Economics

Post #47 – Trump Ain’t A Fascist (yet), But the Truth is a Lot Scarier

In the wake of Britain’s EU Referendum, it seems we have been asking the wrong kind of questions about Trump… and Clinton too.

With the recent shock vote for Great Britain to leave the EU, Trump exclaimed from the grand opening of his new Scottish golf-course that BREXIT was a “great thing“. Many are now questioning whether Thursday’s result will significantly increase the chances of Trump’s anti-establishment ideals. For example, CNN pondered whether the result would trigger…

… a cascade of events that could spark global economic chaos, remake the Western world, reverberate through November’s presidential election and challenge U.S. security for years to come.

Such an event means that comprehending what Trump actually stands for becomes tantamount to comprehending if the American ‘establishment’ are in for the same treatment in November. Naturally this has led to the current debate amongst the intellectual elite as to whether Donald Trump is a fascist – or at the very least, he has fascist tendencies. According to The Atlantic, The Telegraph and Forbes – he’s not. Salon, New Republic and George Clooney think he is. Most can agree that he is an unashamed populist, positioning himself as an anti-establishment messiah campaigning on a platform of economic protectionism and a critic of free trade deals (such as the North American Free Trade Agreement and the TPP/TTIP).

The question as to whether one is a fascist depends on one important element though – power. As the German-born political theorist Hannah Arendt once said,

Revolutionaries do not make revolutions. The revolutionaries are those who know when power is lying in the street and then they can pick it up.

So if Trump is the revolutionary he paints himself to be, it won’t be until after he becomes President of the United States (POTUS) that a proper assessment of his fascist tendencies can take place – anytime beforehand (more…)

Post #45 – The Five Stages of Australia’s Housing Bubble

So recently I blogged about some of the common myths surrounding the Australian housing market. That post also hinted that I believe our housing market is entering a very fragile phase, where finally, after many false prophecies of collapse, our luck might finally run out. I am predicting that the Australian housing market will enter a volatile period within the next 9-12 months, with a drop of approximately 20-40% in the next two to three years after that. And I’m going to borrow the theory of an obscure and oft-forgotten 1960’s economist by the name of Hyman Minsky to explain exactly how this housing market bubble will pop and collapse.

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Hyman Minksy

This man’s ideas have never really been applied to a housing market though, dabbling predominantly in the world of finance. However, I believe that the financialisation of the housing market in Australia means that the leap between his theory and the housing market in Australia can be made. Let me quote BBC News to give you a brief introduction to this man:

American economist Hyman Minsky, who died in 1996, grew up during the Great Depression, an event which shaped his views and set him on a crusade to explain how it happened and how a repeat could be prevented…

Minsky spent his life on the margins of economics but his ideas suddenly gained currency with the 2007-08 financial crisis. To many, it seemed to offer one of the most plausible accounts of why it had happened.

He referred to his theory as the Financial Instability Hypothesis (FIH), and argued that lending goes through certain stages in a capitalist economy. Considering housing in Australia is no longer just a roof over your head, but rather seen as an investment and an asset, it’s easy to apply his different approach to finance to the housing market here. This is how it flows:

1. THE HEDGE POSITION: Your expected inflows are expected to be less than your committed outflows for the foreseeable future. You’re good.

2. THE SPECULATIVE POSITION: Your committed outflows are larger than your inflows, but enough to pay interest. You must refinance to pay the principal. You’re playing with fire, but still… you’re good.

3. THE PONZI POSITION: Your interest payments are greater than your inflows. You’re fucked.

I’m going to outline the steps below, and explain how they can be applied to what we have seen, and what we are currently seeing in the Australian housing market.

PHASE I: RECOVERY

This is the first stage, when banks and borrowers are cautious. They’re usually cautious because the inherent contradictions of capitalism have once again fucked things up, the housing market is a shambles and everybody is broke. You can take your pick which economic downturn you’d like to focus on. For example, (more…)

Post #43 – 10 Myths of the Australian Housing Market

Every time I try to suggest to my family and friends that the Australian housing market is in a bubble – the likes of which no developed Western nation has ever seen before – I’m dismissed as a bit of a ‘crackpot’. Amongst the sneers and chuckles, I’m told that the Australian housing market is ‘different’. Yes, different. What makes it ‘different’ is something nobody can really tell me – but here are a few of the excuses I’ve heard:

ARGUMENT 1: WE’VE GOT BIG HOUSESLargest in the world by some counts. According to our former Treasurer Joe Hockey, this means that Australia has a fundamentally different ‘asset’ class. Here’s exactly what he said:

A lot of Australians put a lot of new capital into their homes – renovate their homes, upgrade their homes – and we have the largest homes on average perhaps in the Western World, and the world more generally. So it’s a very different asset class in Australia than in other jurisdictions.

