Thursday, 30 May 2019

Around the Traps 31/5/19

It is time again for Around the Traps

Aussie,Aussie, Aussie, Oy,Oy,Oy
Northern America
Andrew Gelman ( mainly stats)
Genial Dave Giles ( econmetrics)
  • nuttin
Dianne Coyle ( quirky + book reviews)
Vox Wonk

Wednesday, 29 May 2019

Kevin Bonham lets fly at O/S 'experts on our polling failure plus ALP talent pool

The wonderful Kevin Bonham lets fly in an article entitled oh-no-this-wasnt-just-average-polling-error.

As usual it is a must read.
We should remember which a lot of journalists and 'pundits' do not we simply do not know why the Liberals won and the ALP lost.
I shake my head when they quote polling on the result. No-one but no-one got it right. the polling therefore is useless.

Meanwhile Ed Husic and Andrew Leigh will not be on the opposition front bench. given that these tow men are amongst the most talented people in the ALP in parliament this is extraordinary.
Why anyone would have to make way for Kristina Kenneally is a mystery to me. If she had talent then I have not spotted it. I was disappointed when she was the ALP candidate for Bennelong when we had a by-election. I have seen nothing since then to indicate to me she is worthy of a front bench position.

Tuesday, 28 May 2019

Public Debt and interest rates

An interesting paper on public-debt-and-risk-premium.
Stephen Grenville's america-s-fiscal-policy-rethink-reaches-japan should also be read in tandem.

Two comments.

The first articles misses the elephant in the room concerning public debt namely Japan. what about Ricardian Equivalence, Remember Kuttner and Posen did not find it in Japan and if you were going to find it anywhere than Japan was the [place

Monday, 27 May 2019

Impaired Money Markets

A fantastic paper on the-macroeconomic-consequences-of-impaired-money-markets.

This is very important.
We know all about liquidity traps but little about impaired money markets and they are crucial for banks.  I remember bringing up impaired lending as a reason for fiscal policy as monetary policy was impotent but was ridiculed by some alleged conservative people.

Was I a prophet??

Here in Australia the CBA which has/had the strongest balance sheet and a commonwealth government grantee to boot could find get any financing at all way back in 2009. I was told at the time they had hired a new bloke in Queensland in charge of lending in that state and then suddenly h=w was told NO MORE LENDING.

This is essential reading

Sunday, 26 May 2019

Beware of richardsonisms and why ALP supporters should not get depressed

Oh dear we are being blessed with richardsonisms. I blame this disease after Graham Richardson who would big note himself when he had nothing to big note about.
Only Alan Ramsey of the Canberra press Gallery realised how much BS Richardson would exude on any topic and his alleged role in it.

In Saturday's SMU Peter Harcher showed he had swallowed hook line and sinker the Textor Crosby line of greatness.
first some context. Crosby first came to prominence when he helped engineer the win in 1996 which a drovers dog could have won.
In 2015 CT bragged about their superior polling ability. Orly problem was they never told anyone what they id right and what others did was wrong. Also very important is why politicians briefed by CT weren't at least quietly confident instead of simply relying on hope.
Come our election here and hey pronto again CT a polling geniuses.
1) No-one I saw from the coalition looked confident at all.
2) No-one with said superior polling stats plunged on the betting markets
3) no-one said at the time the Libs polling was different to the public polling

Now why ALP supporters should not get depressed
There is a lot of 1993 about this election but everyone forgets Keating blew it away on his first budget.
so what issues could be front and centre next election

1) Budget and fiscal policy. The tax cuts coming in after the NEXT election are very expensive. If you believe the government will cut expenditure to finance them then I have shares in the Harbour Bridge to sell you.
Allied to this in the very short term is the economy is slowing. RBA government Lowe has argued for active fiscal policy. The government simply cannot do this politically UNLESS Commodity prices are raring.

