In brief: The Australian Property Market really is Different, but for all the Wrong Reasons

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Australia’s two largest property markets, Sydney and Melbourne have recorded the largest falls in property prices since the financial crisis.

Sceptics of a large fall in Australian housing prices have long decreed that “Australia is different”, that our nation through some combination of culture, lending standards and other factors, is somehow immune to the large housing price falls endured by other nations throughout the world.

For that reason, perhaps now is the time to examine a few ways that Australia is different to these nations that suffered housing crashes during the financial crisis.

Australia’s level of household debt to GDP is one the highest in the world, with the current level being more than 58% larger than that of the United States at that nation’s absolute peak.

Australia household debt

Generally banks throughout the world prefer diversified loan portfolio’s spread across a number of different loan classes. However, in Australia our banks have concentrated heavily on residential property, with our banks holding more than doublethe proportion of residential mortgage loans as banks in the United States.

Australia mortgage concerntration

Australia has some of the most expensive property in the world in terms of price to income ratio’s, with both Sydney and Melbourne ranking in the top 10 most expensive housing markets in the world going by the price to income metric.

Demographia

As you can determine from the graphs above, the sceptics are a hundred per cent correct that “Australia is different” although not for the reasons they espouse.

With the combination of one of the highest levels of household debt in the world, a banking system built on a previously unheard proportion of mortgage lending and some of the highest property prices on the planet Australia could scarcely be more different to other comparison nations.

One way or another, the Australian property market is going to become a pertinent lesson for policy makers and economists of the future. Either it will be recorded as the largest property bubble to ever safely deflate or it will become a reminder that asset price bubbles always find a way to eventually burst.

Once unthinkable, an alliance between Moscow and Beijing is becoming increasingly possible.

Joint Sea Drill 2016 - Russia and China military exercise

As the United States ramps up its rhetoric on trade toward China and continues sanctions on Russia, the two former cold warriors are coming together for the largest Russian military exercise since 1981, Vostok- 2018. The exercise is set to include over 300,000 Russian troops, 36,000 vehicles and over 1,000 aircraft.

This cooperation is just the latest sign that the two former adversaries are willing to bury the hatchet in the face of the threats to both of the nation’s strategic interests. In recent years Moscow once again began selling its latest and greatest military equipment to China after over a decade of pause caused by issues around intellectual property.

These sales have drastically improved the capabilities of the Chinese armed forces in many key areas where they were previously lagging behind the West. The Russian S-400 Triumph air defence system for example, gives the Chinese the ability to effectively deny enemy aircraft access to airspace within a 400km radius.

If Russian claims about its effectiveness prove to be accurate, it also has the ability to “see through” the stealth abilities of U.S aircraft like the B-2 Spirit bomber, F-22 Raptor and the F-35 strike fighter.

This is a potentially nightmare scenario for Pentagon defence planners, a prospective fight with the Chinese armed forces over the South China Sea for example just became that much harder.

The delivery of these, potentially game changing weapons are just one part of the warming relationship between Beijing and Moscow. The Chinese participation in the Vostok-2018 exercises is a huge change compared when they were last held in 2010. Back in 2010 the exercise was conducted with China being considered the potential foe according to geopolitics analysts.

At Vostok-2018 things could scarcely be more different, the Chinese armed forces will now line up side by side with the Russians, a profound change in the relationship between Beijing and Moscow in a relatively short period of time.

What has happened to bring about this change?

Both Russia and China are facing American led attempts to curtail their potential or existing spheres of influence.

For the Russians it was the coup against the Russian friendly government in Kiev of Viktor Yanukovych, which was backed partially by the United States. For decades the United States had been breaking a promise made in 1990 for NATO not to expand into Eastern Europe.

With the removal of the effective buffer state between the bulk of NATO forces and Russia’s borders the Kremlin burst into action. The Russians quickly seized the Crimean peninsula and quickly began arming separatists in the Eastern part of Ukraine.

For China it’s the expansion of their sphere of influence that is causing the problems. China believes it owns almost the entirety of the South China Sea with its “9-dash line” claim.

