tag:blogger.com,1999:blog-43351848982816368922024-02-21T06:59:53.554+11:00Aussie Macro MomentsReal-time, stream-of-consciousness insights on financial markets, economics, policy, housing, politics, and anything else that captures my interest. Tweet @cjoyeChristopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comBlogger3148125tag:blogger.com,1999:blog-4335184898281636892.post-33064397857441496882013-02-09T15:39:00.002+11:002013-02-09T15:42:24.224+11:00What has happened to Aussie house prices since 30 June 2012? (chart)A friend kindly pointed out that I had said on 25 January 2012 that<i> "If the RBA cuts again in February [they did not], and further thereafter [they started in May and June], as some analysts believe they will, expect to see the return of rapid house price appreciation."</i> Here is what happened to national home values since the RBA started cutting rates in 2012...I am not sure if everyone agrees 6% pa house price growth, which is well above wages growth, is "rapid". It is certainly not slow, and much stronger than my through-the-cycle forecast of 4-5% pa...Read more <a href="http://afr.com/p/blogs/christopher_joye/housing_values_maintain_build_up_N2u1LtLLkNmHCKvZXOxlFJ">here</a>.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_w29Tr_ciLOOxPIAlvaiopU1SwvgT2JUyzXwqAbhuN3tj0Yl38PJDoAB-fkL7eVIOZodYBtJC9ax6VUad88baISKat5jTyBghwar09HqM7m_xf2tXO_JkU3MVFhsy4qgknHp74fHUbz8/s1600/cv2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="231" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_w29Tr_ciLOOxPIAlvaiopU1SwvgT2JUyzXwqAbhuN3tj0Yl38PJDoAB-fkL7eVIOZodYBtJC9ax6VUad88baISKat5jTyBghwar09HqM7m_xf2tXO_JkU3MVFhsy4qgknHp74fHUbz8/s320/cv2.png" width="320" /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-80159411675924763742013-01-02T17:34:00.002+11:002013-01-04T15:11:30.358+11:00AFR article on ASIO and cyber-war now *free* onlineThis is an exception, but you can read my long feature story on David Irvine, ASIO, ASIS, DSD, Stuxnet, Flame, MiniFlame, Gauss, Duqu, the NSA and cyber-warfare over at the AFR for <a href="http://afr.com/f/free/national/it_global_cyber_war_out_there_94da3CY7Avufi9jp5d0JTI"><b>free</b> now here</a>.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<br />Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-43663577403468118922012-12-04T07:18:00.003+11:002012-12-04T07:18:36.747+11:00All posts going to AFR blog now...As per my comments below, all my posts are going to my AFR blog now. You can access it for <a href="http://afr.com/Blogs/christopher_joye">free here</a>.<br />
<br />
<b>RSS URL: </b>http://www.afr.com/rss/blog/christopher_joye<br />
<b>RSS Feed Name: </b>christopher_joyeChristopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-71272925999500283062012-12-03T06:57:00.000+11:002012-12-03T06:57:03.043+11:00This blog is going to sleep soon...G'day, I will be migrating most of this blog over to my <a href="http://afr.com/Blogs/christopher_joye">AFR blog</a>, which is also free. You can subscribe to the AFR blog through the following RSS feed details:<br />
<br />
<b>RSS URL: </b>http://www.afr.com/rss/blog/christopher_joye<br />
<b>RSS Feed Name: </b>christopher_joye
<br />
<br />Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-45463988164459654582012-12-01T08:27:00.001+11:002012-12-01T10:49:10.254+11:00Consumer confidence to revolutionise Australian superI have some ideas on the future of super, and how to go about selecting fund managers. You can read them over at the <a href="http://afr.com/f/free/personal_finance/smart_money/consumer_confidence_to_revolutionise_upXaDx1OyCwSMCDKHAEEgO">AFR here</a>.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-67864931761656095272012-11-29T15:02:00.003+11:002012-11-29T15:02:35.139+11:00Why a December rate cut is now likelyActually, I flagged this weeks ago after the soft wages data. But you can read my AFR column on the RBA's December board meeting over at the AFR <a href="http://afr.com/p/blogs/christopher_joye/december_rate_cut_firmly_in_frame_3ClrejIZh89Yo8apMlVOMI">here</a>.