Prediction - House of Cards

Well, the trigger was wrong but are, as predicted, facing an economic meltdown in Q3/4 of 2008. We're seeing lots of bold predictions about how Australia should rise above this - and to a degree, I have to agree.

What I don't agree on, however, is that we'll be left "untouched". Whether we like it or not, housing prices in OZ are ridiculous. They do not represent "true value" or are sustainable at their current levels. Shit, on "Two in the Top End" last week, in the middle of nowhere we saw 3 bedroom shitboxes selling for $550,000 and higher. In Townsville, we're seeing 4 bedroom houses in the middle of a bog-standard estate asking over $1m.

No, on this count, I have to agree with Marc Faber that we're in a bubble and it WILL burst. Nay, it MUST burst. The downsteam consequence of this is not good - but it needs to happen.

What also worries me is the leveraged leverage that has been sold as a "sound investment" by some in recent years. We've been to a couple of these in recent years and it goes like this:

1. You have equity in your house - you can leverage that to buy shares
2. When your shares go up in value (and they will), you can leverage that equity and buy more shares
3. Repeat, rinse, spin

Of course, this is a fantastic system in a market going upwards. But in a declining system, it's a house of cards. All this debt is layered on asset values that no longer exist and at some point, it all has to come home to roost. My guess, the trigger point will be job losses. When some people start getting laid off or stood down, we'll have another run on shares and, worse, property - and it will all come tumbling down.

So, the next questions are "when" and "by how much"? When is a hard one. I suspect it'll actually come out of the resources sector first as the folks working in this game have leveraged the most (so have more to loose). We've already heard about delays to contracts for steel going into China - so once that comes back, it'll be on for young and old again. There was a report last nite that Woodside have already announced they will begin a freezing on new hiring - so that's not a great start. And, as expected, some of the newer entrants - who rely on inflated commodity prices to survive - are feeling the pinch. There will also be a swayth of mining ventures that are not viable at a more "sustainable" commodity price.

So, all we need now is for China to slow down a big, commodities to fall further and ... well, we'll all be fucked!

What The - Labelling for Outrage

There's been a rash of coverage about the poor gent who, in an attempt to make the Darwin Awards, decided to drag in his crab pots from the banks of a Crocodile infested river in FNQ.

Whilst his decision was a poor one, it irks me more that the media persists with their "labelling" of this, rather ill-informed, gent.

That this recent snap from the Courier Mail (now 2 weeks after the event):

THE remains of Vietnam veteran Arthur Booker, who disappeared in far north Queensland two weeks ago, have been found in a 4.5m crocodile.

Erm, what difference does it make that this guy was a Veteran? He's still an idiot for doing what he's done. If it was a silly European backpacker, we'd have all sorts of stories about how they shouldn't be so silly - but the respectability given to this guy has been over the top.

And that, I suspect, is the intention. This isn't about Mr Booker - this is about Croc Culling. By presenting Mr Booker as a decent, upstanding citizen - we turn the Croc into a criminal and, as a result (like all minorities), we need to fear and punish them.

No, this ISN'T a campaign to ensure Mr Booker is given the respect he deserves - this is about currying favour for a massive Croc Cull.

Thoughts: Local News Content

There was some media today concerning Win News' decision to cut back on local news staff in the Qld Regions. This decision isn't a huge problem (the real disaster occurred years ago when we lost local production) but it coincidentially ties in with another "major news" story that I think highlights the problem.

Like Katrina before it, Hurricane Ike (like all major systems that hit populated areas) MUST have immense learnings for communities all along the northern Queensland coastline. Yet, where is all the analysis in our local press? What lessons can WE learn? What mistakes are being made there that we MUSTN'T repeat here? Yes, there is coverage in the national media, but as these events are never likely to hit anywhere south of Rocky, there's no detailed analysis.

You can be sure that, if this was something that Sydney could endure, we'd have media all over the place running comparisons, etc. But not for us. And there's very little coverage (other than what they take off the news wires) about how these events might affect us.

