitting advice from the think tanks, all of which would become far more effective than they are at present.


Fiona Prior bids farewell to the ballet superstar Sylvie Guillem who is up there is the world of dance legends with Anna Pavlova, Margot Fonteyn, Vaslav Nijinsky and Rudolph Nureyev. Guillem is hanging up her leotard after almost 40 years of dance. Please see here.

the magnificent Sylvie Guillem


Usain Bolt has given global athletics a welcome boost by beating his convicted drug-enhanced rival in the 100 and 200 metres world title races. The world's fastest man has revealed his ambition to break 19 seconds from his favourite race, the 200 metres, equivalent perhaps to running the marathon in two hours.  An Aussie long jumper surprised the world with a silver medal in the long-jump, and a young bloke called Starc (brother to the cricketer) has jumped a best height of 2.1 metres to win a place in the high-jump final.

Could Australian athletics be making a comeback?

Footy approaches the finals.  How did that Hawthorn star get only 2 weeks off for driving an opponant into a goal post is a mannr that seemed deliberate to this viewer?  And how did the Brownlow medal favourite get off after sliding into an opponant?  Could it be possible that the mighty AFL money machine is protecting its profits from the finals and Brownlow awards?

Caaaarlton! provided cheer in the Thornton household with an upset win over Melbourne.  Our main trouble has been 1. Lack of confidence (thanks Mick); 2. Lack of a power forward and a ruthless centre half back, and ditching some players who have flourished mightily elsewhere (thank you, recruiting team); and 3. The lingerly effects of the cruel penalties applied by the AFL for salary cap rorting all those years ago (thank you big bad John.)

Not much cricket news, but Henry did spot Watto playing one day cricket against Ireland.  Glad to see that this fine cricketer has not been fully sent to the cricket knakery.

We come now to a subject usually unnoticed by Henry, ... SEX. Betina Arndt has tackled the apparent loss of libido by women, noting in passing that blokes retain their demanding, animalistic habits, meaning growing malesunhappiness in the bedrooms, couches and back seats of cars in our overworked, stressful, boozing, child molestering nation.

Soon the ABC will take up this theme, in the process blaming Tony Abbott and Joe Hockey.  Wht fun it will be on Q&A in a week or two.

Read all about the whole sorry tale here.

Image of the week.

Courtesy The Oz

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