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-78310977045856606302012-11-29T06:34:00.003+11:002012-11-29T08:15:27.265+11:00The banks' love-affair with APRAYep, it was truly a love fest. The banks' gushing praise for APRA and John Laker was a little over the top---especially when they responded to questions about whether they had enough capital with the comment, "Ask John what he thinks." Laker was compelled to bat-back, "Oh no, I am now going to get queried about [industry] "capture"." Over to you, Adam Creighton... ;-)<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir3qj9px7XeGpOYKQXosNhyphenhyphenUfs3LiBS4RyMZA372Wy0QsAYuheNcJrRJ4xA1ONbKpr7_zsmyXRL2A3jxuEihYRXZmR_wNr09eqaRKRXXD5E_9cqOZVSO99yjfX2_7u89XTNY4b7ehbfxA/s1600/e07e1130-3933-11e2-983f-7d4ec7326d0d__AAA2314_B+-+6.0.394588h9079--646x363.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir3qj9px7XeGpOYKQXosNhyphenhyphenUfs3LiBS4RyMZA372Wy0QsAYuheNcJrRJ4xA1ONbKpr7_zsmyXRL2A3jxuEihYRXZmR_wNr09eqaRKRXXD5E_9cqOZVSO99yjfX2_7u89XTNY4b7ehbfxA/s320/e07e1130-3933-11e2-983f-7d4ec7326d0d__AAA2314_B+-+6.0.394588h9079--646x363.jpg" width="320" /></a></div>
<br />Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-16377917994306951782012-11-27T07:39:00.002+11:002012-11-27T07:39:38.479+11:00(1) The price of bank safety and (2) Who will succeed RBA's Stevens and APRA's Laker?I have two AFR stories--one print and one online--today. The first in print is called the "<a href="http://afr.com/f/free/blogs/christopher_joye/the_price_of_bank_safety_sSTMi3Fx7fmEyUZCeZCkTM">price of bank safety</a>". You can read it <a href="http://afr.com/f/free/blogs/christopher_joye/the_price_of_bank_safety_sSTMi3Fx7fmEyUZCeZCkTM">here</a>. It opens as follows:<br />
<br />
<i>Investors expect a trade-off between risk and return, but in Australian banking this relationship is inverted – banks with the lowest risks provide the highest returns. Taxpayer subsidies probably explain why.</i>
<br />
<br />
The second is on the <a href="http://afr.com/p/blogs/christopher_joye/shock_appointment_as_bank_of_england_L1LkUtLo8M4PY6eix3QvcN">shock appointment of the Canadian central banking boss as Bank of England governor</a>. You can read it <a href="http://afr.com/p/blogs/christopher_joye/shock_appointment_as_bank_of_england_L1LkUtLo8M4PY6eix3QvcN">here</a>. I also discuss possible replacements for Glenn Stevens at the RBA and John Laker at APRA:
<br />
<br />
<i>The two most obvious and apolitical successors to Stevens and Laker are, respectively, the RBA’s Dr Phillip Lowe and Dr Guy Debelle. Both have PhDs from MIT and are experts in monetary policy and financial stability. Dr Lowe is currently deputy governor and widely considered a natural replacement to Stevens. Dr Debelle runs the RBA’s financial markets division and led the central bank’s efforts to keep banks solvent during the global credit crisis.</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-66231283667316210622012-11-24T08:17:00.003+11:002012-11-24T08:17:33.374+11:00Saturday AFR news exclusive and column links<br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">In the <i>Weekend
AFR</i> I have a page one, exclusive news story entitled, <b><i>“RBA governor
mulling retirement”</i></b>. You can read it <a href="http://afr.com/f/free/national/rba_governor_mulls_early_exit_ZZrV1M3TejrHNn2MRJdfFJ">here</a>. </span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">I also have my standard Saturday column, <b><i>“Housing gain, retiree pain via
cheap money”</i></b>, covering the RBA’s December board meeting and what it
means for housing, cash, floating-rate bonds, fixed-rate bonds, and equities.
