Sunday, 31 July 2016

Malcolm Turnbull looking poor

It was not a great week for Malcolm Turnbull.
He has never had a reputation for political judgement but it certainly came home in spades last week.

first we had the mean and incredibly small minded decision of not to nominate Kevin Rudd to the Secretary General 's job of the UN. If a former successful; Prime minister and foreign diplomat cannot be nominated then no-one can. Peter Nadin has it right 

Then we have Turnbull appointing the former Chief Justice of the northern Territory to head the Royal Commission. It should not have gone to an insider so to speak but to someone outside the Territory. Also Shorten's  thoughts of an aboriginal person on the RC was worthy of consideration.

In the end I agree with John Quiggin.for-his-own-self-respect-turnbull-should-quit

Martin has resigned being the Royal Commissioner. oh dear.
He has shown more class and integrity than Heydon ever did.

Further Update:
Mick Gooda is hopelessly compromised on this nor does he possess the intellectual disposition to be a co-chair of a Royal Commission. It was a woeful decision to appoint him, Margaret White is going to do a hellva lot of heavy lifting on this.

Thursday, 28 July 2016

Around the Traps 29/7/16

It is time for Around the Traps

Northern America
Andrew Gelman ( ie mostly Stats)
Genial Dave Giles ( ie econometrics)
Dianne Coyle (quirky + book reviews)
Vox wonk

Wednesday, 27 July 2016

The ALP is in the box seat

The ALP is looking good for the next election.
The reasons are myriad
Shorten is now seen as a credible leader.
Turnbull is still seen as being led by conservative forces and not being himself.
The conservative forces want to get rid of Turnbull with the major problem being no credible alternative.
The ALP has had an infusion of talent which might put under performing shadow ministers under pressure to perform.
The government has no program of policies to deliver
Medicare will be looked at with great scrutiny.
The big plus to the government is now the ALP can smell government they are morel likely to support budget repair measures providing they are fair. Thus the government will enact ALP policy in essence.

As Harold McMillan once said events change things. In 1998 we could have said the same thing but along came Tampa and Howard rode that to victory.
the question is could Turnbull rise such an event to power again and is the current ALP as over-confident of victory now as then.

We shall see

Tuesday, 26 July 2016

Michele Obama wows them

Just when Sanders delegates wanted to be Corbyistas ( although it must be noted most people who voted for Sanders will vote for Clinton and they have changed earlier than Clinton supporters did for Obama 8 years ago. ) along comes Michele Obama who in only 15 minutes gave a magnificent speech. It was the stirring oratory of her husband  but it didn't have to be.
She simply told everyone what was at stake, how to behave and how to campaign.

She is a very impressive woman..

Don't believe me. Then see for yourself courtesy of Brad De Long

Monday, 25 July 2016

Rising Energy costs in South Australia

Silly me. Here I thought the reason for rising energy costs in South Australia was their reliance on wind power.See Alan Moran's looney toones impression.

However I read the very sharp Hugh Saddler and find out no it isn't. It is mainly about natural gas.

Fancy Catallaxy being wrong and not knowing its subject!!

Sunday, 24 July 2016

Shorten dogs it

Bill Shorten was in a commanding position following the election but was unable to provide leadership.

Kim Carr is from a different era. He is an old fashioned left wing dirigiste who thus love intervening in an economy.If we were living in the 1940s or 50s he would be very much part of the political scene but now he is merely an economic dinosaur.

It is made much worse when Andrew Leigh one of the bright stars of the ALP suffered. Shorten has quite a bit of talent at hand. If he is smart and uses the skills he learnt from doing an MBA then he should be preparing for whom should be in his first ministry should he win after the next election.

Kim Carr would surely not be in that.

Thursday, 21 July 2016

Around the Traps 22/7/16

It is time for Around the Traps again.

Northern America
Andrew Gelman (mainly stats)
Genial Dave Giles (econometrics)
Dianne Coyle ( quirky + book reviews)
Vox wonk

Wednesday, 20 July 2016

Climate Change and Health

This morning Fiona Armstrong and Peter Doherty have an article examining the link between climate change and health costs.
Sehr interessant

Tuesday, 19 July 2016

Budget Repair

Budget Repair is all the rage.

