Australian Politics Forum - Political SPIN & Reality

Emma Gold Member Offline Australian Politics Posts: 9853 OZ Gender:	Re: Political SPIN & Reality Reply #135 - Sep 21^st, 2013 at 11:37pm oh.. and Perceptions Now..? I find your POLL too limited.. altho I have finally voted. One has to understand the terms Reality... and.. Spin... in order to vote... and.. how subjective can THAT be,..? no offense.. just on a roll at the mo. Hmm..? perhaps I'll go play Backgammon..
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perceptions_now

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Re: Political SPIN & Reality
Reply #136 - Sep 23^rd, 2013 at 11:39am

stryder wrote on Sep 21^st, 2013 at 10:49pm:

No right or wrong decisions here, ? is that right Perceptions ?

Doesnt matter what abbott does.
It doesnt even matter what Rudd would have done.

???

Yes & No!

Yes, all decisions & actions matter!
Yes, all decisions & actions make a difference or would make a difference!
Yes, whatever decisions/actions are made/taken or would have been made/taken, by the Liberals or by Labor, they all make a difference and the results could be both positive & negative!
Yes, IF the correct Decisions are made AND Actions are taken, then the OZ outcomes could be improved!

Will whatever decisions the Liberals now make & the actions they implement OR whatever decisions/actions Labor would have made/implemented, would they be able to restore the old status quo of Economic Growth & prosperity?
The answer is NO!

And, the answer is NO, because the vast majority of what is now infecting the OZ Economy and has been doing so for some 6 years or more, is largely Global in nature, the outcomes are now locked in and any change/s by either Labor or Liberal will only affect outcomes on the periphery, not the core direction/s!

Those core directions are now locked in, because of the decisions taken & actions implemented, over some 60-80 years, by governments of all persuasions, both here & Globally.

Whilst the worst of decisions/actions were mainly Globally in nature, they are now affecting OZ & that situation will continue, for decades to come.

As I have previously said, those Global issues relate mainly to Demographics, Energy & Climate, but the reactions over the last decade have exacerbated the situation by raising Global Debt to unmanageable levels.

And, whilst the OZ Debt has also increased recently under Labor, the OZ Debt is still vastly better than most other countries, with the OZ Gross Debt still being under 30%, whilst many other large Economies are over 100%, which is past redemption & some are over 150%/200%, which is completely out of control!

So Yes, Decisions & Actions DO Matter, but regrettably at this point, Good Decisions/ Actions will only make matters a little better, in terms of final outcomes, WHILST POOR or BAD Decisions/Actions will serve to make final outcomes considerably worse, as is being demonstrated in Greece, the USA, Germany & many other countries.

That said & on balance, my best recommendation is for a complete revue, an all of government overhaul, including All Revenue avenues, All Expenditures, in fact all governments, with Local government councils to be completely done away with, BUT at the basis of all Decisions/Actions should be PRODUCTIVITY, BUT OUTCOMES MUST BE FAIR TO ALL or the actions will fail!

Finally, in terms of choices between Labor or Liberal, THERE REALLY IS LITTLE REAL DIFFERENCE, but given the likely outcomes & likely differences, my best guestimate is that a Liberal AUS-terity outcome would now produce the worse outcomes, as is now being demonstrated in Europe, by Greece & others.

For OZ, time will now tell, BUT the next few years, will certainly be tough, a lot tougher than most people contemplate!

So, I wish us Good Luck, because we will all need more than our fair share of it!

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Emma

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Re: Political SPIN & Reality
Reply #137 - Sep 23^rd, 2013 at 6:39pm

doesn't look good
but you never know..??

anything is possible..

Roll Eyes

like the reality that details of boat arrivals are now restricted till an 'ARMY'? dude allows a release..??

Does this represent the reality expected by those who want to STOP the BOATS..??

I wonder.. ?

I personally am horrified... but
REALITY BITES kids...

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perceptions_now

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Re: Political SPIN & Reality
Reply #138 - Sep 25^th, 2013 at 9:48pm

perceptions_now wrote on Sep 25^th, 2013 at 9:43pm:

perceptions_now wrote on Sep 24^th, 2013 at 11:15pm:

Andrei.Hicks wrote on Sep 24^th, 2013 at 9:06pm:

skippy. wrote on Sep 24^th, 2013 at 9:03pm:

perceptions_now wrote on Sep 24^th, 2013 at 8:46pm:

From the above link ...

The Federal Government's moving to clamp down on environmental groups who lobby for company boycotts overseas.

That has been welcomed by forest workers in Tasmania who accuse green groups of spreading half-truths in key markets like Japan.

It's encouraging to see that Abbott is supporting (and is being supported by) forest workers. About time workers got a break. Good on you Abbott

this is how Abbott well get to be even more popular - by standing up for workers and business against the bully-boys from the greens and labor. It is exciting watching our economy start to move again.

Is the OZ Economy picking up?
Really?
Please explain?
How?
Where?
When, did it start?
What, are the major Drivers?

In a small mind it is. I am willing to put money on us going to the next election, NO MATTER WHEN IT IS with a worse economy than the last election had.

Like the 2013 election showed an economy a sh*tload worse than when the Government took over in 2007.

