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Henry Thornton - Contributors: A discussion of economic, social and political issues Blogs
What is to be done?
Date: Tuesday, August 09, 2011
Author: Henry Thornton

Like our loyal readers, Henry awoke this morning to news of a stomach-churning fall in European and American stockmarkets.

It is especially awful when a prophet who has sounded the warnings has failed to fully protect his family from a predictable market debacle.  (Refer http://greatcrisesofcapitalism.com/.)  

So what is to be done?

Developed nation policy makers will do their best to change the weak and indecisive policies that have produced this unhappy state of affairs.

Trouble is, most of the respectable ammunition has been spent.  Further fiscal stimulus would make the debt burdan of the deficit nations - ie virtually all 'developed' nations - worse.  'Tea Party' fanatics in both USA and Europe will stand in the way, preferring global depression to their turn on opposition.

With interest rates at zero, central banks of the debtor nations cannot be cut further, although further 'quantitative easing' (= printing money) is possible.  The cost, however, will be further global inflation, hardly a way to restore confidence to markets. 

The western nations are 'very close to stall speed' said Martin Wolf on ABC radio this morning.

By coincidence, Henry's favourite fund managers weighed in overnight with their 747 analogy.

'The Jumbo 747, since the early 1970's, became the icon of mass transport over long distance. In a similar vein, and over a similar timeframe, the American economy, via the consumer, became the mass driver of global economic growth.

'At cruising height the Jumbo can, and has stalled, at which point it loses significant altitude in a matter of seconds. If the flight crew panics and tries to start all 4 engines simultaneously the plane will crash as there is insufficient in-board battery power to execute such an attempt. It is possible to start each engine in sequence, however, thereby using the power from engine 1 to start engine 2 and so on'.

'Last week the Jumbo stalled mid-flight and most financial assets lost significant altitude in a gut wrenching hurry. To determine what will happen from here we must make a judgement call as to whether the flight crew, namely Messrs Bernanke, Trichet, Lagarde, Merkel, Sarkozy, Cameron and Kan, react in the correct manner'.

Read on here, gentle readers, and you will come to the good news. 

We need the Eurocrats and politicians to decide on a proper, Eurolandwide bailout - paid for mainly by Germans.  Alternatively, let the Eurozone fall apart and then bail out the banks that will be in trouble.

American politicians need to agree on a long-term plan to return the USA budget to modest surplus to allow some debt reduction and restoration of America's AAA rating.  Then Ben Bernanke can get on with the job of soaking up the excess liquidity he has been creating as a way of saving the global economy.

Australia's government must drop the carbon tax, reform the tax system, restore competitive labor markets and stop installing massive, poorly managed 'improvement' plans.

Once such a plan is agreed, which should not take too long, the government should call an election. 

This would give Tony Abbott the chance to present his plan for return to prosperity, and it would give us long-serving voters a chance to choose a decisive government.

Then the good news would emerge, as articulated by Harry Cator and Julian Mitchell.

'We think there is good buying now in selective Australian shares that are offering excellent fundamental value on a long term basis. Cautious buying today may not provide instant rewards but acquiring quality assets on cheap fundamentals makes money in the end.

'Australian shares remain cheap on a variety of measures which is positive for the medium term but valuations alone will not be supportive in the short term in the absence of clear cut policy responses. Australia’s ability to respond to further risk aversion is better than most of the developed world. We are in a position to cut interest rates significantly should the need arise. Our banks rely considerably less on wholesale funding than in the GFC, the budget surplus could be deferred and bank deposits could again be guaranteed. All of these measures are defensive in nature and in our view limit the downside.

'Addressing the structural issues that have given rise to the Jumbo’s engines stalling however would likely see a powerful rally and the base line set for the next bull market. Even some of the short term solutions we have discussed would in all likelihood see markets spike upwards but at some point in the future the US and EU will need to tackle their long term issues'.

