Worsening Income Inequity Troubles Hong Kong and China

Tags

, ,

As I described in a previous post, there are socioeconomic determinants driving the pro-democracy protests in Hong Kong. Yet, these are hardly problems localised to Hong Kong, but are a symptom of wider problems affecting the whole of China. Hong Kong may be but a taste of worse to come for Beijing.

The Wall Street Journal discusses the economic aspects of the movement:

http://blogs.wsj.com/chinarealtime/2014/10/10/hong-kong-protests-also-fueled-by-widening-wealth-gap/

Nouriel Roubini Criticises the Australian Federal Budget

Tags

, , , , , ,

Known for having predicted the global financial crisis precipitated by a popping of the US property bubble, Nouriel Roubini has now issued more warnings about something similar happening in Australia. In particular, he openly criticised the poor timing of the dogmatic neoliberal imposition of harsh austerity measures on the economy by the Abbott government:

Bottom line: Australia’s economy is one of the most vulnerable to a slowing China (which takes 37% of Australia’s exports) and … we expect terms of trade to suffer. Low interest rates are spurring housing, but the coal and metals mining boom is set to end over the next few years, despite the government’s scrapping of the mining tax.

Austerity is poorly timed, with a planned 1.6% of GDP of fiscal tightening over two years. GDP will fall below 2% in 2015, weakening the Australian dollar and persuading the Reserve Bank of Australia (RBA) to cut interest rates; outcomes that are out of consensus, despite continued softness in PMIs and leading indicators.

The housing boom is continuing unabated, and looks increasingly out of line with fundamentals, especially alongside PMIs for both manufacturing and services that are stuck below 50 (indicating contraction), and rising unemployment.

Quoted from Roubini Monitor, 8th October, 2014

Property prices in Australia keep rising, driven by investors, despite the fundamentals of the economy plummeting. The mineral boom is over and iron exports are sinking rapidly. Rising asset prices despite falling fundamentals represents the very definition of a bubble. The Abbott government has helped to push Australia closer to the recession it secretly craves for.

The RBA knows the economic fundamentals are worsening and wants to cut interest rates now, but finds itself unable to out of fear of exacerbating the real estate bubble. Just as fundamentals tank, the Australian Federal Government introduces a ill timed austerity policy, as part of its multipronged suicide strategy for Australia.

At some point, however, Australia’s 24 year recession free run must come to an end. The likely trigger for this is the end of the mining boom. It is hard to see how real estate prices would not also return to pre-mining boom levels.

realhousepriceindexUSA_AUST

Christopher Joye, in his blog for the Australian Financial Review even quotes an anonymous banking as saying that the RBA should increase interest rates:

The Reserve Bank should simply bite the bullet and lift interest rates by 25 basis points to send a shot across the bows of borrowers to remind them that the lowest home loan costs in history cannot stay with us forever

Joye was famously someone who had once vigorouslsy argued against the very existence of a property bubble, but has now dramatically changed sides to argue that the bubble poses one of the chief threats to the Australian economy. It is the same position taken by Lindsay David in Australia Boom to Bust:

Australia Boom to Bust David

In their books on economic crashes, Kindleberger and Aliber state that after periods where currencies are overvalued, as the Australian dollar has been for the last five to ten years, there often follows a swing towards undervaluation. This is often a precipitant of an economic crisis, as it will cut off the flow of liquidity to Australian banks that is the source of easy money for mortgages.

When real estate bubble bursts it often takes the banking system down with it. This contrasts to when stock market bubbles crash, since stock market speculators uncommonly take out large mortgages to invest.

In any case, stock market bubbles are often driven by technological innovations such as the nineteenth century railway and the recent dotcom bubble. After the stock market mania is over, the technology remains a growing source of social productivity. Not so the case with real estate which contributes little to productivity.

ManiasPanicsCrashes

Roubini has also put out a statement anticipating that the Australian dollar will plunge around 20%, likely due to the end of US quantitative easing coinciding in a untimely manner with the rapid waning of the mining export boom with China importing less and less iron ore and coal.

Worse too is that Australia has done precious little to transition the economy towards a post-mining boom manufacturing and services driven model of productivity. Growth in real estate does relatively little towards increasing productivity and represents a dead end. Instead of stimulating the productivity index of the nation to prepare for the next phase of development, the Australian Abbott government has prematurely pushed a European styled neoliberal austerity programme onto the nation.

