Saturday, 31 January 2015

Frank Zappa

I saw Frank Zappa at the Hordern Pavillion and it was amazing. Jean Luc Ponty was brilliant but Garry McDonald ( as Norman Gunston) was fantastic on mouth harp.


Thursday, 29 January 2015

Around the Traps 30.1/15

It is time for Around the Traps.
Quite a bit in the European section due to Greece. I will update on the weekend.

Northern America
 Andrew Gelman ( Mainly Stats)
Genial Dave Giles (Econometrics)
nutting yet. Bad Dave

Dianne Coyle (Quirky + Book Reviews)
Vox Wonk

Wednesday, 28 January 2015

Fiscal Consolidation

I notice Judith Sloan got her knickers in a knot about when does a country undertake fiscal consolidation.
The answer is pretty easy. fiscal consolidation or austerity should be undertaken when times are good just as Keynes said way back in 1936.

The last time Sloan wrote about this topic The Kouk showed her figures were all contrary to those in the budget papers. I then looked at all Labor budgets but couldn't find in any Budget or MYEFO where Sloan could have got her figures from. We can be thankful she hasn't done that here! We should also note she never told us where she got those figures from.

I have to say there isn't a lot more one needs to add to this piece from the Kouk.

One might also add this from Simon  Wren-Lewis on Europe.

If a country under-takes fiscal consolidation too soon it risks destroying any recovery. We saw this in the USA in 1937 , in Japan in 1990s and even here when Wayne Swan brought down the most restrictive budget in history. Swam actually cut NOMINAL not just real spending.
Unfortunately for him and Australia with nominal GDP weak from the falling terms of trade it simply made the economy weaker and hence the budgetary situation got worse after getting better. The Deficit which fell from 2.9% of GDP to 1.2% of GDP consequently rose over 1% of GDP.  Even with low wage growth and stalling revenues we have a deficit of 2.5% of GDP! wow.

When you undertake fiscal consolidation you reduce the structural deficit. This impacts on the cyclical part of the budget which is far larger. Thus if you undertake austerity too soon then the economy will weaken.
Fiscal policy is quite potent. You fiddle with it at your peril!

Alas the peroxide princess believes national budgets are just like household budgets.
Some people are just like the Bourbons. Never learn, Keep on making the same mistakes.

Tuesday, 27 January 2015

Is Tony for the high jump?

Yesterday was interesting. both John Quiggin and Sinclair Davidson wondered where however both got their wonderings wrong.

John thought out loudly about Bishop replacing Abbot. He seemingly forgot her disastrous time as Opposition spokeswoman on Treasury. if she was to be put in as leader then Hockey would be removed as treasurer but Turnbull could not replace him as the right wing would not wear that.
Way too many problems for a change.

Davidson wants all AOs to be replaced by knighthoods and Dames. however given that Angus Houston still wants to be known as Angus and NOT Sir we can reasonably assume knighthoods in Australia are an embarrassment.
More so when you award one to the Queen's husband and is clearly inferior to the umpteen titles he already has. What exactly he has done in service for Australia is unclear. His best supporters said yesterday he was patron of a lot of causes in this land, A patron is merely a figurehead who does no work at all.  Oh dear.

The great problem the Liberals have is that there are NO people who one could say are leadership material. Moreover they are unlikely to do anything until much closer to the next election. Indeed by the time they think they may lose it could well be too late.

I still think the most important thing to examine on whether the government is re-elected or not is whether nominal GDP rises and gets back to trend levels. If it does the government will win. If it doesn't they will not.

Monday, 26 January 2015


Greece will have a new government elected on a platform of anti-austerity.

Now let us get its straight as Kruggers shows Greece has certainly done a lot to improve its budgetary position.
However as Tony Yates shows it cannot go alone.
The problem in Europe is that the new Government are not all that radical.It is the Germans who are very radical and very wrong.

The BIG problem is Europe is that the Germans , like the bourbons, have learnt nothing about their failures. Until the Germans stop living in their delusions and understand what is occurring in the real world Greece ( and Europe) will continue to idle.

Simon Wren-Lewis  makes, as usual, some sensible suggestions.

Sunday, 25 January 2015

Industrial Relations

The Productivity Commission will be examining the Industrial Relations system.