Sunday Sanity Break, 29 May 2016
Date: Sunday, May 29, 2016
Author: Henry Thornton

Labor remains 51-49 and Bill Shorten on one measure (net lack of popularity) has equalled Malcolm Turnbull. Well, Comrades, what a turn up for the bookies, the pundits and Malcolm Turnbull. As Richo said, the Libs sacked a bloke with no judgment for a bloke with no ticker.  And no debt and deficit reduction strategy either, substituting instead what a great time it is for Australia, and to be Australia’s Prime Minister, even if it will turn out to be for less than a year.  One your bike Malcolm, lots of ground to make up and the possibly fatal decision to punish your heartland with retrospective changes to their retirement plans.

And can we believe it? Caaaarlton! beats Premiership hopeful Geelong despite having no fit players on the bench for most of the last quarter. This side is very special. 'Grit and determination, spirit' this is the secret.

Read all about at the Herald Sun.

Janet Yellen has now said US rates will rise ‘in coming months’.  In distant Bergen, last week’s weekend FT was 39 Norwegian Krona, 40 with a plastic bag to keep out the rain. Its editorial says ‘The Fed nudges investors toward another rate increase’ following the release this week of ‘hawkish-sounding minutes’ from its late April meeting.  Yet, the FT says, inflation is still falling and in Japan and Europe (and, we hasten to add, Australia).   In Japan and the Eurozone, monetary policy is still being eased.  Even with some increase in commodity prices, a sudden upsurge of inflation is unlikely.  The FT says ‘A fresh rate rise in the United States at this time would be a mistake’ and it must be agreed that inflation is apparently still falling despite improving activity.

The more important issue, at least for Henry and Mrs T, is the outlook for equities. The FT asserts that ‘fund managers are braced for ‘a summer of shocks’.  These shocks include:
• Corporate earnings are falling and ‘no-one likes equities’. (Bad luck for self-funded retirees.  They will be told by financial planners to spend up big and apply for a pension.)
• The world is entering a time of falling returns. (Any chance of this effecting Australian companies?  CEOs, especially overpaid bank CEOs, will find downward pressure on remuneration.)
• UK leaves the Euro zone, although recent polls are discounting the Brexit shock.
• Europe must negotiate a deal with Turkey on immigration.
• Support for Greece needs sorting.
• Spain is experiencing the need for another election after recent elections failed to produce a government. (No chance of this in Australia?)
• Italy is facing a constitutional crisis which one guru said ‘might turn out to be a referendum on the popularity of the European Union as a whole. (In Henry’s modest view, the Euro zone is doomed because the Euro is too weak for the strong nations of Europe and too strong for the weak countries.)
• And there is the old Northern hemisphere advice to ‘sell in May and go away’.

Here is one prediction with especially relevance to Australia. A Mr Barry Norris, head of Argonaut Capital Partners, is quoted as saying: ‘Nearly every commodity in the world, with the exception of salmon, is oversupplied relative to demand’.  Recent signs of fresh demand has just delayed the reckoning Norris believes, which has merely been delayed for six to twelve months.

Henry and Mrs T are determined not to let all this pessimism ruin their current journey. Indeed, the report on our time in Norway has been added to here.  Page down to Balestrand - the Kaiser's playground


The Raff reports on Vietnam -booming economy, great  place to invest, or take a holiday.

Image of the week – ‘The trouble with Mexicans, correction Australians’

Bill Maher, an American comedian, has realised that Australians are quietly taking over lots of fun areas of American life – working bars, teaching skiing and surfing, taking acting jobs from Americans. It seemed to Henry that he was trying to illustrate Donald Trump in action, although he did sort of apologise for asserting that Australians are rapists.

Click here for a You Tube extravaganza. WARNING: do not do this if you are a sensitive adult or if children are in the room.)