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This has unsurprisingly raised serious flags with not only the countries who believe their territory is being encroached on, but also those who rely on the South China Sea for martime trade.

As China continues its meteoric rise there is a strong belief among certain officials in Beijing that war with the United States is “inevitable”. This belief coupled with the United States “Pivot to Asia” has only further inflamed tensions between Washington and Beijing.

So where are relations heading between Moscow and Beijing now?

An alliance between Beijing and Moscow may still be a long while off, but the recent rounds of cooperation between the two former adversaries on everything from military exercises to trade agreements leads credence to its potential.

Different geopolitical analysts paint either Moscow or Beijing as the reticent partner in any potential alliance. Russia is allegedly seen by the Chinese a potential liability given its involvement in existing conflicts in Ukraine and its position as the far inferior economic party in any alliance.

China is apparently viewed by Russian military officials as a potential unreliable partner. China’s military may be extremely powerful on paper but it is a nation that has not been tested in a real war in decades.

The once unthinkable alliance between Beijing and Moscow may not end up happening, but the very possiblity is none the less the stuff of nightmares for Western military planners.

 

Energised, Unified and Out of touch: A critique of the modern Democratic Party

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This is the accompanying article to go with last weeks Critique of the modern Republican Party.

The Bad

The Democrats are a party that is still profoundly out of touch with much of Middle America, tens of millions of Americans in the so-called “flyover states” are largely either forgotten or ignored by a Democratic Party drunk on its own anti-Trump hype.

The forgotten Americans still remember how Barack Obama had 8 years in the White House and more or less completely failed to deliver any of the “Change we can believe in” to people like them.

While the forgotten America struggles with things like unemployment and access to basic necessities, there are Democrats like Kamala Harris are touting her ‘Rent Relief Act’ which would use taxpayer dollars to subsidize the rent of Americans who earn up to $100,000 per year.

When there are millions of Americans who are struggling to put food on the table or find a good job, the idea of helping those on nearly six-figure incomes should be a complete nonstarter.

Instead, the party including many prominent potential candidates for President in 2020, are pressing ahead with this display of exactly how out of touch the Democratic party is with anything resembling those in middle America.

The idea that a working single mother with two jobs in St Louis, Missouri should be subsidizing the lifestyle of someone in management in upstate New York on nearly $100,000 a year not only sounds wrong, but its also a great betrayal of the ideology of the ‘New Deal’ Democrats who genuinely stood up for the little guy.

The Good

In the lead up to the Mid Term elections, the Democratic Party has increasingly coalesced largely around the Democratic Socialist agenda of Alexandria Ocasio-Cortez and Elizabeth Warren.

Aside from a few notable exceptions, the Democrats are displaying an enviable amount of political cohesion that is sorely lacking on the other side of the aisle.

The embracing of the Democratic Socialist agenda has reinvigorated a party that was reeling from its shock election defeat at the hands of Donald Trump and the Republican Party less than two short years ago.

Democrats at all levels are getting behind the message hoping to bring about the much talked about “Blue wave” to tip the balance of power on Capitol Hill in their favour.

Many of those in the Democrat old guard is slowly being either converted to the new ways or is falling by the wayside.

The most recent expression of this was the loss of 10 term congressman Michael Capuano to challenger Ayanna Pressley, a Boston city councillor, who is also campaigning on a strong Democratic Socialist message.

As a whole, the pollsters currently predict that it is indeed likely that the Democrats will retake the House if the election campaign continues on its current course. Polls suggest that the Senate will remain under Republican control, but potentially with a reduced majority.

On the face of it, for a party that had the DNC leadership and its political message decimated as a result of the 2016 election, the Democratic Party seems on course for what one might consider a miraculous recovery.

Conclusion

The Democratic Party has made an impressive comeback from their crushing defeat less than two short years ago, assisted handsomely by a heavily anti-Trump media and an injection of new ideas in the form of Democratic Socialism.

With a White House seemingly in almost constant chaos, the Democrats are displaying an enviable amount of political cohesion, lending serious credence to their message of being an alternative government in waiting.