As Roubini states, the results of austerity combined with popping asset bubbles in the face of a rapidly falling Australian currency and mineral price could spell disaster for the nation. Australia could soon be following in the path of post-property bubble America, Japan, Spain and Ireland.

The Socio-economic Roots of the Hong Kong Pro-democracy Protests

Tags

, , , ,

Forbes mentions something the rest of the media seems to have largely ignored about the origins of the Hong Kong pro-democracy movement. It coincides with an era of growing socio-economic hardship driven by the price of property (and consequently rent).

These figures come from Demographia 2014:

MostExpensiveCities

Hong Kong is the most expensive city in the world to live in from the real estate perspective. The problem with rising property prices is that it creates a stark disparity between the Haves and Have-Nots. Those who have money own property for themselves as well as earning money from rent. The majority get shut out of this market, and the disparity only grows where house prices rise grossly in excess of incomes.

The world ends up like a Jane Austen novel. In that era, to inherit or own land defined wealth, and one’s place in society. Where land ownership through inheritance defined the wealth of rentiers it was impossible to escape from the place in society into which one was born.

Forbes puts this well:

Hong Kong has made economic gains over the past decade, but these have disproportionately accrued to the economic elite.

While Hong Kong’s GDP has grown by about 50% in the past decade, median household income has risen by only about 10%. Hong Kong’s Gini coefficient, a score of income inequality, has risen into the territory of developing countries; according to the CIA World Factbook, Hong Kong had a Gini score of 53.7 in 2011, indicating that its income distribution is more unequal even than that of the US, which scored a 45 in 2007.

Real estate is the source of much of this inequality.

Note, however, where Sydney sits relative to Hong Kong on the list. Sydney sits at number four, with Melbourne just behind it at number six. Note too the prominence of Vancouver. Canada, like Australia, is in the midst of a Chinese driven mining boom.

Part of what is driving prices up is also the influence of Chinese property investors. I quote from the Eurasia Review from 24th of September, 2014:

In 2013, China emerged as top foreign investor in Australia’s real estate – pumping in USD 6 billion – nearly double the amount just a year ago. Chinese hunger for real estate as an investment option has pushed property prices across major cities in North America, Europe and Australia. The trend has picked up as Chinese property developers look to diversify the effect of cooling domestic property market. My emphasis

ChinaInvestment

From the Sydney Morning Herald

One source in the Australian Financial Review claims that, according to Treasury statistics, this figure of 6 billion has since “surged to $24.8 billion in the first nine months of 2013-14, an increase of 93 per cent on the previous year”.

Australia is the number two most popular place for Chinese property investors in the world after the US. Today it has been announced that the Chinese government has made it easier to move money overseas. The mere trickle of Chinese money into the Australian real estate market will soon turn to a flood.

The same thing is happening in Hong Kong, only it is much easier for mainland Chinese to purchase there as none of the restrictions on sending money abroad apply. The end result is that Hong Kong property prices have reached an intolerable 15 times the annual income. Property bubbles usually start to burst at around 7 to 8 times the annual income. Sydney has reached 9 — and since the Demographia figures were released has probably already reached 10. All driven by deluded investors who think that real estate is a safe haven because it allegedly never devalues.

Imagine living somewhere housing cost around twice as much as Melbourne. Almost all of your income would go towards rent or mortgage payments. This would cause immense economic hardship. If the Chinese central government embark on another massive stimulus to expand the Chinese property bubble even more vastly, the spillover effect on the Sydney and Melbourne real estate market will result in prices reaching those seen in Hong Kong.

The effect of Chinese stimulus on Australian property prices would be both as a result of Chinese investment as well as increased sales of Australian minerals prolonging the minerals boom. Australia is exquisitely sensitive to the volume of mineral exports to China:

ChinaShareofTotalExports

See last reblogged post for source.

What we are seeing in Hong Kong could well represent the tip on the iceberg of simmering social discontent in China. It is a discontent that may erupt if the real estate bubble on mainland China bursts. Huge numbers of investors will lose their life savings. Others will be left with mortgages worth more than the value of their homes. The effect on the economy could engender a recession. On the other hand if more stimulus inflates property prices even more this will render housing unaffordable to most. The Chinese government is caught between a rock and a hard place.