Fiona Prior falls for the charm of the latest film version The Jungle Book. More here

Art Exhibition by Pete Jonson
Date: Saturday, May 28, 2016
Author: Henry Thornton

Henry's editor, Pete Jonson, has recently decisively wound back his corporate involvement. He is now fulfilling the promise he made to himself as a young part-time landscape painter that he would, later in life, spend more time painting. This time has arrived; and Pete has been painting seriously for several years now, gradually devoting more and more time to this most pleasurable activity.

Pete has just opened his first exhibition, an eight weeks solo showing at Whitehill Gallery & Sapori Di Casa Restaurant, a small slice of Tuscany on the Mornington Peninsula.

The exhibition has just been extended until August 12. Henry urges Pete's friends to go along, have a great Italian meal and buy a painting.  They are of high quality and priced to sell. Each painting comes with a conversation with Pete about his views on global economic prospects in the puzzling (to many) age of deflation and what should be the policy of Australia's government after the current election.

The address is Whitehill Road, (near the corner of Old Whitehill Road), Dromana, Mornington Peninsula. This is about 1 hour and 10 minutes by car from most parts of Melbourne, using the M1 and M3 and then the M11 (new Peninsula Link freeway).

The Gallery is open each Thursday to Sunday from 11am to 5pm. And the Restaurant is open each Friday to Sunday for lunch (phone 03 5931 0146 to book, if you would like to enjoy the paintings with home-made Italian food and superb local and Italian wines). The exhibition will closeon August 12.

Pete Jonson: Perspectives features Pete's landscape paintings from 1988 to 2014. His goal was to capture on canvas both the physical reality and the soul of each vista.

In Henry's impartial opinion, viewers of the works will see that Pete has achieved both; with inspiration, subtlety, technical ability and, above all, a deep love of our natural environment.

Below is an example, The Spirit of the Rock (Uluru) (2013):

The Spirit of the Rock (Uluru)
Oil on Canvas
4' x 3'

SOLD in week 1 of the Exhibition

This is the first time the paintings have been publicly shown; and each is very modestly priced (from $1,000 to $3,000 with one especial favourite of the artist at $4,750).

Enjoy!  And please pass on to your friends if you are moved to do so.


Pete's new Econart images may be viewed here and will be offered For Sale at a later exhibition.


Sunday Sanity Break, 22 May 2016
Date: Sunday, May 22, 2016
Author: Henry Thornton

Henry cannot access The Australian despite being a lifetime subscriber and a person who also had a digital subscription almost from inception of that service, he cannot access all the locked articles in that great organ's site. This problem first occurred two months ago when Henry took a digital subscription to the Herald Sun.  It took three long phone calls to the laughingly incompetant 'Help Desk' before Henry was again able to access the Digital Oz.

Now sitting the La Guardia airport awaiting the flight to Washington, Henry is off the air again. Lordy, lordy, as they say in parts of the mighty USA, what can be done?  Call the Oz's 'Helpline' on the mobile and wait for 20 minutes to reach a nymphette who cannot fix the situation?

Better still, email David Uren and see if he can get me back online for the Oz and Herald Sun.

I have been touched by the high levels of public civility we have experienced in New York.  It this the aftermath of the so-called 'Great Recession', more thoughtful civil leadership or more NYPD presence on the beat? Who knows, but the culture seems different compared to that experienced during our one month visit about 30 years ago.

We had the great good luck to obtain tywo cheap seats at the Saturday afternoon performance of The Book of Mormon. A snip at $US69 each, sitting in a box at the front side box.  Wonderful show, and top prices were $US750 each, an offer we declined with shocked amusement.

Economic and civility commentary here.

Due to above-mentioned interrnet news black-out, I am unable to comment much on events in our dearly beloved Banana Republic. Our gently skeptical comments on the late, much lamented budget have been overshadowed by the news that Treasury Secretary John Fraser is to resign after the election and by a brilliant analysis by former Secretary of Treasury John Stone.  This was published in the Australian Spectator and may be accessed at the link below.

Like the Book of Mormon, a treat not to be missed.