2) Climate changing will be much more important next time. for example solar PV costs will be nearer $30/ MWh than $40.
There is likely to be blackouts because  units in coal fired power stations break down as it becomes very hot.
The world demand for Thermal coal will be declining and Adani will be seen as the con trick it always was.  We should also remember that this is a hot button issue for those countries in the South Pacific.

3) Water. The Murray/Darling problem will get worse as most of the scientists predict.

Just as Keating had little talent to play with in organising his cabinet after the election of 1993 Morrison is equally bereft of talent. The promotion of Stuart Robert is evidence of that. The promotion of Melissa Price before the election is also evidence that Morrison makes woeful mistakes of recognising talent.

All enough to win comfortably next time

Saturday, 25 May 2019

John Williams Masanga

Our own John Williams is possibly the GOAT of classical guitarists.

This is my favourite of the songs he plays. Masanga


Sorry it just won't come up on youtube when I try to put in the video

Thursday, 23 May 2019

Around the Traps 24/5/19

It is time for Around the Traps.

Northern America
Andrew Gelman (mainly stats)
Genial Dave Giles ( econometrics)
Dianne Coyle ( quirky + book reviews)
Vox Wonk

Wednesday, 22 May 2019

Poll Problems, ALP Leadership etc

Well the POLLBLUDGER has done us all a favour by giving us most of the best articles on why the polls were wrong. Kevin Bonham's article is a MUST READ IMHO. POLLBLUDGER 11,  Mark the Ballot 11, POLLBLUDGER 111 POLLBLUDGER again
Why did the ALP lose the unlosable election? Well this helps us understand.
In the irony of ironies low income and low educated people were the main reason there was a swing against the ALP!
These are the VERY people who would have gained from ALP policies. It is very hard to think they were swayed by either franking credits or negative gearing! Ben Phillips finds this ironic as well. Actually he also finds the very people who would have been hit by the policy voted for it.
Ross Gittins to the rescue as well

There is an ALP leadership contest at least I think there is.
Chris Bowen has no self awareness. He was one of the chief architects of the ALP policy which was rejected yer he though he could be leader!  I am amused about the explanation of why he decided not to stand. how does anyone know how the ALP rank and file will vote?

Albo is the clear favourite. He is apparently a great guy. Loves a beer and South Sydney. A shame he has a weakness for very fast trains.

My preference would be either Tony Burke ( although I dislike him) as he is very f good at prosecuting a case. However it seems he won't run. That being the case Jim Chalmers is a new generation leader who understands economics without being technically being an economist. Economists have a bad record in politics ever since the great Bertie Ohlin failed in Sweden
Given Morrison will have a lot of trouble funding his tax cuts he will present for the next election it follows economics will be the main subject on offer. More so as climate change increases in importance.

Tuesday, 21 May 2019

Tax offsets are not tax cuts plus RBA awkwardness

okay let us get down to tin taks.
A tax cut is when your paypacket is larger every time you get paid as there is less tax being taken out.

A tax offset is simply a cash splash given by the government which is in addition to any tax refund you may get AFTER you put your tax return in

I think it likely the economic effect of a tax offset will be larger than a tax cut.but we shall see.

The government had to know this would be delayed  when the election was called for May 18. if they did not they were either incompetent or simply did not care as they expected to lose.

As for the RBA let me outsource this to Ricardian Ambivalence.

My onlu thoughts what is so  different in June that was absent in May. If you examine RA's blog you wil see there is nothing!

Monday, 20 May 2019

We do not know why Saturday night happened. Will we ever?

It is acknowledged by one and all that ALL the polling firms got it wrong badly wrong. Both published and party polls are included.

I think we can anticipate these firms will now get access to people's mobile phones for example although it is easy for people to avoid those calls. Why so? Because Political parties need accurate polling. We can also anticipate the media who pay for the public polls will demand action as well.
Both media companies and parties pay top dollar for these polls.

Another issue just as important is that focus group research or qualitative research is also affected. It is through focus groups parties enquire of the 'electorate of what are 'hot button' issues and then post-election why they either won or lost the election.
They select people from a representative sample and ask questions. They hope they get the right people. Confirmation is getting the same answers from all the groups.

