Hours worked crashes, mortgage stress up

Budget warning as workers made to slash hours

Oh dear oh dear.

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The past should not be used naively to predict the future
Some of my wayward thoughts are kept at http://ozhouse.invisionplus.net

no real surprise here. not really good news and i shouldn't be happy about it, although it is somewhat comforting. towards the end of last year i was in more than one argument about the health of the employment market. of course i lost because the headline was always unemployment down. now that it suits them to acknowledge a loss - woila! we have a problem Houston.

Before the last election my opinion was that it was a great time to lose, both in the US and Australia. It's terrible being a politician when your revenue stream falls off a cliff, and your expenses start multiplying.

This, combined with the very natural tendency to get Keynesian in a downturn, leaves you open to charges of profligacy, when the official numbers start to be tallied. In the US, almost every state is in a financial situation that goes form very bad to disastrous. In Australia, so much of the revenue of states is determined by house prices and sales, that any downturn will also be a disaster.

I anticipate an election in the second half of 2010 in Australia. Rudd is already in campaign mode (see the pledges on health care). He should win this election, as Australia has almost never elected a one-term government.

But bubbles and history cannot be stopped by good intentions, and certainly not by poor management. The recent experience with insulation installation and school hall building leads me to suspect that Rudd and co will try to micromanage their way out of the looming property crash by throwing yet more money at the problem.

Look for another election in 2012 - interesting times.

It was clear that a number of things were occurring: on the street: high paid finance sector workers paid out of the easy credit money rolling in had been retrenched in large numbers and now were doing any sort of unstable, casualised work to make ends meet -- the unemployment sampling method only requires that you are doing 1 hour a week to be classed as employed, you need to look at other measures of underemployment to see what is happening -- employers were clearly cutting hours -- Centrelink were processing more people than ever whose incomes had slipped below critical threshholds -- a lot of workers in formerly dual income households abandoned the search for work which ironically reduces the unemployment statistic.

Interestingly, the $2.5bn loss in revenue is roughly equal to the amounts being handed back every year by the ATO to landlords via negative gearing props.

It'll be a brave PM that risks political backlash to reign in tax loopholes for the financial elite.

Fact is, the tax dodging ponzi in Australia has been promoted so well that it's now a political damned if you do, damned if you don't situation.

I would suggest the government will not make any policy changes regarding this unless it was a last resort to save their own political hides.

However, it is very interesting to note that for the longest time the bull market has promoted ever lasting prosperity on the property bandwagon assuming the market will dictate the climate, yet it seems that the growing tide of political adversity facing the government might force their hand after all.

We'll wait and see.

tax breaks will be abolished in time, when it suits. then they will be reintroduced when it suits. i wouldn't be surprised if the US re-introduces tax concessions to PI in the next few years. prime the bubble again.

they're not really the 'financial elite', mostly mum and dad speculators with no more than 1 IP. But they are a bigger and bigger share of the vote as more people get hooked into the ponzi scheme. as you say, the ALP are damned if they do, and damned if they don't -- they want to keep the conservative greedy vote they anxiously courted in the last election, being these mum and dad investors, at say 20% of the population, whereas the ALP believes it has the downtrodden renters vote anyhow, so they won't make up the lost 20% by appealing to the other sector. unfortunately the electorate itself is forcing the parties to the right.

Ahhhh yes the house owning democracy!

I know I'm sounding like a conspiracy theorist here and its in total conflict with having studied science however!

There was a time in the early 20th century in the US that a concious decsion was made to make house ownership a lot easier.

On the one hand there is the basic need/right to have a house/roof over our head and its a good wholesome move for the sake of families to have some stability and for the owners of the house it should mean that after a period of time the house will be theirs and will make retiring a lot easier because at least they own the house.

A lot of good things come out of home ownership and I'd like to think that these were the motivations for such a political move. Old Maggie Thatcher did the same thing in the UK in the 80's. Although her motives are always questionable.

BUT

Encouraging homeownership also gives a huge amount of political control just including housing as part of you political promise and you have the house owning democracies attention in a big way!

Politicians then have a leverage over the population to a large extent.

Has this happened in Australia? Through indirect methods and lobby groups rather than direct encouragement? Or is the first home owners grant really a bribe in disguise?

To be honest I don't know if the intent was there regarding home ownership in Australia or the act of ownership evolved to a point where the powers at be realised they could manipulate the situation and gain some control. The control was a bi product.

Sorry that was a bit rambling but I have been thinking about the concept of a home owning democracy for quite some time and what the real impact of that is.

Cheers

(Deeply Philosophical Today)

Justin

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Economics in a Nutshell: Sure, it works in practice, but does it work in theory?

Even the majority those with a PPOR and no IP are under the spell that rising prices are wonderful, even though if they sold to upgrade they are clearly disadvantaged.
It is hard to see the government doing anything other than throwing money at this bubble, but surely there is a limit to their spending on this and global factors must come into play also.

I'm yet to see either economically or socially how ridiculous house prices are good for the Australian population as a whole.

It's a national disgrace we allowed Australian values to encompass such a paradigm as a positive.