Not Trampis: May 2014

You can always tell when a government is under pressure. They make stupid decisions in Parliament and yesterday the government was in their top stupid form.

We have shown before how stupid Bronwyn Bishop is as speaker. She actually suspended an ALP member for LAUGHING!

Yesterday the government made the decision to have Christopher Pyne defend the Speaker.Given most people view Pyne as a pretentious prat ( Liberal 'qualitative polling is similar to the ALP's) the ALP could not believe the luck they had. Bishop held a Liberal function in the Speaker's offices. The only other Speaker to do that was 'Leaping' Leo McCleay.

I had previously thought no-one could come near to McCleay as the worst speaker of our lifetime. I was wrong Bishop is right up there with him. Her snide comments make her look quite weak and it is strange to see her 'taking orders' from Pyne when Hockey gave his budget speech.

Bishop has two big problems. She is quite unattractive and quite stupid. In this regard the ALP only have to let her do the job she is doing and the government looks bad each time they see Bishop in action.

It only gets worse when she makes a token suspension to a Government member for doing nothing very much at all.
Bishop therefore is an asset to the ALP that simply keeping on giving.The ALP can only hope Pyne attempts to help Bishop more often.

Tony Abbott is trapped. He cannot get rid of Bishop despite her disastrous impact for the Government.

I should have added the previous speakers we have seen i.e Jenkins, slipper and Burke have been quite good!

I have been asked who should the government use in Parliament if not Pyne. Easy peezy Turnbull!

Monday, 26 May 2014

Bill Shorten, most successful Opposition Leader yet thus far?

On the only metric that matters for politicians polling, Bill Shorten the Opposition Leader is easily the most successful Opposition leader we have seen in Australia.

He is currently facing a Government which has only just come into office. This is traditionally the worst time to be an Opposition leader. Indeed many fail and are tossed out by their party however the current Government is the only Government since polling began not to experience a honeymoon period.
Moreover this has gotten worse in recent weeks.

It doesn't matter what poll you examine the ALP would win if there was a general election.
All this doesn't mean the ALP will win the next election as most people would still have the government as clear favourites given Australians rarely toss out a first term Government however we must acknowledge Bill Shorten has performed much better than most people thought he would have.
One might say the problems are mostly of the government's making. That could be so BUT for the ALP to be riding high in the polls after the recent change in government is quite extraordinary.

Sunday, 25 May 2014

Budget Blues continued

The Government really is suffering from the budget.
Why is this?

Well here is my five cents worth.

Before the election the now government essentially said it was all the ALP's fault because of reckless spending and when we are elected we will fix that. In other words we will cut spending and wella no budgetary problem. Reckless spending was never the problem and the Government has never really been able to spell out why the 'problem' is taking so long to fix
Allied to that they have an almost incoherent message on why the solving of the budget 'crisis' is taking so long. People think if there is a crisis you solve it quickly not slowly.
We also had the problem of the government doing things they previously castigated the previous government for. Class warfare on means testing for example.
There are very few people if any who understand fiscal policy who believe there is a budget and debt crisis.
PEFO hangs around their heads. They either understand it and are lying or didn't and are ignorant about simple fiscal policy.
The Government said everybody needed to take some pain to 'solve' the budget problem however the pain is highly inequitable as both NATSEM and Peter Whiteford have proved conclusively separably.
Neither Tony Abbott nor Joe Hockey are detail people and have made mistakes in their understanding of the budget.
All the easy cuts were done by the previous Government particularly in the last full Budget Wayne Swan brought down. So 'courageous' decisions had to be made. These need clear and unambiguous talking by the Government on the need for them. We did not get this.
What really topped the week off for the Government was the inability to acknowledge they clearly breached promises to the electorate. This made them look really quite foolish and shifty. As John Howard showed you can breach promises if you have a good reason. This government had NO good reason and they showed that when questioned on it.

Saturday, 24 May 2014

John Wiliams

Australia's own John Williams is possibly the greatest ever classical guitarist.

This is quite simply magic

Thursday, 22 May 2014

Around the Traps 23/5/14 Piketty Edition

It is time yet again for Around the Traps.

