Why we should get rid of negative gearing in Australia.

I am a convert to not allowing negative gearing in Australia.

Firstly and most importantly if a person has a property for example and the interest bill on their loan is greater than the rent they are getting then ip so facto they are NOT investors but SPECULATORS. They are only interested in future direction of their capital price ( which they think can only go up).They are NOT interested on the return on their investment

It follows that such people are never worried about the quality of the property they own since the return they are getting on their money is not the reason they bought the property.

It also means Central Bankers  sweat on property prices not falling because if they do these 'investors' will sell their properties post hast which would exacerbate any business cycle. As we saw in the USA if the housing industry is the culprit for a slowdown even a recession then the recovery will be muted!! ( Lower interest rates cannot stimulate the housing industry is such circumstances.)

Negative gearing is  favoured  by people of high net worth to both reduce their tax bills and increase their property portfolios. Peter Martin has shown that millionaires pay no tax because of this. They are the tax nots???

If negative gearing is such a great policy then why don't companies do it? Well because they invest they do not speculate.

However we should also be aware that negative gearing only become a 'problem from when Howard halved the capital gains tax.

Given all this I would be in favour of abolishing negative gearing. Allowing interest as a tax deduction on positive gearing would still be okay . In this way we can encourage investment and discourage speculation.

A few random thoughts on 'Christianity' in Australia

There have been a few things in the news about Christianity so let us look at a few of them.

Royal Commission
Roger Herft at present the Anglican Archbishop of Perth and previously bishop of Newcastle was cross examined about what occurred in the diocese concerning child abuse.  I was not in the least surprised of his fiddling whilst Rome burnt. He is a prime example of an Anglican Archbishop who is not a christian. Like his predecessor in Perth he is not really a supporter of Christ been punished for mankind on the cross nor does he believe in the resurrection.
He is in trouble because like Peter Hollingsworth he did not act as a christian when faced with grave charges.  George Browning another Anglican bishop thought nothing of admitting to adultery. It was not that bad he only did it once!

A pity it  goes completely against biblical principles. The pastoral letters shows god holds pastors etc to a much higher standard then other people.
In all these cases the persons concerned should have resigned immediately after the offence was done. If not they should have been sacked. They could continue to be in church IF they confessed their sins but never in any office.

the Australian Christian Lobby
The ACL  should be an organisation which is rich in christian principles. To my mind the men who have headed this organisation have never shown to be  Their campaign in the same sex marriage debate has been quite poor.
compare the present head performance with for example the-extremely-impressive-katy-faust.

Ask Peter Jensen if he is available to head the organisation. He is quite presentable and highly biblically  literate as most sydney anglicans are

Bill Shorten

Bill got caught yesterday by Ian Powell about his comments on the same sex debate. Ian Powell is a 'refugee' from Sydney where the evangelical view is dominant.  Not a good look Bill!

A few random thoughts on politics here

First I think I should fess up to saying I am finding it very hard to write anything on Mondays. Perhaps it is because I am too bored. I can't even be bothered writing about wonderful examples of stupidity at Catallaxy from Katesy or The Peroxide Princess and this is dead easy and takes little time. Things may change. Who knows

Now onto politics.

Northern Territory election
I suspect if was was mad enough to live in the Northern Territory then I would have voted for the CLP. Not because I would have supported them. They were the worst happless water buffaloes ( to use a Roy and HGism)  I have perhaps ever seen. No the reason is it is not good for a major party to be so comprehensively thrashed. We saw it here in NSW and it wasn't good for Government. It is laughable to believe the Four Corners episode had any influence in the result. Since when did people ever give aq damn about anyone in gaol?  The problems the program showed were the result of both the CLP and the ALP as the program showed!

Malcolm Turnbull
Turnbull has shown during the election and since the result he possess poor judgement. the Liberals and Nationals should thank him for winning the election because if Abbott had still been PM they would have been decimated. Moreover since the election he and the government have been reacting to events not giving any lead at all. If the Gillard experience showed us anything it is that people want Governments to lead even when they deny them the means to do that!
I suspect Turnbull will lose the leadership as the polls show he is no longer an election winner, Although I would love Abbott to make a comeback I very much doubt the Liberals are that stupid.
It is anyone's guess who will succeed Abbott. There is no obvious candidate

