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  • Writer's picturePete Jonson

NEWS + VIEWS - September 2016

Superannuation Expose, 1 September

The wonderful expose by Judith Sloan in this week's Oz should make pollies and senior public officials hang their heads in shame.

The 'fairness' test that justifies incomes from Henry's self-managed and self-funded superannuation fund being taxed should be properly assessed against the myriad pollie and public servants' pensions, allowing for the fact that those privileged folk are not at risk in market melt-downs like us 'punters'.

Who can do the assessments? Pollies, judges and senior public officials are all deeply conflicted. It up to us voters, comrades, so roll on the next election.

Return of the warriors, 3 September

Who would have imagined it was possible? A shakey new government with a tiny majority from which two cabinet ministers, one 'minister' (= junior minister) and several back benchers 'leave early' after a 4 day sitting following months away.

Is there no common sense? Or attention to reality? Malcolm has chastised , even 'excoriated' the offenders. As the Irishman said: 'It won't 'appen again', but the damage is done, comrades.

Changing guard at the RBA, 7 September

Monetary policy remains unchanged following Glenn Stevens’ last meeting of the board he has chaired for 10 long years. Now Dr Philip Lowe takes the reins at an especially difficult time.

Gov’nor Glenn has a high reputation and generally did well as Chairman of the Reserve Bank of Australia. Goods and services inflation has been under control – some say too well controlled as the world teeters on the edge of deflation.

Asset inflation is another matter entirely. Share price inflation is substantial and can be largely attributed to the US Fed’s extraordinary series of ‘anti-cyclical’ policy easings. Bailouts of failed financial institutions (except Lehman Bros), large scale ‘Quantitative Easing’ and near zero cash rates. Australia has imported asset inflation from the USA and could only have been avoided by (gasp!) a tax on capital inflow. And who could possibly want asset inflation to be lower?

‘Our children’ is the answer. They would want lower asset inflation, specifically the prices of houses so they can afford to buy into one of the hottest house price markets in the world. It looked like house price inflation was petering out, but Gov’nor Glenn’s last two rate cuts seems to have awakened that particular dragon.

The problem of excessive and damaging asset inflation will be handed to Gov’nor Phil from 17 September. We say two-and-a half handclaps to Gov’nor Glenn and wish him a long and happy retirement. Do not join private sector boards Glenn . You do not need the money and why be bored in the afterlife without Jackson Hole and all the other exciting events of your career as a central banker.

Gov’nor Phil, over to you.

Gentle pot stirring, 14 September.

At last, one tiny step for the world, and Australia's next generation - a bill containing the opposition's election promises to cut spending is passed in the House of Reps and presumably will squeak through the Senate.

Alan Jones and Mark Latham interviewed Tony ('Tabs') Abbott last night. Sure looks like a man refreshed, loyal to the guv'ment and ready to serve.

Watch closely, comrades, the pot is being stirred ever so gently.

Hope for the Turnbull government?, 17 September

Paul Kelly's fine column in the Oz today says the Turnbull government is showing signs of learning about governing. This leads into a far wider discussion.

' Malcolm Turnbull and Scott Morrison have enjoyed their best week since the election — but not before time.

'The key to the hope they have generated is a capacity to negotiate, compromise and implement. This week’s boost to government morale underlines how far expectations and media pessimism about the Prime Minister had sunk.

'Turnbull desperately needed some wins, and this week he got them. Suddenly, the super-pessimists have been checked. Suddenly, the idea of a doomed outfit seems less certain. Understand what has happened: Turnbull and his Treasurer have seeded the notion they might just be able to govern, not govern brilliantly or perfectly or for optimal policy because these are false tests in the current parliament, but muddle along with incremental gains, hold the show together, exert some political leverage, have some policy wins and display the judgment to discern what is achievable and what is not'.

Global economic warning, 23 September

Ambrose Evans-Pritchard writes today for the Telegraph: 'The third leg of the world's intractable depression is yet to come.

​'The third leg of the world's intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.

'It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.

"Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out," said the annual report of the UN Conference on Trade and Development (UNCTAD).

'We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been.'

And here is a warning: 'If policymakers fail to mitigate the negative impacts of unchecked global market forces, then a turn to protectionism could trigger a vicious downward spiral for everyone.'

Read on below.


The coming economic crisis - #1 Global, 29 September

Well, ring the chimes, comrades. Malcolm struts the world stage with force and dignity and the next poll puts the coalition behind Labor and with a greater dissatisfaction ratio for the PM. Clearly Australians don't care a toss for pollies strutting the world stage, just as at least 50 % of Americans prefer an amateur who is rude, who clearly has no respect for women, who tells obvious porkies and whose main attraction is obviously his amateur, rude, disrespectful approach to many people and issues. And looseness with the truth. He did confirm that he is a successful tax avoider which he apparently thinks shows how smart he is.

​Experts say The Donald won the first 15 - 30 minutes and Hillary perhaps won the rest of the debate. I am someone who like many Americans is sick and tired of professional pollies but, when it comes to it, I'd far prefer Hilary to the obnoxious Trumperator. As someone said, 'Hillary can be trusted not to start a nuclear war by accident'. Not that I think the

Donald would start a nuclear exchange by accident. But I do think he might do so in a fit of rage or because he thought some foreign nation did not like him or deserved to be taught a lesson.

​Anyway, back in the land of flooding rains, cyclonic winds and power failures, Malcolm clearly has some ground to make up in the opinion polls, not to mention fixing the budget deficit, finding policies to raise national productivity and to sell such policies as likely to raise incomes for most people . And accepted as fair. Blimey, comrades, quite a list.

​A good judge said to me recently. 'We have had such a lot of temporary leaders lately because many Australian are doing it hard'. Compounding this problem is that the leaders simply ignore this fact and fail to suggest policies to fix things. Obviously things feel ok in Canberra and because most folk say nice things to pollies when they are on the road they hardly ever get to hear the bad news. Recognition of real problems and advocacy of policies to improve things might well get a government fired, but at least recognition of problems might burnish a leader's reputation and allow the possibility of an eventual return. (29/9).

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