Debt increased by 340%
Debt increased by $235,000,000,000
Forecast missed of $107,000,000,000 in just 3 years
Unemployment rising
Business confidence stalling
Six deficits out of six budgets

Yep the last Government sure did a grand job

Congress Session Years President Start debt/GDP End debt/GDP Increase debt
(in Billions of $) Increase debt/GDP
(in percentage points)

77–78 1941–1945 Roosevelt 50.4% 117.5% +203 +67.1%
79–80 1945–1949 Roosevelt, Truman 117.5% 93.1% -8 -24.4%
81–82 1949–1953 Truman 93.1% 71.4% +13 -21.7%

83–84 1953–1957 Eisenhower 71.4% 60.4% +6 -11.0%
85–86 1957–1961 Eisenhower 60.4% 55.2% +20 -5.2%

87–88 1961–1965 Kennedy, Johnson 55.2% 46.9% +30 -8.3%
89–90 1965–1969 Johnson 46.9% 38.6% +43 -8.3%

91–92 1969–1973 Nixon 38.6% 35.6% +101 -3.0%
93–94 1973–1977 Nixon, Ford 35.6% 35.8% +177 +0.2%

95–96 1977–1981 Carter 35.8% 32.5% +288 -3.3%

97–98 1981–1985 Reagan 32.5% 43.8% +823 +11.3%
99–100 1985–1989 Reagan 43.8% 53.1% +1,050 +9.3%
101–102 1989–1993 Bush Sr. 53.1% 66.1% +1,483 +13.0%

103–104 1993–1997 Clinton 66.1% 65.4% +1,018 -0.7%
105–106 1997–2001 Clinton 65.4% 56.4% +401 -9.0%

107–108 2001–2005 Bush 56.4% 63.5% +2,135 +7.1%
109–110 2005–2009 Bush 63.5% 84.2% +3,971 +20.7%

111–112 2009–2013 Obama 84.2% 102.7% +6,061 +18.5%

http://en.wikipedia.org/wiki/History_of_the_United_States_public_debt

http://www.usgovernmentdebt.us/debt_deficit_history

Andrei,
I have posted the above US info, simply to confirm again that Global Economics is far from static, there are continually movements, including Political, Economic & just plain old Greed that influence & shape events.

It is simply not logical or indeed possible to say that "Countries should always run at a Surplus. As can be seen from these US examples, the US has almost always run at a Debt. Certainly the Roaring 20's got things started, the Great Depression moved things up a few notches & WW2 really ramped the Debt into the stratosphere.
Post WW2 Politicians from both the Right & Left generally moved Debt lower, until Reagan (a Republican) again released the Debt genie from the bottle, in the 1980's.
Then, Clinton (a Democrat), with the advantage of some of the Peak Baby Boomer Boom years, again moved the Debt lower.
Then came Bush Jnr, 9/11 & the start of the GFC in 2007 and Debt again took off and it has continued back towards the stratospheric heights of WW2, with little or no positive results to show for it!
So, in the US, between 2005-2013, their Debt to GDP ratio has gone from 63.5% to 102.7%.
Whilst in OZ, between 2007-2013, our Debt to GDP ratio went from around 5% to around 27%.
The start point of 5% is attributable to the Libs & although they could have & should have, done better because they had the advantage of those Peak Baby Boomer years (like Clinton did), they clearly did quite a lot better than did the US & many other countries.
From 2007, Labor has had the GFC to deal with & whilst they did have some cock-ups, their overall result was actually quite reasonable compared to the US and most other countries.

That said, the major Economic Drivers, which have been directing events for quite some time, are all still negative & they are likely to remain so for quite some time.

So, we can not continue with the old status quo, as it simply is no longer available & we can not continue to increase Debt, therefore we will have to look at things differently!

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perceptions_now

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Re: Political SPIN & Reality
Reply #139 - Sep 25^th, 2013 at 9:50pm

perceptions_now wrote on Sep 24^th, 2013 at 8:19am:

Governments commission a lot of Reports. Some of them actually make a difference. The forthcoming Commission of Audit can make a major difference with the right personnel, careful Terms of Reference, a realistic understanding of what is achievable and a willingness to stretch the boundaries.

After that it is up to the decision-makers. They get to pick and choose what they will implement and so they should. Because, at the end of the day, they will be judged by the consequences.

Link -
http://www.dailytelegraph.com.au/news/opinion/liberals-walk-in-on-a-mess/story-f...
========================================
Somewhat Predictable -
1) The message = it's worse than we thought & worse than we were led to believe.
2) The messengers = Costello & Murdoch.
3) The outcomes = forget Reality, LOOK AT THE DNA!

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Emma Gold Member Offline Australian Politics Posts: 9853 OZ Gender:	Re: Political SPIN & Reality Reply #140 - Sep 25^th, 2013 at 10:02pm all fair comments percepnow. From experience..?? our economy will NOT show any amazing improvement under Abbott... it was doing pretty good when he took over, whatever the SPIN may have led you to believe.. I agree it will be doing WORSE.. after a couple yrs of LIB governance. We will see.
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perceptions_now

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Re: Political SPIN & Reality
Reply #141 - Sep 28^th, 2013 at 7:42pm

perceptions_now wrote on Sep 26^th, 2013 at 7:55pm:

Tony Abbott & the Liberals have given some major commitments to the Australian Public, over the last 3 years & particularly during the recent election campaign AND PERHAPS THE MOST SIGNIFICANT OF THOSE COMMITMENTS IS TO STOP THE BOATS!