Piketty articles in bold. Many thanks to Mark Thoma for most of the articles.

A large Aussie section because of the Budget.

I have also just got onto Jim Rose's blog which is quite interesting.
both the wonk and vox wonk sections are quite large but great reading ( as are all)

Updates on Sunday
AVAGOODWEEKEND!!

Aussie,Aussie,Aussie,Oy,Oy,Oy

The Kouk on mr-hockey-s-beer-cigarettes-health-services-and-electricity, surprising-economic-news-necessitates-a-view-change
Don Arthur on humiliation-and-the-dole-a-forgotten-debate
Mumble on its_a_stinker, how_big_was_labor_spending, is_tony_disposable
Ross Gittins on less-to-budget-than-meets-the-eye, hockeys-budget-game-plan-favour-well-off, sleights-of-hand-in-hockeys-budget
Andreas Ortmann on Reading notes: Submissions to the ACNC Senate Inquiry
Andrew Elder on judged-on-performance, looking-for-second-chance
The Piping Shrike on budget-panto-goes-wrong
Antony Green on an-early-double-dissolution-dont-hold-your-breathe
Mark Banisch on Budget 2014-Its the unfairness stupid, Clive Palmer: Angling for a D/D election
Greg Jericho on questionable-budget-maths-politicians-agenda, aaa-credit-rating-fear-jump-shadows
Matt Cowgill on real-wages-and-productivity, cut-and-paste-3
Kevin Bonham on the-golden-age-of-studybludging
John Quiggin on if-it-looks-like-a-debt-walks-like-a-debt-and-quacks-like-a-debt
Jim Rose on can-new-zealand-blame-distance-for-its-economic-woes, can-new-zealand-blame-its-small-size-for-its-economic-woes
M0nty on peta-credlin-can-only-dream-of-dd , the-green-gold-lantern-theory-of-prime-ministership, in-defence-of-clivezone-populism
Steve from Brisbane on more-fun-and-games-in-defend-the-budget, a-friend-on-board

Northern America

Calculated Risk on quarterly-housing-starts-by-intent-and-compared-to- New home Sales, apartments-supply-and-demand
House of Debt on save-the-banks-save-the-economy thanks Mark
John Krainer on existing-home-sales-slowdown Thanks Mark
Mark Thoma gives us Tim Duy on fed-watch-dudley-revisits-exit-strategy
Edward Lambert on defending-higher-nominal-fed-rates-response-to-mr-thoma, projecting-a-possible-path-for-inflation-as-the-fed-rate-rises
Antonio Fatas on the-us-labor-market-is-not-working Thanks Mark
Robert Waldmann on waldmann-v-waldman
Livio De Matteo on is-health-care-reform-working

Europe

Simon Wren-Lewis on the-eurozone-recovery-and-household-savings
Kevin O'Rourke on why-vote-for-a-left-wing-party-so-they-can-implement-right-wing-policy
Mark Thoma gives us paul-krugman-crisis-of-the-eurocrats

Asia

Dan Crawford on chinas-trilemma-maneuvers

Wonk

Tony Yates on raising-the-inflation-target-great-idea-but-not-now Thanks Mark
Kruggers on interest-rates-and-inflation-and-evidence, is-piketty-all-wrong
Simon Wren-Lewis on keynesian-economics-works-eurozone-edition, how-to-avoid-austerity-mistake-next-time and see Simon Wren-Lewis on mistakes and Chrisd Dillow on housing-vs-financial-wealth, House of Debt on piketty-and-u-s-wealth-inequality, Johnathon Hopkins on debunking-debunking-of-piketty , Branco Milanvic on inequality, James Hamilton on criticisms-of-piketty
Brad De Long on weekend-reading-robert-skidelsky-review-of-thomas-piketty-capital-in-the-21st-century
Jim Rose on margaret-thatcher-hayek-friedman-margaret-thatcher-foundation, corporate-welfare-and-middle-class-welfare-defined, who-gains-from-anti-imperialism-and-opposition-to-foreign-investment
David Andolfatto on g-and-i-in-europe-and-japan Thanks Mark
House of Debt on debt-forgiveness-in-history Thanks Mark
David Wiczer on the-recessions-effect-on-job-churn Thanks Mark
Roger Farmer on animal-spirits-an-empirical-test Thanks Mark
Jeromie Cohen-Setton on blogs-review-benign-and-malign-deflation Thanks Mark
Nick Rowe on how-long-is-the-short-run
Cameron Murray on unique-economics-of-healthcare Thanks Mark
Menzie Chinn on guest-contribution-sovereign-to-sovereign-capital-flows
Steve Roth on (modern) monetarist thoughts on wealth and spending: Volume or Velocity
Mark Thoma on a-note-on-the-lender-of-last-resort
Chris Dillow on what-can-governments-do, immigration-the-preference-problem
David Glasner on never-reason-from-a-disequilibrium
Mark Thoma gives us James Galbraith on unpacking-the-first-fundamental-law