Why Australian Government Debt is the Least of Our Problems

Tags

, , , , ,

There is an interesting piece in The Age about the problem of rising household debt: If we are so wealthy, why are we in so much debt?

The problem with the article is that it tends to conflate public and private debt.

After the Great Depression, the institution of Keynesian styled stimulus resulted in the socialisation of the burden of economic hardship. The result was higher levels of government debt — public debt. In the neoliberal reform era this socialisation of hardship went totally out of fashion.

The great advantage of socialisation of hardship was that it could be centrally directed towards public works that generate labour and productivity. The Sydney Harbour Bridge was a Great Depression public works project that added incalculably to the nation as a whole for generations to come.

The_bridge_in_curve_1926

The Sydney Harbour Bridge being constructed. By Grace Cossington Smith (1930)

The current economic orthodoxy tells us that the lower the level of government debt the more virtuous the ruling government. Virtuous governments are do-little laissez faire governments, one that spend money on little more than paying off their debts. The Australian Liberal government claims to thus pursue a policy of greater virtue than Labor, namely the virtue of lower government debt, one allegedly resulting from doing nothing.

Sadly, the problem is that this policy has resulted in a transfer of the hardship of debt from the public to the private sphere as this figure from a study by Philip Soos shows:

Debt_to_GDP

Compared to the past, the level of Australian public debt remains at an all time low. Yet the level of private debt has soared to astronomical levels.

This next graph shows that the source of the public debt is housing and mortgages:

Debt_businessVshousehold

You can see that the banks are now lending more to households than to businesses:

BusinessVsOwnerOccupierLoans

In the past, liquidity flowed into supporting the business sector, where it could stimulate productivity. Today it is getting caught up into an unproductive sector the economy, housing.

The trouble is that the adverse economic repercussions of total debt are far less when the burden of debt is shouldered by government to start with, since it is far less likely than the public to default. Catastrophic banking crises ensue when the public start to default en masse on their debts to the point that their cummulative effect begins to take on ever broader socio-economic consequences, and in the worst case can bring the entire banking system to its knees.

Then the only way to contain the contagion of panic that ensues is for the burden of public debt to be socialised through government intervention — bailing out failing banks. The private sector gets bailed out by the public sector. Or, as they say: “there are no libertarians in financial crises”.

The end result is that the trend towards shifting the burden of debt from the public to the private sphere is merely a way for governments to cook their books and pretend that they can claim that their government bottom line looks good as a result of their virtuous neoliberal do-little governance. It is a lie — a problem-shifting exercise of massive proportions.

Part of the problem is well described by Nouriel Roubini. Roubini was ridiculed when he predicted the subprime crisis in the US, but every one of his predictions came all-too frightfully true. In his book on the subprime crisis, Crisis Economics, Roubini tells us:

For the past half century, academic economists, Wall Street traders, and everyone in between have been led astray by fairy tales about the wonders of unregulated markets, and the limitless benefits of financial innovation. The crisis dealt a body blow to that belief system, but nothing has yet replaced it.

As we’ve made clear throughout this book, the crisis was less a function of subprime mortgages than of a subprime financial system. Thanks to everything from warped compensation structures to corrupt ratings agencies, the global financial system rotted from the inside out. The financial crisis merely ripped the sleek and shiny skin off what had become, over the years, a gangrenous mess.

The world has deluded itself into thinking that the GFC was triggered purely by grossly subprime lending practices. Instead of using it as the impetus for reform, it was swept under the rug as being a purely American problem associated with lax local lending practices.

As a result, as long as lending practices are more virtuous, we are told the problem could not possibly repeat itself. The crisis thus need not be seen as a symptom of a thoroughly pervasive global and systemic problem, but could be conveniently explained away as a simple local issue with simple local solutions of only modest relevance to the rest of the world.

The extent of this delusion is exemplified by the way in 2008, German finance minister, Peer Steinbrück declared that events taking place in America could safely be dismissed as a local American problem of little relevance to the rest of the world:

“The financial crisis is above all an American problem”, and added, “The other G7 financial ministers in continental Europe share this opinion”. But a few days later much of the European banking system effectively collapsed. ”

Quoted in Crisis Economic by Roubini

Roubini thinks that such thinking is driven by a delusion. It is a delusion driven by a childish desire to cling to the neoliberal fairy tale that The Market is a beautiful and virtuous self-regulating miracle, a perfect example of celestial harmony. Alas, the apple in the eye of neoliberals that is The Celestial Market may be rotten to the core. Something is rotten in the state of Denmark — nay, the entire world.