This is no bad thing. It is always good to review how things are going, to see if improvements can be made etc. There is no reason to think the Commission will not do a decent job in examining the present set up.

Critics of the present system such as Steve Kates, Judith Sloan and Gerard Henderson have egg all over their faces. They believe the previous government re-regulated the Industrial Relations systems.
However in the three key areas nothing has changed. We have not seen industrial disputation rise. Wages are not substantially above where we might expect them to be indeed they are growing slower than have ever been recorded and unemployment is not higher than otherwise might have been i.e. the NAIRU has not risen.

I would like to see similar action taken to what the Nationals did in New Zealand when they had only 96 pages of legislation. This improved the flexibility of the labour force , reduced the NAIRU and did not have the intention of destroying trade unions that Work Choices had. Indeed Work Choices was the greatest re-regulation we have witnessed in recent times.

I await the findings with great interest and hope.

Saturday, 24 January 2015

Cat Stevens

I never liked Cat Stevens a lot whilst most of my school  mates did.

This is the one song I did like.

On the road to find out.

Quite interesting lyrics

Thursday, 22 January 2015

Around the Traps 23/1/15

It is time for Around the Traps again.
Busy on the weekend but will try to update on Sunday

Northern America
Andrew Gelman (Mainly Stats)
Genial Dave Giles ( Econometrics)

Dianne Coyle (Quirky + Book Reviews)
Vox wonk 

Wednesday, 21 January 2015

Peter Martin 1 Judith Sloan 0

Peter Martin wrote a good column on what the government could do with such low bond rates.

Note he says this.

'If we are prepared to grasp it, there's no shortage of projects that would set us up for decades to come. In education, in health, in the delivery to railway lines into suburbs that are at present barely accessible - in all of these areas there are projects whose benefits would exceed their costs and exceed them by more than enough to pay the minimal rate of interest being demanded.'
 He later says this

'the risk is that bad projects would be chosen over good ones and the money wasted. Abbott himself provides reason for concern. Despite promising during the election to "require all Commonwealth-funded projects worth more than $100 million to undergo a cost-benefit analysis by Infrastructure Australia" his first budget funded scores of road projects without such approval. Some of the cost-benefit studies weren't even published, in others the figures were massaged to make them look better than they were.'

 From this the redoubtable Judith Sloan alleges thus

'Fund all those expensive boondoggles  sorry, I fluffed my lines: visionary nation-building projects that will create jobs and improve the productive capacity of the economy – at special low rates.'

'And all that debt-funded public works has really achieved miracles around the world – just take a look atJapan: over twenty years in the economic doldrums, public debt a multiple of their GDP, but check out those bridges that don’t go anywhere: PRICELESS, REALLY.
And who is the salesman? Why none other than Pete (Peter Martin, Economics Editor of The Age.)  Here’s the pitch:'

Now does this sound anything like Martin proposed?
No of course not.
Why would she allege that?

1) she didn't read what he said. Quite possible although she did link the article

2) She didn't understand the article. It is about budgets ans we know she doesn't read budget papers. NBN is NOT in the national balance sheet anyone?

3) She is deliberately being misleading about Martin's position. Again quite likely

Please note NONE of the commenters have read Martin's piece either.
Catallaxy is simply an echo chamber of the ignorant

Tuesday, 20 January 2015

Movies Review

I saw the Hobbit ( Battle of the five armies) down at Jindabyne with my two sons ans then saw the Imitation game last night with my wife.

I found the Hobbit to be quite enjoyable. I have seen all three movies with my sons. The reason I have liked them is that they are nothing like the book which is quite boring UNLIKE Lord of the Rings (the book).

The Hobbit was made to be quite similar to Lord of the Rings and the Director simply made the decision to stick to what has worked previously.

There is plenty of action and I did like Billy Connolly in particular as a Dwarf king in full battle mode.
If you enjoyed LOTR then you will like this and vica versa.

I wanted to see the Imitation game for some time.
Genial Dave Giles and Barkely Rosser have both said something about Turing and/or the movie . See also Peter Woit and the New York Review of books.