Would local news production make any difference? Possibly not - the Townsville Bulletin IS locally produced yet still has feable coverage - but surely it would create enough content for a local production to at least be viable.

It also staggers me that in a city of over 180K people and in a region of over 600K people - that somehow we do not qualify for "local content"! Oh, the joys of capitalism eh?

Prediction - Anti-Plastic Bag Campaign ... By Retailers

With the price of oil set to stay high and keep going up in coming years, expect to see increasing interest from retailers in campaigns to "ban the plastic bag". It'll be dressed up as environmental concerns but has more to do with their bottom lines than anything.

Plastic, which is a derivative of oil, will becoming increasingly expensive in years to come. Shit, in the last 5-6 years alone, the price of their bags MUST have doubled (at least), so you could imagine their impact in coming years.

This may also explain why, in recent weeks, each time I've visited Woolies in their "express checkouts", that I've been asked "do you want to buy a green bag today sir?".

Oh well, I can't complain - any reason is a good reason I suppose...

Prediction - Global Collapse Q3/4 2008

Yesterday we had a prediction that, of all things, property prices would INCREASE (yes, go up) over the next three years. This despite the credit crunch, etc, etc, etc.

The only logical conclusion for this is that "the world demand will continue to grow" (okay, that's my thinking anyhow) - which I think is bollocks. My prediction is that China is about to turn off the tap. It won't be completely shut off, but compared to now, it will be a trickle.

It seems obvious to me that the resurgence of China is largely off the back of the Olympics and the desire of the regime to "look good" before a worldwide audience. But what happens after August of this year? Once the spotlight has moved, why would they keep this up? We already know that they're facing a problem with inflation and they've mooted trying to curtail their rampant growth (back to 7-8% down from it's current level of 13-15%). That's a halving of current growth.

On the flipside, there's only so much of an increase in resource costs that China can stomach. It has no choice at present because they've got a deadline to meet - but once August 2008 has been and done, there will be nothing stopping them.

So, my (rather bold) prediction, is that China WILL start ramping back in the 3rd and 4th quarters of 2008 and that pull back will put the fear of god into the resources sector (which will already had started suffering thanks to global restraint thanks to the oil price) and prices will start to tumble. My guess is that we'll even see Oil come back to "sane" levels - but by then the rot will have set in. Confidence will spiral out of control, the resource sector will start shutting down "inviable" operations and places like Mackay, Perth, nay even Townsville will feel the effect.

Thousands will loose their homes and the damage to the economy will be unrelenting. So by the time resource prices are "affordable", the rest of the economy will be so scarred that it'll lie dormant for many years.

I still don't understand why EVERYONE seems so convinced that China will continue to act like a capitalist economy. How ANYONE can predict what they will do is beyond me - let alone speak with confidence that "they'll grow forever". I'm sorry, but it just doesn't happen like that. China MUST take a breather or they'll hurt their own economy and at 7% it's still "booming" - but when everyone expects growth to keep going up and up, well, we all know how well markets take that sort of news.

So, lets bring it on. Time has come to burst this bubble so we can all get back to normality (well, once we've all experienced the pain that is)...

Thoughts: Commodification of ... Everything

A recent blog on Larvatus Prodeo got me stirred up about a long held whinge RE: how the move to "franching" everything led to team names I had no association with.

Rugby Union lost me as “growing market” when the Super-12’s went “franchise” mode and they became SO obsessed with “branding” that I could never work out who was playing who.

Gone are the days of Queensland vs NSW - we now have “the Blues vs the Crusaders”. I keep expecting to see NSW playing against … well, actually I still have no idea who the Crusaders are. I used to think the Highlanders were from South Africa (instead of NZ) because I kept picturing Tabletop Mountain in Jo-burg (etc, etc, etc).