You can read my opinion piece <a href="http://afr.com/p/personal_finance/smart_money/housing_gain_retiree_pain_in_cheap_mC7S1cwhktsIXyarnPXnBO">here</a>.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-AU" style="font-family: "Arial","sans-serif"; mso-ansi-language: EN-AU;">The <i>AFR</i> has massively boosted its content in
the last year or so under the leadership of Brett Clegg and Michael Stutchbury.
You can access the entire newspaper and the many magazines/lift-outs online or
via an iPad for circa $1.90 a day <a href="https://subscribe.afr.com/afr/website_pay.aspx">here</a>.<o:p></o:p></span></div>
Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-56429170347836051692012-11-23T08:17:00.003+11:002012-11-23T08:17:50.706+11:00Fantastic column from The Oz's Adam Creighton on the banksI <a href="http://www.theaustralian.com.au/business/opinion/time-to-force-the-big-banks-to-hold-more-capital/story-fnc2jivw-1226522327791">love this column</a>, which echoes my views on the subject (see <a href="http://www.afr.com/p/blogs/christopher_joye/imf_harsh_words_for_banks_fall_on_ertDbZMBu9KZuyIxzlyRpI">here</a>). Excerpt below...<br />
<i><br />
IF the value of your total assets fell by 6 per cent would you be insolvent? If you are sensible, probably not. Big companies like Woolworths or BHP would have to endure a drop in their assets of at least 40 per cent before their assets were worth less than their liabilities.
<br />
<br />
Yet the four major banks would be. If National Australia Bank's total assets, for instance, fell in value by 6 per cent to $717 billion, its capital or shareholders' funds would be more than wiped out.
<br />
</i><br />
<a name='more'></a><i>
Such a fall is far from impossible given the Big Four's huge exposure to home lending. The International Monetary Fund prompted lots of harrumphing from the Big Four this week when it suggested they held too little capital -- the difference between assets and liabilities.
<br />
<br />
ANZ's chairman said extra capital would make the Big Four banks, which have among the highest returns on equity among any group of large banks in the world, "globally uncompetitive".
<br />
<br />
The IMF said the four majors were "highly profitable, enjoying a funding cost advantage derived partly from the implicit government support and earning larger net interest margins than smaller banks and international peers".
<br />
<br />
A very large chunk of their $25bn-a-year profits arises from their ability to borrow more cheaply because investors know hapless taxpayers' stand ready to bail them out if they falter.
<br />
<br />
"Significant and protracted difficulties in any one of them would (have) severe repercussions for the entire financial system and real economy," the fund added...
<br />
<br />
A century ago and decades thereafter, before prudential regulation was even conceived and only market forces provided discipline, Australia's banks maintained capital ratios of between 15 per cent and 20 per cent, more than three times what they maintain today.
<br />
<br />
With memories of the 1890s, when the Depression wiped out half of Australia's banks, banks prudently built up their capital ratio to near 20 per cent. In the Great Depression of 1929, not a single bank failed. A far smaller economic lull in 2008 paralysed the world's financial system...
<br />
<br />
One theory is that bureaucrats become captured by the institutions they "supervise", reluctant to upset friends or limit lucrative job opportunities later. Formal regulation means the banks and their creditors absolve themselves from serious prudential introspection, and instead focus on jumping through (or avoiding) the arbitrary and naive hoops regulators set for them.
<br />
<br />
Ideally, government wouldn't regulate banks and wouldn't save them if they collapsed. But that is a libertarian fantasy given the big government reality.