The problem is that the house price to annual income ratio in Sydney and Melbourne have now reached a factor close to ten. Most housing bubbles start to pop when this ratio reaches 7 to 8. Yet there are self-professed economic prophets who claim that we are on the cusp of a ten year real estate boom. If so, housing prices will reach heights beyond a ratio of 10, making Sydney and Melbourne house prices the highest relative to income in the world. It would make it impossible for people to live in these cities. Just to own even a mediocre piece of property would place enormous mortgage stress on the average Australian household. Rents too would reach impossible heights.

All this is occurring just as unemployment is rising. The mining boom is on the wane as iron ore prices go into freefall, leading mining companies to lay off workers in ever larger numbers. The Australian dollar likewise has gone into freefall. Next US Quantitative Easing will come to an end in November, thus curtailing the easy flow of credit to banks that encourages Australian home buyers to take on enormous mortgages. As the Australian dollar tanks, that in itself will further weaken the position of the banks to lend. Next as US interest rates rise at the end of US Quantitative Easing, investors will pull out of the Australian dollar and transfer funds into US dollars, once again reducing the flow of credit to Australian banks.

The result is also a huge burden to businesses. The cost of rent goes up, putting commodity prices up. There is pressure to pay workers more so they earn a living income to keep up with cost of housing.

It may not be long before there is a huge credit crunch and liquidity crisis driven by the intolerable burden of private debt accumulated in Australia. This may even lead to a massive banking crisis that brings the entire nation to its knees, and all of the private debt may need to be socialised, turning them into government debts, as failing banks are bailed out. The delusion that Australian government debt has become so big as to have reached crisis point will be exploded, as the magnitude of that debt is dwarfed by the threat of the burden of excessive private debts. Then the harsh reality of the fact that post-mining boom Australia is once again facing becoming a “banana Republic” might dawn on everyone.

Australia’s Suicide Strategy: Invest in Coal

Tags

, ,

In a follow up to the last post, spokesman for Angela Merkel’s right wing Christian Democrats has called Australia’s emissions policy a ‘suicide strategy’:

It is just as I said, Australia wants to cling to the dinosaur technology of dinosaur fuels. It is a suicide strategy that is asking for Australia to become a dinosaur economy.

Merkel is proving to be one the most staunchly hard-line right wing neoliberal Christian Democrat leaders in living memory, one who insists on pushing a brutal austerity policy for the EU.

If the Liberal government fails to even listen to the warnings of hardline right wing ideologs, then they are truly stupid indeed.

Australia’s Mining Boom Curse

Tags

, , , ,

We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy — sun, wind and tide. … I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.

Thomas Edison, 1931

Natural resources and prosperity can often be a curse. Nor does money buy wisdom or foresight.

Note that Joseph Stiglitz mentions the Resource Curse in the following recorded talk (at 17:20) that having mining resources inhibits growth in a nation:

Joseph Stiglitz: Public talk in Paris on the Global Economy

And, Australia is clearly cursed in this respect, because, just as Stiglitz says, this has caused the Australian dollar to be overvalued, thus inhibiting the growth of manufacturing. Part of what has also been inhibited is the fossil fuel independent energy manufacturing sector. Every effort is made to prevent the growth of competition from sectors that look set to overtake fossil fuel based energy sources.

One of the most interesting insights of late has come from economist Nouriel Roubini, who accurately predicted the US subprime mortgage crisis. He was ridiculed at first for his predictions, but the chilling accuracy of his predictions has earned him the moniker of Dr Doom. Paul Krugman was to write his praises in Time magazine:

Nouriel Roubini was right. At a time when the likes of Alan Greenspan were dismissing concerns about excessive home prices and declaring that banks were stronger than ever, Roubini warned that there was a monstrous bubble in the housing market and that the bursting of that bubble would cause much of the financial system to collapse.

And so it has turned out, with even the most seemingly outlandish of Roubini’s predictions matched or even exceeded by reality.