General

Climate

Jim Rose on iea-graphic-shows-how-to-radically-reduce-co2
Benjamin Preston on the-bloodletting-down-under-continues
Brace New Climate on the-clock-is-ticking-on-the-drive-for-sustainable-energy
James Empty Blog on bengtsson-burns-his-boats and Rabett run on the-third-referee-waits-in-wings
Climate Science Watch on national-climate-assessment-key-findings-part-4-response-strategies
Bart Verhaeggen on climatedialogue-about-climate-sensitivity
Mark Thoma on buying-insurance-against-climate-change

Andrew Gelman ( Mainly but not only Stats)

Dave Giles ( Econometrics)

correlation-not-causation
a-l-nagar
Mark Thoma on using-econometrics-to-figure-out-how-the-world-really-works
Peter Dorman on regression-analysis-and-the-tyranny-of-average-effects

Dianne Coyle ( Quirky + Book Reviews)

a-call-for-stubborn-unreasonableness, humans-or-freaks, butterflies-and-hurricanes, pop-economics-and-pop-economic-methodology, handling-policy-on-the-ground, chewing-over-the-beautiful-game
James Hamilton on cancer-and-age
Stephen Gordon on soccer football actually!

Vox wonk

Tuesday, 20 May 2014

Gosh Keynesianism works wow!

Simon Wren-Lewis has an article out concerning keynesian-economics-works-eurozone-edition.
In it he goes through what has occurred in the Euro-zone and shows how Keynesian economics has been spot on with how it all worked out.

Here is a table from one of his links, another more aged article of his.

GDP losses due to Eurozone fiscal consolidation (including spillovers) 2011-13. Source European Economy Economic Papers 506, Table 5.

	Impact on GDP 2013	Cumulative Impact 11-13
Germany	3.9%	8.1%
France	4.8%	9.1%
Spain	5.4%	9.7%
Ireland	4.5%	8.4%
Greece	8.1%	18.0%

Incidentally this is the period when Good old Katesy said the Eurozone was engaged in Keynesian spending. This was because the Deficits grew! Our old Mate Sinclair Davidson said spending was the problem.

In actual fact the Eurozone was dong exactly what the Catallaxy clowns wanted. Getting into Austerity bigtime .And what did they get. A recession!

In Australia Wayne Swan brought down an austerity budget that cut spending in Nominal terms. What did we get? The lowest nominal GDP growth we have seen since our last recession.

Expansionary austerity was shown to be complete and utter cobblers by the IMF . This was published in 2011!

As Keynes said in 1936 Austerity only works when the economy is doing well. If it isn't then it merely makes things worse!

Monday, 19 May 2014

Ross Gittins is wrong

The redoubtable Ross Gittins is incorrect on two fronts.

On the first front he believes the budget is CONTRACTIONARY. however he has not looked at the RBA Statement on monetary policy in enough depth.
They were clearly expecting fiscal policy to ADD around 0.4-5 percentage points to GDP in the incoming fiscal year. This appears to be on the money.

A contractionary budget detracts from GDP growth. To put it another way all Mr Hockey is doing is taking his foot off the accelerator somewhat after he put it down quite a bit on getting into office. He most definitely has not put his foot on the brakes as yet! Hence the budget is merely less expansionary than the current one which he manipulated.

