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Henry Thornton - Contributors: A discussion of economic, social and political issues Blogs
Demise of the Euro?
Date: Tuesday, October 25, 2011
Author: Henry Thornton

The Eurozone crisis is reaching its peak, with increasing numbers of analysts concluding that collapse of the one currency regime is more likely than not - eg Wolfgang Manchau in the FT.

This need not turn a nasty global recession into depression, but this possibility cannot be ruled out.

If there is a disorderly sequence of sovereign debt repudiations, followed by a series of bank failures, this is the nightmare scenario.

The Economist this week looks at 'Rage against the machine' among the 'Occupy Wall Street' followers and fellow travellers from Seattle to Sydney.

There are 'legitimate, deep seated grievences'. Young people face higher taxes, less generous benefits and longer working lives than their parents.  Houses are expensive, credit hard to get and jobs scarce - all issues bothering Henry's late teens/early 20s offspring, incidentally.

Older people face falling real wages, diminished pension rights and inflation (and asset deflation generally) eroding living standards.

The standard governance models of capitalism are under pressure, and governments have little to boast about.

European social democracy made promises that cannot be kept.

The Anglo-Saxon model delivered a 'series of debt-fuelled asset bubbles and an economy rigged in favor of a financial elite, who took all of the proceeds in the good times and then lefy everybody else with no alternative other than to bail them out'.

Politicians need quickly to find an answer to the Eurozone crisis and provide some short-term support to activity while delivering credible plans for long-term fiscal balance, a nice trick that Henry doubts can be delivered.

The alternative is to embrace austerity - as Iceland's Prime minister put it, his people need to learn to go fishing again - to recover economic balance via the conservative solutions of hard work, thrift and innovation.

The venerable mag's second prescription is far more palatable - governments should tell the truth, especially about what went wrong.  'The biggest danger is that legitimate criticisms of the excesses of capitalism risk turning into an unwarrented assault on the whole of globalisation'.

America's resort to protectionism helped turn a nasty downturn into a Great Depression in the 1930s and that is still a major risk now.

Another view

Echoing Henry's Great Crises of Capitalism, global consultant Towers Watson sees Global Depression as the first among 15 extreme risks facing their clients.

'Sovereign default has risen four places to second position in Towers Watson's ranking of the top fifteen extreme risks while Depression retains the top position and hyperinflation moves to third'.

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

Establishment gets it, at last
Date: Thursday, August 27, 2015
Author: Henry Thornton

The Great and the Good have spoken - Australia needs economic reform, there are plenty of good ideas and the government needs to get on with it, helped by the opposition.  The AFR and The Australian have provided excellent summaries and Henry's favourite quote was from Dr Martin Parkinson - 'We are 'sleepwalking into a real mess'.  This is great rhetoric, especially as it echoes Henry's comment published in The Australian in August 2013. 'Now the nation's leaders are walking unknowingly into a new economic crisis'.  The the now free-to-speak former Secretary of the Treasury also spoke of "Recession". As Henry said two years ago: 'Why is Australia headed for a grim recession, and why will it be seen by historians as a recession we did not need to have?'

Here is where the current grim economic situation was predicted before it happened, and why. 

The master writer about the political economy of Australia is Paul Kelly.  His column today starts as follows: 'The National Reform Summit has sent a singular message to the political system: Australia is a better country than you think, it is more ready to debate reform than you think and it is past time to tell the economic truth about our future.

'The agreement from the summit is that reform is now urgent, our economic and social position is slipping, unemployment is too high, poverty is rising and growth combined with equity is the priority objective.

'The summit stakeholders — if true to their word, and this is a hefty proviso — have drawn the line against the “rule in, rule out” political culture that is wrecking policy progress and driving the decline in living standards growth. The widespread coverage of the summit constitutes a threshold of sorts — public recognition the political system is failing.

'This perception imposes fresh obligations upon Tony Abbott, Bill Shorten, the parliament, the Senate and the states to lift their game'.

Do not miss Louis Hissink's latest diatribe. The summary is the 'Establishment economists have wholescale embraced Keynesianism and contributed to the death of the free market in the Western world'. sort of consistent with what the great and the good were saying at the latest economic Summit.

Read on here.  Those with a mistaken view of causation in economics are destined to repeat the mistakes of the past.

Market meltdown
Date: Monday, August 24, 2015
Author: Henry Thornton

'The Australian sharemarket has plummeted today amid a global sell-off sparked by fears of deflation and standstill economic growth, with a plunge on the Chinese markets making matters worse.

'At 3.15pm (AEST) the S&P/ASX200 index was down 4 per cent cent to 5007, the biggest intraday drop since 2007.

“Today has all the hallmarks of being one of the worst trading days of the past five years,” IG market strategist Evan Lucas said.

