The coming Australian recession...?

I buried my prediction of the first Australian recession in decades in a post back in May, because I wasn't quite sure it would come to pass. Today, in the light of the most recent quarter having growth of a measly 0.2%, Fairfax runs an Ian Porter piece laying out the reasons for believing that the recession will come in the next year or two, which boils down to the delayed effect of the Abbott decision to cut off assistance for the car industry and its subsequent withdrawal from the Australian economy.

The timing is interesting electorally, because the process of up to 200,000 automotive workers losing their jobs is due to be completed in 2016/17, with a full Abbott term due to finish in November 2016. We are already in some hinky territory with the Chinese slowdown, albeit currency devaluation has solved a lot of problems for our exporters and there's probably more room to drop below the current ~70c.

The last budget was a cash splash so large that it caused many pundits to think it was priming the Keynesian pumps for an early election, yet the economy is barely escaping contraction as it is. Far from a budget emergency, now we have a growth emergency, which will be followed by an employment emergency. Hockey hasn't really got any more gears to shift up fiscally, so when the automotive fecal matter hits the Centrelink air circulation equipment, the job of stimulating the economy is going to fall to the RBA, which has only 200 base points to play with and would only be forced to burn them under great duress given the housing market is already hubba-bubba-double-trouble. Then we hit the zero lower bound, and we're cactus in a Mad Max Fury Road scenario.

This is playing out a bit like George W. Bush's last days, where all of his dud decisions culminated in a massive economic and political collapse. Just as Dubbya is now seen as a contender for the worst US President in history, Tony Abbott is shaping up to be the worst Australian Prime Minister in history if these doomsday detentes come to pass. All we could do was sit back and enjoy the hot licks from the Doof Warrior.

Short Kicks: Br'er Abbott and the IR patch

Spending more time on work lately so don't have mental bandwidth for feature length posts on a single subject, or proper sentence structure. Dot point time!

- Tony Abbott's War On Workers continues apace, with a raft of rightwing lies about SPC's industrial relations which were summarily shut down by the company, the stupidity of Judith Sloan telling the orchardists to have a cow or two, and continuing with Paul Howes trying to come across all Hawkey-esque with talk of a grand bargain. Howes is playing Br'er Rabbit: please don't throw me in the IR patch! Only fools could pretend that Abbott has anything like the power and skill of Hawke to achieve anything like the Accord. While Howes looks like a shag on a rock, Abbott's swift repudation of any sort of deal with unions only highlights how little of substance he has to say on industrial relations.

- Regarding SPC, SPC is Shepparton in certain respects. I have relatives around the Goulburn Valley (I was born in Shep), and they tell me that the northern part of that region has been forgotten time and again due to it being so uncontested. Seymour is included in the Federal seat of McEwen so it gets some attention (bugger all really), but even in the regional movement in which Jeff Kennett failed but Steve Bracks succeeded for so long in state politics, the battlegrounds were always Bendigo and Ballarat, with Shep not featuring. There is no Cathy McGowan in that area, though Sharman Stone is being pushed to emulate her through her own party's abandonment. Now she knows how it feels to be a National MP.

- Tom Sizemore, so flakey that he spent most of his appearances on the Celebrity Rehab reality show obviously still on drugs, made up the story about Liz Hurley having an affair with Bill Clinton which was passed around the wingnut blogs... because he got high. Hillary is going to have a field day with this crap.

- The Kouk has been acting like a jackrabbit who found Sizemore's stash lately because he's got it in his head that the RBA are going to hike rates due to the economy heating up again, and he's excited to be going against consensus predictions. He is quoting insanely short-run market fluctuations as if it's a herald of the Second Coming. Koukoulas' theory seems to be that Joe Hockey has already nobbled Treasury and that Treasury's forecasts are significantly lowballing reality, which along with the RBA grant money possibly being refunded at an opportune moment, means that Hockey will be able to build some sort of war chest for the next election. Empirical testing of economic assumptions is always good, I suppose.

- Is it just me, or does anyone else not remember the dressup scene in Groundhog Day at all? Did the Australian censors cut it from all those times I watched it?

UPDATE: Stephen Koukoulas has confirmed the nature of his conspiracy theory.

The Great Interregnum: Hillary and the mountain of gold

Perhaps I'm alone on this one, but hear me out on a theory. We are not living in the most interesting times imaginable. Things were more exciting and vibrant in the past, and will be so again. We are currently waiting out in an interregnum, a middle ages, like the movie Hobbit: The Desolation of Smaug - the second film of a manufactured trilogy which didn't have enough going on to merit three separate stories.

Every such narrative trilogy begins with an origin story. From an economic point of view, the current interregnum started with governments in America under George W. Bush and Australia under Howard instituting massive tax cuts for the wealthy. This created a structural deficit in the public books, which was hidden for a time by economic bubbles: America with their housing bubble that catalysed the Global Financial Crisis, and Australia with the resources bubble mainly caused by China's historic government stimulus. America has been able to recover somewhat due to currency devaluation and temporary nationalisation of strategic firms which allowed their manufacturing and financial sectors to survive, albeit their recovery is still hamstrung by fiscal austerity imposed by Republicans in Congress. Australia was saved from any recession at all due to fiscal stimulus, but saw its currency gain value to the point where every industry except resources came under massive export pressure, which is only now easing slightly. 