Roubini now predicts that the profoundly misguided austerity measures imposed by the Australian Liberal government budget perfectly mistimed to exactly when the mining boom wanes, will help to precipitate a crash in the Australian economy. Exactly the same prediction I also made in a previous post about the likely outcome of the effects of the Liberal government’s imposition of austerity measures in the federal budget.

Roubini also predicts a 20% fall in the value of the Australian dollar. In the classic study of boom-bust cycles, Manias, Panics and Crashes—A History of Financial Crises Kindleberger and Aliber tell us that periods of currency overvaluation are often followed by a swing towards undervaluation. Driven by the mining boom, the Australian dollar has gone through a prolonged period of overvaluation. Soon overvaluation risks a counter-reaction in the opposite direction, when the US ends its programme of quantitative easing, and the US dollar once again becomes a more attractive target for investors — all exactly timed to the point that the mining boom wanes. The flow of reinvestment away from the Australian dollar, back in the US dollar will lead to a sharp drop in Australia dollar.

There is a danger that rapid undervaluation of the Australian dollar may precipitate a liquidity crisis amongst Australian banks, especially if it occurs precisely as the mining boom collapses, and the Australian economy falters under as asset bubbles burst.

ManiasPanicsCrashes

It is merely a matter of time before Australia’s 24 year recession free run will come to an end. A whole generation has grown up without knowing what a recession even looks like. The worst case scenario would be a prolonged recession, extending into a depression with dragging stagnant deflation. Then the mining boom would really look like a resource curse.

Of particular concern is the degree to which the Big Four banks have become over leveraged. If you look at the Big Four’s cash asset to debt ratio, it looks rather like Lehman Brothers before the GFC. This table comes from Lindsay David’s book, Australia: Boom to Bust:

DavidLindsay_BanksOverleveraged

Due to the astronomical price of housing, households are frequently burdened with mortgages that are now up to ten times their annual household income: worse than what the US reached before the GFC. The historical house price is more like 5-6 times the annual income, and real estate bubbles usually start to pop when the ratio reaches around 7-8. Even leading economists such as Ross Garnaut now publicly state that there is a housing price bubble. Christopher Joye, a former staunch housing bubble denier, has even made an about turn and is loudly trumpeting the dangers of a US styled housing crisis crashing the economy.

Now, with the Australian dollar and iron ore prices on free fall, accompanied by equal falls in Big Four bank share prices, and an escalating unemployment rate, it seems a crash is beginning to look imminent. Nor will China bail out Australia again as they did after the GFC, since it has grossly overbuilt in the real estate sector, construction in which had up till now driven a seemingly insatiable hunger for Australian iron ore. With eerie ghost cities everywhere, vast urban jungles with nobody in them, China has already announced that it will not invest in another construction stimulus project:

When economists write about this era in retrospect, they may well write that the neoliberal reform era that started in the 1980-90s universally conspired to blow housing bubbles, unsustainable capitalist bubbles engendered by money made from money, in a global scale neoliberal Ponzi scheme sold to the gullible as a source of infinite economic prosperity.

The US and Japan are merely ahead of everyone else in going through the consequences of a real estate boom and bust cycle. Here are the US and Japanese housing bubbles overlayed on top of one another:

JapanVSAmerica_Bubble

In both cases, the bubble reaches a peak before housing prices return to something closer to historical averages. This is how the Australian real estate bubble looks:

realhousepriceindexUSA_AUST

It looks like it is only a matter of time before the Australian curve starts to look like the US and Japanese curves.

At the end of the day, reliance on real estate as a source of income is a dead end that merely returns us back to the feudal era. You end up in a world like Jane Austen’s where the Haves were aristocratic landowners reliant on rent income, and the Have-Nots were renters, namely commoners. Sadly, that also describes the Australia of today and how unaffordable housing prices have become for the average Australian. The only way this situation can change is if there is economic collapse, so that recession runs like a wildfire through property investment portfolios.

The problem for post-mining boom Australia then becomes one where it will soon become painfully apparent how little Australia has invested in planning for a post-mining boom economy. The Liberal government, reduced to a puppet of mining company interests, seems to think that the mining boom will last forever, and that selling carbon emission producing energy sources such as coal will keep Australia the lucky country for all time. It is a delusion stemming direclty from Australia’s resources curse. Sadly, selling and investing in fossil fuels is like investing in dial-up modem technology. Carbon fuels are dinosaur fuels, and in many sectors, the technology that goes with it is gradually turning into a dinosaur technology.