It is an enjoyable movie as Turing attempts to crack the Nazi code.
Turing is played as a man who clearly has Aspergers.  He clearly was very bad at socialising and came over to most people very badly.
It is ironic that in the end the team back him up when most clearly do not like him. That provides the flaw and they do become a team.
MI6  clearly are shown as a shadowy organisation.

It too was an enjoyable movie.
Both were quite long as well.

Monday, 19 January 2015

Test Cricket Australia V India

The Test series is over.

What have we learnt?

The wickets were terrible. Both Smith and Kohli hit 4 centuries in four tests. Australia always made over 500 runs in their first innings and India over 400 runs in their first innings. A batsman's wicket is a very poor wicket.  We need more help to the bowlers. WE need more pace and bounce. One century in a series is suffice.

The Umpiring was fine by me EXCEPT they did not intervene to prevent sledging. Let us be very clear. Sledging is NOT permitted under the spirit of cricket. The reason being people who sledge do not show respect of the opposition .

Australia learnt very little form this series. Any batting weaknesses  were not seen as the Indian bowling was very poor. It is very hard to make any changes to the batting lineup when everyone succeeded except Watson.

The bowling was lacklustre. An Indian collapse was always going to occur at some time. Harris is not going to be around a lot more. Johnson has lost pace. The others are still not consistent .

The Indians didn't learn a lot either. Sharma too a long time to realise what line you bowl here yet he is highly experienced. The other pace bowlers were lamentable in their length They appear to have a number of very good batsman but you need to get the opposition out twice and they never looked like doing this.

We play for the Ashes in our winter and if I were in England's shoes I would ensure all test wickets are seamer's paradises. To be sure Harris would succeed under these circumstances but our batsmen under pressure could be problematic.

Sunday, 18 January 2015

Book Reviews

A friend lent me two old books he had over the holidays.

The first one is The History of World War 2 by Lt-Colonel E.Bauer.
I originally thought it was a pictorial history but although it has a lot of pictures it also has a lot of writing. It is old but wonderful reading if you like your military history.
I found out a lot of Germans died in the Russian winter from their anuses freezing when going to the toilet!
Hitler was not bad in strategy when attacking but very poor when defence was needed. He loved the counter-attack way too much.

It is a very long read but worth it.

The other book was Berlin the Downfall 1945 by Anony Beevor.
Although this was compulsive reading it was horrific to read. It shows the moral depravity of the human race. We all knew the Nazis as racist murdering thugs but the Red army's exploits matched them.
The German let Russian POWs only have underwear in the winter. Few survived this.
The Red army looted like crazy once into Germany and were surprised just how much better it was in Germany compared to the 'workers paradise' they lived in. German women were gang raped no matter what their age with Female soldiers looking on sometimes!
German soldiers who were wounded and lying on the ground during the winter had their stomachs slit by a knife and died a long painful death. Few German soldiers who surrendered survived.

Delusion was around everywhere in the German high command. Armies were constantly given reinforcements of divisions etc that existed only on paper.
Hitler did not care how many Germans died in fighting the Red Army. The more the better. He would not countenance diverting most of his resources to fight the Red army and so let the Allies move much quicker into Germany. The 'exploits' of the Red army were well known and Germans attempted to flee from them. Fanatical Nazis murdered such Germans as they were 'cowards'!

Everyone should read this book.

Thursday, 15 January 2015

Around the Traps 16/1/15

It is time for Around the Traps again.

Should update over the Weekend.

Northern America
Andrew Gelman ( Mainly Stats)
Genial Dave Giles ( Econometrics)
Dianne Coyle ( Quirky + Book Reviews)
Vox wonk

Wednesday, 14 January 2015

Medicare again

When the government originally announced their changes I said THIS.

I would not change any of it. This government loves to annoy the crap out of the Electorate for very little gain. The links are essential reading

Steve From Brisbane also comments.

Tuesday, 13 January 2015

Blogs to read

It is the New Year. What blogs you should  read. I had some spare time so here goes.