However, despite all of these positive developments for the Democratic Party, they appear to remain painfully unaware of the struggles of many of the forgotten Americans.

Their continued embrace of policies like the ‘Rent Relief Act’ is only going to further alienate voters who may have chosen to give the Democratic party another chance.

By continuing to concentrate on the issues of those in Democrat strongholds on the coasts, they risk yet another backlash in the long term. The forgotten Americans, who arguably helped to propel the Republicans to their big win in the 2016 election cycle, may once again choose to make their voices heard at the ballot box.

A house divided against itself, cannot stand: A critique of the modern Republican Party

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Foreword: There will be the accompanying critique of the modern Democratic Party coming next week.

In the race for the Texas Senate seat up for grabs this November, former Republican Presidential candidate Ted Cruz, has apparently called on his old campaign trail nemesis  Donald Trump to help him campaign in the Lone Star state.

With a strong Democratic challenger in the form of Beto O’Rourke, some recent polls have put the prospective Senator as little as 1 point behind Ted Cruz.

Some analysts in the mainstream media put Cruz’s poor showing in the polls down to the “Blue wave”, that according to some pollsters is going to cost the Republicans the house and seats in the Senate.

That may well be a contributing factor, but there is arguably a far greater one that will more seriously affect the outcome on Election Day.

The coverage of contemporary politics by much of the news media has degenerated to the point where the Republicans are portrayed in an almost sitcom fashion, as “Donald Trump and friends”.

This lack of “clean air” in which other Republicans can share and promote their message is forcing Republicans from across the country to increasingly lean on the President for political firepower in the run up to November.

This has only intensified the identity crisis the Republican Party has been suffering from ever since Donald Trump won the party’s nomination for President.

Other than Trump’s huge political presence there is no real cohesive message coming out of the Republican Party as a whole, it is a scattered jumble of idea’s from all over their side of the political spectrum. As a result Trump remains front and centre going into November, as he likely will going into the future.

However, in order to remain competitive the Republican Party must show that it has an identity of its own, something that extends outside of President Trump’s immense political shadow.

Trump may have great appeal to the Republican base, the polls well and truly reflect that. But Republicans need to appeal to independents and even right leaning Democrats should the candidate have that type of character.

Meanwhile the Democrats have rebuilt their policy platform in the wake of their shock 2016 election defeat. The Democratic Socialist ideology is front and centre, with its standard bearers Alexandria Ocasio-Cortez and Elizabeth Warren spearheading the charge toward November.

The Democrats are showing a level of unity that should be coming naturally to a Republican Party that controls Congress, the Senate and the White House.

Instead the Republicans are currently a party that struggles with its own internal divisions, with battles over the correct level of conservatism the party should embrace constantly raging in the background.

These internal divisions have already inadvertently or otherwise effectively torpedoed the Speakerships of two of their own in recent years, John Boehner and Paul Ryan.

If the Republicans are to have their own vision for the future that extends beyond that of President Trump’s, they must unify their party behind a cohesive message they can all agree on, no matter how begrudgingly.

Arguably the greatest Republican President Abraham Lincoln once said “A house divided against itself, cannot stand”. He was talking about the unity of the United States, but it applies just as well to the Republican Party.

Socialism is like a loaded firearm and Democratic Socialists are waving it around wildly at everything that ails America.

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The Democratic Party is currently riding a wave of support from its left, brought about by the agenda of the party’s new defacto spiritual leader Alexandria Ocasio-Cortez.

The S word once associated with being run out of politics entirely in the United States during the early years of the Cold War is now on the tip of everyone’s tongue, Socialism is back.

This “new” brand of “American Democratic Socialism” seeks to emulate the policies of countries where socialist policies have in fact been successful and relatively sustainable. Examples of that include Scandinavia, Australia, New Zealand and Canada to name a few.

Australia for example is considered a “socialist nation”  (which it isn’t) by some Democrats because of its strong commitment to universal healthcare and the welfare state across most of the political spectrum.

However, neither of Australia’s major parties would even consider implementing some of the policies that are fast becoming the foundation of the Democratic Party’s platform heading into November’s Mid Term elections.