On the second front he , like others such as Chris Richardson et al , keeps on saying this budget is not as strict as the one in 1996 nor in 1987.
However he ignores Wayne Swan's last budget. He actually cut NOMINAL spending. This budget led the public sector detracting 0.7 percentage points from GDP. Although clearly the most austere budget since Budget papers have been released this budget was one of the reasons we got the LOWEST Nominal GDP growth we have ever seen! (Peter Costello was a wimp by comparison. He could not cut spending at all in real terms!)
In other words it was not the optimal fiscal strategy.

What is the most optimal fiscal strategy? Getting back to trend nominal GDP growth. If we get there then we do not have a deficit at all!! Fancy that.

Postscript
EVERY Costello budget added to demand. People who have the simplistic idea that surpluses detract from GDP and Deficits add to demand simply do not understand basic fiscal policy.

Sunday, 18 May 2014

The Budget Blues

Wow the polls are in and it appears the punters understand that Abbott, Hockey etal are talking porkies about the budget.

Just to begin.

Try Matt Cowgill on pefo-what-is-it-good-for and The Kouk on take-away-there-budget-snake-oil- and -what-are-you-left-with and my-ten-questions-for-mr-hockey-ahead-of-q-a.

On the politics Steve from Brisbane has budget-chickens-home-to-roost. He has lots of links including that of The Pollbludger which gives us all of the current polling. M0nty tells us of peta-credlin-can-only-dream-of-dd.
She is clearly living on another planet with Katesy!

The Government claimed they only found out the problems when they saw the books. Matt demolishes that.
The Commission of audit found on a no change basis NET debt would only reach 17.5% of GDP. some crisis.

It does appear the punters of more aware of the Charter of Budget Honesty than either Mr Abbott or Mt Hockey!

I forgot to add it does appear from modelling done that the budget is quite regressive and so it would not be surprising to see this appear in figures such as Retail Trade turnover at the margins.

Postscript.
Clearly the main problem is Abbott. At one level to break promises isn't a big deal . The big deal is to say you haven't when every man and his dog knows you have. The other problem is as Lenore Taylor points out in Steve from Brisbane's column that he simply has little idea of what is actually in the budget. Now that is scary.

Saturday, 17 May 2014

Dana Lyons ( cows with guns)

Cows with guns is one of the funniest songs I have heard.

There was a better audience on Sydney radio than here though!

Wednesday, 14 May 2014

Around the Traps 16/5/14

It is time for Around the Traps

I will try to update on Sunday

Aussie,Aussie,Aussie,Oy,Oy,Oy

John Quiggin on voter-suppression-comes-to-OZ, dont-follow-leaders-watch-the-parking-meters, australian-right-a-dumping-ground-for-failed-us-ideas, core-promises-repost-from-2008
Mumble on how_high_will_it_go, this_is_how_its_done, before_and_after_a_budget1, out_abbotting_abbott1
Don Arthur on learn-or-earn-is-the-politicians-equivalent-of-stairway-to-heaven
The Kouk on take-away-there-budget-snake-oil-and-what-are-you-left-with, mr-abbott-embraces-big-government, my-ten-questions-for-mr-hockey-ahead-of-q-a.
Harry Clarke on emissions-reduction-fund-is-now-definitely-revealed-to-be-a-bad-joke
Paul Fritjers on pigott-and-libich-on-pension-reform
Ross Gittins on labor-sells-its-soul-to-fight-deficit, hockeys-first-budget-tough-but-unfair, budgets-effect-on-economy-not-as-bad-as-it-looksl
Harry Clarke on free-markets-in-higher-education
Matt Cowgill on a-brief-history-of-australias-unemployment-benefits, /pefo-what-is-it-good-for

Northern America

Brad De Long on the-consensus-is-that-tim-geithners-blocking-of-mortgage-foreclosure-relief-was-his-biggest-unforced-error-as-us-treasury
Calculated Risk on flashback-to-march-2009, key-inflation-measures-show-increase-in-April, a-few-comments-on-housing-starts
Menzie Chinn on gdp-prospects
David Altig on pondering-qe
St Louis Fed on why-inflation-matters-in-setting-monetary-policy Thanks Mark