This means, naturally, we have to pay more for our houses – because they’re bigger than everyone else’s.

DEBUNKED: Hockey is correct in saying that a bigger house costs more than a smaller house. However, it doesn’t excuse why a median house price in Sydney is $1 million, whilst in Houston, a city of comparable size and wealth, it’s about $US146,600. Americans tend to challenge us for the title of most obnoxiously big houses in the Western world, so we’d hope to see some correlation there. But we don’t, the maths just simply doesn’t add up.

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Post #40 – Beefcake-Bro Culture: The New Wave of Bogan

I left the suburbia of Penrith a few years ago for the big smoke of Sydney. At the time I told people the reason I was moving from the place I was born and raised was for convenience and accessibility. What I didn’t tell them was that I secretly couldn’t stand Penrith anymore. Despite being only an hour from Sydney’s CBD, in many respects it feels like its a million miles away from the beaches, the sky-rises and the trendy inner suburbs that define Sydney’s core. It certainly wasn’t the locale of Penrith that didn’t sit easy with me – the snaking Nepean River with the majestic Blue Mountains as a backdrop, the fresh air and wide open spaces mean Penrith provides a welcome reprieve from the hustle and bustle of the city. Nor was it the ‘typical westies’ that (sometimes) unfairly characterise the outer western suburbs of Sydney. No part of Sydney is immune from these so-called ‘uncultured’ characters, and I find the down-to-earth larrikin nature that inflects the good people of the Western suburbs refreshingly welcome in comparison to their Eastern counterparts. However, what ultimately drove me from my hometown was the rise of what I refer to as the ‘Beefcake-Bro Culture’ – a new wave of disturbing bogan culture festering in the youth of suburbia.

The re-birth of Australia’s muscle bro culture in not unprecedented – Australia has seen a rise and demise in both the surfie culture of the 1960’s and the ‘get big’ gym phase of the 1980’s amongst its blokes. But this new era of ‘roided boganism contains a much more dangerous and volatile streak amongst the suburban youth of today. It really is a perfect storm of factors that has given rise to the latest manifestation of boganesque masochism rampant within Australian youth culture, but particularly apparent in the Western suburbs of Sydney. It’s not just cultural either, with economic, political and ethnic factors also contributing to this ‘Bro Culture’. From Ambarvale to Abbottsbury,  Bankstown to Blacktown, Castle Hill to Campbelltown, and Parramatta to Penrith, Beefcake Bro Culture reigns dominant. Here are the factors that have given birth to this new wave of blatant boganism:

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Post #39 – How Skype Helps Large Mining Companies Not Give A Shit

I have family and friends alike who have been fortunate enough to cash-in on Australia’s mining boom. Even though it looks like the ‘boom’ might finally be petering out, there’s still money to be made. But the golden goose doesn’t seem to be laying the golden eggs anymore… and I personally blame Skype.

You see, Skype and other forms of new technology have helped the mining industry break barriers that have existed ever since this country has had white folk in it. These barriers have been…

  • Isolation – Australia is a fucking big country. Its vast distances meant that a mining town (i.e. Broken Hill or Ballarat) was permanent and therefore needed investment and infrastructure. Otherwise labour wouldn’t be enticed to live and work near or at the mines.
  • Community – This investment fostered a sense of community and camaraderie in these mining towns, so much so that the employees banded together.
  • The Workers – United together they formed associations and unions to increase economic and political influence for the betterment of their lot in life, their community, and last but not least…
  • The Nation – The royalties, tax collection and economic stimulation played a large part in making Australia one of the richest and opulent nations’ the world has ever seen.

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Post #38 – Common Sense (or Lack Thereof… ) and the Trans-Pacific Partnership

After being under wraps for over five years, it arrived a couple of days ago. The long-awaited full text of the Trans-Pacific Partnership (TPP) was released to the general public… and it’s fucking huge. Like, literally huge (30 Chapters all up). Across the expanse of the Pacific, people have been trying to sift through the text and figure out what it has in store for all of us… and thus far, it’s not pretty. But the question is, what can we make of it all? Well, the TPP signifies a new era in free-trade agreements, in that “the agreement goes beyond traditional trade issues such as tariffs and import quotas and includes giveaways to powerful business lobbies”. It’s a new kind of monster, the likes of which we have never seen before.

WHY THE HOSTILITY, MAN?: This is why the TPP faces such stiff opposition – both here in Australia and abroad. But like other things we the people despise, it will most likely pass into law across the Pacific over the next year or so. There’s a feeling of inevitability and helplessness wrapped up in these convoluted and secretive trade agreements our governments keep buying in to.