The same was true of the “Sheffield Shield” (sorry, Pura Cup - geez, what a crappy name for a competition) and the use of idiot names for the State Teams. I still hardly know who’s playing who in these matches as well.

Unless you’re a rabid supporter, these names mean nothing to Joe Public and rather than drag me in, they tend to frustrate me and turn me off them…

Prediction - Solution to Housing Affordability is ...

... a forced crash of the market.

Yes, I hate to say it, but the only real solution to housing affordability is that ALL housing becomes cheaper and the only way that will happen if we have a massive crash in prices.

Hey, we all know it to be true. Affordability needs to be $100-200K cheaper than it currently is. How do you get there? Well, almost ALL options have the same affect - they force down prices EVERYWHERE.

If you flood the market with cheap land, what happens? Everyone goes and buys the cheap stuff, forcing it higher but in doing so, they desert the current market, forcing it lower. So, we all KNOW that govts WON'T provide cheap land because they'll be accused of causing the crash.

So, all I can assume is that they're simply waiting for it to implode - which is true of any market (govt doesn't go in and buy shares to keep the stock market happy) - no, the market will correct on its own, and I suspect that's what we're seeing know - encouraged by govt. We'll soon hit a tipping point, we'll have our own sub-prime, the economy will slow, China will stop spending, the US will collapse. Whatever the cause, it will trigger a huge problem in housing and the market will collapse.

Actually, that creates an interesting problem. If people start baling out of mortgages, they still need a roof over their heads - so they rent. But the rental market is already saturated and some probably can't afford the rents. So that will either force some investment properties to become fragile or banks will be forced into the property management market to recoup SOME income on their failed investments. Each event will spiral down on the other.

Fun, fun, fun...

Gender Bias

On RN's "Australia Talks" yesterday, the discussion was on domestic violence but what seemed to bubble to the surface was gender bias. The same is true for raising children and things like maternity leave - i.e. this is an issue for females.

Bollocks. If anything's clear from the discussion, its that there we shouldn't stereotype these issues and every case is different. Let me give an example. Say a mother wants to actively pursue her career and has a supporting husband who would be happy to play caregiver. Why aren't we arguing equally for his right to be paid to stay at home? Similarly, women are just as good at domestic violence - not so much physically, but mental abuse.

The point is, there are problems and they need to be addressed. By giving them a gender bias, you tend to alienate the other side (particularly those with a conservative bias - poor bastards) which then turns the issue into a hot potato. The resultant affect of that - nothing gets done.

So please, take out the emotive gender language and focus on the problem. Violence against partners be they male, female, same sex, etc. Providing care for our children be it home care from a parent or family member, a home care "mum", child care, etc. We should value the decision of others and ensure their interests are looked after.

Prediction - Return to Social Politics

Here's my boldest prediction for a while.

We're about to implode! All Western economies are about to have a MASSIVE crash (driven by god know how many potential bombs - Housing Deflation, CDO's, Sub-Prime Markets, Chinese "Recession", Resources Bust) - whatever the trigger, the knock on consequence to most western societies will be massive.

• Thousands will loose their homes
• Unemployment will skyrocket
• Housing prices will plummet

I think you can see where this is heading - who's going to suffer the pain? You and me.

Thus the prediction AWAY from selfish politics and individualism. There will be a massive loss of confidence in business and people will wake up to the realisation of socialism.

My only concern - we go too far left. We've already swung too far to the right and see where it's taken us - so lets hope the backlash isn't as severe.

So, when will it happen? Well, lets offer some suggestions/triggers:

• Nov/Dec 2007 - Sub-prime Crisis in US extends it's TRUE reach
• Aug 2008 - China shuts down spending after "best ever Olympics"
• Oct 2008 - US Invades Iran to prop up US republicans

It's coming folks - batten down the hatches...

Thoughts - Housing Affordability

I've had this in my mind for a while, but a recent article on the ABC website finally pushed me to write something.

So, why are houses so unaffordable?