However it is immediately apparent the polling disaster has blown all of this out of the water.
Worse still we have the blind leading the blind. People making confident assertions about the election without the slightest amount of evidence.

No-one but no-one knows why Saturday night occurred!!

It is going to make for an interesting three years to come

Sunday, 19 May 2019

Mark the Ballot is a genius or election prognostications

We all must acknowledge the absolute genius of Mark the Ballot. He sniffed there was a problem with the polls and he was right.
As he rightly says there was both a poling and betting failure. Adrian Beaumont has a little in THIS on the polling failure. Mark the Ballot comes in late with this link which as you might expect very good.
Now Brian Schmidt. wow

We certainly need a good study into why the polls ,both public and party, were so wrong. I certainly find it ironic that people who were so certain before the election of why the ALP would win because of the polls and now equally very certain of why they lost without any data to support them.

If the quantitative  polling is so wrong then why would not the qualitative poling be of any use??

I got this from Peter Brent courtesy of Steve  from Brisbane.

Just as in 1993 I had to tell Liberal supporters that they could well win the next election I do so again to ALP supporters now.
why? well Ross Gittins and Peter Martin.
Morrrison was like Keating in 1993.He thought he was gone so he promised a future that won't happen.
In Keating's case it was tax cuts without pain. He actually increased indirect taxes far more than Hewson was going to.
In Morrison's case he has to deal with a slowing economy in which the budget can only be in surplus!! What happens when the economy is not strong and rates are cut twice and that surplus is still not there,
He also has very expensive tax cuts which treasury projections show are matched by very large expenditure cuts. No-one but no-one can sell that more so when he essentially said they were painless tax cuts just like Keating.
I am in the Adani will never actually produce anything as it is uneconomic. either way by the next election it will be seen as hyperbole.
Climate change if anything will gain in importance. Very hot days will have a number of units at coal fired power stations dropping out and thus more black outs. for a; b ut the climate denier nutters this and the lower cost of renewables will see the liberals under pressure as their neanderthal wing obstructs any change in their policy.

Now onto the ALP's loss.
Reasons put up are:

  • Tax credits   only problem here is that ONLY applied to ACTUAL self funded retirees and there aint a lot of them. Perhaps some pensioners also thought it applied to them but no-one is saying that.
  • Negative Gearing   Here again it was only applying to prospective speculators not current ones. Perhaps some renters thought rents would strongly rise as a result BUT we do not know as yet
  • High Spending and High Taxing  Did Morrison';s attach hit the mark here.My gut feeling says yes but again we need data.
  • Climate Change  I haven't heard anyone say this was a negative as yet.but I suspect we will.
  • Bill Shorten   He was too unpopular to win. Two answers to that. tony Abbott was more unpopular than Bill and who said he was so unpopular? the polls.!!
  •  Adani  It is possible to make this argument BUT why then di the rest of QLD vote the same way?
Could the ALP played it differently?
Of course.

It is very easy to show how wealthy a person is getting a superannuation pension plus franking credits yet they not only pay NO tax but get money back from the government. It is middle class welfare at its worst.

It again is very easy to paint people who negatively  gear as speculators who make the housing cycles worse..

There was two arguments against high expenditure and tax. Emphasise again and again that the economy did not die under John Howard and those were the levels they were targeting and make opportunity cost the reason for the program. If you want pensioners ot have free dental care or to have much reduced cancer treatments then  LOUDLY say this is the way we wish to for rather than the government way of cutting expenditure.

In terms of climate change if the Government wanted to argue Fisher's figures then show how his figures for their policy was not that different to the ALP's. Show time and time again that the lowest cost provider for electricity is solar PV

Lastly on a leader it seems to me it has to be Tony Burke. as much as i loathe him he is easily the best communicator  both in parliament and out of it.

I have concentrated on the ALP because like in 1993 they lost the election with the much better policies. 

