Free Nation economics: Time for a change

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Slowly but surely the penny is dropping right around the world.   The issues that caused the GFC have not been resolved, are not going away and are lurking in the corner ready to pounce.

Despite all the radical actions, by Central Banks and governments, the international economic system remains on life support.

What are the key elements of the system that have demonstrated beyond doubt that it is structurally defective? Continue reading

RBA Watch:  Luci and the Platypus

Seasoned RBA Watchers always look forward to speeches by Luci Ellis.

Although solid as rock when it comes to preserving the sacred myths and fables of modern neoliberal era central banking, there is often a touch of punk – a streak of violet hair – through the otherwise formulaic central banker monotone that seeks to encourage listeners to just “move along …nothing to see” and leave the grown up business of the economy to those that know best.

A Glass Pyramid favourite flash of ‘punk’ was Luci’s distillation of a new economic sensation “The Platypus Moment” back in 2011.   The Platypus Moment is on a par with the legal principle coined by The Castle known as the ‘vibe’.  The vibe has now become a term of art in many technical fields from neurosurgery to rocket science.

While the Platypus Moment is not quite so famous, the staff canteen at the Glass Pyramid is a known haunt of those delicate creatures who can detect a Platypus Moment as surely as a Jedi might detect a ripple in the force. Continue reading

Budget 2017: Plans to cut the CGT concession? Not likely

There is a story running in the Australian Financial Review today by Phil Coorey suggesting that Mr Morrison is thinking about reducing or eliminating the CGT concession that has made residential property speculation such an attractive past time for oodles of higher income earners (and others just trying to ‘get ahead’) in Australia.

Believe it when you see it.

And if we do see it expect it to be served up with a large dollop of First Home buyer bonus, a side salad of foreign investor free for all and a large sprinkling of “open the gate” population ponzi.  If Morrison cools the “well heeled” heels of the property speculators and tax dodgers he needs someone to replace them as props for house prices and therefore the Australian banking system. Continue reading

House Prices – Can they fall without crashing the economy?

Everyone seems to be agreed that house prices in Australia are high …. very high…. nose bleed high …. international jet set standards high.

Sure there are a bunch of Bernard Salt types roaming the popular press insisting that if people stopped eating squashed tropical fruits and other fripperies they would be able to afford the unaffordable, but most understand that they are being paid as agents provocateur to “stir shit up” with smug prose and distract people from the real issues.  Things like how our barbaric relic of a monetary and banking system for instance is ruining our economy.

But in all the column inches devoted to this topic very few discuss how housing prices might return to planet earth WITHOUT crashing the economy.     Continue reading

Book Review: The Production of Money – Ann Pettifor

If the Great Financial Crisis  “GFC” (Australian for the Great Recession)  taught us anything, and to date it appears not much has been learnt, it is that a solid understanding by the general public of what money is, how money is produced, and how it is managed or controlled after it has be170212-pettiforen produced, is of critical importance.

Until the broken and dysfunctional nature of our monetary system is understood by the general public (or at least a decent percentage of them) we have very little chance of addressing the issues that caused the GFC and are now leading us merrily down the path towards yet another period of financial system destabilisation and collapse and the politics of anxiety that accompanies economic distress and instability.

Continue reading

RBA Watch: Lucky Phil settles a tough room.

Over the soft tinkle of China and silverware, amidst the contented purrs as Peach Melba slid from hundreds of spoons, the Lucky Country Central Banker in Chief Governor Phil ‘Lucky’ Lowe cast a spell and reminded all assembled of the central myths of the Australian economy.

First were some helpful “TripAdvisor”  tips on spotting some scenic Aussie wonders that a first time visitor might miss between Koala cuddles and feral rumbles with Skippy.

“……….You also find a country that is prosperous and wealthy; Australians enjoy a standard of living that relatively few people around the world enjoy. Continue reading

Border Farce:  Dutton’s Open Borders Fiasco

Minister for the Ring of Border Steel, Mr Peter Dutton gives excellent “Serious Sam” as he makes it clear that Winston Churchill had nothing on him when it comes to resisting unapproved seaborne arrivals.

No doubt the local kids knew that steering clear of Officer Dutton was in their best interests as the trusty prowl car circled donutshops in the QLD badlands.  At least until Officer Dutton made the leap to politics and property investment.

With such gravitas it makes his failures to secure our airports all the more puzzling. If it wasn’t so outrageous one might be tempted to think he was, like some of his colleagues, distracted by the auction listings on realestate.com.au.

Continue reading

MacroPru Crew:  The myth of Macroprudential

In recent years a number of enthusiastic groups, the “MacPru Crew”, have claimed that if only the RBA/APRA would fully embrace the doctrines of Macroprudential regulation, apraAustralia could have a monetary policy magic pudding and eat it.

The theory works as follows:

  • The $AUD is too popular and is trading too high and that is damaging the competitiveness of Australian exports and import competing industries.
  • The only reason the $AUD is too high is because the target rate set by the RBA is too high and that is like leaving a chop on a plate outside an animal rescue shelter when it comes to international capital flows.
  • By cutting the target rate $AUD fanciers will be encouraged to go elsewhere and the Australian economy can then thrive again with an exchange rate circa $0.50 – $0.60.
  • Because a lower target rate and interest rates generally attract speculators, private equity, carpet baggers and other assorted shiny suits like “blowies”the banking regulators should use credit regulation (which is all MacroPru is) to limit credit access to ‘nice’ borrowers with approved wholesome intentions.

Continue reading

 RBA/APRA Watch – The curtain is slipping…..a bit

The first Tuesday of the month is the scheduled day for monetary policy twitchers to don their pin stripe camo and lurk expectantly on park benches in Upper Martin Place.

Their presence is easily identified by small piles of pigeon and ibis entrails – “it is very hard to get good entrails these days” is a common complaint heard. Continue reading

US-Australia FTA: Another “dud deal” done dirt cheap

Here is DFATs fact sheet on US-Australia trade that demonstrates the great “dudness” of the FTA deal with the US signed by Howard back in the early 2000’s.

https://dfat.gov.au/trade/resources/Documents/usa.pdf

usafta3
Trade – A whopping fat deficit on Australian exports – $20B on merchandise and $6B on services.

$26B in favour of the US in a single year! Continue reading

Dick Smith: How to make buying Australian even easier

For many years Dick Smith and his team at Dick Smith Foods have worked hard to encourage more Australians to support local manufacturers and food producers.

Putting together a range of products, working with producers, 161224-dick-smithdistributors and retailers to give consumers access to locally produced goods does not just happen. It takes years of hard work and commitment.

However,   no matter how hard people work to explain why buying locally helps to support Australian businesses, growers and workers, the exercise will always be an uphill struggle if Australian produced goods and services are burdened with a massive effective tariff. Continue reading