I think there are some obvious reasons:

• Greed (those who can borrow are buying up big time) - which means,
• Negative Gearing is part of the problem
• Personal Expectation - we all want McMansion's and not happy with something smaller
• (Historically) Low interest rates
• Greed(=Debt) is Good

It's these last two that I suspect are our biggest concerns. Why? Well, when interest rates go up (and they will eventually), the debt load currently in place will prove to be unsustainable and the resultant collapse will be horrific.

So, is there a solution? Well, perhaps Negative Gearing has had it's day? Problem with this is that there still appears to be a supply problem (i.e. there are still plenty of people wanting to rent) - so killing off one problem would probably just create another. Oh, and the impact it would have on house prices would be a precipitous as higher interest rates.

So what else? The article mentioned "Densification" and the pushback against it from the likes of "Save Our Suburbs". The solution they say is to allow growth on the urban fringe (where it will eventually be uninhabitably thanks to rising fuel prices) - but what gets me is this is classic Nimbyism. I've got my nirvana - go make a mess somewhere else.

We're experiencing a degree of inner city development in Townsville, but NONE of it has been affordable - but why? What's driving these developments into ridiculous dollars? Maybe we need more of it (and increase supply) - there's certainly plenty of demand. Another problem, I'll suggest, is design. Many of the unit designs are shockers (make poor use of the land), 6-packs are part of that problem (historically), but even half-decent developments are problematic because the block next door can look completely different. Why's this a problem? Well, after a while it looks like a dogs breakfast. Take a look at some of the industrial developments in Townsville (e.g. Garbutt). Every building is different and if an epileptic drove through there, they'd have a fit.

Compare that to European cities where ENTIRE blocks are moulded out of the same design. Yes, I know that can be stifling, but any measure of higher-density must surely meet this criteria.

So, what I'd like to see is more of a "suburban block based vision" established where density is completely redesigned across a larger area.

Okay, I'm starting to ramble on this one. More ideas later...

Thoughts - Pre-emptive (Heart) Attack

You know, I used to get bemused by the Heart Foundations flood advertising it started a couple of years ago claiming that "their tick was not for sale". It all seemed rather pointless with so few products (particularly mainstream ones) using the tick.

Then it suddenly became obvious ... when McDonald's and McCain's Pizza all started announcing their "heart foundation tick of approvals".

Was this a pre-emptive campaign to garner credibility for a label ahead of selling out to the highest bidder?

Thoughts: Pell & Hell

I think we were all shocked to see Cardinal Pell's intervention in the NSW vote for Stem Cell research. Questions have been raised whether or not he should be charged with making a threat against a sitting member so as to influence their vote - an offence in all states in OZ.

So here's my two bob's worth on the issue:

• If it was a threat, then he should be charged.
• Mr Pell seems to think that the MPs are voting for themselves and ignoring the fact that they are in fact voting as proxy for the citizens in their electorate. I for one would be aghast that my MP was putting his personal beliefs ahead of the wishes of the electorate.
• If this sort of thing is to continue, then perhaps we need to take these decisions out of the hands of the MPs and return it to the people by way of referendum. I'd like to see him work his smarmy ways on a bunch of anonymous voters...
  

Suggestion - It's Just Not Cricket...

There's been a lot of bluster RE: the looming tour of Australia to Zimbabwe. Apart from the fact that the tour shouldn't be going ahead, what peeves me about this is how the Australian Government seems to want to defer blame onto Cricket Australia than wear any criticism themselves.

If I'm reading the tea leaves correctly, the argument goes like this. The Government is trying to convince Cricket Australia to withdraw from the tour (ABC News Article) however, but pulling out unilaterally, CA is likely to incur a $2m fine, possible sanction from other cricket countries (affecting future income) and likely lawsuits for losses. In response, the government has said it will pay the $2m fine.

However, if I'm reading what CA are saying, if they are unable to tour because of the actions taken by a third party (i.e. if the Australian Government imposes sanctions and stops them from going), then they'll be liable for NOTHING! Jack squat! Nix!