Bill Shorten
It is remarkable how quickly shorten has changed. He is now a very confident leader. He believes he will win the nest election..He is denying the government the means to a plebiscite making the same sex marriage a constant wound in the government. He is offering the government the means to make budget savings but showing up their duplicity on the matter. He knows no matter how silly the ALP behaves the government will cop the flak.
I am unsure whether he actually sees any medium term problems. Abbott didn't and it sunk him in government. He needs to think about how he MIGHT govern  in the future. 'Good'Short term politics sometimes means very bad medium term politics

NSW
Baird has eventually succumbed to bad polls.( This is only one poll and it could well be a rogue .We simply do not know.) We don't know why but we do know it was do to with the Greyhounds ban nor the Lockout laws. Thus it seems the changes to councils and even the inability to sell the poles ans wires must the the main reasons behind the decline together with the opposition doing its job pretty well. I have previously said Baird is not good under pressure as he has had little experience with it. He may well end up changing and as good at behaving under pressure as Bob Carr however I doubt it.
Victoria
I am staggered by the utter incompetence of Daniel Andrews. He ensured a liberal victory in the Federal election courtesy of his behaviour with the CFA. He does seem the epitome of a thoroughly modern politically correct leader these days. It could laso show how cautious people should be in getting rid of a one term Government. Oppositions are rarely ready to govern. It is becoming apparent the current Victorian Government was not ready at all.

The Byrds

How can one like the bible being pit into song by Pete Seeger!! He must have had the wisdom of Soloman!! The best thing done by the Byrds.

Turn, Turn ,Turn

Around the Traps 27/8/16

It is time for Around the Traps again.

Aussie,Aussie,Aussie,Oy,Oy,Oy

• Johan Lidberg on offshore-detention-australians-have-a-right-to-know-what-is-done-in-their-name
• Philip Zilstra on new-modelling-on-bushfires-shows-how-they-really-burn-through-an-area
• Ross Gittins on time-for-new-thinking-on-reforms-to-encourage-growth , we-shouldnt-feel-bad-about-leaving-debt-to-our-kids
• The Kouk on poor-economic-data-is-bad-news-for-australia , inequality-the-facts-and-the-future , aussie
• John Quiggin on abandon-inflation-targeting-while-we-still-have-time , /nitpicking-on-nominal-gdp-targeting
• Nicholas Fuller on science-or-snake-oil-is-a2-milk-better-for-you-than-regular-cows-milk
• Greg Jericho on why-unemployment-is-no-longer-the-best-indicator-of-the-economys-health , the-new-normal-why-we-need-to-shake-up-economic-policy
• Croaking Cassandra on the-governor-has-form
• Ross Guest on explainer-why-some-economists-think-the-rba-should-drop-its-inflation-target
• Eliana Maddock on poor-and-rich-retirees-spend-about-the-same
• Roger Lennane on Australia-writes-itself-out-of-nuclear-disarmament-dipl
• John Daley and Brendan Coates on a-super-test-for-australias-political-system
• Peter Martin on xenophon-axe-inflation-target , whats-wrong-with-reserve-bank-target
• Julian Teicher on turnbull-steps-in-as-promised-but-dont-expect-a-swift-end-to-firefighter-dispute
• Saul Eslake on scott-morrison-has-correctly-diagnosed-the-problem-but-needs-to-be-flexible-about-solutions
• Rebecca Reeve and Kristy Muir on two-million-aussies-are-experiencing-high-financial-stress
• Harry Clarke on thoughts-on-australian-company-tax-reform

Northern America

• New deal democrat on real-aggregate-wage-growth-august-2016-update
• Brad De Long on macroeconomic-policy-reform-a-tentative-agenda
• Mike Kimel on explaining-trumps-appeal-part-3
• Menzie Chinn on guest-contribution-trumps-fiscal-brainstorm-cut-taxes-for-the-rich
• Emma Connors on Roger-Ailes-and-the-dark-arts
• progrowth liberal on the-infrastructure-investment-debate
• Edward Lambert on predict-inflation
• Timothy Taylor on how-much-slack-is-left-in-us-labor-market , fed-policy-negative-rates-neo-fisherian-or-no-change-at-all
• Narayana Kocherlakota on the-fed-knows-how-to-hit-its-target Thanks Mark
• James Bullaed on st-louis-fed-new-approach-near-term-projections Thanks Mark
• Joseph Cammilleri on adrift-in-a-sea-of-violence-obamas-legacy-and-the-prospect-of-a-trump-or-clinton-presidency
• Kruggers on on-fed-complacency
• David Andolfatto on jackson-hole-and-fed-communication