What is it and what can we do?

Budget Repair is eliminating the structural deficit ( currently estimated at around 2% of GDP).
We need to understand that almost all of this is due to revenue problems.  As both Treasury and the Parliamentary Budget office have both pointed out the two major policies that contributed to this are:

  • the elimination of indexation on oil by John Howard,
  • the reduction of personal income tax given the boost to  company tax revues coming from the commodities boom by Peter Costello
So two things stick out like a shag on a rock.
  1. A stronger economy will not lead to budget repair as it will not affect the structural deficit
  2. A program of only spending cuts to achieve budget repair could distort resources.
John Daley and Brendan Coates from the best think tank in the nation , the Grattan Institute, argue how to go about budget repair.

We should also remember going too far too fast in fiscal consolidation could prove self defeating.
The current deficit is 2.2% of GDP. We can assume only 0.2% of GDP is due to cyclical factors.
A full blown attack on the structural deficit would lead the cyclical deficit overwhelming any improvement thus leaving the overall deficit worse.  It would be a budget far more austere than the one Wayne Swan did which cut 0.7 percentage points from GDP.and that budget seriously reduced GDP growth!

I suspect the present Government will go slowly on budget repair as they have done already.


I didn't talk about the ratings agencies.
Most fund managers have their own credit departments on which they rely on for advice on. They will liaise with credit agencies but not rely on them. Indeed for most investors in Government bonds this is the case.
Thus in the short term a ratings downgrade would have no impact on bond yields at all.
Indeed it probably would not in the medium term given how slow the credit agencies are to see any improvement in budget balances. Thus it is possible one might even see greater demand for Australian government bonds if a downgrade occurred as investors would still view our bonds as AAA and not AA.

Monday, 18 July 2016

Banning all Muslin immigration

One of more  absurd things that occurred yesterday was a remark made on the back of the Nice terrorist attack. It was to ban all muslim immigration.

Only one problem with this. Most of the terrorist attacks around the world have occurred from homegrown  muslims. Moreover most of these attacks have been from lone wolves.Banning immigration would have done nothing.
It comes from an extreme form of wahhabism which in itself is ironic. Perhaps some pressure on Saudi Arabia could prove useful here?

Two other related items on this.

Australia is not a christian country.
We are going to have a plebiscite on allowing homosexuals to marry for petes sake. Homosexuality is not illegal. Neither is adultery nor fornication both of which are rife in Australia.
We do not give a stuff about refugees at all. We put them into prison!

Apparently political correctness has got to a point where people just cannot talk about certain topics like Islam.
I guess that is why Pauline Hanson and two of her ilk look likely to get elected to the Senate or why Andrew Bolt has three jobs!!

Sunday, 17 July 2016

Defeating ISIS

I doubt if anyone doesn't believe ISIS is an inherently evil organisation ( although the Syrian Government has murdered far more people than it) however it seems to me defeating it is problematic.
Why so?

It has to be defeated in two ways.

Directly in Iraq and Syria and thus destroy the idea of a Caliphate.  The reason this is hard is if you have the wrong boots on the ground  you could destroy ISIS but have another organisation as bad or worse replace it.We should always remember the disaster of invading Iraq and how it led to the creation of ISIS

Indirectly we have to destroy ISIS's ideology. Much more than Al Qaeda ISIS has been able to successfully infuse their idea of islam onto young men of many nations who then commit terrorist acts under their name although they are mostly lone wolves.
How you destroy such an ideology is something few people know how to do. I certainly do not.
I suspect this will be something we will be fighting  for a long time

Thursday, 14 July 2016

Around the Traps 15/7/16

It is time for Around the Traps again.

Northern America

Andrew Gelman ( mainly stats)
Genial Dave Giles ( econometrics)
Dianne Coyle (quirky + book reviews)

Vox wonk

Wednesday, 13 July 2016

Polling and Prediction markets

Andrew Gelman has a wonderful blog for those of us who wish to keep up to date with statistics we learnt at Uni.

