Categories: It's the economy, stupid!

14 Feb 2010, Comments (12)

How do you Sleep while your Butts are Burning?

Author: Helen

Yes, I’m looking at the Australian Liberal party, who have gleefully piled onto Peter Garrett and called for his resignation over the Insulation scheme debacle (which is predictably being called Insulationgate), but don’t seem to know that their arses are on fire.

Now, sure, I’m predisposed to like the guy. But let it be known I’m not particularly keen to fight Garrett’s corner as a minister in the Labor government. I’m the Voter who Cannot Love*, after all. He, like Julia, has broken my heart over environmental and Arts policies. No, I don’t think parachute-in celebrity politicians are necessarily a good thing, and I also think he’s overfaced. He was given too much responsibility, too quickly. The fact that every right wing hack was automatically programmed to hate him was just icing on the cake.

Should he move aside into a less demanding portfolio to gain more experience? Should he sit down and have a big think about whether the realpolitik of the Labor tent has negated his entire life’s work on environmental issues? Yes and yes. Should he stand aside because his position has become completely untenable and he’s electoral poison? Or because, in some quaint and symbolic way, in the Westminster system a Minister is required to fall on his or her sword for the actions of other people? Probably. But should he stand aside, or be sacked, because he bears some kind of moral responsibility for the four workplace deaths that have happened since the inception of the insulation scheme? That is such a pack of horse hockey I’m unable to contain my rage.

Gosh, it’s touching that the Liberal party has suddenly discovered workplace deaths in the building industry. When they were in power, those despised Unions were constantly trying to tell them. About forty people a year, more or less, die in Australia every year. Are the other thirty-six people who died in Australia in the last year chopped liver, just because they don’t come with a Ministerial scalp? I don’t hear any outrage in doorstop interviews about them.

The four people (some of them boys) died for the usual reason: because their employers ignored occupational health and safety practice (as well as ordinary common sense). The employer of the worker who died in October could possibly claim ignorance about the metal fasteners used with metal foil insulation close to wiring. The others couldn’t, because Garrett didn’t do nothing: he moved to ban the fasteners in November. Two more workers died as a direct result of the employer ignoring a new regulation which Garrett himself had put in place, as well as one from heat stroke, again the employer’s responsibility. To quote one commenter, the responsibility to run a safe workplace lies with the employers.

Now we have the Liberals shouting that Peter Garrett should have micromanaged the scheme to the point of overseeing every employer, perhaps, I don’t know, climbing into every roof space himself. This is the same Liberal party mainly composed of people who see every government regulation as a slippery slope to socialism. This is the Liberal party whose constituency is business groups which oppose industry regulation as “anti-business”.

These are the people who claim to espouse a doctrine of individual responsibility, but because it suits them at the moment, they’re willing to abandon that. “If you don’t like my principles, I have others”, I guess? See Also, the invisible hand of the Market sorting things out? When push comes to shove, this incident has shown that they really know it’s a crock.

So, Libs, if you want to claim your prize Ministerial Scalp at the prize desk, I think you should have to fess up that the despised unions were right all along and that government oversight of private industry is totes necessary (and that at the moment you’re calling for government micromanagement on a scale hardly known except in command economies). Also, that conservatives are for Individual Responsibility, except where you can blame something on someone you don’t like.

Also, that your arses are on fire.
 
 
 
 
*Just like Chilly, the Elf who Cannot Love.

20 Sep 2009, Comments (12)

What Mr Bucket did next

Author: Helen

As of Monday after next, SO no longer has a job.

He hasn’t been a casualty of the financial crisis. He no longer has a job because things are going so well. Mr Bucket sales are through the roof and he can’t keep up.

You’ll remember that Mr Bucket started Going Off back in March. I forgot to blog about the Rose Street Market fashion-show-with-models for L’Oreal Fashion Week. Which was a whole lot of fun – see the ultra-professional Bucket segment here. Ahem.

He’s started running the stall on St Kilda Esplanade on Sundays and has been included in this book.

Wolf at the Door, a new place in Hepburn Springs, bought a fuckton of T shirts and were sold out by the weekend after that. He also had a writeup in Men’s Style mag – no link for that.

Week after next Mr Bucket moves into his new studio in an old factory in Brooklyn, next to an artisan associated with the Wolf at the Door, who runs a bronze casting foundry.