<br />
<br />
The second-best option is to force banks to hold much more capital than they </i>do.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-32322204928644707342012-11-22T08:17:00.000+11:002012-11-22T08:17:01.240+11:00Shorten and Stevens throw "knuckle-balls" at banks, non-banks, and FX tradersRead all about the big news for banks, non-banks, and FX traders outside the AFR's pay-wall <a href="http://afr.com/p/blogs/christopher_joye/rba_news_for_banks_and_currency_P2xtgRR3Lmu5JZREiqgdTJ">here</a>. Amazingly, this was completely missed by the media aside from the AFR's reporters (and online media published since). My <a href="http://afr.com/p/blogs/christopher_joye/rba_news_for_banks_and_currency_P2xtgRR3Lmu5JZREiqgdTJ">opening paragraph</a>:<br />
<br />
<i>RBA governor Glenn Stevens and Financial Services Minister Bill Shorten have both thrown “knuckle-balls” into the evolving policy debates on how to prevent banks and non-banks from collapsing. Stevens also revealed he’s taken a directional punt on the Aussie dollar.</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-42694653801922957972012-11-21T12:00:00.002+11:002012-11-21T12:00:52.531+11:00No surprise: Aussie growth expected to be "above trend"From the usually very dovish Westpac:<br />
<br />
<i>The annualised growth rate of the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 4.1% in September 2012, above its long term trend of 2.8%...This is the second consecutive month that growth in the Index has been above trend with August and September the only months since August last year that above trend growth rates have
been recorded. Westpac is a little less optimistic than the Index at this stage with our expectation that growth in the second half of 2012 will be around 2.5%, slightly below trend.</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-68457659593674688352012-11-20T11:52:00.001+11:002012-11-20T11:52:16.631+11:00AFR Column: Aussie dollar joins the big boysRead my <i>AFR </i>column in reaction to the IMF news on the Aussie dollar today <a href="http://afr.com/f/free/blogs/christopher_joye/aussie_dollar_promoted_to_first_KW4c3GFQ4q4V8AXpXUhwIP">here</a> (free).Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-85212734950539280842012-11-20T10:46:00.003+11:002012-11-20T10:46:45.560+11:00What I said about Aussie dollar b/c global reserve currency in July 2011Read it <a href="http://christopherjoye.blogspot.com.au/2011/07/is-aussie-dollar-becoming-global.html">here</a>.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-77476009101301012792012-11-20T08:26:00.000+11:002012-11-20T08:26:13.399+11:00Ironic: HSBC gets out of the non-core banking gameHmmm, I have warned about this for too long to recall:<br />
<div>
<br /></div>
<i><a href="http://www.bankingday.com/nl06_news_selected.php?act=2&stream=1&selkey=14044&hlc=2&hlw=">Banking Day</a>: HSBC has confirmed it is in talks to sell its US$9.3 billion (A$9.0 billion) stake in China's Ping An Insurance, as it continues to shed non-core businesses and rebuild its profitability. In a statement to the Hong Kong Stock Exchange yesterday, HSBC said the talks might not result in a sale of the 15.6 per cent stake, however. On Monday, the Hong Kong Economic Journal reported that Dhanin Chearavanont, Thailand's richest man, might buy the shares.</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-44611806519223602802012-11-20T07:35:00.001+11:002012-11-20T07:35:14.474+11:00Another good AFR op-ed on big banksRe-advocating my Son of Wallis idea too. Read it <a href="http://afr.com/p/opinion/banks_require_scrutiny_QgRIE5DDF8qXfiAXlB05CJ">here</a>.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-14743585817108674852012-11-19T07:00:00.002+11:002012-11-19T07:00:57.573+11:00IMF rebukes APRA and RBA on too-big-to-fail major banksYou can read my <i>AFR </i>column today on the IMF's reform ideas for Australia's banking system <a href="http://afr.com/p/blogs/christopher_joye/imf_harsh_words_for_banks_fall_on_ertDbZMBu9KZuyIxzlyRpI">here</a>. I open up like this:<br />
<br />