For example here a few comparisons between Australia and the Democrats plan for their utopian America.

Abolishing ICE – Australia has some of the toughest border enforcement legislation in the world and also heavily punishes illegal immigration. Illegal arrivals are sent to offshore immigration detention centres on Pacific islands like Nauru or Manus Island until such time as their applications for asylum can be properly assessed.

For example here is an example of advertisement run by the Australian government to dissuade illegal entry to Australia by boat.

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A guaranteed job for everyone – No mainstream Australian party would consider something that economically reckless, that flies in the face of all conventional economic and social wisdom.  Political parties on the fringe have considered programs like a universal basic income (UBI), but even the majority of them would not seek to interfere so blatantly in how companies choose to run their businesses.

Housing as a human right – Australia has some of the most expensive housing in the entire developed world, with both Melbourne and Sydney ranking as more unaffordable than San Francisco when compared by price to income ratios. Implementing this kind of policy would be even more expensive per capita than it would be in the United States.

There seems to be a prevailing idea amongst Democrats in favour of Democratic socialism, that somehow they can do better than countries where socialist policies have been in place for decades and the general public overwhelmingly supports them.

There is certain hubris in that idea, that the Democrats can simply superimpose the successful socialist policies of other nations on the United States.

But it goes even further than that, they believe they can somehow go even further in the promises of their version of a utopia, where there are no borders, no homeless and no unemployed.

Ben Shapiro made the argument in a recent article in the National review that cultural factors must be taken into account before simply imposing the successful socialist policies of the Nordic nations on to the political and social landscape of the United States.

Shapiro is of course absolutely correct, what works for one country with its own cultural idiosyncrasies and singular national viewpoint isn’t necessarily going to work for another.

Making socialist policies work is not the piece of cake many on the left believe it to be, finding an equilibrium between what is economically, politically and socially possible can be an at times impossible balancing act.

Numerous countries have gone down a socialist path before, many of them unsuccessfully because they failed to find an adequate balance between all the different factors that socialist policies face.

If the Democrats do indeed implement their entire wish list of Democratic Socialist policies in the United States, they will be attempting to implement a level of socialism that has never succeeded anywhere in the world.

Attempting to enact socialist policies is a bit like handling a loaded firearm, it is a weapon that can be an effective tool in the battle against poverty. But only when they are used in moderation, carefully targeted and used properly by experienced professionals.

What the Democratic Socialists seem to be currently proposing is the usage of socialist policies to completely transform American society. With those who would be enacting the policies having no real prior experience on the implementation and sustainability of large scale socialist legislation.

Socialist policies are a potent piece of policy firepower, wildly waving it around at everything that ails a nation like the Democratic Socialists are now, is a recipe for legislative missteps and policy mistakes that will have serious long term consequences on a national scale.

Trump’s Presidency may be like a bull in a China shop, but it has delivered real results for Republicans

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At first glance Obama and Trump don’t appear to have anything in common other than they both made it to the highest office in the land. But when one looks closer at their individual political circumstances in their respective first terms and the electoral landscape after their first election victories, striking similarities begin to emerge.

Obama was elected in a landslide victory, which also handed the Democrats overwhelming control of both Congress and the Senate.

Trump was elected in a narrower victory than Obama in terms of the Electoral College, but he was nonetheless was elected with a large majority in Congress and a sufficiently large majority in the Senate.

Both Presidents effectively had the ability to pass whatever legislation that they could get their Congressional and Senate Colleagues to agree with. These large majorities in both halls of Capitol Hill coupled with a President of the same party are relatively rare. They are great opportunities to pass bills that are kryptonite to the party on the other side of the aisle, that would never pass under normal circumstances.

The Obama administration largely failed to capitalize on the large Democrat majorities in both the House and the Senate while they had the opportunity.

If the Obama administration had of made “Obama care”, a single payer universal health care system for example, their priority in the first two years they could have gotten a system much closer to the one they wanted. Instead Democrat concessions made necessary by a much less friendly Capitol Hill later in Obama’s presidency, led to Obamacare being “ineffective” and “compromised” according to some policy analysts.