Oh, and he has bought this thing, which is really cute, but the exciting part for me is that our family mitsu-bashi isn’t the Bucket car any more and I get to do things on weekends like a normal person!

So, life is set to change. It seems all go for the Buckets and unusual and exciting things are happening all the time. SO has his books all in order and is doing his own super and insurance and everything properly. I’ll be looking at the Dow and the Futsi and the All Ordinaries with more than usual anxiety in the next twelve months and hoping we don’t have this W-shaped recession that some party poopers are talking about.

Excuse me while I just go and hyperventilate into this brown paper bag.

11 May 2009, Comments (9)

TAX SLUG!!!1!

Author: Helen

It always appears when a Federal or State budget night is – to use the MSM’s current fave word du jour – looming.

I saw it as I was coming out of the turnstiles at Parliament station. The poster for the Herald Sun: TAX SLUG BEER CIGS. Oh. Budget time.

This ghastly gastropod has terrorised the Australian scene for decades. My extensive research (i.e. Wikipedia) has eliminated the common slug, banana slug or even the Red Triangle slug (found in Melbourne snooker halls?) No, this is more of your gigantic mutant movie monster, like the Slugs that Ate Canberra.

The Hun obviously doesn’t approve of the Tax Slug and seems to be urging the citizens of Australia, as in any good B-movie, to band together to fight this mucous menace. Here is how a Hun journo and Aghast of Mt Martha see the Tax Slug:

The Tax Slug: Eating all your money!!1!1

However! We of the social democratic persuasion see the Tax Slug in a more glass-half-full way:

The Tax Slug, the social democratic view

Something I forgot to add when I photoshopped this Tax Slug… We can haz Paid Parental leave? I hear a weak cry of “yes”. But not until 2011, apparently. Bummer.

Some people of a needlessly literal and nitpicking type might drop in at this point to inform me that Slug is used here in the sense of a Tax Hit, as in taking a hit, possibly from the German schlage? Well, I refuse to believe that, that’s all. Not only have I forked out all that money for a mucus-proof suit and slug gun, but that would require me to believe that all these journos all over Australia, people who are paid to write, just keep recycling and recycling a piece of slang that was out of date when my mum was a girl. Say it isn’t so!

16 Apr 2009, Comments (5)

This has left me with a bad taste in my mouth

Author: Helen

Across the US, tens..er…of thousands of republican voters have been participating in “Tea Party” protests, because Boston Tea Party and taxes are bad. Just think of your primary school American history and join the dots. (April 15 is the deadline for tax returns in the US.)

Unfortunately, Fox News and the right-wing astroturf organisations which promoted the Tea Parties have decided to try to be all colloquial an’ appeal to the younger generation an’ stuff, so they have referred to themselves as “Teabaggers” and the protests as “Teabagging”.

Much hilarity has ensued.

P.S. Just for comparison, now that you’ve probably seen these entitled babies on the news making fools of themselves, you might be interested in a real (non-astroturf) protest, at real risk to themselves, by genuinely courageous people who deserve our support.

14 Apr 2009, Comments (32)

The Home ATM is out of order #2: Thinking about schools

Author: Helen

So, to revisit my “Home ATM is out of order” post, I think that while subprime mortgages have been getting a lot of attention with regard to the Great Financial Crisis, the problem we have here in Oz is more to do with all debt and how our whole economy has become dependent on spending more than we earn. Mining home mortgages for their equity, because house prices always rise, don’t they? has been a very popular way to do this for people who are relatively well-paid and settled, but it can’t go on forever. What happens when it stops?

Where did those home equity loans and lines of credit go? Irvine Renter points out that the situation went really toxic when people realised that they could take out money, not just for renovations – which would then increase the house’s value – but for consumer spending. Boats, cars, holidays, that kind of thing. But I can see that many people who would balk at spending on these kinds of things might consider using their home equity for something they consider more important, more reasonable, more of an investment.

Back in the Australian context, I’m wondering how many households have been mining their home equity for education.

(more…)

11 Apr 2009, Comments (12)

If you thought we were over the idea of women as tradeable commodities in the “developed” countries

Author: Helen

You might like to read the first paragraphs and second page of this Bloomberg article.

(Although I have zero sympathy for any of the protagonists in this story, to most of us, “£1.17 million” =/= “broke”.)