The Indonesians, are now making a big deal out of the problems for them, arising from difficulties created by Australia in our "live cattle exports to Indonesia" AND THE INDONESIANS ARE WANTING US TO SELL THEM SOME HUGE AUSTRALIAN CATTLE STATIONS, SO THEY CAN DIRECTLY SUPPLY THE INDONESIAN MARKETS!

Normally, the Indonesians chances would be between none & buckley's, BUT CAN ANYONE SEE WHAT MAY BE PREDICTABLE?

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perceptions_now

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Re: Political SPIN & Reality
Reply #142 - Sep 28^th, 2013 at 7:45pm

perceptions_now wrote on Sep 21^st, 2013 at 10:38pm:

The End Game Draws Near

Ambrose Evans-Pritchard (AEP) reports on the newest BIS report on global banking and the global debt situation, noting that its former chief economist William White (now with the OECD), is once again issuing a stark warning. Note that Mr. White was one of the few officials in the central banking world to have predicted the 2008 crisis. Not that it was particularly difficult to predict it, but similar to the story about the egg of Columbus, almost no-one in an official capacity did. 99% of the world's central bankers insisted the crisis was 'well contained' up until the very last minute, and then panicked along with the markets.

This is happening just as the US Federal Reserve prepares to wind down stimulus and starts to drain dollar liquidity from global markets, an inflexion point that is fraught with danger and could go badly wrong. "This looks like to me like 2007 all over again, but even worse," said William White, the BIS's former chief economist, famous for flagging the wild behavior in the debt markets before the global storm hit in 2008.

"All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle," said Mr White, now chairman of the OECD's Economic Development and Review Committee.

European Sovereign Debt Developments
We will look at the BIS report in more detail in an upcoming post, but in the meantime, here is what euro-stat reported with regard to the state of sovereign debt in the euro area and the European Community as of Q1 2013.
Not surprisingly, sovereign debt in Europe is at a new record high, both in relative and absolute terms.

Since the Maastrich treaty as well as the new 'fiscal compact' insist on comparing stocks to flows, euro-stat issues debt-to-GDP ratios. The maximum allowed under Maastricht is 60%. The euro area's member nations collectively however sport a new record high public debt-to-GDP ratio of 92.2%

"The highest ratios of government debt to GDP at the end of the first quarter of 2013 were recorded in Greece (160.5%), Italy (130.3%), Portugal (127.2%) and Ireland (125.1%), and the lowest in Estonia (10.0%), Bulgaria (18.0%) and Luxembourg (22.4%).

"Compared with the first quarter of 2012, twenty-four Member States registered an increase in their debt to GDP ratio at the end of the first quarter of 2013, and three a decrease. The highest increases in the ratio were recorded in Greece (+24.1 pp), Ireland (+18.3 pp), Spain (+15.2 pp), Portugal (+14.9 pp) and Cyprus (+12.6 pp), while the decreases were recorded in Latvia (-5.1 pp), Lithuania (-1.9 pp) and Denmark (-0.2 pp)."

Note that 'model student' Ireland has recorded the second largest increase with 18.3%

Finally, here is a table that shows the actual figures as well as the composition of the debt (bonds, bank loans, etc.).
http://static.cdn-seekingalpha.com/uploads/2013/9/18/saupload_EU-government-debt...

The upshot of all of this is: the sovereign debt problem in the euro area remains not only unresolved, it is getting worse.

In spite of the constant stream of proclamations that we must let bygones be bygones, that the 'crisis is over', that 'Europe has shown its willingness and ability to deal with the problem and defend the viability of the euro', the reality is that the mountain of debt has just kept growing, and even faster than before.

As soon as money supply growth slows down again, the crisis will be back. It's as simple as that.

In conclusion:
"Mr White said the five years since Lehman have largely been wasted, leaving a global system that is even more unbalanced, and may be running out of lifelines.
"The ultimate driver for the whole world is the US interest rate and as this goes up there will be fall-out for everybody. The trigger could be Fed tapering but there are a lot of things that can go wrong. I very am worried that Abenomics could go awry in Japan, and Europe remains exceedingly vulnerable to outside shocks."
Mr White said the world has become addicted to easy money, with rates falling ever lower with each cycle and each crisis. There is little ammunition left if the system buckles again.

In a way one could say that faith in central banks is the last bubble that remains to be popped. They were the final barrier fighting off the tide in the 2008 crisis and the subsequent euro crisis. Once faith in the omnipotence of central banks falters, it will be game over for the modern debt-money system.

Link -
http://seekingalpha.com/article/1701712-the-end-game-draws-near?source=email_mac...
=========================================

1) Under the current circumstances, AUS-terity does not work!
In Fact, it makes matters worse!
2) Under current circumstances, massive increases in Money Supply & Government Stimulus have not worked!
In Fact, it makes matters worse!