So, what we're seeing here is the government trying to play politics through a sporting organisation because it itself is too weak wristed to take action!!!

In my mind, it's easy to work out who the bad guys are here...

EDIT (4/6): And as we've now worked it, this is exactly what the ACB was eluding to and, to their credit, Howard's lot have seen fit to intervene and ban the Aussie team from touring.

How About: Fair Pay?

With much of Howard's "fair pay" rehetoric ringing foul in many's ears, how about we follow the Norwegian model of publishing everyone's taxable income each year (see BBC Article)?

This would allow workers to compare income with their colleagues and to stop the mushroom syndrome from being applied to the wage bargaining process. What a way to stop driving income to the bottom. Make it public information!!!

Edit (4/6): And we see it again in today's article RE: Women being affected by AWA's (story on Radio National's "Life Matter's" this morning). Folks, let just make it all be public (the AWA's) and all this will go away!!!

Equality?

I sometimes wonder whether the Feminism movement would be better to strive for "Equality" as much as they do for "women only" rights. From my perspective, much of what they're asking for are equally valid goals for many men (okay, some of us) as it is women.

I crave an environment where, as parents, we can access affordable childcare or, if we so wish, offer "parental" leave so EITHER parent can choose to stay at home for a period. Surely it comes to the circumstances of the individual? In our case, I'm firmly entrenched in a career - so if I opt out for a period, the impact is unlikely to be severe. However, my wife is breaking into a new career where every foothold is important. So why can't I take "paternity leave" and care for the children so my wife can continue to bolster her career? Taking a one-side only view on things is going to alienate many men - because they feel like they're being left out.

The same now applies to wages. I'd like to see more transparency to wages generally as, in this day and age, we're all equally screwed. In fact, I'd LOVE to see the Norwegian (or was it some other scandinavian country?) system brought in whereby ALL incomes are made public available. That way you can check what your colleague is getting and thus you have a leg to stand on asking for more.

Economic Rationalism & Competition Policy vs Reality

I've long argued against some of the idiocy that arose from Howard's "Competition Policy" - a lot of it stank of economic rationalism for the sake of idology - the market knows best.

Classic case in point was the Dairy Industry. Now deregulated, many once prosperous dairy regions (Malanda, Mackay, Sunshine Coast, etc) were left at the mercy of supposedly "efficient" Victorian farmers. So we now are flooded by cheap Victorian milk whilst the local suppliers struggle to survive.

Yet this decision alone smacked of hypocracy. The so called "efficiency" these farmers gain have come from MASSIVE water subsidies whereby incredibly cheap water is supplied into regions where previously dairy was not viable.

However, my biggest concern was one of staking too much in one hand. Whilst it may be great we can get cheap milk from one region to supply Australia, it also means that one major disaster has the power to throw milk supplies into jeopardy. The obvious one would be an outbreak of a disease like Foot & Mouth. With thousands of head of Cattle having to be destroyed, the milk market would go into meltdown. An unlikely scenario, but with similar outbreaks in the UK, it seemed like it could happen.

Well, we've now apparently got armageddon looming. We've been told that, unless there is significant rain in the catchments of the Murray Darling basin within 6-8 weeks, the draw of water for irrigation will stop. That means all that lovely cheap milk production will likely come to an end.

Let's hope that Malanda haven't been savaged too badly by Howard's disasterous policies!!!

Prediction - YouTube = Google's Demise

I've been meaning to post this one for a while...

I have to say that I was stunned by Google's idiocy buying YouTube for an astronomical amount of money (what was it? $2b?). Is this a sign that the money hungry been counters are now in charge?

Google has always inspired because of it's ability to create wonderful web applications out of nothing: Gmail, Google Earth, Writely, etc. Yet it went out to market and purchased YouTube - why the sudden change of direction? Worse, it's hardly a unique idea - proven by the vast number of competitors in the market - and worse, it's vapourware. YouTube is only fashionable - it's not going to be a long-term product. What happens when the next YouTube hits the market? Google will be left with a $2b dead duck around its neck.

