Dissecting America

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Renegade Economists Podcast 102

As broadcast on the almighty www.3cr.org.au 19/08/09

Dissecting America: Karl returns from the US armed with signs, stats and interviews from the raw edge, defining a crumbling empire.

Show Notes
Interviews with Na-Haaa (Sunset Boulevard, LA), Leon the taxi driver (Cleveland, Ohio) and the renegade at the bus stop (San Francisco): checking in with renegade economists from all walks of life – you don’t need a degree to get a jist of this mess. It’s in everyone’s interest to understand the fundamentals of economics.


Monsanto to increase the price of GMO seeds by 42%

Music

Snog – This is Capitalism
Blank Blue – Eyes Open
Electric Egypt – Kundalini

Fast Forward News #2

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Straight On
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David Pecotic

Wow – what a vital source of news, varied angles on most current issues – thanks David

As Arctic Ocean warms, megatonnes of methane bubble up
[More detailed analysis about the increase in the release of methane that had been frozen beneath the Arctic: over 250 plumes of gas have been discovered bubbling up from the sea floor to the west of the Svalbard archipelago, which lies north of Norway. The entire hydrate deposit around Svalbard could be releasing 20 megatonnes a year, a greenhouse gas much more powerful than carbon dioxide.]

Gorgon no threat to environment: govt
[There’s “no way” the $50 billion Gorgon LNG project off the West Australian coast poses any threat to the environment, federal Resources Minister Martin Ferguson says. But he also admits it’s not really his place to make that call, with Environment Minister Peter Garrett officially in charge of environmental approval.

Fav line: Mr Ferguson told Network Ten on Sunday … “the environmental considerations are not my considerations”. Indeed …\
Also stories are that the $50bn price tag is really $27bn at best]

Cities could deliver greater emissions reduction than the CPRS
[Australian cities could halve their greenhouse gas emissions over the next 20 years by implementing a targeted strategy similar to the City of Sydney’s Sustainable Sydney 2030 plan, a new study has found.]

Former treasurer defends role in CBus and property sale
[FORMER Keating government treasurer Ralph Willis has defended in court his stewardship of superannuation giant CBus and his role in overseeing the sale of a Whitsundays development to property developer David Marriner. The construction industry’s superannuation fund is taking civil action against Mr Marriner in the Victorian Supreme Court, alleging that he misappropriated about $850,000 from a property development and investment business connected to CBus.]

Property avoids the plunge, at a cost
[The Government’s chief adviser on housing affordability, Julian Disney, says these grants have caused a housing bubble and reduced affordability. “We are paying too much for housing and people are getting much too overcommitted,” Professor Disney said. He agrees with the IMF assertion that Australian homes are overpriced by up to 20 per cent. “Housing affordability will continue to get worse, but the problem is it is already very bad … It’s an overinflated balloon and we need to gradually deflate it.” Yet federal Housing Minister Tanya Plibersek said the Government was pleased with the success of the first home buyers’ grant because “a strong housing market is critical for underpinning confidence and supporting jobs in the Australian economy”.

The Australian economy isn’t the only institution giving pundits mixed signals these days …]
In effect Pliberseck is hereby admitting that the FHOG is an economic stimulus package, not a housing affordability policy. Will young home buyers understand this nuance?

Houses of cards
[From the UK Spectator Australia: The latest house price data from the Australian Bureau of Statistics is a little embarrassing – from October to June the number of dwellings purchased with borrowed money each month increased by about 15,000, to 65,000 — a level similar to the heady days of 2007. More than two thirds of this increase arose from the purchase of already-constructed dwellings; only 2,400 of these purchases entailed any new building. The cause, the FHOG; the main policy impact of which appears to have been an increase house prices, which ultimately helps the banks out no end …]

Revealed: The Housing Shortage Lie
[Money Morning Australia demonstrate that the numbers (derived from FACSIA’s National Housing Supply Council State of Supply Report 2008) which represent the entire basis for the ‘chronic’ housing shortage just don’t add up. Regular readers will already be aware of this, thanks to the work of Earthsharing and Prosper Australia.]

LVRG Blog: Stimulus without deficits
Land Values Research Group’s Gavin R. Putland, whose analysis often appears here, writes that prominent critics of deficit-financed stimulus measures have nothing to offer as an alternative but deficit-financed stimulus measures.

In other words, to quote the piece, whereas the Right has nothing to offer but more private debt, the Left has nothing to offer but more public debt. All seem to accept the assumption that governments can stimulate demand only by increasing expenditure and/or reducing revenue.] Read More

Recovery! Funny photo

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Recovery!

Originally uploaded by ChrisI1024

Lets see what happens at the September correction. The stock exchange ‘cash out’ month used to be October, last year saw Sept 22 with the Lehman brothers catastrophe. This year some are saying Sept 4th to end the bull run.

Please watch Phil Anderson to understand more via Sky News

Monash rates proposal flops in Tasmania, rankles in WA

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Hammond Parking Rates
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Dr Gavin Putland

As Monash City Council tries to manufacture consent to tax buildings through council rates, the same idea looks set to be dumped in Tasmania and has just been pilloried in the local press in WA.

Strictly speaking, the systems under attack in Tasmania and WA are based on the rental value of the property, including the land and building(s); this is called the “assessed annual value” (AAV) in Tasmania and the “gross rental value” (GRV) in WA. The system proposed in Monash uses the “capital-improved value” (CIV), which is a purchase price rather than a rental value. But the difference is of no consequence; in all cases the rates bill is proportional to the value of the property, including the building(s), and in all cases the proportionality factor (the “rate in the dollar”) is determined by working backwards from the required total budget.