We are now awaiting, the straw that breaks the camels back. We know not what it will be, but we know it is coming.
We do not know the exact timing, but we do know it is close!

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perceptions_now

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Re: Political SPIN & Reality
Reply #143 - Sep 28^th, 2013 at 7:51pm

perceptions_now wrote on Sep 28^th, 2013 at 12:18pm:

Ex Dame Pansi wrote on Sep 28^th, 2013 at 7:20am:

Limitless ceiling? US debt doomsday approaches

With the US debt ballooning to a new record of $16.7tln and the deadline to fix the ‘debt ceiling’ expiring on October 1, a default threat looms over the world’s largest economy. Experts agree the government will broaden its borrowing limit.

http://rt.com/business/us-debt-ceiling-default-384/

Just a little on Debt & Debt limits.

It is worth noting that despite a lot of "noise" in Australia about Debt, in fact Debt is a standard part of Government operations here (in OZ), as it is & has been Globally, with those on both the Right & Left of Politics!

Indeed, Debt is also common to Business & individuals, as it is for Government operations, the "trick" is to ensure that Debt is used properly, to ensure that Debt remains within manageable levels, so that Debt remains a servant, rather than a master.

By way of example, the current US Debt Limit is supposedly US$16.7 Trillion, whilst the US GDP is "reputedly" around US$16 Trillion, so the US Debt to GDP ratio is over 100%.

However, with any Debt to GDP ratio over 90-100%, it is generally accepted that the country is in very serious strife Economically! When referring to the Debt to GDP ratio, it is also generally accepted that the Debt referred to is the countries Gross Debt.

There are currently many Countries who exceed or are bordering on this 90% plus, Debt to GDP area.
According to Trading Economics, these countries include -
Japan - 211%
Greece - 156%
Euro Area - 90%
France - 90%
Germany - 82%
Ireland - 117%
Italy - 127%
Portugal - 124%
Singapore - 98%
Spain - 84%
United Kingdom - 91%
United States - 102%
Zimbabwe - 151%
http://www.tradingeconomics.com/country-list/government-debt-to-gdp

Many/most of these were reported as at 12/2012, but some are earlier.

By enlarge, these Debt to GDP levels are much higher than usual & most are attributable to the effects of the current GFC and the underlying Economic drivers that are directing the Global Economy! Most countries have also shown considerable increased Debt levels, with the advent of the GFC, although some were already showing higher than usual Debt levels, prior to the start of the GFC in 2007.

However, the Australian experience is certainly different!

According to Trading Economics, the OZ Debt to GDP ratio as at 12/2012 was 20.70%, which is demonstrably better than all of the above major/European countries. Supposedly our best result was 9.70%, which no doubt arose thanks to the Liberals during the Howard/Costello years & thanks to the Peak Baby Boomer years from 1995-2006.

From what has been written, it would seem certain that our OZ Debt to GDP Ratio has continued its slide and it is now around 27%.

Given the the Global GFC, the underlying Global Economic drivers and the consequences of not stimulating the OZ Economy, it would seem the Debt outcome has been "reasonably balanced", albeit with some unwanted errors in execution of actions.

That said, I must stress that we are now at the cross roads of history, where the usual Economic remedies will no longer be effective. That is, neither Keynesian Stimulus nor Austrian AUS-teirty will produce the result they have on most previous occasions and the reasons why they will not be effective are the same reasons/drivers behind the GFC and the collapse of the Global Economy!

Those reasons/drivers are -
1) Demographics - Baby Boomer retirements/Global Population ceiling.
2) Energy Supply Shortages & higher Price
3) Climate Change
4) Excessive Debt - which largely is a result of 1-3.

These Global drivers are set to continue for quite some time (decades) and as such, we (OZ) simply can not go back to the old status quo's, we will need to venture down new paths, to ensure that the worst effects from the impending collapse of many of the large Global Economies are offset, as much as possible, before reaching Australia.

We should therefore take action (ASAP) to boost Productivity, starting with losing one arm of government, that being Local councils. We should also REVIEW ALL TAX REVENUES & EXPENDITURES, starting with the Henry Review, BUT we should always look at Productivity as the first priority & ensure fairness in outcomes or we will risk defeat before we start!

So, I wish Good luck to us all, we will need it AND WE WILL ALSO NEED A REAL POLITICAL BI-PARTISAN APPROACH, not just the usual CRAP!

Oh & btw, if OZ Debt were similar to US Debt to GDP levels, then the Australian Debt would currently be looking to raise our Debt limit to about $1.6 Trillion, not to $300 Billion.
http://www.reuters.com/article/2013/09/27/us-australia-debt-idUSBRE98Q03I2013092...

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Phemanderac

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Re: Political SPIN & Reality
Reply #144 - Sep 29^th, 2013 at 7:56am

perceptions_now wrote on Aug 26^th, 2013 at 12:06pm:

perceptions_now wrote on Jul 8^th, 2013 at 4:18pm:

Swagman wrote on Jul 8^th, 2013 at 10:51am:

perceptions_now wrote on Jul 8^th, 2013 at 12:10am:

That said, targeted change, to reduce expenses & primary consideration going to improving Productivity, is absolutely the correct thing, as this once in history combination of Economic drivers will continue to impact on us Locally & Globally, for decades to come.