Saturday Sanity Break, 14 May 2016
Date: Saturday, May 14, 2016
Author: Henry Thornton

Great excitement and 'white hot rage' about the clearly retrospective changes to Superannuation law and practice. Messrs Turnbull and Morrison are sticking to their guns despite this being a major issues for the Liberal faithful.  Especially with people who have accumulated enough money not to need to suckle on the gummint teat like, apparently, 50 percent of Australians of working age.

First leaders debate saw Bill Shorten apparently more sincere and able to connect with real people, while 'Harbourside man' spoke well and smiled nicely with an invisable thought bubble hoverering over his head suggesting 'Why am I bothering?'

As many people have said: 'It will be long and it will be hard (no sniggering please) and it may well end with a hung parliament and more of Australia's increasingly dysfunctional politics.

Henry and Mrs T leave for the USA on Tuesday and will find it difficult to get access to all the political goss, and for that we are very grateful.  In fact today we shall explain courtesy of Australia post - with the letter 50 % likely to get tossed in a bin - why we shall be unable to vote.

The most important reason apart from destroying people's sense of financial well being in their twlight years for objecting to the mooted changes in the law and practive of Superannuation is this. Like assassinating a serving Prime Minister (which both major parties have done), major changes to the law and practice of Superannuation provides a reason why, in due course, the other mob will use the Coalition precedent to inflict further, probably worse, damage on Superannuants.  Bleak this week said it so well, although not all the allegedly 'rich' people are as fat as the bloke on the donkey.

In the USA, Donald Trump surges on and after clumsy attempts to block his ascendency  Republicans seem now to be doing their best to embrace him.

Sensible, moderate government seems to be breaking down everywhere, perhaps as a delayed response to the Global crisis.

From Wednesday we shall be in the once-mighty USA, watching the political antics close up and personal.  It will be something of an antidote to the shananigans in the Banana Republic down south and around the globe.


Henry's editor's art show has opened well with two sales and lots of polite interest. We have emailed our list of special buddies and we'd welcome feedback from anyone who visits the exhibition, details here. Contact Henry here. 

Fiona Prior sees director Andrew Rossi's The First Monday in May. Oooo-eee! More here

Footy'n'other stuff

The eighth round of AFL footy has begun with Geelong scoring a comfortable win over Adelaide. 

Tomorrow Essendon meet the Shinboners, Hawthorn will presumably belt the hapless Freo, the Giants play the pygmies from the Gold Coast, Richmond will fail to redeem its season by slowing Sydney's stately run, for the flag and Brisbane and Collingwood play for twe wooden spoon.

Sunday looms as of most interest to Henry, if only because a newly competent Caaaarltonn! play the porters from Adelaide in Melbourne. Then Melbourne take on the mighty Western Bullies and the inconsistent Weagles meet rising St Kilda.

Not much 'other stuff' about this week. Will Rio be able to host the Olympics, is Kurtley Beale going to the Wasps in old blighty, and will this weaken the newly resurgent Wallabies, when do th futballers play again? These are the big questions in the Thornton household, apart from the outlook when Henry is diverted from the world of High Kulture to again be planning for a financial future with a tax on superannuation and worse atrocities to come if Billy Shorten wins the current oh so boring election race.

Who'd of thort that Malcolm seems like the tortoise so far.  If it was a boxing event it would be promoted as the smooth talking Harbourside Mansion dweller vs the rough diamond who has (gasp!) taken up running.

Image of the week

Courtesy The Oz

Sunday Sanity Break, 8 May 2016
Date: Sunday, May 08, 2016
Author: Henry Thornton

Gor Blimey, Comrades, ain’t politics confusing.  Messrs Turnbull and Morrison are willing to screw Australians who have built up sufficient funds to avoid demanding a tax-payer funded pension with retrospective changes in the rules, and Bill Shorten opposes the change on the grounds that retrospective changes to tax policy are just not on.