Europe

• Simon Wren-Lewis on brexit-economists-and-journalists , new-labour-and-neoliberalism , minority-rule-migration-brexit-and-mandates , why-corbyns-brexit-campaign-matters , why-we-must-have-second-referendum
• Chris Bertram on why-it-is-not-unfair-to-think-of-nearly-all-brexiteers-as-racists
• Chris Dillow on truthful-lies
• Brad Setser on germany-is-running-a-fiscal-surplus-in-2016-after-all Thanks Mark
• Kruggers on germanys-drag

Asia

• David Brewster on India-plays-the-Balochistan-card-with-China
• Roger Shanahan on Syria-Pity-the-children
• Stephen Grenville on Japans-economy-travels-a-narrow-road
• Brad Setser on imf-cannot-quit-fiscal-consolidation-in-asian-surplus-countries Thanks Brad
• Ken Silverstein on stolen-war-in-Iraq-and-the-rise-of-ISIS
• Crispin Rovere on A-review-of-RAND-Corporations-War-with-China-Thinking-Through-the-Unthinkable
• Menzie Chinn on interpeting-performance-japan-since-2012
• Susanne Schmeidl on Afghans-are-running-out-of-places-to-hide
• John Lee on Floating-nuclear-plants-and-safety-zones-another-looming-problem-in-the-South-China-Sea

Wonk

• Menzie Chinn on too-systemic-to-fail
• Noah Smith on free-market-ideology-reply-to-some , data-geeks-are-taking-over-economics
• Coppolla comment  on the-art-of-economics , no-please-dont-show-me-your-model , the-art-of-economics_21 , maslows-hierarchy-of-money
• Timothy Taylor on automation-and-job-loss-leontief-in-1982 , the-allure-of-catastrophe-bonds
• Chris Dillow on capitalism-neoliberalism-excellence , bonuses-here-to-stay
• Mike Callaghan on Report-shows-IMF-in-need-of-reform
• Kruggers on the-folly-of-prudence-imf-edition
• Cecchetti and Schoenholtz on negative-nominal-interest-rates-again Thanks Mark 
• David Halpern on its-time-to-bring-more-realistic-models-of-human-behaviour-into-economic-policy-and-regulation Thanks Mark
• Eric Lonergan on institutions-matter , there-is-no-shortage-of-safe-assets-a-short-proof
• David Gruen on The-global-trade-slowdown-What-can-be-done
• Nick Rowe on alpha-banks-beta-banks-and-negative-rates
• Brad De Long on why-do-we-talk-about-helicopter-money
• Nick Gruen on imf-researchers-on-inequality-on-social-capital
• Gasbriel Chodorow-Reich and Johannes Wieland on secular_labor_reallocation  Thanks Brad

General

• Millicent Weber on a-fortune-built-on-slavery-the-bright-family-papers-and-their-journey-from-uk-to-melbourne
• Nick Gruen on in-praise-of-blogging-hoist-from-2009-archives
• Econfix on football-salaries-superstar-and-tournament-effects  Thanks Jim Rose
• Tim Harford on does-hosting-the-olympics-make-us-happier
• Jonti Horner and  Tanya Hill on say-hello-to-the-earths-nearest-exoplanet-neighbour-proxima-centauri-b
• Lord Keynes on some-reading-on-what-went-wrong-with-the-modern-left
• Claire Roberts on why-males-are-more-likely-to-die-from-conception-to-old-age
• Scepticlawyer on the-hugo-awards-and-the-decay-of-western-civilisation

Climate

• Stephen Knight-Lenihan on new-zealand-is-letting-economics-rule-its-environmental-policies
• Variable Variablity on naive-empiricism-and-what-theory-suggests-about-errors-in-obsereved-global-warming
• moyhu on progress-toward-record-hot-2016
• and Then Theres Physics on saving-science , science-communication-3
• Critical Angle on on-and-against-method-and-process
• Ed Hawkins on predicting-an-ice-free-arctic-summer
• Roger Jones on discussion-paper-for-open-review
• Eelco Rohling on without-a-longer-term-view-the-paris-agreement-will-lock-in-warming-for-centuries
• Various on the-industrial-revolution-kick-started-global-warming-much-earlier-than-we-realised
• Hotwhopper on time-to-look-at-arctic-sea-ice-2016
• Arctic sea ice blog on asi-2016-update-6-hell-and-high-pressure
• David Stern on corrections-to-global-temperature-record
• John Abraham on global-warming-melting-greenland-fast