WE NEED NEW APPROACHES/SOLUTIONS TO THESE PROBLEMS, WHICH ARE FAR FROM "NORMAL"!

I agree with most of this statement.

Productivity improvement should be top of the list.

Tax reform.

Reforming out of date IR policies.

Concentrating on providing (affordable) incentives to industries that Australia has a competitive advantage and not cripple them with taxes .

Reforming Govt services to make them more self sustainable.

Well, there certainly is a lot to do!

However, I would make reducing government from 3 branches to 2, as the first cab of the rank.

In doing so, I would completely get rid of Local Councils, by making those services fall under the relevant State Government minister for Local government.

That would remove one whole tier of graft & corruption, although there would still be plenty to go around.

And, it would reduce expenses, additional red tape & unnecessary variations in local regulations.

That said, there is also a heck of a lot about both Commonwealth & State governments that also need a lot of changing!

I agree in part with this comment, except, I don't think State level government is the one to keep. Local Council (corporations) have their ups and downs at least, State Governments, regardless of the jersey they were are consistently wasteful, inefficient, corrupt and negligent. Further, State Government does not (increasingly so) look after the State as such, they mostly look after (if they look after anything) the capital city they are based in, with some crumbs spread around for the rest.

Restructuring Local Government and constitutionally recognising, but more importantly, constitutionally set up clear boundaries, expectations, responsibility and accountability would, to my mind at least, greatly improve how we are Governed. Not to mention potentially free up millions (hell maybe billions) after the deadwood of State level politics is removed.

No easy task this though, too many gravy trains to upset.

In short, it would require a shift in how we "do" politics, Australia would need to move towards a far more representative form of democracy firstly. Then the constitution would require a significant re write to bring it up to date and capture the changes to Government structure.

That one paragraph indicates decades of change, struggle and hard work. That said, I personally believe it would be worth it because I think the current practices are unsustainable and do not encourage real progress in this country.

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"They're not rules as such, more like guidelines" Pirates of the Caribbean..

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perceptions_now

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Re: Political SPIN & Reality
Reply #145 - Sep 29^th, 2013 at 2:20pm

Phemanderac wrote on Sep 29^th, 2013 at 7:56am:

perceptions_now wrote on Aug 26^th, 2013 at 12:06pm:

perceptions_now wrote on Jul 8^th, 2013 at 4:18pm:

Swagman wrote on Jul 8^th, 2013 at 10:51am:

perceptions_now wrote on Jul 8^th, 2013 at 12:10am:

That said, targeted change, to reduce expenses & primary consideration going to improving Productivity, is absolutely the correct thing, as this once in history combination of Economic drivers will continue to impact on us Locally & Globally, for decades to come.

WE NEED NEW APPROACHES/SOLUTIONS TO THESE PROBLEMS, WHICH ARE FAR FROM "NORMAL"!

I agree with most of this statement.

Productivity improvement should be top of the list.

Tax reform.

Reforming out of date IR policies.

Concentrating on providing (affordable) incentives to industries that Australia has a competitive advantage and not cripple them with taxes .

Reforming Govt services to make them more self sustainable.

Well, there certainly is a lot to do!

However, I would make reducing government from 3 branches to 2, as the first cab of the rank.

In doing so, I would completely get rid of Local Councils, by making those services fall under the relevant State Government minister for Local government.

That would remove one whole tier of graft & corruption, although there would still be plenty to go around.

And, it would reduce expenses, additional red tape & unnecessary variations in local regulations.

That said, there is also a heck of a lot about both Commonwealth & State governments that also need a lot of changing!

I agree in part with this comment, except, I don't think State level government is the one to keep. Local Council (corporations) have their ups and downs at least, State Governments, regardless of the jersey they were are consistently wasteful, inefficient, corrupt and negligent. Further, State Government does not (increasingly so) look after the State as such, they mostly look after (if they look after anything) the capital city they are based in, with some crumbs spread around for the rest.

Restructuring Local Government and constitutionally recognising, but more importantly, constitutionally set up clear boundaries, expectations, responsibility and accountability would, to my mind at least, greatly improve how we are Governed. Not to mention potentially free up millions (hell maybe billions) after the deadwood of State level politics is removed.

No easy task this though, too many gravy trains to upset.

In short, it would require a shift in how we "do" politics, Australia would need to move towards a far more representative form of democracy firstly. Then the constitution would require a significant re write to bring it up to date and capture the changes to Government structure.

That one paragraph indicates decades of change, struggle and hard work. That said, I personally believe it would be worth it because I think the current practices are unsustainable and do not encourage real progress in this country.

Unfortunately, all 3 branches of government fit the tags wasteful, inefficient, corrupt and negligent & that goes for both major Political party's, plus most of the minors!

The main reason I decided on getting rid of councils simply came back to balance, with the States being big enough (sometimes) to put up a decent fight with the Feds, BUT that wouldn't be possible, if there was only the Local councils, which are pretty small, versus the Feds!

