Thursday, January 31, 2013

Housing Futz

The real estate commentary in Australia is all about how house prices are not rising as they once did - and isn't it just appalling?

Because as we all know, Peter and Pamela Punter are not happy unless their housing investments are increasing in value.  They have been conditioned to believe that real estate is the best investment - ever.  And they never let anyone tell them otherwise.  They refuse to look at or listen to contrary stories - and always find opportunities to talk up the value of the property they own in joint-venture with the banks.

Except it is all a mirage.  They got conned into paying too much and they justify that by living in a parallel universe - where life is just bliss - and house prices are always rising ;-)

It will come as a bit of a shock when it all goes pear shaped.  The only thing that is not yet clear - is when.

The bigger problem is related and it's "housing affordability" - for all those mostly younger people who don't yet own a house.  They would adopt the same attitude as Peter and Pamela - should they ever get on the housing bandwagon - but in the meantime they are locked out because it is all so unaffordable.

And they are locked out because they don't have the income or the job prospects to generate the cash flow that is needed to get them on the bandwagon.  So one of two things will need to happen to change that.

* House prices will need to reduce substantially - in order to make them affordable to the millions of Australian's who aren't yet on the bandwagon or;

* Incomes will need to substantially increase to generate sufficient cash flow to justify current prices.

What do you think is more likely Virginia?

There is another scenario of course.

If the current situation were to remain for an extended period then many smart young Australians will vote with their feet and move overseas where real jobs are more plentiful and housing is affordable.  Many of them will never return.

And the nation can't afford to lose these bright young things - the place is already enough of a retirement village.  Our leaders need to address this issue soon - I reckon they have about 8 months to sort it out.  Will they?

Tuesday, January 22, 2013

A short history of Adelaide

I am in Adelaide for a few weeks - sucking up the atmospherics and other things.  My transport is my trusty Strida boat bike.

Am not a big fan of the place but I am in awe of the marketing guru's who have so successfully managed to insert their hands into the wallets of the locals.

Back in the 1990's the locals were consumed by football.  Crows and Port Power players were local hero's - and their supporters spent thousands on merchandise, local games and trips to away games.  Football is an industry that was created by marketing.

Ex Premier Mike Rann once famously said that the collective IQ of both Adelaide and Melbourne increased when Port played in Melbourne and their fans followed them to the away game ;-)  And all the sages nodded and pocketed the proceeds.

But things have changed a bit - these days football doesn't have quite the same cachet - anything to do with the scandals?  The locals have found a new passion - cycling.

Actually it looks and feels like cycling - but its not cycling as many of us know it.  This is cycling that is built around the "Tour Down Under".  Cycling that involves big brands, expensive carbon bikes, heaps of padded lycra and cripple boots.  And it has all been created by the marketing guru's.

All because ex Premier Ranny paid his mate Lance Armstrong about $9 million to front up and be the Adelaide "Tour Down Under" poster boy.  Lance was once a hero in this town.

And it's become spectacularly successful.  So successful that most locals between the ages of 18 and 35 now own an expensive bike and kit with all the trimmings.  The local bike shops have become big and profitable as a result.  One of the very obvious changes since I last paid attention is that many more females have joined the ride.

And what a ride it is - Adelaide is now cycle town.  A great demonstration of the power of marketing.

Monday, January 21, 2013

Claytons Choice

It's scary that our politicians don't seem to *get* one of the main rules of politics.  Which is - "Don't piss off your constituents".

Or if you are going to do that then you had better make sure that your opponents are "pissing off their constituents" much, much more than you are.

Because the only way that an unpopular political leader and political party can get anywhere near the big seats - is if they are "much less unpopular" than their opponents.

And if no-one who votes is paying attention.

In the Australian version of pseudo democracy we have been reduced to claytons choice - the choice that you have when you don't have a choice.

At the next election - apparently we will get to choose between "Ms Gillard and the Labor Party" and "Mr Abbott and the Liberal Party".  That ain't a choice that I am happy about Virginia.  And judging by recent opinion polls - I am not alone.

One leader is hugely unpopular - the other is seriously unpopular.  Are we really going to install one of these characters as our next Prime Minister later in 2013?  I don't think so.

IMHO neither are up to the standard that we require of our leaders.  Both are consumed by power and both have put the interests of their party ahead of the interests of the nation and the people.  Post 2013, both will continue to pursue a crazy neoliberal ideology and a discredited austerity agenda and suck up to a foreign warmonger - along with other dingbattery.