Thursday, 16 May 2019

Around the Traps 17/5/19

It is time for Around the Traps.

Northern America
Andrew Gelman ( mainly stats)
Genial Dave Giles ( econometrics)
Dianne Coyle ( quirky + book reviews)
Vox Wonk

Wednesday, 15 May 2019

Poll roundup plus rant on polls

The redoubtable Kevin Bonham has his last polling roundup. Here is Mark the Ballot's monte carlo simulation

A few observations.

Why so few polls? I cannot remember an election when coming into the last week we have just two polls : Newspoll and Essential.

My guess is the media want a close election. to foment this instead of having weekly polls we have the useless seat polls. This means ,they hope, more readers of papers or websites.

If the ALP have been leading in the polls from essentially ( no pun intended) since the last election a sudden change is unlikely. Moreover we would see it it the betting markets which seem to following either published or party polls.

People should also take into account Mark the Ballot 'worries' about herding. If the polls are out by a small amount will it go to the ALP or the Liberals? I suspect the former more so given their infighting this week.

Personal voting habits
I am in Bennelong and thankfully will be able to vote against John Alexander. A very poor candidate although this election he has discovered suits!
Brian Owler is an impressive candidate however I will be voting for Jason Yatsin Lee below the line in the Senate who is easily the most impressive candidate I have ever met. If only I could have voted for him in 2012!!


Why do journalists write so much political gossip. The ALP are quietly confident in such in such a seat. Same for the Liberals et al. Perhaps they are not capable of writing about various policies or the election is so boring they have to write about something, anything

Tuesday, 14 May 2019

Was it wrong to ask Morrison do gays go to hell?

I see a few people are all in a lather about Scott Morrison being asked if gays go to hell?

Liberal shill disguised as a journalist Denis Shanahan thinks it is a disgrace.So does another person who is disguising herself as a journalist Fran Kelly.

Morrison was asked by a Journalist this very question and he dodged the answer.
Shorten leaped upon this later thinking here was an east attack and to be fair it dominated the headlines.
What to make of all this.

  • Firstly on a general level Australia is NOT a christian country.  The same sex  plebiscite showed that 
  • Secondly this evolves from the Israel Folau debacle where he is being persecuted for his christian  beliefs
  • Thirdly it shows Bill Shorten is not a Christian. A belief in heaven and hell is central to christianity and he does not believe in hell.
  • Fourthly it shows again the ALP is now a secular humanist party who may well discriminate against christians some time in the future.
  • Fifthly it shows Scott Morrison is ashamed of his beliefs. This was the perfect opportunity to proclaim his christian beliefs yet he did not do so. It could only be that he though if he said words to the effect .No gay people do not go to hell simply for being gay but we all sins and thus go to hell unless we all ow Jesus to pay the punishment for a sins  then that was a vote loser.
So was it wrong to ask?

No. He allows himself to be televised inside his church on a Sunday. We need to know what his beliefs are but we do not.

In their own different ways both Shorten and Morison were both very shallow men yesterday.

Monday, 13 May 2019

Uncertainties and Australia

Warren Hogan who I remember from the financial markets but has now followed his illustrious father into academia has kindly  written an article along these lines.

Obviously the largest threat that can be viewed is a US/Sino trade war. Here we simply do not know the reaction of Donald Trump/, In some ways he reminds me of Mussolini. He is a shallow 'strong man'.  He thinks you can win trade wars and tarries are paid for by the importing
On the first John Quiggin shows the way. On the second Trump obviously has no idea.
Whilst Menzie Chinn examines who might win in terms of pay-off matrices  It is very hard for either side to 'appear weak in this dispute. We must not discount given Trump simply does not understand the costs of a trade war he could easily over-rule his negotiators because he appears to have given too much away. We should be scared. Very scared. Very late Tyler Cowen on who-loses-most-from-the-u-s-china-trade-war

In case the worse happens we have how-design-to-a-stimulus-package

Whoopsy. I should have mentioned  Morrison's tax cuts way into the future. The Grattan Institute have examined these cuts and found very stringent spending cuts are needed for the budget figures to be even feasible. No government has ever been able to cut spending consistently by this much.
Why was this done by the Government? Because they put all the figures into the never never where Treasury simply makes projections. My thinking is if they win the election then they will worry about this problem. Perhaps let tax rise as a % of GDP??