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Re: Political SPIN & Reality
Reply #146 - Sep 29^th, 2013 at 2:25pm

Demographics That Slammed Economy In 2008 Now Poised To Slam Stocks

The aging of the baby boom appears to have great influence on the economy and markets. It appears to explain why the economy is much weaker than indicators like initial unemployment claims suggest. It helps explain the depth of the great recession and why the economy remains weak. It may explain why the stock market is about to crash.

We're going to focus on the impact of the first leg of the baby boom that occurred in 1947 as it hits three significant points in the life cycle. First, we will look at when people are most likely to leave a job without being fired. Then, at when people are most likely to start contributing less to the production of goods and services. And finally, at when they are most likely to sell stocks.

Initial Claims falsely indicate Strength
Historically, when initial unemployment claims are in the low 300 thousands the economy grows faster than it has been. Below is a chart of annual GDP growth (in black) and the 4-week moving average of initial claims (in red). Claims suggest the economy should have grown at about 3.3% in the last year rather than 2%. The discrepancy was even larger going into the great recession. On the other hand, in the late 1990s growth was stronger than initial claims suggested.

In wondering why the economy was so much weaker than indicated I wondered if the aging baby boom generation played a role. After all, if people are leaving jobs voluntarily a business can reduce its work force with attrition rather than firings. At about age 59 and a half people appear most likely to leave a job without being fired. They may leave to start a business, find a less demanding job, to retire early or for health reasons. The chart below shows the residual GDP growth, or the rate of growth less the growth estimated by initial claims in the chart above. It also shows the percent of the population aged 50 in red with a 9.5-year lead time. Age 50 with a 9.5-year lead time shows the influence of people at age 59 and a half. This was the lead time with the highest correlation. Note: the percent of population scale is inverted. So a rise in the percent of the population age 50 is shown as a dropping red line.

In 2006 growth started becoming weaker than initial claims indicated it should be; this corresponds on the chart with the percent of the population age 50 rising (falling on chart) to 1.5%. By contrast, when the percent of the population age 50 was less than 1% GDP was stronger than initial claims suggested. It's very reasonable that when the birth dearth of the Great Depression was 59.5 there were fewer people than normal leaving by attrition. Looking forward, the correlation suggests initial claims will over estimate growth at least through 2020.

Declining Economic Contributions
Even though people are more likely to leave a job at age 59 they still usually contribute to growth a bit longer. Significant declines do appear to occur around age 62.5. Below is the five-year rate of GDP growth (in black) with the population age 50 (in red) leading almost 12.5 years.

So the Great Recession corresponds with the first leg of the baby boom born in 1947 turning 62 and a half. After 1947, births declined for a few years resulting in fewer people turning 62.5 the last three years. In the chart above this corresponds with growth strengthening a bit the last 3 years or so. Going forward the number of people reaching this age begins to rise (fall on chart). This larger share of the population reaching the age where they are less able and or willing to contribute to growth will be an economic headwind for a number of years.

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perceptions_now

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Re: Political SPIN & Reality
Reply #147 - Sep 29^th, 2013 at 2:29pm

Demographics That Slammed Economy In 2008 Now Poised To Slam Stocks (Cont)

Waiting For Wave of Selling

During retirement people tend to lighten up on equities. Some get out of equities all together. What may be the trillion dollar question is when the first leg of the baby boom generation will sell the most stock. The chart below takes a stab at answering.

Currently the best correlation suggests that at age 67 they will sell. That's 67 or age 50 with a 17 year lead time. It further suggests the selling should have already started. The black line in the chart above is the S&P 500 adjusted for inflation. Looking at the market this way we appear to be in a secular bear market that started in 2000 with a series of lower tops and lower bottoms.

Are we about to experience the largest share of the population to ever enter the peak age of selling stock? I can't get too excited about the chart indicating the selling should have started a couple of months ago. Two years ago the strongest correlation suggested the peak age of selling was 65 and a half. This bull market (or up leg in the secular bear as the case may be) has shifted the lead time for maximizing the correlation 18 months. If two years of rising markets can shift the lead time that much it casts some doubt on the meaning of the correlation. While I still expect a huge wave of selling from the baby boom generation, it may not come until something else breaks the upward momentum of stocks. Baby boomers may be willing to let it ride as long as they can.

On the other hand, the selling may have begun and we just don't see it because our measuring stick is shrinking. Priced in euros our market peaked back in May. Priced in pounds it peaked on August 1. On the Wednesday, the Fed announced no taper and stocks went up about 1%, the trade weighted dollar index fell 1%. So, there was no gain for non dollar observers.

After years of being told we were the "cleanest dirty shirt in the laundry hamper" foreign stock markets have outperformed the U.S. market the last few months and from a non dollar perspective it looks like our market could have topped and be headed down. Even so, the big wave of selling I have been expecting the last year and a half has not started, yet. We are still dancing on the edge of a value cliff.

Value Cliff
In the last 20 years stock valuations according to the PEses that I use are about twice as high as they averaged in the 120 years prior to that. This article has more info on the PEses. Currently, the PEses is just above the average of the last 20 years. So if the last 20 years are the new normal we are near normal and there is little to worry about.