Europe

Edward Lambert on is-sweden-experiencing-the-fisher-effect
Tim Harford on when-a-man-is-tired-of-london-house-prices
Simon Wren-Lewis on inflation-risks
Ronan Lyons on housing-supply-and-demand
Kruggers on not-on-the-mend, secular-stagnation-in-the-euro-area
House of Debt on a-european-house-of-debt Thanks Mark

Asia

Menzie Chinn on guest-contribution-forex-reserves-why-following-china-wont-work-for-india
Edward Lambert on does-china-show-the-fisher-effect

Wonk

Edward Lambert on distortions-in-inflation-by-comparing-long-run-natural-inflation-to-fed-inflation-target, what-goes-down-must-come-up
Tony Yates on did-economics-fail Thanks Mark
Kruggers on desperately-seeking-irrelevance, Mark Thoma gives us Kruggers on asymmetric-misinformation
Simon Wren-Lewis on yes-economic-policy-did-fail, humility-and-chameleons
David Andolfatto on desperately-seeking-humility Thanks Mark
Tony Yates on did-economics-fail-reflecting-on-the-krugman-and-wren-lewis-responses Thanks Mark
Brad De Long on john-quiggin-market-monetarism-noted-for-november-1-2013
Robert Waldeman on methodology-intellectual-history Thanks Mark
Mark Thoma on the-inequality-puzzle Piketty and reply
Mark Thoma on are-banks-too-large IMF research
Jim Rose on what-is-evidence-of-price-collusion
Matt Breunig on what-larry-summers-gets-wrong-pikettys-capital Thanks Mark
Kathleen Geier on what_pikettys_neoliberal_critics_get_wrong Thank Mark
Mark Thoma gives us Brad De Long on you-dont-have-to-fill-a-tire-through-the-leak
Noah Smith on entrepreneurship-and-pricing-of-uncertainty

General

Brad De Long on noted-for-your-morning-procrastination-for-may-12-2014
Harry Clarke on reforming-economics-teaching
Simon Wren-Lewis on sticky-prices-how-we-confuse-students, the-media-market-and-truth
James Hamilton on peak-oil-interview
Noah Smith on todays-econ-aint-your-pappys-econ, market-priesthood and Kruggers on faith-based-freaks
Lord Keynes on mises-and-great-depression-in-austria
Jim Rose on marginal-tax-rates-and-labour-supply

Climate

Brave New Climate on the-clock-is-ticking-on-the-drive-for-sustainable-energy
Real Climate on el-nino-or-bust
Rabett run on something-scary-comes-this-way, the-invisible-modifier-and-another-fine-mess-in-the-west-Antartic-iceshett-collapse
Mauri Pelto on pine-island-glacier-hypothesis-to-emergent-event

Andrew Gelman (Mainly Stats)

Dave Giles (Econometrics)

publications-of-george-box
interpreting-confidence-intervals
more-on-properties-of-adjusted-coefficient-of-determination
free-eprints-of-paper Onya Dave
Tim Johnson on is-it-robust-knowledge-or-make-believe Thanks Mark

Dianne Coyle (Quirky + Book Reviews)

Voxwonk

Tuesday, 13 May 2014

The Budget.

Okay I have asked whether Joe Hockey is a LIAR or DELUSIONAL. I think it must be the former.
He made changes from PEFO so MYEFO showed the budget blew out. What he didn't say was that HE increased spending and changed economic assumptions that made it so. See the Kouk here ,here and here.
He knew the state of the budget and he knew it was not an emergency.
If he believes the economy will grow well below trend levels for Nominal GDP then he should say so. He hasn't. He has implied very strongly that conditions are back to normal. Trend Nominal GDP would mean a budget in SURPLUS.
The RBA was certainly on the money when they estimated the public sector would add about 0.4-0.5 percentage points to GDP. Thus the Budget is not contractionary as Wayne Swan's last budget was only less expansionary than Hockey has made the current budget.

The major cuts are back loaded so Hockey is assuming a stronger economy later on can take those cuts.Most of the major cuts are put onto the States mainly in Education and Health. Clearly Hockey is trying to get the States to demand an increase in the GST and even broaden the base.
We shall see.
I wouldn't be surprised to see the Government to lose from the budget. the Medicare co-payment will hit young families and older people. Do not forget the co-payment affects blood tests ans X-rays something you have to have if you go to a specialist
Also the lamentable excuse for lying makes it even worse.
The punters except politicians to lie. Howard was pretty successful and he lied profusely. The point was he have a reason which was accepted sometimes.