The structural deficit is now exposed in both countries, as both are back to something like historical trend GDP growth, but tax revenue does not cover government expenses. As a percentage of GDP, it is revenue which is lagging on historical measures, not expenses. The right's agenda is, as always, to dismantle the welfare state, but government spending levels had been perfectly affordable before Bush and Howard had slashed taxes, and would be again now if those tax cuts were all rolled back.

Inequality has risen across many Western countries (including Australia) since the advent of Reaganomics in the 1980s. It has risen so alarmingly now that the richest 1% are becoming a factor in the weakness of economic recovery, in that their income is saved more often than that of the poor, thus representing yet another reason why demand is depressed. 

The 1% are the dragon Smaug in this scenario; the ancient evil sitting on top of the mountain of gold and guarding it with fiery jealousy, while the poor folk of the countryside suffer with mere memories of how good things used to be. They are the apotheosis of the baby boomer generation, the demographic bulge passing ever so slowly on to the other side, soaking up wealth through its bloated power sources as it has done all its life.

What is their weakness, the chink in their armour, whose discovery will allow the third part of our story to begin, so that the golden mountain can be redistributed to kickstart demand once again and this interregnum can finally be done with? If anyone knows, it is the person who is most likely to play Bard the Bowman in our tale: Hillary Clinton. She looms as the hero of the third act of this morality play, if not the entire Third Age. What better candidate to conquer a mountain than a Hillary? Her accession to the US presidency in 2016 seems assured, as the Republicans flounder about like beached whales, bro. The rest of the Democratic Party seems like supporting characters in her own personal return-of-the-queen destiny. With husband Bill running economic policy - hopefully you remember how good that was the first time around - the Hillary administration could be the climax to the lull we are currently experiencing.

Before that, though, comes a little thing called the Battle of the Five Armies, as the remaining players squabble over ownership of the monty haul. Hopefully that's not a literal analogy!

Elysium: Obamacare 2154 (spoilers!)

Neill Blomkamp may deny that his movie Elysium has modern political parallels, but he is not kidding anyone. There are so many allegories with the modern fight over Obamacare that the audience can't help but make them on their own. The year is 2154, the Earth is exhausted yadda yadda, and the rich have retreated to a spaceship in a low earth orbit called Elysium, which has universal healthcare that is even better than that bulldust they have in Star Trek. Matt Damon plays Obama Max, not so much Mad Max as Rad Max. He gets irradiated working in a robot factory, the doc gives him five days to live, and is forced to agree to break into Elysium by going all Johnny Mnemonic on his boss by downloading his brain, but not before getting all Universal Soldiered up with a spiffy new exoskeleton. Serendipitously, his boss is about to start a coup on Elysium and has the virus in his brainstem that will shut it down, like in ID4 but looking more DOS than iMac. Jodie Foster is Delacourt, the Francophone Rumsfeldian head of security on Elysium, who is engineering the coup while wearing some killer business skirts. Sharlto Copley is Kruger, Delacourt's Afrikaaner muscle who steals most scenes he is in and causes considerable mayhem.

So, I was trying to work out which characters were which, if we're drawing the extended analogy here. Max is Obama, obviously, with Delacourt as the Beltway faction of the Republican Party trying to not only maintain their privilege, but secure rule for decades to come through subversion of democratic process. I'm not sure we can pin the Delacourt role on any single politician - John Boehner is more like the hapless President Patel. Perhaps she is a portent for Marco Rubio? Unfortunately for Delacourt and the GOP, however, Kruger is the Tea Party. It doesn't end well for Delacourt, and if life imitates art things aren't going to turn out the white way for the Republicans. Then again Max doesn't get a sweet ending either, though I guess Obama's presidency has an end point regardless.

Wagner Moura as ghetto gangster Spider also enlivens the spectacle, in a performance that I grew to like over time, and he and the other non-whites in the cast playing ghetto characters (with a fair few redshirts who buy the farm) represent the rainbow coalition of demographics behind the Obama presidency. This is not just about healthcare but also immigration, the echoes are too loud to ignore.

As for its general merit, I don't think you can say Elysium is technically or artistically groundbreaking. It doesn't stray very far from Blomkamp's last effort, with many action scenes in dustbowl townships that could have been the Soweto-analogues of District 9. As with many recent sf films, though, it is slick and competently executed from start to finish as a production, and most importantly it is grand entertainment in the spirit of Aliens and Terminator 2. We are getting movies that look as good as those last two several times a year now, which is a great thing and is a major reason the cinema in general, and sf in particular, is so strong at the moment. Finally: Afrikaaners make the best villains!