Whoever holds the key to power in the future will be whoever owns the technology patents for new energy technology, and not who holds political hegemony over Middle Eastern oil fields, or who owns Australian coal mines. By failing to collect a tax on carbon to reinvest in new energy technology development, Australia will be left behind in the dark ages peddling a dinosaur product that fewer and fewer buyers will pay profitable amounts of money for.

Soon Australia will be forced to play catch up in a big way. More likely it will by then have found itself to be a nation that has missed the boat, and that it must pay other nations money for use of new energy technology patents. Then, instead of owning the license to print money, it will have to pay others for the privilege.

For in a sense, clean energy technology is a license to print money. It is a license that fools give up because the printing press costs too much money to set up. You can make the equivalent of oil and coal literally out of thin air: wind and sun. You don’t even have to dig it up. Solar energy is also the original form of fusion nuclear energy technology. The sun, after all, is a massive fusion nuclear reactor, 109 times larger than planet earth. Whoever ignores those who have, like the philosopher’s in Plato’s cave, seen the light will be judged by history as being even more dimwitted than the Beverley Hillbillies, who at least were smart enough to recognise the value of what they were sitting on:

Only a fool would fail to invest in harnessing energy that is literally falling on our heads in spades. Yet, sadly, the money made from the resource curse turns thinking people in abject fools.

Arise Sir Joe: no Cigar Chopping Capitalist, but Servant of Peruked Neoliberal Pseudo-Aristocracy

Tags

, , , , ,

In a previous post I correctly predicted a brutally neoliberal budget that would impose austerity on the Australian economy in a way that recalls the sort of austerity measures imposed on nations in genuine debt crises like Greece, Ireland or Spain. The catastrophic failure of other political parties to counter the blatant lies sold to the public about a fictional debt crisis through the Murdoch-owed media was breathtakingly woeful to behold. Greece has a debt to GDP ratio of 175%, whereas that of Australia is the best in the OECD. I quote:

Australia has the lowest debt (measured by Gross Financial Liabilities) in the OECD. In 2013, Australia’s Debt to GDP ratio was 34.4 %, Germany was 80.9 %, the UK at 111.6 %, USA at 106.5 % and the OECD average was 112.0 %. 

In a way, although there is evidence that they flinched just a little before plunging in the knife*, the Abbott-Hockey budget was in many way still everything expected of it, with the brunt of the burden of expenditure cuts bourn by those most vulnerable and least able to afford it. Gone is the age when Henry Ford once insisted on a decent minimal wage, given that if the masses were not decently paid they would be unable to afford to buy his cars—en masse. Where, one wonders, does the money paid by a welfare beneficiary for a loaf of bread go? It goes to the outlet that sells it, the baker who bakes it: both parts of the Australian economic infrastructure. Give tax breaks to multinationals corporation, as the government has done, and the money is more likely to “disappear” out of the Australian economy. Nor in the face of the GFC did capital flinch at accepting bale-outs for their mistakes: corporate welfare, where tax collected from the average person is given to corporations who preach the evils of government monetary intervention.

Alas, the neoliberal dogma of the trickle-down effect, used to justify making the rich richer and the poor poorer, simply does not lead to a better or more just society at all, let alone a more affluent one. In future, either we will all be capitalist lords or serfs—assuming we are not there already. As the aristocracy blamed the alleged innately lowly “stock” of serfs to argue the pointlessness of liberating them or giving them opportunities, so too are a growing number of people trapped in the poverty cycle dependent on welfare, but where their allegedly innate laziness and lack of enterprise is used to justify cutting ever more brutally from their welfare payments. Far from it, the disparity between rich and poor today is increasingly reaching proportions resembling the eighteenth and nineteenth centuries:

The disparity in remuneration between average workers and CEO’s stood at around thirty to one in 1970. It now is well above three hundred to one and in the case of MacDonalds about 1200 to one.

David Harvey

The corporate aristocracy rules over nations using the Murdoch news empire to spread its propaganda. The petty anaesthetising amusements manufactured by the pop culture industry, including mass spectator sports and reality TV, serves as the new opiate of the masses. The Murdochs and Rineharts of the world rule as a new capitalist aristocracy, who live in gaudy palaces resembling that of Versailles. They virtually own the government, which, as everything under capitalism, is up for sale—just like any other commodity in neoliberal economics. Parliamentarians in the age of constitutional monarchy did more to stand up to the powers exerted by monarchs than political parties today. Once again, Oliver Twist goes hungry when he dares to plead “please Sir, may I have some more?” Those wretches on welfare are just too greedy, after all.