21 Dec 2008, Comments (2)

The Home ATM is out of order. We regret any inconvenience this may cause.

Author: Helen

Image from http://www.hhmi.org/bulletin/feb2008/chronicle/cards.html

I’ve been musing a lot lately on our financial situation, and everyone else’s, and I thought I’d write about it without a licence. No, no economics degree, no MBA, not even bookkeeping in secondary school. Whooee! I’m living dangerously.

I don’t think Rudd’s “fiscal stimulus” is going to do much to save us all from a recession. Why? Because although we’ve had the resources boom, I think a lot of our economic “growth” has been due to demand created by people spending more than they earn, and doing it for a long, long time. I think it’s unsustainable and will inevitably have to stop, and I’m no Robinson Crusoe there. We’ve heard a lot about people who have credit cards stacked on top of other credit cards and who end up declaring bankruptcy. I think that from now on we’ll hear a lot more about the other story, people pulling money out of their houses for consumption spending.

Like me, you might be watching the price collapses and home defaults in the US and thinking “is it going to be just as bad here?” Many well-informed people think it won’t. It’s scary, though, to see so many people lose their homes there.

Of course, the flip side is that houses might become more affordable. If, that is, people still have jobs and credit to buy them with.

In the last few months I’ve been following this blog, which tracks house sales in the Irvine district of Orange County (yes, that’s “the OC”), California. Unlike the stratospherically rich suburb in the TV series, this is a place roughly similar to – I’d say – Malvern or Brighton in Melbourne. So, much more upmarket than where I live. It may not sound like fascinating reading, but in California, it’s somehow possible to obtain and publish details of the house’s financial history as well as the number of granite counter tops. The lessons to be learned are salutary.

I like the Irvine Renter’s blog concept, in which he ties each post to a song with a Youtube link, although I don’t always agree with his song picks!

One of the central themes of the Irvine Housing blog is HELOC abuse. A HELOC is a Housing equity Line of Credit. Long story short, it is borrowing money against the equity in your house, supposedly for improvements to that house which then increase the value. But in the last few years homebuyers, thinking house prices would rise forever, have been taking out one HELOC after another to support their consumer spending – cars, holidays, boats, that sort of thing. Some people are even using it as income. IR calls it the “Home ATM”, because they’re treating their house like an ATM that gives out free money.

We do this too here in Australia, we just call it a home equity loan or refinancing, and there’s a scary looking thing called a Viridian Line of Credit, which seems very much like a HELOC to me. Sometimes, financial advisers encourage people to roll their credit card debt into their house loan, because of the lower rate of interest. It seems to me that that’s not an easy way out, because unless you cut up your card after that (or become the perfectly responsible pay-off-every-month customer, which probably wasn’t happening before) you’ll just keep on increasing your mortgage faster than you pay it.

As Irvine Renter points out, this was all fine when everyone thought house prices would never fall. But now that they are, some people end up owing more than the house is worth. “Negative equity”, they call it here. Irvine Renter calls it being “underwater”. He calls the desire to spend your house “the Kool-Aid”, because it seems so simple and tempting.

We were tempted to sip from the Kool-Aid in 2001, when the presence of a second child (one more than available bedrooms), plus wiring and plumbing that had reached its use-by date, coupled with a loan that was laughably titchy in today’s terms (55,000) made us decide to get the place in order. I don’t regret that, because if I do the maths I can tell we’re unlikely to end up underwater. And I really don’t want to live with wiring that’s going to kill us.

But we’ve survived that because we’ve paid it down since then. The people featured in the IR blog have been increasing their house debt year by year. Back when we borrowed to renovate, everyone was madly sanguine about what a massive price we’d get for the house if we ever sold, but we like living here. We didn’t renovate it to flip it – we did it to live in ourselves. Thank the FSM we didn’t get a taste for the Kool-aid and start using the home equity to pay for a big shiny SUV, holidays, furniture and consumer gadgets.

An important difference between Australia and the US is that over there the homebuyers can choose to walk away from the whole mess and the bad debt is taken over by the bank. The homebuyers’ credit rating is up the creek, but they don’t get chased for the balance of the loan. In Australia, we do.

It’s going to take more than the injection of a couple of thousand per selected household to kickstart an economy if that economy is dependent on people spending more than they earn. Once the homeowners have to stop using the home ATM, the music really will stop for some. That’s going to mean a lot of pain for people who make stuff and sell stuff and provide services. More thoughts on that later.

