Saturday Sanity Break, 25 March 2017 - Economic misery ahead
The government has had some recovery in the polls, due to a stronger performance by Prime minister Turnbull, especially his thought bubble called Snowy 2.0, action on section 18C of that so-called Human Rights law and some minor social welfare reforms passed by the Senate.
Yet there are skeptics about Snowy 2.0. Mainly the 5-7 years before it is working, but also an argument that it will cost more to recycle water that the value of the electricity generated by the recycling process. Reforms to 18C may be blocked in the Senate, and there seems to be tacit agreement that it is no use even thinking about serious work to turn the budget deficit into a surplus. Even when that did look worth chasing, there was never a plan to produce a surplus large enough to repay a chunk of the debt.
The unavoidable problem in Henry's view is that with the rise in global interest rates currently underway servicing the debt will be far more costly. That means government deficits will rise, leaving less money for more welfare, defence spending or other things any same government would worry about. But the even bigger problem is Australia's households' massive debt - soon to reach 2 times household income. When borrowing costs double, there will be much misery - on one estimate up to 30% of households will experience serious financial difficulty.
The good news for those of us with children needing help to enter the housing markets is that there will be mortagee sales for sad people whose houses are worth less than their equity. With a 20 to 30 % drop in housing values there will be bargains to be had. Do not assume this is a gloat, gentle readers. Henry has been a near lone voice in the wilderness warning about excessive spending by governments and households. There are plenty of experienced, mostly retired, people who will agree Australia is in great trouble, but the elderly rarely wish to enter the bearpit to be savaged by the 'she's ok' brigade now in political office.
Misery will be compounded by regular blackouts, rocketing costs of rates and taxes, electricity, gas, water and other necessities of life. What if President Trump wins his tax reform and reduces company tax to 15 % with associated details that make America a far more attractive place to do business? Australian manufacturing and mining will be further hit by loss of corporate head offices. Our kids will be going in even larger numbers to work overseas or flocking to pick fruit as deep recession further reduces job prospects in Australian cities.
When the crisis arrives, the government people will say 'no-one could see this coming', or 'no-one warned us' and a generation of failed officials will retire quietly with fat pensions. Politicians will be punished, and fairness demands that the main Coalition leaders lose seats along with the Labor leaders. Who knows which politicians will replace current leaders. Will some Trump-like swamp drainer occupy the Lodge? With a still hostile Senate to prevent his or her swamp-draining effects to succeed. This time the risk of Paul Keating's Banana Republic will be far more real and it will require very firm government to restore business as usual.
Time will tell, gentle readers, but please do not say you were not warned. Spend less, reduce debt and work hard. You may this way minimise your misery.
Fiona Prior reports on Lion, a lovely movie that she feels is so good many readers will have already seen it.
The sporting life.
Adelaide won the first AFLW premiership from an unlucky Brisbane. Amazing to see how standards improved over the course of the first season. There is even a speculative article today on the theme will a women eventually play with the men - probably no was the conclusion. Henry must report that over 20 years ago a famous AFL coach told him that he coached a young women who could have done just that. He could not tell me her name but he did not doubt her ability.
Henry on Thursday attended at the 'G' to watch the first AFLM game for points in season 2017. Richmond were a much improved outfit and seem to have a Bulldog-style of swarms of players supporting each other and breaking free to kick goals almost at will.
Caaaarlton! have also improved but were systematically outclassed. One trouble is they lack two or three large, scary key position players for the legion of fast little blokes to feed off. Kruezer rucks all day with only occasional relief when he is replaced by Casbolt! Who was the genius who sent Jacobs to Adelaide, where he has become one of the game's best ruckman? And why let Eddie Betts leave rather than making him the best small forwards in history playing for Carlton? I could go on but no-one will answer these questions and the many others I could ask.
The good news is the Caaaarlton! players did not give up and will win a few games when the new blokes figure out how to play at this level. But recruiters need to find those big scary guys and if they can play as well as the classy mosquitoes already in place, Caaarlton! will eventually restore their proper place in the footy universe.
Image of the week