Trump on the other hand has in relative terms run riot with his policy agenda despite having a smaller majority than Obama did during his first two years.

The Trump administration has passed large tax cuts, for both personal income tax and corporate taxes with relative ease given the policy deadlock that usually defines Capitol Hill.

In addition to that Trump has cut 16 regulations for every new one fulfilling the ideals of Libertarian Republicans the country over.

Both Trump and Obama started out in very similar positions, but one administration has been willing to severely rock the boat in order to pass the bill’s they wanted. The other was trying to mend fences and build bridges the other side was never interested in, in the first place.

In essence Trump is the Anti-Obama, a bull in a China shop figure who doesn’t use a scalpel when a hammer will do. But his hammer job on U.S politics has given the Republican Party and Trump supporters things that have been on their wish list for decades.

Obama on the other hand delivered many Democrats disappointment that he didn’t do more when he had the chance, leaving many die hard Democrats hopeful that next time will be different.

The censorship of Alex Jones is just the beginning

Censorship

The removal of Alex Jones content from all the various mediums is still sending shockwaves throughout the free world. It turns out there are indeed limits to free speech on the internet even when you are obeying all the relevant laws.

The intricacies of the right to free speech in the United States tends to be somewhat understood by some Americans. The first amendment protects the right to free speech from the government; however it doesn’t protect it from corporations or private institutions.

So while Alex Jones effective ban from most of the mainstream internet platforms is perfectly legal, it very clearly goes against the spirit of the first amendment and the very concept of free speech that many Americans hold extremely close to their heart.

According to a Pew research poll done in September 2017 a large majority of Americans under 50 now gets their news from the internet, rather than the TV and that number is growing by the day. Going into the future, people are going to increasingly get their news and current events information from the internet that is why it is so important to protect it from censorship.

Shielding Alex Jones’s Info Wars from censorship in actual fact, has almost nothing to do with Alex Jones at all; it is about protecting content creators from censorship. Because ultimately who decides what is acceptable or not?

Political extremists would love nothing more than to silence their harshest critics, removing them from the World Wide Web entirely and effectively kneecapping their movements in one fell swoop.

There are those who are celebrating the removal of Alex Jones’s content from most of the mainstream platforms, but they don’t realize the censorship Rubicon has been crossed. The leadership in charge of companies like Facebook and YouTube that define the modern internet, now have the power to decide who’s content survives an ideological purge and who’s doesn’t.

No one knows what the next Facebook will be and who will control it, but one thing is certain that person will have an almost unimaginable amount of power.

In recent years political discourse has become increasingly polarised, even individuals with relatively centrist viewpoints like Toronto University Professor Jordan Peterson for example are routinely attacked.

Jordan Peterson

Peterson’s speaking engagements are often protested and condemned by political extremists that believe that his pro free speech platform is somehow akin to a rerun of National Socialism in 1930’s Germany.

He is routinely accused of being part of the alt right and is frequently labelled a Nazi simply for disagreeing with those on the militant left. The disagreement is on issues that most people consider to be on the political fringe, such as compelling individuals to use new gender pronouns.

The militant left trying to classify Peterson as a Nazi is an attempt to not only censor his message but remove him from the debate entirely. They have no real counter to his arguments so instead of attempting to debate his message they simply try to knock him out of the discussion entirely.

On the face of it Jordan Peterson and Alex Jones have nothing in common; Peterson is a well centered academic preaching a message of responsibility and self-improvement. Jones on the other hand is off the deep end at times, ranting recently about the Psychic Vampire conspiracy and the Inter-Dimensional war on Joe Rogan’s podcast.

What they do have in common is that there are those on the extreme political fringe, who would love to remove both of them from the political and social debate for their apparent sins against their personal sensibilities.

By silencing Alex Jones we take a step towards a terrible outcome, censorship of the only completely free medium we have ever had in the history of humanity.  This censorship will start slowly like most steps to shut down debate and censure free speech.

Today its people like Alex Jones, but who will it be tomorrow?