All in all I was more worried about the last lamentable episode of Castle!

Postscript

Mark Banisch make a comeback and John Quiggin's opinion

Monday, 12 May 2014

Fiscal Policy , Budgets and proposed cuts

I am staggered to read at times people advocating strong expenditure cuts and then assuming they have no impact on the economy.

It reminds of dear old Samuel J who used to 'write' over at Catallaxy. One of his great bits of economic understanding was to say if the ALP had not spent money in their first budget then the budget would have still have been in surplus . In Samuel's world the economy has no impact on the budget!

We see it again with the proposed budget by the Liberal Democratic party.
M0nty and Steve from Brisbane have written about it.

I thought I would just add something else. On the numbers their budget is more contractionary than Wayne Swan's budget. That budget cut 0.7 percentage points from GDP. The only reason Australia did not then go into recession was monetary policy which could not fully offset fiscal policy.
( Isn't it great that those lovers of classical economics NEVER EVER talk about this budget!)
As it is We got the LOWEST Nominal GDP rate in Australia's history.

It is as like the GFC never occurred. the reactions by countries are ignored.As I have repeatedly said they are so similar to the 1950s communists. Evidence is always ignored and ideology is paramount.

Sunday, 11 May 2014

Commission of Audit, Budget etc

I eventually started to read the Commission of Audit but stopped early because it was clearly goebbelsing.

It compares the current forecasted payments as a % of GDP and then compared it to the what it was before the Government came to power.
Why would you either compare the latest figures which were manipulated by Hockey to make them larger than otherwise they would be ( by actual spending and changing the economic parameters).

It is comparing apples with oranges. For a start the figures are influenced by the government combating
( successfully) the GFC. You only gradually reduce spending otherwise you may cut off the recovery, like Japan did in the 90s , and this the previous Government was doing.
You also need to know what the AVERAGE Nominal GDP growth rate was during the Howard years.
This present government has had much less than the average Nominal GDP rate since recovery took place.

If you have say less than half the average nominal GDP growth then the automatic stabilisers kick in . This is why Payments as a % of GDP were going to rise from the last fully ALP budget to this current budget. It was the current government that actually used some active fiscal policy which boosted payments.

Now guess what if you stick in an average Nominal GDP rate of the Howard era now and adjust spending then hey presto it magically falls as a % of GDP to Howard era levels. Wow

If you have a long period of below trend growth in Nominal GDP growth as the Commission of Audit has in its projections then why wouldn't you say that and give reasons why Australia is going to have its own variation of secular stagnation.This could be a reason got cutting spending BUT they never say that.
They clearly imply we are headed for normal economic times but we have deficits all the way without change.
( By the way even on this scenario in 2023/24 NET Debt is still a mere 17.5% of GDP which is less than it was in 1996! It is clearly anything but a debt crisis.)
Clearly the deficit is far morel likely to come in around 1.9% of GDP as Treasury forecast in PEFO than the 3% of GDP Hockey gave us in MYEFO.
There has never been a deficit and debt crisis in Australia recently and manufacturing figures to suit your case was simply a waste of public finances. Clearly the Commission of audit was a waste of time and money.

In Swan's last budget the public sector detracted 0.7 percentage points from GDP. The RBA is estimating that the public sector is going to add roughly 0.4 percentage points over the next few years.
They maybe wrong but I doubt it.

Saturday, 10 May 2014

Ted Nugent

Ted Nugent was a great rocker and not a bad guitarist.

To my mind this was easily his best song. Rather ironic for a man who became a redneck!!

Thursday, 8 May 2014

Around the Traps 9/5/14 Gary S Becker Edition

It is time for Around The Traps again, Articles on the late and great Gary Becker are in the General section.

~~Genial Dave Giles is obviously grading a lot of papers!~~

updates on Sunday

Aussie,Aussie,Aussie,Oy,Oy,Oy