America I think has tended to accept what's happening fairly well, albeit that there is some naïve hope focused around the new president; in the UK, denial about the crisis mainly focuses on denial about how long it'll last, but there's been a move from imagining it'll be a one-year thing to a more realistic 2–3 years. In Australia, however, denial continues. The Sun Herald yesterday led with a story about how NSW was in recession – but wouldn't be for long. The state government has now retorted that NSW is not in recession at all. The point is really not whether NSW is in recession or not, but rather that sooner rather than later the entire Australian economy will be in a state of collapse. Australia was sustained through the early noughties recession by the fact that primary production remained robust, in particular with there being good harvests, and a lack of exposure to hi-tech industry. Every significant segment of the Australian economy is today rampantly exposed, however. Primary production is primarily geared towards an Asian market that is in collapse, driven as it was by production for the US market primarily. The very significant financial services sector is in itself a sick economic segment. The tourism sector is dependent on overseas visitors who can easily not come to Australia. These are the three segments where the recession will start. The construction industry has already died in the arse, and the housing bubble is due to burst any minute once job losses feed through into forced sales and repossessions. The biggest Australian secondary industry, automotive, is highly prone to recession as it's easy for people and companies not to buy new cars. The education sector will be one of the last to go, with Asian students being unable to afford to come here in such numbers, and more importantly cease to be so interested in immigrating to Australia with the Australian economy in recession. With this goes the demographic increase that is in itself a driver of the Australian economy, particularly construction.
As I argued elsewhere some years ago now (3.5 years ago, I think), the Australian economy is a house of cards in which any slipping element can make the whole thing fall over. There is no way this precarious structure can weather the current international economic maelstrom.
19 Jan 2009
Economic denial continues
15 Jan 2009
Fiscal stimulus – Australian style
I note that the Sydney housing market is not behaving like it should giving the looming tide of economic depression – that in fact it remains buoyant, at least as reported by the Herald, a paper which is known for spruiking real estate, however.
Still, there are important things to note here. One is the giant injection of federal money into housing in the form of the increased first homebuyer's grant. I'm tempted to see this as a bailout of the speculative buyers and builders who are currently holding the properties that the first homebuyers will buy, and who are otherwise sitting on unsaleable houses. It is of course obviously also a subsidy to people to buy houses, but this in fact depends on the real value of houses, which is fairly difficult to determine. It's quite possible that in the longer term even with the grant, especially in more expensive properties where the grant is a relatively small proportion of the purchase price, that the homeowners will be left out of pocket in time.
The fundamental driver of any housing market is population growth. In recent times we've seen a massive additional impetus to it in the form of the wealth effect caused by cheap credit, the additional employment seen in the wealth-effect economy, and the high salaries in certain sectors that accompanied it, and then a further major impetus in the form of speculation. The wealth effect one can expect to now disappear – this includes the drying up of cheap credit, rising unemployment and lower household incomes. Speculation worked on a perception that property prices would just keep rising, and in current circumstances has itself largely dried up. This all spells a crash in housing prices. I doubt population growth will hold up either – the collapse of the economy will likely reduce immigration, a major component of Sydney's population growth, and may even result in increased emigration.
The real wild card here is what the government will do. The Australian government is still enamoured of the wealth-effect economy like so other governments, and is trying to jump-start it again, an attempt that may have short-term success, but cannot have long-term success. The value of those grants are being built into the national debt and will have to be paid off by the battlers they are apparently helping, so this 'free money' is rather illusory.
11 Dec 2008
PPP
This is your public-private partnership – the public purse lines the pockets of the bourgeoisie. According to this article, the Sydney Harbour tunnel cost $550 million to build. Rather than pay this money, the shifty NSW government of the day got a private company to build it, to operate as a toll road, to recoup vast profits from the users. However, just to make sure they'd build it, the government removed the element of risk on which capitalist enterprise supposedly thrives, and guaranteed not simply the investment, but the profits.
What is the point of such a deal? Well, it means that the state can avoid an initial outlay. But it also means that they are deliberately foregoing a revenue stream that they know will be profitable. Since it will be run as a near-monopoly (actually in competition only with the government's own harbour bridge), there is no likely advantage to consumers or profitability having it privately-run. It's thus simply short-termism.
The claim that the tunnel cannot generate enough revenue to run is total nonsense – the problem is not that the tunnel is not financially viable, but that it's not profitable, that it cannot make the giant returns required by finance capital for them to get out of bed in the morning.
Why the short-termism? Two reasons: firstly neoliberal ideology, and secondly the shambolic Australian federalism. The influence of the first should be obvious enough: cutting taxes is good, private industry is good. The second is less noticed, but operative: the state of NSW is hard-pressed to afford serious infrastructure investment. Nationally, however, it becomes possible for the government to invest $1 billion dollars in an infrastructure project in Sydney, on the understanding that the next time it has money it'll go to Melbourne. To some extent the existing federal government already does operate like this, but imagine what it could do if it had all the money in one pot, and if proportional representation cut out the pork-barrelling.
8 Dec 2008
The strong arm of internet censorship
Two incidents in a short period of time seem to presage things to come with new internet laws; these pertain to existing laws about the depiction of children on the internet.
A 60 year-old Queensland man arrested for uploading an already widely disseminated video of a man playing with a baby in a way that is dangerous, although not evidently harmful to the baby and asexual.
A NSW man is convicted for possessing (not disseminating) a video depicting Bart and Lisa Simpson engaged in sexual acts, which is covered by the child pornography laws according to the presiding judge, though he sensibly rules that this is not as serious as the depiction of actual children. Nevertheless, the very fact that the mere possession of a single video of actual children is said by this judge to warrant incarceration seems deeply OTT. I could right now (I presume) with a few clicks and keystrokes find and download an image of such actual child pornography, possibly in error. The mere possession would then potentially earn me a jail sentence, despite the fact that there would be no link between my actions and any abuse depicted in the video.
17 Nov 2008
Appeal for contributions
Though I never intentionally stopped maintaining this site, I must concede that it has ceased to function in fact. It was never my intention to maintain this site by myself – it began as a group blog with the intention of the group of bloggers expanding, but it's dwindled to no-one. I believe that this blog is still necessary, and I hope that someone will put their hand up to revitalise it with contributions. I am still willing to operate it in an editorial capacity. Anyone in any way interested should contact auswatch at gmail.com
11 Oct 2008
9 Sept 2008
Garnaut
Condemnation by climate scientists of the Garnaut report is well placed.
Garnaut is an economist, and as such is concerned with the stability of the economic system. He recognises climate change, and tries to put in place a feasible plan for reduction of human activity related to warming.
The scientists however deal in objective reality: we need to radically reduce emissions now, or we're going to die. You can talk about whether other countries should be reducing their output and what is achievable, but all the while we're literally destroying the ecosphere. Preventing this destruction is something in the order of an absolute: we just need to do it, and other costs pale in comparison.