“Fear-selling is now stronger, faster and harder than ever before, and now there’s another pressure to it — are central banks out of tricks.”

'China’s main stockmarket gauge, the Shanghai Composite index, tumbled 6 per cent in the first minutes of trade, despite Beijing authorising the state pension fund to invest in stocks to shore up the markets'.

This grim news continues here. 

So what does it mean?

Whether this is part of a 'correction' (a 20 % fall), a 'crash' (up to 40 % fall) or a catastrophe (name your own figure) is impossible to say.  Henry said in his 2011 book Great Crises of Capitalism (signed off in late 2010) that he had no confidence that the Global crisis was over.  Since then 'Quantitative Easing' and near zero interest rates have boosted global share prices and there have been rapid recovery from downturns in global indices.

Factors that are worrying experts, and should be worrying us all, include: continued near-zero interest rate and uncertainty about how that situation can be normalised; the apparent severe slowdown in the Chinese economy - with non-official sources suggesting this problem is far worse that official numbers; continued uncertainty about economic recovery in the Eurozone and how very weak Eurozone countries like Greece can recover with continued, much disliked austerity imposed by creditors; the signs of slowing in the US economy; fears of global deflation; and poor 'Animal Spirits' among many global investors; businesses and households.

The link to Australian superannuation is that the market meltdown has already hacked into incomes of retirees with self-managed funds, and will decimate returns several times more in a wost case.  Most if not all global decision makers, like Australian politicians and officials, have defined benefit retirement schemes that are backed by tens of millions of assets. This illustrates the ridiculous nature of those who argue, while sitting on a guaranteed pension backed by millions of dollars of assets, that a person who has accumulated a one, or two or three million super fund is 'rich'.

The only way to minimise the fallout from the market meltdown and all the current uncertain but mainly bleak prospects, is to embark on thorough-going economic reform, after the government carefully and honestly explains things are not 'she'll be good mate!' as weekend propaganda put it.

Superannuation and tax reform

Superannuation tax has raised its ugly head again, thanks to Henry Ergas.  The rhetoric is wonderful, and the warning (front page of The Oz) is chilling: 'It seems only a matter of time before super savers are slugged'. But try as he might, Henry (Thornton) cannot see how Henry (Ergas) justifies his argument that super savers are already being slugged any amount between 40 % of income and 465 %. We suspect it involves calculations that depend on humanity's defective way of discounting the future, but we cannot be sure.  Please Mr Ergas, explain so even a man close to entering his eighth decade can understand.

The big front page headline, of course, says Smokin' Joe Hockey is going to raise thresholds for income tax bands and (possibly) cut rates of income tax. Great for future earners of salaries, but not so good for people entering their eighth decade whose future income is (ahem) limited.  Smokin' Joe may not survive to introduce these essential reforms, although Henry dearly hopes he will. “At the moment, 2.7 per cent of Australian taxpayers [including both Henrys presumably] fall into the top income tax bracket, and they are paying more than 28 per cent of all income tax,” [Joe Hockey said].

Smokin' Joe will promise to reform income tax without introducing a higher GST tax rate, but rather cutting spending.  This is going to be part of the current government's pitch to voters at the next Federal election. Recall Smokin' Joe's first budget, dear readers. Fat chance of spending cuts even if the coalition wins the next election, currently not something to bet the house on. The possibility of super being slugged while income tax is being cut, in both cases when Henry (Thornton not Ergas) is no longer earning much by way of fresh income, is deeply disturbing.

Thorough-going economic reform includes tax reform.  In the modern global economy, rates of tax in various catagories need to be near the that of competitor nations or there will be massive local disincentives. But there are plenty of non-tax reforms that are needed if Australia is to become a dynamic, entrepreneurial nation that is as fire-proofed as possible in a dynamic, unstable world economy.

Saturday Sanity Break, 22 August 2015.
Date: Saturday, August 22, 2015
Author: Henry Thornton

The by-election for the seat of Canning is the next moment of truth for Tony Abbott and his government. Polls are unpropitious and the money-pinching scandal in the Victorian branch cannot help.  The battle over the Royal Commission into Trade Union Governance and Corruption into  should help, especially if Mr Abbott can persuade commissioner Heydon Dyson to tough it out and finish his report.

But Labor will run hard both to discredit the commissioner and get the commission closed down. Kelly again: 'Whatever happens, Abbott won’t close this commission. The political story of the week was the Abbott government’s resort to an aggressive campaign against Labor and unions over jobs, suggesting that Abbott has found a powerful script'.

Mrs T wonders what all the fuss is about.  The terrorists of the Middle East cut live people's heads off on camera, while a brave Australian soldier is persecuted for cutting off the hand of a dead terrorist so the body can he identified. 'Where is there any sense in the carryon' she asks. The Thornton household hopes Mr Hastie gets elected in Canning with an increased margin.