This is why the metaphor of the “out-of-touch cigar chomping capitalist” used by Bill Shorten to describe the Liberals is already out of date in that it recalls the rich industrialists of the early to mid twentieth century.

ImageFrom the Courier Mail

Things have gotten much worse than that today, for the figure of the rich, cigar chomping industrialist is already too modern, and too progressive to describe our age. Rather, levels of income inequality have regressed to the point that the metaphor of the peruked aristocrat is far more apt to describe our age. If inequality continues to grow at this rate, one wonders if it is only a matter of time before not only the fashion for the peruke, but that for the guillotine will also see its revival as proletarian outrage turns to violence. For now, though, what rich rewards awaiteth their obedience to the capitalist aristocracy? Knighthood, of course! Arise Sir Joe. Arise Sir Tony. Thou hast carried out thy duty to thy Masters well:

Image

 

 

* It has been pointed out that there are some Keynesian infrastructure building elements to the budget of a kind diametrically opposed to strict neoliberalism. This suggests that the government lacked the courage to fully make good with their extreme neoliberalist rhetoric with universally lower taxes and no government-driven infrastructure stimulus whatsoever. If they had the stomach for it, they would have certainly achieved the neoliberal dream of exposing Australia to the international recession that the extraordinary Rudd government Keynesian stimulus saved it from. In the neoliberal dogma, to intervene against the capitalist “self-regulating” natural order in this interventionist manner is evil. However much neoliberals yearn for such ideological puritanism, to actually plunge the knife in by casting Australia straight into the abyss of recession is something even the Liberals have flinched from fully carrying out. So some Keynesian infrastructure stimulus elements managed to creep in. The result is a budget ideologically neither fish nor fowl. Yet, once the mining boom fades, the Liberals may still see their wish fulfilled, as the more discreet jack-knife they have plunged in ultimately has the same effect, since the 22 year recession-free run of the Australian economy has to come to end at some time. As the song about Mack the Knife goes, when Mack the pro hitman strikes with his jack-knife, it is clean without messy splatter. But one must beware what one wishes for, as sometimes this is the greatest possible of nightmares. Once the mining boom ends, Abbott will likely get that wish he flinched at the spectre of. For Tony Abbott seems to live under the delusion that the prosperity of the Howard years had something to do with Howard neoliberalist spending cuts and staunch fiscal discipline. The truth is that the mining boom allowed them to buy themselves into three terms of government, by spending freely like drunken sailors.

Book Review – Mikkel Borch-Jacobsen and Sonu Shamdasani, The Freud Files: An Inquiry into the History of Psychoanalysis (Cambridge Univ. Press 2012)

It is Freud’s birthday today. A perfect time to read “The Freud Files” by Mikkel Borch-Jacobsen and Sonu Shamdasani.

http://www.amazon.com.au/The-Freud-Files-Mikkel-Borch-Jacobsen-ebook/dp/B006W71K86/

h-madness

Mikkel Borch-Jacobsen and Sonu Shamdasani, The Freud Files: An Inquiry into the History of Psychoanalysis  (Cambridge Univ. Press 2012)

Mikkel Borch-Jacobsen, Making Minds and Madness: From Hysteria to Depression (Cambridge Univ. Press 2009)

By Simon Taylor

Beginning with the French publication of The Freudian Subject in 1982, Mikkel Borch-Jacobsen has established himself as one of this generation’s foremost historians of psychoanalysis. Strongly influenced by the intellectual atmosphere of late-1970s France – including the thought of his teachers Philippe Lacoue-Labarthe and Jean-Luc Nancy – his work is known for its dense theoretical expositions, close readings, and forensic attention to detail. It has also, from the beginning, been characterized by a relentless and penetrating critique of Freud and the psychoanalytic endeavour as a whole; as early as The Freudian Subject, Borch-Jacobsen declared that, “All this (psychoanalysis, in short) was nothing but a great egoistic dream” bolstered not only by Freud himself…

View original post 1,876 more words