What if the last 20 years were an aberration that is about to end? As I see it the last 20 years were largely a demographic phenomenon. The birth dearth of the Great Depression went through the peak years of selling stocks while the baby boom generation went through the peak years of buying and holding stock. So an unusually small group of sellers combined with the biggest ever group of buyers pushed prices and valuations to unheard of levels.

The Depression babies are long past the age of selling stock. The tail end of the baby boom is still buying stock, but they are being displaced by the birth dearth of the 1970s. So the number of people reaching the peak age of buying stock has been in decline for several years and will continue declining for several more. The baby boom while buying less stock remains in the age of holding it. Perhaps the only thing holding valuations at twice the normal level is that baby boomers have not reached the period of selling.

One Catalyst Away
Anything that spooks 67-year olds could tip off the biggest selling spree in history. We are perhaps one catalyst away from starting the third and most destructive down leg of the secular bear market. The catalyst might be a government shutdown, a weak jobs number, a stock price rally that falls short of a new high or dozens of other events. I expect the next leg of the bear market to take the PEses down to the 11 it hit in 1982, or perhaps even the 7 it hit in 1932. Once we hit a low valuation like an 11 or especially a 7 the market will be in position to start a real secular bull market like ones that started in 1920, 1949 and 1982.

For now, the economy faces a demographic headwind that means it is weaker than many indicators like initial claims suggest. The stock market (SPY) faces a demographic cliff.

Link -
http://seekingalpha.com/article/1714962-demographics-that-slammed-economy-in-200...
==========================================
We should bear in mind that Demographics is but one of the major factors now driving Global Economics and there are also other factors influencing events.

So, whilst I concur that Demographics are certainly the major player, there are also other factors, which are muddying the Economic waters and the overall effects are making the timing of events "somewhat" difficult to gauge.

We should also bear in mind that none of the major Political Party's will tell the Economic truth!

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Phemanderac

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Re: Political SPIN & Reality
Reply #148 - Sep 29^th, 2013 at 4:42pm

perceptions_now wrote on Sep 29^th, 2013 at 2:20pm:

Phemanderac wrote on Sep 29^th, 2013 at 7:56am:

perceptions_now wrote on Aug 26^th, 2013 at 12:06pm:

perceptions_now wrote on Jul 8^th, 2013 at 4:18pm:

Swagman wrote on Jul 8^th, 2013 at 10:51am:

perceptions_now wrote on Jul 8^th, 2013 at 12:10am:

That said, targeted change, to reduce expenses & primary consideration going to improving Productivity, is absolutely the correct thing, as this once in history combination of Economic drivers will continue to impact on us Locally & Globally, for decades to come.

WE NEED NEW APPROACHES/SOLUTIONS TO THESE PROBLEMS, WHICH ARE FAR FROM "NORMAL"!

I agree with most of this statement.

Productivity improvement should be top of the list.

Tax reform.

Reforming out of date IR policies.

Concentrating on providing (affordable) incentives to industries that Australia has a competitive advantage and not cripple them with taxes .

Reforming Govt services to make them more self sustainable.

Well, there certainly is a lot to do!

However, I would make reducing government from 3 branches to 2, as the first cab of the rank.

In doing so, I would completely get rid of Local Councils, by making those services fall under the relevant State Government minister for Local government.

That would remove one whole tier of graft & corruption, although there would still be plenty to go around.

And, it would reduce expenses, additional red tape & unnecessary variations in local regulations.

That said, there is also a heck of a lot about both Commonwealth & State governments that also need a lot of changing!

I agree in part with this comment, except, I don't think State level government is the one to keep. Local Council (corporations) have their ups and downs at least, State Governments, regardless of the jersey they were are consistently wasteful, inefficient, corrupt and negligent. Further, State Government does not (increasingly so) look after the State as such, they mostly look after (if they look after anything) the capital city they are based in, with some crumbs spread around for the rest.

Restructuring Local Government and constitutionally recognising, but more importantly, constitutionally set up clear boundaries, expectations, responsibility and accountability would, to my mind at least, greatly improve how we are Governed. Not to mention potentially free up millions (hell maybe billions) after the deadwood of State level politics is removed.

No easy task this though, too many gravy trains to upset.

In short, it would require a shift in how we "do" politics, Australia would need to move towards a far more representative form of democracy firstly. Then the constitution would require a significant re write to bring it up to date and capture the changes to Government structure.

That one paragraph indicates decades of change, struggle and hard work. That said, I personally believe it would be worth it because I think the current practices are unsustainable and do not encourage real progress in this country.

Unfortunately, all 3 branches of government fit the tags wasteful, inefficient, corrupt and negligent & that goes for both major Political party's, plus most of the minors!

The main reason I decided on getting rid of councils simply came back to balance, with the States being big enough (sometimes) to put up a decent fight with the Feds, BUT that wouldn't be possible, if there was only the Local councils, which are pretty small, versus the Feds!

Fair comments all, especially about the waste etc Grin

I guess for my part I would look to how we create the constitution in terms of creating balance. Of course, perhaps what we really need is to be totally creative and meet halfway between state (far to cumbersome) and Local (far too small) and look to a regional idea. Then the delineation of who is responsible for what would, if we get it right (and of course acknowledging that wasteful, inefficient, corrupt and negligent practices can derail the best plan) the division of strict roles/responsibilities would come into play.