The dark clouds overhanging the Australian economy are ignored, with power brokers whistling happy tunes and telling us 'punters' 'she'll be good, mates', an attitude Henry emphatically objects to. The sustained examination of the global economy in Henry's Raff Report, whose latest edition is available here, suggests she won't be right. In contrast, the Raff reports: 'Figure 2 shows USA production of agricultural, construction and mining machinery. There is clearly no joy here and the rates of deterioration are accelerating. This is not the picture of an economy going gangbusters. Rather of one in a tad of difficulty. It’s rather interesting but considering all the charts the Raff has published over the past 6 to 7 years, none of them show a hike that might reasonably have been expected given the trillions of stimulus'. 

This burst of cold, hard reality comes just when we discover Australian share prices are now below levels at the start of the year.  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 (as systematically documented by Nick Raffan here), caution due to unsustainable levels of household, business and government debt everywhere, clear signs of global deflation and deep uncertainty about the eventual outcome of global currency wars and when and how the US Fed will begin to raise interest rates.

Go carefully, dear readers.


Bill Leak is a serious painter as well as an esteemed cartoonist.

He presents a hard hitting review of 'the Archibald' whose custodians for many years hung his fine portraits but never awarded him the prize.  (Henry knows a fine Victorian portrait painter whose offerings were not even opened, like an elderly spinster, returned unopened.) Bill Leak is not bitter, but perhaps a bit battered. Here are a few snippets.

'... things are crook, but nothing will change because art is different. It exists in a sort of mysterious realm protected by an impenetrable barrier of spin, written in arcane but deeply politically correct language. And no one dares question it for fear of revealing they don’t know what it means.

'The spin doctors of art have been very successful at making the world of art an inhospitable place, inhabited only by the cognoscenti and shut off to everyone else'.

But there is also a heartfelt tribute to real Great Art. 'Standing in the middle of the Simpson Desert and looking into the clear night sky is the sort of visual experience that can give you a sense of the numinous, to put you in direct contact with something too awe-inspiring to even begin to understand.

'Standing in front of great paintings can be overwhelming, too. Looking at great works of art and wondering how they were created is like looking at the night sky and wondering how all the stars got there.

'The difference, of course, is you know what you’re looking at was not created by an unimaginable God but by an almost — but perhaps not quite — imaginable human being'.

Read Bill Leak's full article, based on a recent speech, and decide for yourself.

Fiona Prior directs you to an ingenious visual record of the history of the Archibald Prize provided by the ABC that will have you up-to-speed with the changing face of portraiture in Australia in 60 seconds! Highly recommended.


Australia's netballers won the world title for the third time in a row. 'Go guuurls!' as we said last week, no doubt serious uplifting advice the shielas were delighted to hear.

The much maligned Aussie (men's) cricket team is well on the way to winning the dead fifth rubber after an embarrassing batting collapse by the pestiferous Poms.  Poor Cap'n Clarke, still his 15 runs eclipsed Bradman's final innings of zip. Leaving the Don's average a tad below 100 and the Pup's a bit below 50.  Both a lot better than Henry's average of 2.5,with some redemption after a final inninings for Mont Albert Fourths of zip not out while fighting (successfully) for an improbable draw.

The big footy news was the sacking of James Hird because of Essendon's dismal on-field performance.  If only he'd fessed up when the initial charges were laid and stood down he'd be seen now as an unreasonably persecuted here rather than, how shall we put it, a whipped dog.  Caaaarlton! of course in another proud footy club still recovering from punishment after behaving badly, in its case salary cap rorting rather than 'substance abuse'.

Almost as dramatic as Hird's departure from Essendon was Port Adelaide's beating of Hawthorn overnight, again showing signs that their early signs of infallability were simply too good to be true.  And Australia's previously infallable Rugby coach, Michael Cheika, fell to earth when our boys were belted by the All Blacks at Eden Part, where no Aussie team has won since the heady days if the Banana Republic, a state peeping out of the data again, though, of course, 'she'll be good, mates'.

The cricket team has finally come good.  Batters have batted like it is a test match, and Peter Siddle has reminded us all what a good bowler he is. One wicket for no runs after 5 overs it was at one stage. So absent monsoon rain for 2 days the series should end 3/2, but with many questions to be answered by both teams.

Image of the week

Courtesy HeraldSun

Saturday Sanity Break, 15 August 2015
Date: Saturday, August 15, 2015
Author: Henry Thornton

China's market meltdown will not influence Australia, says Treasurer Joe Hockey. The Chinese are learning about modern capitalism and have intervened to devalue their currency.  China will also 'do what it takes' with fiscal and monetary policy to maintain growth.  We certainly hope so, Mr Hockey, because failure of China's stimulus would make the RBA's recent forecast downgrade look like a gentle overture to a dramatic symphony.  Wait, there's more - jobs growth is strong, retail sales have picked up and Australia is surfing its way to renewed prosperity. We hope so, Mr Hockey, because many of those people Henry talks to are far more skeptical about the state of Australia's economy.  Maybe its because those people travel in crowded cars, trains and trams rather than in comfy Comm cars and at the front of aeroplanes, and pay for those uncomfortable trips out of their own pocket.