In respect of the $1.6 million limit on tax free disbursements, Cory Bernardi asked the killer question of a senior treasury official.  What if markets crash and $1.6 becomes, say, $0.8 million, with income halved?  ‘Tough titty’ said the Treasury officer, or words to that effect.  I bet she smugly mused that couldn’t happen to her good self due to defined benefit nature of her pension, even if she were paying 15 % tax on pension amounts over $100 K.  Same point for pollies, folks, so let’s get on with screwing financially successful non-pollies, non public officials.

Other than that, the budget was a timid affair and provides no guarantees that Australia will keep its AAA credit rating. When that is lost, plus global interest rates finally rise,  the costs of servicing our rapidly growing international debt will increase catastrophically.  Bill Shorten has outlined $70 billion of tax cuts plus new spending plans, while the government is hoping wealthy donors will overlook the extra work and accounting fees to restructure a superannuation plan that was adopted in good faith based on rules provided by the Howard-Costello government.

And the Libs will not just find donations dry up. Just about everyone in Henry’s circle, almost all rolled gold Libs, are threatening to vote Labor, in most cases for the first time since they were hard-playing university students.  Even the normally well-behaved Centre of Independent Studies has unleashed a missile.   ‘A leading free market think tank has lashed the Turnbull budget, saying it offers no crediblepath back to surplus and has permanently entrenched big government.

‘The executive director of the Institute of Public Affairs (IPA), John Roskam, sent an email to members last night saying "the size of government will have grown by nearly 10 per cent in the course of just over a decade".

"That's unsustainable. That heads us down the path of European-style economics," he wrote.

"If Labor win the election the situation will be even worse."

‘Mr Roskam said he had received phone calls and emails from IPA members worried about what would happen to their superannuation.

"It's not just that the Government is increasing taxes on superannuation," he wrote.
"What will really concern people are the retrospective changes to superannuation taxes that will hit people already in retirement”.

Read on here.

The election will be held on July 2 and battle is joined.  Labor is for more spending and higher taxes. The Coalition offers relative (but insufficient) spending restraint and  (assumed) gradual restoration of an acceptable fiscal position. 

 Both sides make optimistic assumptions and neither seem to take into account the possibility of a 'reasonable worst case' - China's economy and indeed global growth struggling,  the new Senate just as reactionary as the old one and the ideological  battle leaving a divided polity unable to agree on either the economic problems facing Australia or the most sensible solution.

Malcolm Turnbull has failed to produce his promised convincing economic narrative and seems to struggle with basic political strategy. Bill Shorten has began to look like a winner. A Liberal apparatchick suggested to Henry this weekend that another minority government was possible, indeed likely, with Greens and Xenophons holding the balance of power in the House of Representatives. And who knows how the Senate will pan out.


Henry's editor's exhibition of paintings has been launched and readers are urged to visit the Whitehall Gallery and restaurant, details here.


Fiona Prior sees Gail Louw’s Blonde Poison starring Belinda Giblin, a confronting one-woman drama about a Jewish Nazi-informer. More here


John Elliot once said that no season in which Caaaarlton! defeated both Essendon and Collingwood was too shabby, and this was achieved at the 'G' yesterday.  Unlike the wins over Freo and Essendon, the game was of a reasonable quality - moderate AFL rather than Nunawading seconds or  Auskick under 12s.

Hawthorn redeemed itself by flogging Richmond, Sydney were awesome and Geelong is top of the ladder.

Image of the week

Courtesy The Oz


Saturday Sanity Break, 30 April 2016
Date: Saturday, April 30, 2016
Author: Henry Thornton

It will be long, it will be hard, and there is always the chance that Bill Shorten will win, or there will be another messy minority government.

No point in pontificating today. All is being revealed before the official release. 'Living within our means' is the mantra, there will be a bandaid to prevent bracket creep for the year ahead. A start on cutting company tax, or a promise to do this if reelected. And cuts to superannuation tax benefits for the rich, and also for the merely well-to-do who place serious weight on living within their means after regular earnings have come to an end.