H/T Belle (this is becoming a habit, isn’t it?)

12 Oct 2008, Comments (3)

Man-Bites-Dog story

Author: Helen

Treebeard the Ent

This is delicious: FORESTS might help to destroy Gunns Ltd’s latest old growth-chomping project.

Frankable Optionally Redeemable Equity Settleable Transferable Securities, that is.

No, this is not a joke. Surely a box of Monte Christo cigars will have been bestowed upon the banker who dreamt up this acronym.
Anyway, Gunns is looking to wrap up its $430 million capital raising by early October, before the interest rate on its Forests resets on October 14 to an expensive 12.5%…

October 14, eh? Tick, tick tick…

Of course, it’s more fun to imagine Treebeard storming into the Gunns Ltd boardroom, bearing two tonnes of old growth woodchips, all of which he forces John Gay to eat. With milk but no sugar.

19 Sep 2008, Comments (6)

Friday Earworm

Author: Helen

It’s been one hell of a week. It seems natural that this song has been following me around.



This old town is filled with sin,
It’ll swallow you in
If you’ve got some money to burn.
Take it home right away,
You’ve got three years to pay
But Satan is waiting his turn

This old earthquake’s gonna leave me in the poor house
It seems like this whole town’s insane
On the thirty-first floor your gold plated door
Won’t keep out the Lord’s burning rain.

Here’s the original version.

15 Sep 2008, Comments (5)

Bullshit generates Methane

Author: Helen

You’re all familiar with the populist narrative that greenies and lefties are all out-of-touch elites who like to “sneer at” ordinary (suburban, small-town) people. (Current example: the Sarah Palin campaign vs. the elitist, arugula latte-drinking Obama). It’s so popular in Australia at the moment, you can hardly open a newspaper without being scolded for daring to suggest that the way we build our cities, and travel around them, could possibly be improved. Public transport is a concern for upper middle-class wankers; Real people love their cars so much, they don’t care that they’re trapped into using them. As for the price of fuel, well, er… something will come along, don’t worry.

As for not building great swathes of housing development, inappropriately sited, overlarge, artificially cooled and out of reach of train or tram lines, that’s just those greeny lefty elites forcing their elitist concerns on the Real People again. Real People want big houses and they want them to look Tuscan and have no eaves and anyone who wants to take that dream away from them is just an over-educated latte-sipping poopyhead. Development good, conservation – and re-thinking our ways of building and getting around – bad.

This view is as popular in Labor and certain self-identified “left” groups as it is in Liberal and right-leaning groups.

I do wonder whether the deep and abiding love for Tuscan-style villas built to the fenceline isn’t the product of lavish and expertly targeted marketing rather than something deep in the Australian soul, and such marketing couldn’t have created an equally enthusiastic market for more appropriate housing, but that’s a discussion for another day.

Last week, an entire suburb was evacuated because the developer had built on land next to a landfill containing methane gas. The developer chose to build on the land to make money, and probably got the land at a bargain price because of the proximity to landfill. The council which owned and operated the landfill first opposed building so close to the area, as did the toothless Environment Protection Authority, but the developer went to VCAT. The bureaucrats at VCAT overturned the opposition and now we have a complete dog’s breakfast out at Cranbourne. None of these entities are from the greenie left. They represent the “hooray, development!” mentality.

This is a disaster. Without warning, these people have had to pack up their houses and find accommodation for themselves and their young children for an indeterminate period. If and when they’re allowed to return, their houses may be worthless. Many of them are walking a financial tightrope already and this will send them to the wall.

Cranbourne and Casey have been a byword for urban sprawl for years. We’ve had item after news item about the lack of infrastructure, social isolation and car dependence, debt, poverty and disadvantage. It’s time the boosters of road-based suburban sprawl admitted the problems with this social model. The methane problem is acute, but the problems of this area are chronic.

I wonder how deeply these non-elitist, non-green, pro-development business suits and bureaucrats care about the people in that suburb. Let’s call this Roveian anti-elitism for what it is: an excuse for governments to neglect infrastructure and due process and private companies to extract maximum profits from the “ordinary Australians” they’re supposed to represent, and then move on. They are the out of touch elites.
 
 
 
Crossposted at Road to Surfdom

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