Politically, it was a heck of a week. The ridiculous debate about same sex 'marriage' - will it be a decision of parliament, will it be a decision by the people, will it be a plebisite or a referendum, most of us just don't give a toss. If gay people want to marry, let them do so. Traditional religous folk surely believe such people (and pedophile priests) will surely burn in hell forever, and surely that is punishment enough. Important that the legislation frees religous practitioners to say 'no thanks' to gay people asking them to marry them, but there will surely be gay religious willing to tie the knot.

How could a distinguished former eminant judge, now presiding over the Royal Commission into Trade Union Governance and Corruption, be conned into delivering a speech to a Liberal Party function? Henry hopes the Commissioner will be forgiven his misjudgment (or reveal how he was conned) and gets on with his job.  Sadly, however, mud sticks and this may mean he has to stand down in a stunning victory for Bill Shorten.

Henry was dining with around 100 of his closest friends at a social event last night. No-one was willing to say the government was doing a good job and there was much gloom about prospects for the conservative side of politics, and indeed about Aussie politics in general.

The shape of things to come

Brilliant article today on one vital medical development.

'Amanda Gorvin began to think her life had become unbearable in the early hours of a November morning last year when she found herself crawling agonisingly down the hall from her bedroom to the darkened kitchen of her home on the NSW Central Coast. ...

'If Anatomics [a Melbourne Company] could custom-build an implant to fit snugly into Gorvin’s damaged vertebra, Coughlan [a surgeon] explained, it might straighten her spine and alleviate her pain. The technology was so new that few surgeons in the world had attempted the procedure, and therein lay the rub: Coughlan would be the first Australian ­surgeon to attempt it, and Amanda Gorvin the first patient in the country to agree to it'. ...

“I was back at work four weeks after the operation, back in the gym after six weeks,” says [Amanda Gorvin]. “I was breathing better, my mind was clearer, I felt lighter. It’s incredible how much influence the spine has on the rest of the body. I remember that pre-surgical pain and now I ­haven’t got one per cent of it. It’s nothing short of miraculous.” As she speaks, Gorvin becomes emotional and reaches for a tissue. “This has absolutely changed my life,” she says.

'For Coughlan, it’s an outcome beyond his expectations and a pointer to where medicine is headed. “The last time I saw Amanda before surgery, she was pretty stressed and quite desperate. As a doctor, you try to factor in the physical and the emotional coping mechanisms of your patient. Maybe this is the way medicine can go, customised more to the patient’s needs.”

Read more here.  This is a vital part of modern medicine and shall solve many previously insoluble medical issues.

And if you are someone who takes a long view, try this article on our dying universe.


Fiona Prior takes us on a tour of the Venice Biennale All the World’s Future, curated by Okwui Enwezor. The Venice Biennale is the world's most influential contemporary art exhibition.

image: detail from Japanese Pavilion, Venice Biennale 2015


Following the stirring win in the Four Nations Competition, Australia's greatly improved Rugby team takes on the All Blacks tonight in Eden Park, where our last win was in the distant past. It will be a stern test and coach Cheika's bold selection calls seem to have injected new confidence and determination into a previously lacklustre mob.  Tonight it is the inclusion of Quade Cooper that has the Rugby community abuzz and Henry will be cheering from his armchair in Marvellous Melbourne.

More here. 

The Age has kindly provided an upbeat two page spread by Garry Lyon headed 'Carlton have foundations to build on'. The necessary renovation - yes Mr Lyon uses a nice extended metaphor about houses and streets - will require a lot of hard work and (Henry adds) better choice of the furnishings.  This is a team that 'let go' Eddie Betts, Aaron Jacobs, Vin Waite and many others, and now Gary Lyon says has only 16 players worth perservering with.  Tonight Carlton battles with Brisbane for the wooden spoon and a loss my open the door to a first round draft pick. 'So what' say the pundits, all the first round picks are good, or seem so, and there's a fair bit of luck involved.

The cricket sheilas are set to win indeed, if Henry can count, have already won the sheilas' Ashes. Great work Guuuurls, and an inspiration for the downcast and beaten Aussies.  Looks like a wholesale renovaton is called for, borrowing from Garry Lyon, with perhaps 8 elderly players freed to make their fortune in the Indian or Big Bash competitions.

And if you are someone who takes the long view, try this article on our dying universe.

Image of the week

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