Saturday Sanity Break, 7 October 2017 - Modern Macroeconomics
What can be said about another massive killing from a clearly insane American gunnut. The second amendment to the American constitution was devised when it took two or three minutes to load a musket. Now rifles can be modified to spew bullets at a horrendous rate. John Howard's solution clearly needed but chance of this is zero.
This week Henry and Mr Thornton returned from a long trip that culminated at Birdsville. Then we headed south to a Station named Nurraburra where we met some pleasant pig shooters, explored the station and searched for elusive goats. A set of trip reports is available here.
Our return shows some welcome movement in politics – involving agreement between the national government and the state governments on use of face recognition technology. Polls suggest the plebiscite on same sex marriage will produce a strong overall ‘Yes’ result. Bandaids are being applied on energy policy but a convincing long-term solution seems a long way off.
The government 's ratings in the polls has fallen back to 46 vrs 54 on a two party preferred basis. Malcolm Turnbull has morphed from a bloke telling us what a wonderful time it is to be an Aussie, with an innovative future for us all, to a harried CEO trying desperately to avoid the chop. Lack of a plausible replacement may keep him around until the next election, perhaps mid 2019.
Nick Xenophon is returning to state politics in South Australia and Henry will not be surprised in Nick ends up as premier.
Paul Kelly, quoting the Economist, speculates today on whether the world is reverting to socialist policies.
In our benighted economy, wages growth is still low and defying RBA projections that look likely to set a world record for misplaced optimism. Henry's editor's column on Modern Macroeconomics, available here, contains several suggestions that may be useful if officials were not self-satisfied and arrogant. It also demonstrates how the RBA is trying to manage the economy, the currency and house prices with the cash interest rate which is grid-locked because the mighty RBA does not know whether to cut interest rates to reduce the currency or raise it to take the bubble out of house prices.
Meanwhile, low wages and fear of unemployment is leading households to reduce spending, a trend that one has to applaud as demonstrating good sense. But household debt keeps rising, almost 2 times household income.
This week the International monetary Fund (IMF) related household spending to GDP. I have not seen the full report, but the IMF warned that Australia's household debt implied grave potential problems, a theme of this website for some time now. As a ratio to GDP (rather than household income), Australia's households have debt equal to national income. The average for other 'developed' economies is reported as 0.67 of GDPs. Unsustainable, and there will be many tears as global interest rates rise. Despite RBA gridlock, Aussie bank lending rates are already rising.
Fiona Prior whets our appetites with Sydney Theatre Company’s Dinner. More here.
Joke of the week
Kim Jong-Un announced at a news conference that North Korea would be sending a man to the sun within ten years!
A reporter said - "But the sun is too hot. How can your man land on the sun?”
There was a stunned silence. Nobody knew how to react.
Kim Jong-Un quietly answered "We will land at night”.
The gathering and everyone in North Korea watching on television broke into thunderous applause.
Back in Washington, Donald Trump and his entourage were watching the news conference.
When Trump heard what Kim said, he sneered - "What an idiot. Everybody knows there’s no sun at night.”
His cabinet and everyone working in the White House broke into thunderous applause.
Image of the week