<i>"The International Monetary Fund has recommended a raft of fundamental policy changes that should be sending shock waves through the banking community."</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-66001010005635547492012-11-17T08:29:00.001+11:002012-11-17T08:29:47.880+11:00Weekend AFR Column: Why Westpac has the best bank franchise.Read it <a href="http://afr.com/f/free/markets/market_wrap/benchmark_breakthrough_on_banks_S7QKHUaiB2ju0mk3LyUORJ">here for free</a>.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-30822287640599358412012-11-16T19:09:00.002+11:002012-11-16T19:09:11.524+11:00CBA analyst: Why Westpac is Australia's best bankYou can read about this fascinating new analysis <a href="http://afr.com/p/markets/market_wrap/benchmark_breakthrough_on_banks_S7QKHUaiB2ju0mk3LyUORJ">over at the AFR here</a>.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-6881016531394609662012-11-16T16:07:00.001+11:002012-11-16T16:07:07.516+11:00CBA comes up with a new tool for assessing bank profitabilityRead about it over at the <i>AFR </i><a href="http://afr.com/p/markets/market_wrap/benchmark_breakthrough_on_banks_S7QKHUaiB2ju0mk3LyUORJ">here</a> (outside of the paywall).Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-5916224124248686822012-11-15T07:16:00.001+11:002012-11-15T07:16:15.668+11:00Great Greg Sheridan column on defence spending cutsThis is a terrific <a href="http://www.theaustralian.com.au/opinion/columnists/defence-cuts-make-americans-uneasy/story-e6frg76f-1226516931763">effort</a>.Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-6051502885075536542012-11-14T08:05:00.003+11:002012-11-14T08:05:55.490+11:00Peter Reith joins Joel Fitzgibbon: put nuclear-powered subs back on the tablePeter Reith argues the case <a href="http://www.abc.net.au/unleashed/4367590.html">over at the ABC</a>:<br />
<br />
<i>It was a mistake not to be prepared to consider every option for the subs. Until last weekend, any signs of another back flip (a la India) have been muted. At last someone within Labor has now recognised the folly of Labor's decision on submarines. Former Labor defence minister Joel Fitzgibbon said:
<br /><br />
I now believe it was a mistake to rule out a nuclear option and we should have a discussion about every option which might deliver the capability we need in a timely and affordable manner.</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-7949590862995690602012-11-14T08:04:00.001+11:002012-11-14T08:04:12.315+11:00Michael L'Estrange calls for more defence spending, not lessA good op-ed from former DFAT boss Michael L'Estrange <a href="http://www.theaustralian.com.au/national-affairs/opinion/dont-discard-old-ties-for-new-times/story-e6frgd0x-1226516161974">here</a>:<br />
<br />
<i>In the future, <b>more rather than less defence spending will be required</b>, partly to fulfil our responsibilities in terms of self-reliant capabilities, partly to meet the increased expectations that the US will have of allies including Australia, and partly to broaden our capacity for enhanced regional defence co-operation arrangements.</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-52764164415730918042012-11-14T06:53:00.001+11:002012-11-14T08:13:02.206+11:00Koukoulas goes to war with McCrann/HendersonPretty amazing correspondence from Koukoulas to McCrann, and McCrann to Gerard Henderson...<br />
<i><br /></i>
<i>
An open letter to Terry McCrann (full letter can be found <a href="http://www.marketeconomics.com.au/2270-an-open-letter-to-terry-mccrann">here</a> and also see <a href="http://www.marketeconomics.com.au/2249-gerald-henderson-admits-he-was-wrong">here</a>)<br /><br />
CC: mccrannt@heraldsun.com.au
<br /><br />
Dear Terry
<br /><br />
As the Herald Sun economics writer (is that akin to the cordon bleu chef at McDonalds, or peeling potatoes at Heston Blumenthal’s The Fat Duck I wonder?) you wrote to Gerard Henderson last week about the facts concerning the 1974-75 Budget. For those who didn’t see that contribution, I reproduce it below in full.
<br /><br />
Before looking at your lack of self consciousness as you again fail to contemplate facts, I offer an opportunity to you to put your credentials next to mine.
<br /><br />
My brief CV is below. Terry, can you please present your CV and let’s have readers decide who might be better placed to discuss budget matters and, in fact, any issue relating to the economy? Is it you or me?
<br /><br />
The reason I do this is in part because you assert:
<br /><br />
* I recite “my assertions are the facts”;<br /><br />
* that I “have little knowledge of history and even less analytical rigour”;<br /><br />
* that I don’t “understand that in those days budgets were in August”;<br /><br />
* that some of the budget figuring “is beyond your correspondent”;<br /><br />
* “he clearly does not understand that the Treasury ones [data] he quotes are quite literally made up”;<br /><br />
* and finally, “Koukoulas seems unable to understand the arithmetic.”