  • John Quiggin is probably the first and one of the best. He is one os OZ's foremost public intellectuals
  • Harry Clarke whom I cannot link beci=use of database problems is pretty good also. Big on enviornment issues 
  • Ricardian Ambivalence is first class despite absurdly thinking highly of John cochrane. too little articles in recent times.
  • The Kouk is the mirror image of RA.
  • Mumble is a must read on politics
  • Club Troppo is also good to read. It has nick Gruen ,the nicest bloke in the blogsphere but also the thin skinned Ken Parish and Paul Fritjers. The RSS feed is a must read.
  • Mark the Graph and Mark the Ballot are compulsory reading if only for his sidebars! Articles always useful.
  • Antony Green. Compulsory reading for politics
  • Kevin Bonham. Same as above. A must read
  • M0nty. interesting but not updated a lot.
  • The Piping Shrike. Shrewd analysis of OZ politics
  • Andrew Elder same 
  • Steve from Brisbane. Always interesting on a variety of topics but conservative Steve! I don't think so.
  • Greg Jericho. Always worth a read
  • Peter Martin. An old journo mate from the markets. 
  • the Pollbludger see Mumble 
  • Gerry Jackson Great believer in Hayek and Classical economics. Actually does research unlike Katesy!
  • Jim Rose another Hayekian but produces gems every so often
  • DoverBeach  fantastic if you like Catholic religiosity. Book reviews are superb


If you have others to add let me know

Monday, 12 January 2015

Statistical significance V practical significance

Andrew Gelman has a great article on the above today at his blog which is HERE.

Okay you are too lazy to go look there.

Here it then.
Thanks a lot Andrew. This article is gold

"You’ve heard it a million times, the idea is that if you have an estimate of .003 (on some reasonable scale in which 1 is a meaningful effect size) and a standard error of .001 then, yes, the estimate is statistically significant but it’s not practically significant.
And, indeed, sometimes this sort of thing comes up (and, irritatingly, such studies get publicity in part because of their huge sample size, which seems a bit unfair in that they need the huge sample size in order to detect anything at all), but not so often.
What is much more common are small studies where estimated effects are statistically significant but the estimates are unrealistically huge (remember, the statistical significance filter).
We’ve spend a lot of space on this blog recently on studies where the noise overwhelms the signal, where any comparisons in the data, statistically significant or not, are essentially meaningless.
But today (actually, in the future, whenever this post appears; I’m actually writing it on 22 Nov), I’d like to focus on a more interesting example where an interesting study was performed on an important topic, the estimate was statistically significant, but I think the estimate is biased upward, for the usual reason of the statistical significance filter.
It’s the story of an early childhood intervention on children that, based on a randomized experiment, was claimed by a bunch of economists to have increased their earnings (as young-adults, 20 years later) by 25% or 42%. Here’s what I wrote:
From the press release: “This study adds to the body of evidence, including Head Start and the Perry Preschool programs carried out from 1962-1967 in the U.S., demonstrating long-term economic gains from investments in early childhood development.” But, as I wrote on an earlierpost on the topic, there is some skepticism about those earlier claims.
And this:
From the published article: “A substantial literature shows that U.S. early childhood interventions have important long-term economic benefits.”
From the press release: “Results from the Jamaica study show substantially greater effects on earnings than similar programs in wealthier countries. Gertler said this suggests that early childhood interventions can create a substantial impact on a child’s future economic success in poor countries.”
I don’t get it. On one hand they say they already knew that early childhood interventions have big effects in the U.S. On the other hand they say their new result shows “substantially greater effects on earnings.” I can believe that their point estimate of 25% is substantially higher than point estimates from other studies, or maybe that other studies showed big economic benefits but not big gains on earnings? In any case I can only assume that there’s a lot of uncertainty in this estimated difference.
Here’s the point
The problem with the usual interpretation of this study is not that it’s statistically significant but not practical significant. We’re not talking about an estimate of .003 with a standard error of .001. No, things are much different. The effect is statistically significant and huge—indeed, small sample and high variation ensure that, if the estimate is statistically significant, it will have to be huge. But I don’t believe that huge estimate (why should I? It’s biased, it’s the product of a selection effect, the statistical significance filter).
And all this “statistically significant but not practically significant” talk can completely lead us astray, by leading us to be wary of very small estimates, while what we should really be suspicious of, is very large estimates! "

Go to his blog and read the comments as well lazybones!

 This is why I highlight his blog on my sidebar!