In contrast, the existing system in Monash levies rates on the “site value”, which is the value of the land alone (including airspace and building rights attached thereto, but excluding actual buildings).

“TASMANIAN home owners can expect a more equitable council rates system to be operating by next year,” said the Sunday Examiner on August 16. “It is understood that state and local government heavyweights have held top-level talks and agreed to throw out the much-criticised Assessed Annual Value system that has led to wild variances in rates caused by the property boom.”

Eh? Wasn’t it because of those wild variances in rates that Monash allegedly had to adopt CIV? Yes, it was.

And what system is Tasmania proposing to adopt? The Examiner continues: “It is expected that Tasmania will redraft the Local Government Act and that council rates from next financial year will be flattened and based on land value…”

But isn’t the Monash system based on the land value? Yes. With a flat rate? Yes. And doesn’t Monash regard the opportunity to have “differential rates”, instead of a flat rate, as one of the attractions of CIV? Yes. Indeed, didn’t the Victorian Parliament allow such differentials only for CIV in a blatant attempt to induce Councils to adopt CIV? Yes.

Could I make this up? No!

The Tasmanian experience indicates that if wild variations in rates bills are the problem, CIV is a less-than-satisfactory solution.

Admittedly, CIV tends to reduce the percentage changes in bills in so far as the volatile land values are diluted by the addition of the more stable values of existing buildings. But CIV also introduces another source of variability, namely sudden increases in bills due to construction, extension and renovation.

That’s the issue in WA, where the local press reports that a mother in Cottesloe was hit with a 150% rates increase for rebuilding her house (‘Wrong’ rates ping home builder, POST, Aug.15, p.7). That doesn’t happen in Monash — yet. But it will happen if CIV comes in.

Monash is the last remaining Victorian municipality that uses site-value rating. If it goes to CIV, will it become known as a late adopter of a discredited idea?

(See also “ Rates on Site Values don’t punish home builders”.)

Fast Forward News #1

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Izik tiles
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We’re lucky to have supporters like David Pecotic flicking news summaries like this our way. I thought it about time we shared them, infact we should start our own e-news bulletin!

A series of news snippets you can sample or click through.

Big Smoke beats the rest | The Australian
[Cities are where innovation, adaptation and early adoption happen. Cities and local precincts are often the locus of creativity and new ideas, and we need to pay greater attention to the innovative properties of place.

However, the question of why this is the case is left unanswered: and without that, innovation and its rewards will not be socialised but end up largely as unearned income – and it is this which unnecessarily concentrates cities in upon themselves. After all, the continuing advances in IT effectively mean that cities can no longer be defined solely by their geographical boundaries … ]

‘Cap and trade’ creator swings to tax
[ONE of the creators of a ‘cap and trade’ system to cut pollution now doubts the practicality and effectiveness of his own program.]

A quiet revolution: City governments tackle global warming
[One reason why LVT and other “bottom-up” forms of funding would be an effective strategy against the MACC (malignant anthropogenic climate change) – and why constitutional recognition is long overdue: “It appears that while Australia’s federal and state leaders are stuck discussing the introduction of the emissions trading scheme some of our local governments have been trying to do something about the impact of human activity on global warming. What remains unclear, however, particularly in federal systems like Australia, is how climate change policies developed by our city governments will be worthwhile, or even negated by the actions or inactions of the other levels of government.”]

Falling house prices in India
[“House prices in big Indian cities continued to fall during the first quarter of 2009, having begun to slide in 2008. Households are deferring purchases in anticipation of further price falls. Property developers are trying to entice buyers through price cuts and other incentives – usually to no avail.” Ominous, no?]

Dexus Property Group’s shares dive after $1.46bn loss
[INVESTORS punished one of the country’s largest landlords, Dexus Property Group, yesterday after it reported a full-year net loss of $1.46 billion and signalled further vacancies and rental declines.]

Myer site cost hike: Melbourne
[THE cost of developing the former Myer department store site in the heart of Melbourne has increased from $1.2 to $1.4 billion, three years before the completion of the project.]

CAMRA – Cultural Asset Mapping in Regional Australia
[An innovative project that we could plug into in the future (still in development)]

Spirit matters | The High Court passed up the opportunity to clarify important issues in its judgement on the NT Intervention, by Tessa Meyrick in High Court Watch

[Reggie Wurridjal and Joy Garlbin, traditional owners of the Maningrida land in Arnhem Land, joined with the Bawinanga Aboriginal Corporation to claim that the five-year lease created over their land as part of the emergency intervention constituted an “acquisition” under section 51(xxxi) of the Constitution. Compulsory acquisitions of property made by the Commonwealth are constitutionally required to be on “just terms.” According to the plaintiffs, this requirement was not satisfied by the compensation schemes laid out in the challenged legislation and the five-year lease was therefore invalid.

In response to this claim, the Commonwealth lodged a demurrer – a special pleading asking the Court to pre-emptively dismiss the case on the grounds that the facts alleged by the plaintiffs do not show any legal cause of action. In a 6-1 majority, the High Court accepted the demurrer – denying the plaintiffs a right to present their challenge in a trial – and ordered the plaintiffs to pay the Commonwealth’s court costs.

Answering the plaintiffs’ claim head-on, the Commonwealth submitted that either no acquisition of property had taken place or that what had been acquired was not “property” or “prope rty capable of being acquired” within the meaning in s51(xxxi). And, even if there had been a relevant acquisition of property, the compensation schemes in the Acts amount to “just terms” in any case.] Read More