Worse, it now appears to have become a target because now there's someone to blame. Previously, valuing YouTube was difficult so there was really no-one to sue. Now Viacom et al have an easy target - one of the biggest tech stocks in the market!!!

So, will this really bring Google to its knees? Time will tell I suppose...

What The? Same Survey - Two Interpretations?

I'm a little staggered to work out how this happened:

BBC - Pessimism 'growing among Iraqis' vs The OZ: It's better than Saddam, say hopeful Iraqis

How can the same survey be seen in completely different ways? "Lies, damned lies and statistics" I suppose?

Double Speak - Telstra's "NowWeAreTalking.com.au"

Ah, the nerve of the biggest monopoly in the country!

We received a brochure from Telstra today regarding their propaganda site www.nowwearetalking.com.au which is arguing for regulation to be removed so Telstra can provide proper Broadband for "Australian's".

And how does it propose that Telstra should be "unshackled"? By regulating the price of ULL so they can fuck off all the leaches stealing their cream in the capitals. What a load of old shit!

Don't you love it? It's called competition Telstra - you guys bought into this shit, now wear it. They use language like "our competitors like cherry picking" and "they make good profits from the city customers" and then argue this is reducing their ability to meet the obligations of the Universal Service Obligation.

They even have a whole section arguing that Telstra shareholders are subsiding 90% of the USO! Fuck you idiots - it was hardly a fucking secret when you took this on!

They also complain of having to "hand over" the ULL to their competitors. Look you idiots, the network is a national monopoly - if you don't like this responsibility, then sell the network back to the government and let them run it. You can stay in shitty services because that's about all your good for.

God they pricks have some gaul!!! Made worse by all these "notable Australian's" (all of whom have significant stakeholdings in Telstra) arguing the case for reduced regulation.

So, here's my spin on what will happen. If Howard is returned, the regulation will evaporate. We're already seeing an outright, government sanctioned attack on ISPs so stripping back the regs will be next. Once Telstra have anchored themselves and won back their monopoly, just watch how quickly they stick out their hands for regional/rural service provision. "Oh, it costs shareholders too much still" or "if you want national coverage, it should be paid for by the nation".

Oh, and I'm still waiting for Countrywide to be shutdown - my guess it will come once the regs are removed...

Suggestion - Parity Pricing Road vs Rail

Why is it that the Rail industry is only group seemingly forced to pay for "Externalities"?

• For example, the UK govt agrees to push up Lorry Tares to 40tonnes. The knock on, every bridge in the UK needs to be strengthened. Who pays? The trucking industry? No, the Rail industry!
• In Qld, a ruling is made that QR must fence railway lines to "protect children" (or some rot). As a consequence, QR has outlaid MILLIONS on fencing throughout the state. Yet these same fences often run along side busy roadways - you guessed it - that are UNFENCED!

We see this sort of bullshit time and time again and then there's the right wing mantra - full cost recovery - viz, the railway must pay its own way. Yeah, like the truck industry "pays its own way" - the whole lot is massively subsidised.

But I have a solution. Whilst road users continue to enjoy toll free roads, the rail users should enjoy the same privileges. What I suggest is a simple flat "vehicle" registration charge so that the more a "vehicle" is used, the more profitable it is - which is exactly the same logic that sees trucks plying our roads everyday. If EVERY truck journey incurred the same horrendous costs that rail users are levied, watch them clear the roads faster than you can imagine.

So, lets stop the imbalance and lets:

• Open Rail to FULL Competition (operators)
• The only charge on rails should be a per vehicle charge
• Make the State fund the contruction, maintenance and care of the railway network (rails and signals) but get out of operations (i.e. sell off the bit of QR that drives and operates trains).

And then sit back, watch rail prosper and watch the trucks leave the roads in the thousands!!!