</i><br />
<a name='more'></a><i>
<b>Terry McCrann to Gerard Henderson – 2 November 2012</b>
<br /><br />
Your occasional correspondent, former Julia Gillard advisor Stephen Koukoulas, is apparently of the genus of Labor Party shills that believes if you put your fingers figuratively in your ears, close your eyes, and just keep reciting, “my assertions are the facts, my assertions are the facts,” that you can make them so.
<br /><br />
Unhappily for him, though, the facts of the Whitlam government’s dreadful 1974 budget are obtainable. For someone like Koukoulas who has little knowledge of history, and even less, it would appear, of analytical rigour, he would no doubt find puzzling the source I have used.
<br /><br />
As you know Gerard, it is what is known as an original or primary source: the actual budget documents of the time. And more specifically, the 1975 budget, which had the full numbers in all their awfulness of the outcome of the 1974 budget for the 1974-75 fiscal year.
<br /><br />
The relevant page from that budget is reproduced below. Two broad points need to be made upfront. Presumably Koukoulas does not understand that in those days the budgets were in August, so they contained essentially finalised figures for the preceding year ended 30 June. Unlike today’s May budget, which has “estimates,” usually wrong, for the financial year still to finish.
<br /><br />
Secondly, the 1975 budget was not a creature of the incoming Fraser government dressed up to make the Whitlam Government’s total economic irresponsibility look worse. Apart from the fact that would simply not have been possible to achieve, the 1975 budget was brought down by Labor treasurer Bill Hayden, who back then, before the scales would subsequently fall from his eyes, was still a rusted-on “true believer”.
<br /><br />
Indeed, I can vividly remember personally praising Hayden for aiming to exactly halve the growth in fiscal spending from 1974-75’s 45.8 per cent to “just” 22.9 per cent.
<br /><br />
As you and your readers can see, the facts of the 1974 budget are as I stated in my previous correspondence – and you, with one trivial mistake excepted, did as well.
<br /><br />
Outlays leapt as noted 45.8 per cent – as you wrote “close to 50 per cent.” The budget deficit exploded to $2.57 billion. In those days it was broken down into a domestic and overseas deficit. Perhaps one day, I’ll explain why to Koukoulas.
<br /><br />
The domestic deficit in 1974-75 was stated as being equal to 3.3 per cent of GDP. It is a calculation perhaps beyond your correspondent, but for his benefit and that of your readers, the total deficit was equal to a little over 4.3 per cent of GDP.
<br /><br />
In an impressive combination of yawning ignorance and rather clunky abuse, Koukoulas has plucked purported figures for the 1974 budget from a table in the back of the current 2012 budget. He seems completely unable to understand that they are merely a theoretical reconstruction of the actual numbers, in an attempt to put them on the same cash basis as the modern budget numbers.
<br /><br />
Koukoulas accuses me of making up numbers; he clearly does not understand that the Treasury ones he quotes are quite literally made up. They exist only in the Treasury computer. They are not, as he implies, “revised” or to “improve accuracy” – as for example, GDP numbers are revised, often years after the event.
<br /><br />
The lie to that is the fact that the source you quoted for the 1974 budget numbers was published in 1982, some seven years after the 1974-75 fiscal year. Written by the distinguished Reserve Bank economist Bill Norton, whom Koukoulas seems never to have heard of.
<br /><br />
The Koukoulas-(modern) Treasury numbers are not a “revision” but an inevitably crude attempt to adjust the earlier numbers to provide some hoped-for comparability with the modern numbers. If Koukoulas had more understanding of both statistical method and the structure of budgets, he would understand how approximate and indeed unreliable such an adjustment is.
<br /><br />
Koukoulas seems particularly offended at being accused of “springing to the defence” of the 1974 budget. This demonstrates he has as little understanding of language and rhetorical method as he does of budgets and history. That he literally does not understand what he is writing.