And increased tax on smokes, foreign tax-evaders - why was this never tackled before? - and a few other good things to do. Sadly no tax on capital inflow - far cleaner than agonising political decisions about good capital inflow (allowed) or bad capital inflow (buying the farm).

Do not miss the review of the Japanese economy by Nick Raffan, the Raff to Henry's readers.  This is a possible future for us all if Australian governments cannot take a grip on the budget and restore a sensible fiscal policy with budget balance on average over the years. 

Greg Sheridan tells all today about Japanese hurt and anger at Australia's rejection of their offer to build our new submarines. Their claim is that they were encouraged to get into the game by Tony Abbott, supported by the US government and then informed of their failure by leak and not deep and meaningful

From all accounts the French will quickly become our best buddies in ship-building and are also likely to teach us a fair bit about modern manufacturing along the way.

Great to learn that 'Tabs' has recognised his mistakes and is settling down to a new political career as an elder statesman and general good guy.

Presumably, China is probably a tad unhappy at Scott Morrison's decision not to sell to Chinese interests the Kidman empire, including its over 1 % of Australia's sacred soil.

For a satirical account of a previous attempt at an Australian land grab, read Banana Republic, Henry's take on the modern direction of university life and work in Australia.  Link here.


Henry is in the throes of excitement as his editor's exhibition gets set up on Monday and opens on Thursday.  Link to location below image of Henry's favourite painting at end of blog below.

Then with Mrs T he leaves for the USA and then Europe for immersionn in global economics and culture.

Sadly we shall miss the election although hope to follow it on our devices from Prato, near Florence, where Mrs T is teaching for several weeks.


Fiona Prior pays tribute to David Page, music director of the internationally acclaimed Bangarra Dance Theatre by visiting the first Bangarra Dance Theatre performance she experienced back in 2002, Walkabout. More here

image by Edward Mulvihill : Bangarra Dance Theatre


The Shinboners brought the Doggies down to earth last night in a clinal display that represented their best start to a seasonm since 1890, correcvtion, 1971.  It warms the cockles of one's heart to see such a club from the inner suburbs of Melbourne doing so well.  Only the fact that yet another Caaarlton! reject - Vin Waite - helped with the game with a display well above anything he ever produced for the Blues.

Caaaaarlton! has the chance to go two wins in a row on Sunday when playing Essendon, the team of blokes too young or too old, but nevertheless a serious chance to win the battle with Caaarlton! to avoid the wooden spoon this year.

The top teams are just so far above the cellar dwellers that we need some sort of divisional split in Aussie footy.  Hawthorn, Sydney, West Coast, Adelaide, Geelong as well as North Melbourne and Footescray are all well above the rest.

Alternatively, a split of all sports into three groups - amateur, professional (clean) and professional (enhanced).

It is already getting hard to keep track of illicit drugs, and what happens when gene therapies become a regular feature of life?

Image of the week.

Uluru in the Gloaming

Exhibition opening Thursday May 5.  Details here.


Sunday Sanity Break, 25 April 2016
Date: Monday, April 25, 2016
Author: Henry Thornton

We apologise, with Telstra, for lateness of this report.  At our rural hideaway, one hour plus change from the Melbourne CBD, mobile phones do not work and this weekend was worse.  While the PC said it was 'connected' the Internet would not open. Great stuff, Telstra, what if there is an emergency?

Politically we could ask Malcolm Turnbull for an explanation based on his time as El Supremo of the NBN. But he's having  such fun running the nation that he presumably would be disinclined to account for his failure with the NBN, at least as it effects residents of Mornington Peninsula.

Redemption in sight, Tony Abbott admits to his flaws.  Read on here, in the third and final article in Quadrant's fine series, an edited version published in the Weekend Australian.