Andrew Gelman ( mainly stats)

• kaiser-fung-on-the-ethics-of-data-analysis
• bayesian-inference-completely-solves-the-multiple-comparisons-problem
• evil collaboration between Medtronic and FDA
• balancing-bias-and-variance-in-the-design-of-behavioral-studies-the-importance-of-careful-measurement-in-randomized-experiments
• normal distribution
• balancing-bias-and-variance-in-the-design-of-behavioral-studies-the-importance-of-careful-measurement-in-randomized-experiments
• US Politics stats
• better-to-just-not-see-the-sausage-get-made
• Kaiser Fung on gmo-labeling-is-good-science , quote-of-the-month

Genial Dave Giles (econometrics)

• No Hesitations on more-on-big-data-and-mixed-frequencies

Dianne Coyle (quirky + book reviews)

• wandering-around-looking-at-people , the-imagined-north , a-rant-about-markets

Vox wonk

• human-development-inequality-and-long-working-hours
• unity-diversity-way-forward-europe
• how-domestic-trade-frictions-shape-welfare-gains
• financial-market-development-economic-development
• lessons-inequality-labour-markets-and-conflict-gilded-age
• financial-market-development-economic-development
• precision-versus-bias-multiple-choice-exams
• fed-and-lehman-brothers
• smoothing-economic-shocks-eurozone-untapped-potential-financial-union
• newspapers-times-low-advertising-revenues-towards-decline-quality-information-media-outlet-level
• investor-beliefs-and-stock-market-outcomes-emerging-economies
• brexit-and-other-harbingers-return-dangers-1930s
• economic-growth-stagnating-median-incomes-new-analysis
• hidden-productivity-benefits-energy-saving-technology

Getting the budget back to balance

We have a lot of hoo ha ( a technical term) from both parties of how to get the budget back to balance.
ONE problem we are being mightily misled.As Ross Gittins points out the government is covering its recurrent expenses. The reason the budget is in deficit is infrastructure spending.

Now a concerted attempt to get the budget back to balance when it is currently estimated to be 2.2% of GDP has three problems.

The first problem is the contractionary effects it would have on the economy.  I have written about this recently here and here. I suspect that is why all treasurers have been very tentative in their budget consolidation efforts.

The second problem is that infrastructure spending would normally boost the supply side of the economy as Glenn Stevens alludes to in his last speech.  See here for an old paper on how this occurs from the US Treasury.

The third problem is you are cutting programs not associated with the structural problems of the budget. The problems of the structural deficit are all on the revenue side. ( see first here link for that.)

Unfortunately we have politicians on both sides who either do not know what they are talking about or are simply talking porkies.
It is unlikely we will in the foreseeable future so budget repair must be slow but sure otherwise it will be counterproductive. see booming conditions.

update:

I have been asked if the government and opposition are fair dinkum in their efforts at budget repair.

No as I implied neither side is. If the Government was they would have had a meeting with Shorten, Bowen and Chalmers and come to an agreement on what to do instead we first of all had Turnbull saying by megaphone he wanted an agreement with the ALP/ He wasn't serious and we have seen this ever since Turnbull's speech. The government minsters have been politiking and it was easy to spot. ( Thus it was poor politi. king alah Abbott)  The Oppostion then responded  in kind . Our political classes are not of a high order

Castle: The end of the series

Castle ended some time ago and I have yet to comment on it.

That the series ended was not unexpected. It had been in terminal decline since the second half of season 6.
Why was this?
There was no attempt at continuity in the series. Beckett for example did go the prom in season one but didn't in season 6. Lanie hated her mother in season 3 yet did everything to appease her in season 7. Beckett was a model at 17 in season 2 but at 19 in season 6.

There was no research done on anything.Consequently we had Beckett being offered a job on national security despite being suspended for a lengthy time of gong rogue less than a year before this. Beckett becomes a captain after being only a detective. Castle is seen by two police officers attempting to kill 3XK yet is not even arrested!

Possibly the biggest thing however was here we were supposed to have a long flowing love story yet at no time did Castle or Beckett ever share anything in life, no decisions were ever made together and they never ever discussed  major mistakes  in life.

That such a once great series ended ingloriously is a tragedy.