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Henry Thornton - Contributors: A discussion of economic, social and political issues Blogs
Bye, bye, Bunga Bunga
Date: Monday, November 14, 2011
Author: Henry Thornton

Silvio Berlusconi has quit and has been replaced by (gasp!) an economist.

The Economist is scathing about the playboy Prime Minister: 'When the world’s third-largest bond market begins to buckle, catastrophe looms. At stake is not just the Italian economy but Spain, Portugal, Ireland, the euro, the European Union’s single market, the global banking system, the world economy, and pretty much anything else you can think of ...'

'Italy will be the crucible which tests the euro to destruction—or survival. Only a few weeks ago, that test still seemed avoidable. Now it is at hand. If the euro zone wants its currency to survive, it must stem the panic and make Italy’s vaudeville politics credible'.

'Italy is not yet insolvent. Although the rescue plan set out by the euro zone last month is in tatters, the European Central Bank could still gain time by pledging to buy Italy’s debt in unlimited quantities and to protect European banks, as The Economist has argued. The signs this week were that the ECB had stepped in to ease Italian yields. But it has not yet made that vital public pledge to do whatever it takes, without limit, to create a proper firewall and stop the panic'.

Even in Henry's sheltered life, spent mostly in Australia, it is noticable that economists are usually called upon only when there is a sufficiently important crisis.  When Henry was farewelling the board of the Reverse Bank, the then Treasury Secretary said Henry would be recalled if there was another crisis. Such was the smooth path of the Australian economy since 1986, that has not been necessary.

Senior Monti has a hard task ahead of him.  He needs to balance the budget by slashing outlays and forcing rich Italians to pay some tax. Spending cuts and tax hikes will increase misery among the battlers and make fiscal balance harder to achieve - the basic paradox of a bankrupt nation. The new PM will also curtail the number of Bunga Bunga parties and market reality may well cut back on launches of exotic clobber by anorexic young women and darkly handsome men.

But, with a dull dog of an economist at the helm, Italy, and the Eurozone is in with a chance.

The Economist again: 'For the euro to survive, Italy must succeed. For Italy to succeed, its squabbling politicians must find unaccustomed reserves of unity and courage. That depends on ordinary Italians being willing to make sacrifices, the ECB backing Italy, and France and Germany standing resolutely behind the euro. It is a dauntingly long list of things to go right'.

  Courtesy: The Economist.

And here is a critical appraisal, by Asia Times Online's Spengler.

'It’s hard imagining Italy going from bad to worse, but Mario Monti might be a worse choice for Italian president than Sylvio Berlusconi, who resigned over the weekend as Italy’s state finances came close to collapse. Berlusconi presided over a corrupt state, and personified its worst excesses in the form of alleged orgies with underaged prostitutes. In general, though the outgoing Italian prime minister was pro-American.

'Mario Monti hates America, viscerally. Over dinner with a friend of mine not long ago, Monti weighed in on the Americans: “They’re idiots. They think Venice is in Las Vegas.” He continued in that vein until my friend shut him up'.

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

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

Global slowing, Australia could do better.
Date: Wednesday, April 13, 2016
Author: Henry Thornton

World economy slowing says the International Monetary Fund. Aussie economy picking up says various surveys, despite the persistent rebound in the Aussie dollar and the third year of falling income for Australia inc, itself due to a slowing global economy. 

Paul Kelly points out that 'In the democratic world dominated by America and Europe there is a growing and lethal nexus — economic tribulation and weak growth is linked to political dysfunction, rising populism and distrust in the political system.

'The world suffers from what former US Treasury secretary Larry Summers brands “The Age of Secular Stagnation”, the failure of economies to recover from the 2008-09 global financial crisis, the upshot being weak growth, low or negative interest rates, rising asset prices, more inequality and poor investment.

'The former governor of the Bank of England during the crisis, Mervyn King, in his recent book The End of Alchemy, argues that while the 1930s Depression produced a robust policy response this has not been replicated in the years since the GFC.

“Without reform of the financial system, another crisis is certain and the failure to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later,” King says. “Since the end of the immediate banking crisis in 2009 recovery has been anaemic at best. There was a continuing shortfall of demand and output from the pre-crisis trend path of close to 15 per cent.”

Read on here.

Australian politics looks more and more dysfunctional.  The major parties are slowly unveiling their policy pitches for the widely anticipated Double Dissolution election that may be held on 2 July, if the Commander-in- Chief does not lose his gorm. Bill Shorten will have a spend'n'tax pitch, though he will de-emphasise the 'tax' bit.

Malcolm Turnbull will go for a 'prudent', living within our means kind of pitch that may prevail wiven Labor's horrendous record under Rudd'n'Gillard'n'Rudd.  Despite the track record that says his 'Liberal' government cannot find a way to cut spending effectively and cannot find the gorm to fix the budget by raising the GST to 15 % with a broader base.

However, there is a tiny, flickering light on the horizon. Grace Collier has gone in with great gorm in the Australian against the dreaded union'n'big.truckers companies attempt to push self-employed truckies out of business.  The even worse aspect of the relevant legislation, introduced by Bill Shorten when the last, much unlamented Labor government was in power, was that users of the services of self-employed truckies are liable to large fines.  Bloody hell, Comrades, what were you thinking?

Clive Palmer hits the headlines today with allegations that he siphoned $200 million from his corporate plaything, now sadly in the process of being wound up.  Why has ASIC or the police not called on Mr Palmer to check these allegations? The answer provided by an eminent lawyer over dinner recently was simple. 'The regulators have all the law they need to nail the bad guys but are very weak in their attempts to enforce it'. (Of course, Mr Palmer may be as innocent as a baby lamb.  But there is sufficient smoke to demand a proper investigation.)

Henry can attest from personal experience that the regulators go hard against the small guys, like Henry himself. Recently a first demand for payment for our tiny corporate vehicle never arrived, probably because the mighty $1 per letter postage system failed to deliver it. We returned from an overseas trip to find a second demand had arrived, with a large fine added to the original demand and the due date was overshot by 2 days. Our accountant wrote a respectful letter to ASIC requesting clemency, but no, the response was 'pay up or there will be another fine', making the demand more than 4 times the original payment.

Mr Medcraft, I do hope you get reappointed, but I also hope the Treasurer grills you on matters such at this and extracts a promise to focus on the bad guys.  'Why have you never called on Mr Palmer?' could be the first question.

There is a link between Australian regulation and slowing global growth.  Yes, Prime minister, you could convert Australia into the fastest growing 'developed' nation, the best place in the world to be alive. But you need to reform the tax'n'transfer system and get the regulatory agencies focussing on the important issues, not harassing the small folk. And you need to fix the budget deficit, quickly, as Paul Keating did in 1986.

These reforms are even more important because of slowing global growth.

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