Just a glimpse. 'People needed a greater ­appreciation of the government’s aims. We needed to explain better that sensible economic policy is not an end in itself but the means to a better society and to people being more able to achieve their potential. In the busy-ness of ­public life and in the crossfire of politics, the Abbott government was too often unable to convey that its fundamental purpose was a stronger society and more fulfilled people'.

An early Double Dissolution election seems a sure bet. Both teams can claim underdog status.  Labor because of the mess they made in their last try and the Coalition because they have lost so much ground in the polls, there is clear evidence of disunity and the leader seems to have failed to present us with a coherent economic narrative.  It is an exciting time to be leading such a wonderful nation as Australia, but where, sir, are you leading us?

Presumably the budget will provide hints and the election campaign will become definitive.

Mrs T has a 'strange feeling' that the gummint is in deep trouble and may be facing the first first term loss by a government since 1931.


Fiona Prior enjoys Ralph Fiennes being really, really naughty in Luca Guadagnino's A Bigger Splash. More here  

Footy'n'Rio'n'stuff (ie idiocy)

An allegedly 'accidental' crash into the back of Geelong's new star, Patrick Dangerfield, started a quartertime brawl with Geelong struggling.  From then it was a comprehensive flogging of Port Adelaide, as so often results when a winning team gives offence to the losing team in a big day.

And Hawthorn won another game they could have lost by, you guessed it, 3 points after a late surge.

Caaaarlton! meet Freo in Perth! We watched in the hope of a miracle but was been advised by Mrs T not to hold his breath. But the Blues WON, comrades, restoring our faith in our footy team.

Australia's swimmers look to be in great shape and some of the younger athletes ditto.  Provided the venues are ready, and drug testing is of high quality, Rio may present happy viewing after a long run of ordinary performances by our young athletes.

Greg Craven, who should know, reported this week on the subject idiocy in our world.

'Craven’s Law of The Constant Proportion of Idiots [now being shared after long cogitation] holds that no matter how
 theoretically clever a group of people ostensibly is, it still will contain the same average proportion of absolute
dipsticks. And the corresponding number of seriously bright sparks'.  ...

'I thought deeply about all this, and came to an astonishing conclusion. In their distribution of mugs and magi, my fellow parcel heavers in Shed B at Spencer Street were just the same as the intellectual elite at dear old MU. The fact all my classmates had stratospheric ATAR equivalents made no difference at all.

'This revelation has supported me throughout life. There is no group so clever, so august or revered it does not harbour its own village idiots.

This is a real gem of a contribution, and deserves to be read widely and thought about.  Click here.

Image of the week'

Courtesy The Oz

RBA's Stevens warns
Date: Wednesday, April 20, 2016
Author: Henry Thornton

'Reserve Bank of Australia governor Glenn Stevens has slammed calls for central banks to directly pump cash into the pockets of households and governments to resurrect moribund global economic growth, warning that such "helicopter money" drops would be almost impossible to stop once they start', reports Jacob Greber from the AFR.

"Are we that desperate," Mr Stevens said in a speech in New York on Tuesday, in which he also challenged a growing view that the world is suffering from an obsessive desire to save over investment, a growth-retarding trend dubbed the great "secular stagnation" by figures such as Barack Obama's former top economic advisor Lawrence Summers.

What can be done about this? The starting point is that the world needs to face the possibility that global trend growth may have been permanently lowered since the 2008 crisis.

'If true, that would mean savers, pension funds and even governments need to dramatically rethink expectations about rising future incomes, he said.
"It may be that this reconfiguration is, in fact, what is happening. That would explain why ultra-low interest rates are not, apparently, as successful in boosting growth in demand as might have been expected," he said.

"The future income against which people would borrow looks lower than it did, not to mention that the current income against which some already had borrowed has turned out to be lower than assume

'All of which, according to Mr Stevens, intensifies the need for governments to redouble their efforts at blowing away barriers to growth, which he listed as including teetering banks without enough capital; households and companies burdened by too much debt, and; protectionist government policies that impeded productivity or slowed the transitions from old industries to new'.