THIS article on polling and prediction markets which examines the Brexit result is quite informative.

Tuesday, 12 July 2016

The invasion of Iraq and Chilcot

I was going to write about this but the very sharp ( to use a Brad De Longism) Allan Behm has done this at the Lowy Institute.has done this superbly.

A few points.
We knew Hussein had no weapons of mass destruction. Any chemical weapons from the Gulf war were degraded and there were no new chemical weapons. We know this from Rod Barton's book. This didn't stop John Howard saying the opposite one day after meeting with him!
The idea Hussein had any actual or potential nuclear weapons was simply absurd.

Put it another way. If you believe he did have weapons of mass destruction why would you put your own soldiers in harms way?

Iran still possessed Iraq's best jet fighters, they did not have enough spares to service all their tanks and their infantry were made to look second rate in the Gulf war.

If Hussein was gotten rid of because he was a bad man then why they simply stop with Hussein. There were and are still plenty of those men around the world.

At best the Leaders who declared war on Iraq had poor judgement


Rod Barton  on Chilcut and OZ

Monday, 11 July 2016

Mediscare didn't do a thing!

There has been a lot of claims involving the ALP's mediscare campaign during the election. It was this that won the ALP so many seats but is it true?

No it ain't for two reasons.

  1. From the start to the finish the polls simply didn't change given their margin of error.There was certainly no change in either the ALP's vote (positively) or the Coalitions ( negatively) in the last two weeks when this scare campaign was at its height..
  2. How come this campaign was ONLY successful in Liberal held seats but not National seats.It would be absurd in the extreme to argue negative changes to medicare would only affect Liberal held seats.
Now we have got that silly theory out of the way let us examine The Coalition's scare campaigns. They tried a boats will come back scare and a deficit and debt scare campaign. They both sunk ( pun intended) without a trace.
Why ? My view is with regard to boats you cannot revive a campaign if they are not coming.
You cannot scare people on deficits and debt if you have increased it and not decreased it.It is one of the reasons the public turned off Abbott. He insisted they were improving the deficit whilst increasing it.  When Turnbull imitated Abbott he simply became unpopular.

I do think we will face an early election. If Shorten plays his cards well he should win it easily. The same could have been said about Beazley in 1998 and he went on to lose!

There has never been a more exciting time to be a political leader!


  • Yes I am saying the campaign made no impact on how people would vote.
  • I voted for the coalition for the last time until the ALP serves two terms of government.
  • I am pleased Ann Aly won. She faced a very unpleasant campaign against her. Micheal Keenan didn't even have the guts to debate her on his allegations against her. Indeed no-one as far as I can see has even given any evidence to back  these allegations. see THIS

Sunday, 10 July 2016

The Permanent Effects of Fiscal Consolidations

I am doing a Nick Gruen impersonation!!

Antonio Fatas and Larry Summers have written a wonderful paper of the effects of fiscal consolidations.
Brad De Long highlights this pat of the study.

'At the same time, and in response to rising government debt levels, many of these countries have been engaging in fiscal consolidations that have had a negative impact on growth rates. We empirically explore the connections between these two facts by extending to longer horizons the methodology of Blanchard and Leigh (2013) regarding fiscal policy multipliers. Our results provide support for the presence of strong hysteresis effects of fiscal policy. The large size of the effects points in the direction of self-defeating fiscal consolidations as suggested by DeLong and Summers (2012). Attempts to reduce debt via fiscal consolidations have very likely resulted in a higher debt to GDP ratio through their long-term negative impact on output.'

Does this wet your appetite? It should. Everyone should read this paper. Governments ( particularly the German one ), Departments, University academics and Ratings agencies.

It means as we should go about fiscal consolidation very carefully.

Thursday, 7 July 2016

Around the Traps 8/7/16

It is time for Around the Traps again,

Northern America
Andrew Gelman (mainly Stats)
Genial Dave Giles (econometrics)
Dianne Coyle ( Quirky + Book Reviews)
Vox Wonk