<br /><br />
How else could anyone characterise his abusive attack on your comments on the 1974 budget? If he’s not “defending the budget” what is he doing? Especially, as he seems to think it was triumph – his now, the budget’s then – that its spending jumped by only 39.6 per cent in 1974-75, not your “close to 50 per cent?”
<br /><br />
As I noted, the correct increase was 45.8 per cent. As I further noted, even using his made-up, for want of a better word, lower figure, it would be the equivalent of lifting budget spending today by $140 billion, in a single year.
<br /><br />
From his response, Koukoulas seems unable to understand the arithmetic. Given his former role advising Ms Gillard, perhaps that explains an awful lot about recent budgets. And the word “awful” is used advisedly.</i>
<br />
<br />
<i><b>Terry McCrann to Gerard Henderson – 19 October 2012</b>
<br /><br />
Gerard, it takes an impressive level of clueless stupidity for even a Labor apologist to spring to the defence of the 1974 Whitlam budget – the budget that defined that government as the worst and most destructive in Australia’s history. Until that is, first Kevin Rudd came along to top even Gough Whitlam in sheer bumbling awfulness. For him of course, subsequently to have to cede the title of Australia’s worst ever prime minister, to Julia Gillard.
<br /><br />
But up stepped former Gillard advisor Stephen Koukoulas to pompously ridicule your criticisms of the 1974 budget and the numbers you used [See MWD Issue 158]. And get it absolutely and totally wrong. Apart from one minor mistake, which you have acknowledged, your numbers were correct.
<br /><br />
Koukoulas thundered that your ‘howler of howlers’ was to claim the budget deficit increased substantially in 1974-75. When instead, the government recorded a budget surplus. Actually, and I quote from the 1975 budget papers, the 1974-75 budget had a deficit of $2.57 billion. In today’s terms, that does not sound much, but it was equivalent to 4.3 per cent of that year’s GDP.
<br /><br />
Today such a deficit would be around $65 billion. Fancy, that, much like the deficits that Gillard and her treasurer Wayne Swan, who Koukoulas used to, ahem, advise, have presided over. And they’ve done it every year. Back in 1974-75 though, the Whitlam budget lifted government spending by an almost incomprehensible 45.8 per cent in a single year. Koukoulas claimed it was “only” 39.6 per cent.
<br /><br />
Showing just how clueless he is, Koukoulas ridiculed the difference between your reference to the increase being almost 50 per cent and his “correct” figure for the increase, as – “worth around $36 billion in a single year”.
<br /><br />
Being completely unaware that his 39.6 per cent would be like lifting budget spending now by a mind-numbing $140 billion or so in a single year. Something I think that even the team of Koukoulas, Swan and Gillard would draw some breath at.
<br /><br />
Koukoulas’ mistake was the simple one of someone that understands little of budgets and even less of history. He’s just taken his numbers out of the current budget papers. These are a reconstruction of the real numbers, to try to put them on the same basis as the way the modern numbers are done. To my mind, the real numbers are, well, the real numbers, and are as I and you have stated.
<br /><br />
Koukoulas exposes himself by making a snide reference to the author of the source you quoted. W.E. (Bill) Norton was a distinguished head of the Reserve Bank’s research department – an economist who actually knew what he was talking and writing about. Unlike your unfortunate correspondent.
<br /><br />
Terry McCrann
<br /><br />
News Ltd</i>Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.comtag:blogger.com,1999:blog-4335184898281636892.post-20670711425695980752012-11-13T06:37:00.001+11:002012-11-13T06:48:57.506+11:00New interview with Sky Business TVWatch this...
<br /><br />
<script src="http://player.ooyala.com/player.js?height=262&embedCode=IzdnVvNjrbT_sDqHR2HTpj--I5A-2x-U&width=350&video_pcode=xoNW06r3VjwkyJ26TaujFdiKxcp1&deepLinkEmbedCode=IzdnVvNjrbT_sDqHR2HTpj--I5A-2x-U"></script><br />
<br />Christopher Joyehttp://www.blogger.com/profile/17179888415347516976noreply@blogger.com