Read the full speech here.

It`s on - well, almost
Date: Tuesday, April 19, 2016
Author: Henry Thornton

Nicholson said it best, as he does so often when politics in Australia hots up.

Sunday Sanity Break, 17 April 2016
Date: Sunday, April 17, 2016
Author: Henry Thornton

A triumph in China, more warnings about Australia's AAA credit rating, Bronnie de-selected in Mackeller, a lovely week for the Prime minister of the greatest nation to be alive in. Seriously, dear readers, it's all happening and it is no longer a dead cert that the voters will fill in the voting forms with the blue pen.  Malcolm must have reflected just a bit about the weaknesses of democracy as he hobnobbed with the senior leaders of our great trading partner.

The Weekend Oz has lead with a big headline about the fact that almost half of Aussies are reliant on the public  teat.  Also we hear that the new disability support program when expanded from the relatively small set-up to the full disaster will be unsustainable due, you guessed it, cost.  And the same international credit rating agency that warned of our unsustainable AAA credit rating opined that we could not save this unless and until taxes were raised. Rolled gold conservatives will almost certainly dismiss this view with a snort, but what if it's true?  Higher borrowing costs, greater budgetary pressure, less money for people who cannot work. Cor blimey, comrades, what is to be done about it?

Even the RBA weighed in last week, with another edition of its splendid Financial Stability Review.  As I read it, the housing sector may no longer represent a threat, however remote, to Australia's financial stability, except for the gross oversupply of units. The fresh news concerns  'the possibility of large losses on lending to residential property developers and on banks’ commercial property portfolios'.

These and other risks should be 'managable', because Australian banks have improved their capital ratios since the recent global crisis.  The remote possibility of a global banking crisis is mentioned briefly in the same paragraph as New Zealand, where 'high levels of mortgage debt and rapidly rising housing prices have raised the risk that a price correction could adversely affect banks’ asset quality, while persistently low milk prices and declining land values have increased the probability of defaults and likely losses on loans to the dairy industry'. 

Read on here.

Seriously, dear readers, there is no stone unturned in this report. Here is a modest suggestion for Kelly O'Dwyer. Why not ask the RBA to write a regular 'Sustainability Review'. Or if the RBA pleads this is not its main job, Treasury could be asked to provide such a report with a mandate that it should be an independent view, to be written by the brightest and smartest young people in the service. 'Dream on, Henry,' I hear you cry, 'it ain't gonna happen Comrade'.  So what about the IPA? Or the Centre for Independent Studies?


Fiona Prior sees the performance of Savages by Patricia Cornelius,  top-notch theatre, though a play you feel reluctant to encourage others to see because of the challenging nature of its subject matter. Directed by Tim Rossen, Savages goes way beyond men behaving badly to men behaving like savage dogs - hence the name. To give you a hint of this chilling work, you would be forgiven for thinking the rape and murder of Dianne Brimble on a P&O cruise in 2002 at least in part, has motivated the work. More here


It's official, folks.  Aussie rules is the world's most exciting game, originating as it does in the world's most exciting nation.  So said our dear leader whilst in Singapore.  The Prime minister has offended a majority of Australian voters, who variously support one or both versions of Rugby, Futball (Soccer to we Aussies), Gaelic Footy, Gridiron, netball, the list goes on. 

Hawthorn again won a game logic said it should lose. With the help of Eddie Betts ('let go' by Caaaarlton!), Adelaide won a game it was headed to lose.  Meanwhile, judged by the unbalanced injury toll, Caaaarlton! won the fights but lost the game against the rising stars from Footscray. Actually, the Blues got absolutely flogged in the first half but won the second half and for a while in the last quarter looked as if it could cause a massive upset.

So there are green shoots to be seen at Caaarlton! and the fans are coming back in droves.

Image of the week

Courtesy Google Images

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