Do Australian's really want this?  What are we going to do about it?

It really is way past time that we cleaned up our polity and discarded the rubbish that has accumulated across the political spectrum.

Tuesday, January 8, 2013

Our polity is failing

Knowledge of our polity is pretty atrocious - plus we don't have much of an idea about "the constitution" or the roles of "the house of representatives and the senate" and the role that "the states" play in our federation.  Don't even ask about a "half senate" or "double dissolution" election or how you get to be a senator.

These things are just not well known or understood by our people.  Nowhere near as well known as the latest AFL Premiership team - or who bagged the most gold medals at the London Olympics - or the price of a McMansion in any capital city - or the name of the latest 4wd of the year.  All of which have been etched onto a Bogan brain cell.

Call me a cynic but I am pretty sure that things have been designed this way.  Our political system is broken and unrepresentative and as a result our *polity is failing* - simply because so few of us are informed enough to ensure that we get "good outcomes" when we vote.  Mostly we don't know what a good democratic outcome would even look like - all we care about is that "our team" wins the confected race called "an election".

I think our politicians actually like it this way.  For example, despite all the available evidence the Opposition Leader can insist that "climate change is crap" - and his teams' vote goes up.  What is that if not evidence of a "poor outcome"?

If our politicians actually viewed any of this as a problem then they would have done more, much more years ago - to ensure that the people who were being asked to vote were properly informed.

My sense of it is that this is one of main reasons why they won't change "compulsory voting".  Because by focussing on the *compulsory* nature of voting there is less opportunity to question the *quality* nature of that voting.  And that is clearly the problem.

Sunday, January 6, 2013

Poacher and Gamekeeper

One of the greatest failures of our polity is that we have let our politicians become both "poacher" and "gamekeeper".

By that I mean that our politicians have maneuvered themselves into position where they "set the rules by which they play the game".  Citizens and voters have become mere bystanders.

Take the question of "compulsory voting" - or more correctly compulsory attendance at a polling booth - which surfaced during the past week.

The Queensland Premier was doing a bit of stirring by starting a discussion around "voluntary voting" - as a way of diverting attention from his many failures.  But did you notice what happened in the Federal Parliament?

Everyone from the Prime Minister down commented and tweeted about how "voluntary voting" is so bad and will corrupt our polity and allow the dominance of big money and vested interests - and produce bad outcomes.  No evidence mind you - just lots of politicians telling us how "voluntary voting" is a really bad idea.  As one junior politician suggested - "voluntary voting" is somehow less fair than "compulsory voting" ;-)

My standard reaction is this - "If politicians are so quick to rush in and say that something is bad - then there must be something good about it".

Does anyone else see the problem here?  The politicians who are voted into parliament on a system of "compulsory voting" - are keen to keep that system in place - because they use it to ensure the best outcomes for themselves.

Whereas what is needed is an "Independent Commissioner" to study voting processes - and other things that distort our polity -  and to regularly "initiate referendum" to help ensure that we voters are being properly served by our politicians.  This is the job of the Electoral Commission - but they seem to be missing in action.

We the voters are the ones getting poor outcomes - because the poacher is also the gamekeeper.

Thursday, January 3, 2013

Some questions

News today that Melbourne real estate is down 2.9% over the past year made me chuckle.  Because for prices to get back to any reasonable level of affordability - they will need to drop a further 25% to 35%.  Vendor fear is about the only thing that is keeping them from going off the cliff.

Question #1 - "Will real estate affordability ratios revert to the long run average - in the short term or the long term"?

If short term - then lots of people will go bankrupt and probably take a couple of banks with them.

If long term  - then the future will look much like what Japan has endured for the past couple of decades.

Either way -  it won't be a lot of fun getting there.

Question #2 - "Why are we so susceptible to marketing hype and irrational purchasing behaviour"?

What is it about the human condition that causes us to pay way too much for stuff?  How is it that we ignore inherent value and get carried away with hype and marketing and end up outbidding our neighbors?  Is it just about competitive spirit?

I am wondering if this is an inbuilt human genetic trait - or something that is more a learned thing that has been developed and tweaked over time by the marketing gurus?

Actually it probably doesn't much matter - because the end result is the same.

PS - this provides some explanation.