There was a man who understood better than most why we accept these bullshit trade agreements, and he died in the process of essentially, calling ‘a spade a spade’. He was a visionary in (more…)

Post #36 – Why We Should Ban Credit Derivatives

I think we should ban credit derivates. In fact, on one occasion they nearly got me killed. But just what are derivates, and why are they so bad? Well… I’ll get to that in a minute.

To keep this post as deriveting (ha!) as possible, I’m going to adopt at least one more bad pun and pop culture references to illustrate my point. I believe there are six major reasons we need to ban credit derivates – and those points are as follows:

  1. The first is the obvious detriment of counter-party risks.
  2. The second is that they are a sneaky way to hide credit risks from the markets.
  3. The third argument will revolve around regulation being good-for-nothing.
  4. The forth will be an examination of morals (i.e. that thing bankers don’t have) and how credit derivatives play to our worst characteristics.
  5. My fifth point will focus on how these ‘weapons of mass destruction’ as Warren Buffett refers to them – play a major role in the financialisation of labour and the further commodification of the working class.
  6. Last but not least… payback. The conglomerates involved in credit derivatives, and let’s look at the big picture here – there are only a few major players in the game – refused. (more…)

Post #35 – The Language Used to Sell us the TPP and Other Shitty ‘Free Trade’ Agreements

The famous American philosopher and essayist Ralph Waldo Emerson once said that…

Language is a city to the building of which every human being brought a stone

That was in 1876. Today, I reckon Ralph might agree with me that large multinational corporations are on the brink of buying up all those ‘stones’. You see, language is no longer simply a form of communication between us common folk – it is a tool. As with any tool, it can be used for good… or evil. Contemporary ‘free-trade’ agreements, such as the Trans-Pacific Partnership (TPP) demonstrate the latter.

From his self-imposed refuge inside the Ecuadorian Embassy in London, the whistle-blowing Wikileaks founder Julian Assange recently railed against this new global ‘free-trade’ agreement by calling it out for what it is. He proclaimed in succinct and somber terms that…

if you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its crosshairs

With Abbott and Co. close to signing an agreement that you and I have no control over (or that most Aussies have never heard of), but that the largest corporations in the world were brought to the negotiating table for – you have to ask yourself, ‘how’d they get away with it?’. It’s nothing to worry about according to Tony Abbott, we’re just ‘open for business!‘ –  but what does this phrase, and others like it, really mean?
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Post #34 – GST From the Perspective of a Fluffy, Comfy Pillow

Hi there, I’m a pillow. Mr Comfy McPillow to be exact.

You may know me from mundane life experiences such as sleeping, providing comfort and support for a Netflix binge, or a weapon to whack someone over the head with when on camping trips. However you decide to remember me, I know you reminisce of me fondly. In fact, you may be taking comfort from me right now.

My mates and I come in all shapes and sizes plus a multitude of different designs, forms and levels of softness. Sometimes we’re just for decoration, sometimes we’re ergonomically designed for therapeutic needs. Occasionally we’re stuffed with something called memory foam, or feathers, or possibly latex and we can even assist with circulation and a good nights sleep. So yeah, we do heaps of cool shit.

But what’s the best part about being a pillow? I cater for everybody! ‘Leave no weary head behind!’, I always say. Whether you’re young or old, black or white, male or female, rich or poor – I’m there for you, I’ve got your fucking back. Literally!
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Post #33 – How Australia Can Avoid Being the Next Greece and Create a ‘Good Society’ Pt. 2

As noted by journalist John Kelly in a recent article,

Just in case anyone hasn’t noticed, our economy, the former darling of the OECD, is fast becoming a basket case.

There’s probably no need to be that dramatic, but us Aussies have some tough hurdles coming up. Now Benjamin Franklin once said that the definition of insanity is doing the same thing over and over and expecting a different outcome. So I present an alternative: Part. II. Let’s get down to the nitty-gritty, shall we?

As stated in my previous post, the economy in my society will be structured along socialist lines and all economic ‘enterprises’ would be either self-employed individuals, worker-owned cooperatives or in rare cases state owned corporations. This would predominantly apply to public utilities or monopolized entities (rail, water & road infrastructure, electricity generation, waste management etc).

So in regards to the two former enterprises listed, I would argue that the goods produced and the services provided will belong to the individuals (or ‘the collective’ in regards to a co-op) who actually do the work. Under a capitalist system the owner of the capital exploits the labour of the workers and the natural environment for their own personal gain; in a socialist economy it will be cemented in law that there is a distinction between ownership of a company’s profits and ownership of a company’s capital goods.

So what this means is that anyone who works to produce those profits owns a share in them – but (more…)