Double Whoopsy
Read this from my old mate Ricardian Ambivalence on financial-stability-and-mortgage-dynamics abd you get grey hair!

Sunday, 12 May 2019

The ABC last night was an absolute Ripper on TV

The best viewing ever!
Am I over the top?

You decide.
The Programs were:

  • Agatha Christie's The ABC murders    This is a different but enthralling mini-series concerning Poirot but starring John Malkovich as Poirot.

  • Harrow An OZ crime drama starring Ioan Gruffudd ( a favourite of mine since Hornblower)

  • Shetland  Another UK crime drams based guess where!

  • Line of Duty   Yet another UK crime drama where you see 'bad' cops being investigated 
Given the blow-out in the A-League semi-final I gave it a miss, watched these shows and then watched Manchester City win the English Premier League over some red wine.

Best night ever

ALP Costings and other electoral musings

Well Peter Martin has beaten me to it.

The costings of any opposition now should be quite reasonable as opposed to what has occurred in the past as Peter shows . The Parliamentary Budget Office (PBO) is as good at providing costings for policies as the Treasury is. moreover the ALP also has three distinguished gentlemen to overlook all these PBO costings and say the total package is fine.
(Every Australian should than Tony Windsor and Rob Oakeshott for this. This was part of their list of demands to support Gillard.)

Thus there are no longer any 'black holes' as in 1987 or 'rubbery figures' behind the document as in Phil Lynch's infamous 1977 budget.
This lead to the government's response firing blanks. The costings could not be trusted there were no costings for policies on the platform that were not promises!

The main problem with both parties is their promise to keep the budget in surplus in their IF there is a slowdown. This is the worse policy response. Why so?

The state of the budget figures are mainly determined by the economy. Hence a slowdown will affect the budget because automatic stabilisers cut in. This is the cyclical part of the budget.
However it is the structural part of the budget that has the major effect on the economy.
Thus if the economy slows the cyclical part of the budget 'blows  out' because less taxes are coming in and more social welfare payments are going out. The government cannot directly control this part of the budget.
If the aim is to maintain a budget surplus in a slowing economy then the only policy response any government can have is a  larger structural surplus.

 Discerning readers will automatically recognise the contradiction here. The more you attempt to have a larger structural surplus the larger cyclical deficit you will have and the cyclical part of the budget is vastly larger than the structural part hence you not only have a weaker economy and a budget deficit anyway. This is the curse of classical economics.

On another perhaps related track the pollbludget talks about the election campaign.
As toy can see most reports are writing political gossip.
We know seat polls are crap. ( a highly technical term). so why are 'internal seat polls' reported at all?
Probably the greatest load of rubbish I read was that the Nationals had tracking polls in oe close seat.
Are they lazy, ignorant and simply have to write this rubbish because if they did not they would have nothing to write about. Why is this rubbish
1.The cost of tracking polls ( usually made daily) is quite high
2. If the National party has the money why this seat
3. Seat polls are useless
4. The margin is so high as too make useless even if the polls were of a good sample

Please note how can different journalists have different sources saying entirely opposite things?

One last thing. We are now into the last week of the campaign and we have only ONE poll released. WHAT has happened to ipsos and Reachtel? Are they to expensive for Channels 7 and 9?  Strange

At least it ends on Saturday

Thursday, 9 May 2019

Around the Traps 10/5/19

It is time again for Around the Traps.

Northern America
Andrew Gelman ( mainly stats)
Genial Dave Giles ( econometrics)
  • nuttin
Dianne Coyle ( quirky+ book reviews)
Vox Wonk