I get what you mean by a sense of balance, I guess I am too far jaded by more than a few decades of State level being the absolute worst of the worst in terms of achievement, trust and lawfulness. As I said, to my mind, currently state Government strikes me as being little more than an extra local Government for the major city of its state.

Further, I realise this is suggesting an immense change, however, one in my opinion Australia not only needs (desperately) but deserves. Add the concept of a more representative democratic process (i.e. the Population drive referendums, changes and development of the constitution and not the "suits") and I think that would enhance a sense of balance.

I am thinking it is kind of akin to thinking globally and acting locally, if that makes any sense.

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perceptions_now

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Re: Political SPIN & Reality
Reply #149 - Sep 29^th, 2013 at 4:54pm

Phemanderac wrote on Sep 29^th, 2013 at 4:42pm:

perceptions_now wrote on Sep 29^th, 2013 at 2:20pm:

Phemanderac wrote on Sep 29^th, 2013 at 7:56am:

perceptions_now wrote on Aug 26^th, 2013 at 12:06pm:

perceptions_now wrote on Jul 8^th, 2013 at 4:18pm:

Swagman wrote on Jul 8^th, 2013 at 10:51am:

perceptions_now wrote on Jul 8^th, 2013 at 12:10am:

That said, targeted change, to reduce expenses & primary consideration going to improving Productivity, is absolutely the correct thing, as this once in history combination of Economic drivers will continue to impact on us Locally & Globally, for decades to come.

WE NEED NEW APPROACHES/SOLUTIONS TO THESE PROBLEMS, WHICH ARE FAR FROM "NORMAL"!

I agree with most of this statement.

Productivity improvement should be top of the list.

Tax reform.

Reforming out of date IR policies.

Concentrating on providing (affordable) incentives to industries that Australia has a competitive advantage and not cripple them with taxes .

Reforming Govt services to make them more self sustainable.

Well, there certainly is a lot to do!

However, I would make reducing government from 3 branches to 2, as the first cab of the rank.

In doing so, I would completely get rid of Local Councils, by making those services fall under the relevant State Government minister for Local government.

That would remove one whole tier of graft & corruption, although there would still be plenty to go around.

And, it would reduce expenses, additional red tape & unnecessary variations in local regulations.

That said, there is also a heck of a lot about both Commonwealth & State governments that also need a lot of changing!

I agree in part with this comment, except, I don't think State level government is the one to keep. Local Council (corporations) have their ups and downs at least, State Governments, regardless of the jersey they were are consistently wasteful, inefficient, corrupt and negligent. Further, State Government does not (increasingly so) look after the State as such, they mostly look after (if they look after anything) the capital city they are based in, with some crumbs spread around for the rest.

Restructuring Local Government and constitutionally recognising, but more importantly, constitutionally set up clear boundaries, expectations, responsibility and accountability would, to my mind at least, greatly improve how we are Governed. Not to mention potentially free up millions (hell maybe billions) after the deadwood of State level politics is removed.

No easy task this though, too many gravy trains to upset.

In short, it would require a shift in how we "do" politics, Australia would need to move towards a far more representative form of democracy firstly. Then the constitution would require a significant re write to bring it up to date and capture the changes to Government structure.

That one paragraph indicates decades of change, struggle and hard work. That said, I personally believe it would be worth it because I think the current practices are unsustainable and do not encourage real progress in this country.

Unfortunately, all 3 branches of government fit the tags wasteful, inefficient, corrupt and negligent & that goes for both major Political party's, plus most of the minors!

The main reason I decided on getting rid of councils simply came back to balance, with the States being big enough (sometimes) to put up a decent fight with the Feds, BUT that wouldn't be possible, if there was only the Local councils, which are pretty small, versus the Feds!

Fair comments all, especially about the waste etc Grin

I guess for my part I would look to how we create the constitution in terms of creating balance. Of course, perhaps what we really need is to be totally creative and meet halfway between state (far to cumbersome) and Local (far too small) and look to a regional idea. Then the delineation of who is responsible for what would, if we get it right (and of course acknowledging that wasteful, inefficient, corrupt and negligent practices can derail the best plan) the division of strict roles/responsibilities would come into play.

I get what you mean by a sense of balance, I guess I am too far jaded by more than a few decades of State level being the absolute worst of the worst in terms of achievement, trust and lawfulness. As I said, to my mind, currently state Government strikes me as being little more than an extra local Government for the major city of its state.

Further, I realise this is suggesting an immense change, however, one in my opinion Australia not only needs (desperately) but deserves. Add the concept of a more representative democratic process (i.e. the Population drive referendums, changes and development of the constitution and not the "suits") and I think that would enhance a sense of balance.

I am thinking it is kind of akin to thinking globally and acting locally, if that makes any sense.

Well, whether we deserve it not & whether we want it or not, change is coming anyway!

So, what yet remains to be seen, is -
WHETHER WE ENSURE THAT THE CHANGE THAT DOES COME, IS FOR OUR LONG TERM BETTERMENT OR NOT?

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Question: SPIN or REALITY
I am for SPIN I am into REALITY « Created by: perceptions_now on: Aug 26^th, 2013 at 4:54pm »