Why don’t the Greens stick primarily to environmental issues and ditch their more general (and less plausible) pro-Labor agenda?   Why don’t they try to influence opinion on both sides of politics?   The resulting party might split on broad social issues but provide a cohesive platform for addressing key environmental issues.  On the right of politics there are large numbers of middle class voters who are very environmentally conscious.  It might be that this section od society provides a bigger base for environmental policies that do what Julia Dronespeak calls the ‘working families’ of Australia.

The high proportion of Greens voters who gave their preference to Labor might suggest it is this party who is their natural base of support.  Maybe that’s true.  But my impression is that among my colleagues in the universities  and generally among people I meet (a narrow and biased sample I agree) there are many Liberals who did vote Green at this election. Many more would make the switch if the Greens went a bit easier on some of their anti-Liberal and pro-Labor babble.  The result would be a stronger force seeking action on environmental issues.

The election of a Coalition Government will mean a return to good quality administration of the Howard years. Unfortunately it will not mean decent policies on climate change and it won’t create the sorts of pressures necessary to reform the Coalition so that it does place adequate weight on environmental issues.  Currently the Coalition has poor policies on climate change but it has better policies than Labor. In the House of Representatives I am voting 1 Greens with preferences to the Liberals and I will put the Labor Party last.  In the Senate I will vote the Green’s ticket.

Sunday update:  I take no pleasure in being spot on in my election eve forecasts. Not even in probably winning the ex ante tipping competition held at Club Troppo – ex post, yes, I don’t stand a chance. Well done Nick. Predicting the outcome of course does not mean endorsing it.  I can see no positive outcomes from this election – no policy initiatives being introduced that I favour that would not have occurred without it. The only general message of importance sent to the major parties is the electorate’s repugnance with the poor Federal administration achieved by Labor. The Greens will hopefully become a permanent thorn in the side of the disgruntled Labor riff-raff.

I’ve got to say I enjoyed the antics of the Labor Party cry-babies at Larvatus Prodeo – my ability to enjoy the sufferings of others has never been stronger.  Mark Banish is the court jester of student Labor politics in Australia – his earnestness and glib insights make him a possible future Labor leader in Queensland.

Last night I started to wince when wind-bag Rudd got wound up into giving a grand ex-Prime Ministerial account of election banalities. Kerry O’Brien on the ABC cut the interview short with a ‘this looks like it might go on for quite a while’ termination.   I disagree with the proposition that getting rid of Rudd was a mistake for Australia – it might have been a mistake for Labor – but we have all been saved from a further 3 years of pointless wind-bagging from this bore.

Julia Gillard looked like a sad old spinster on the eve without much going for her. She is very unattractive to look at and to listen to and a shadow of her former intelligent self. She wound into a ritualistic Labor account that focused on ‘working families’ etc. and refused to mention the massive slap in the face that the Australian people had directed at her.  I would not be surprised if Labor gets rid of her – off to the glue factory Julia dear you are well past your best.

The bloodletting inside Labor’s ranks should be a joy to watch over the next few months.  Maxine McKew let fly with a few preliminaries last night but, with luck, the smarties at the centre of Labor’s NSW right wing machine will be publicly executed.

I am glad that Wilson Tuckey looks like ending his political career. One of the most ignorant and uninteresting Coalition MPs I cannot imagine his National Party replacement could be worse.

Labor incompetence in NSW and Queensland has been savaged while the relatively competent Labor Government in Victoria has left Labor federally with strong support here.

The contrast with the athletic and optimistic Tony Abbott could not have been more obvious.  He ran a fantastic campaign and should be Australia’s next PM.  My best bet is that he will be. Standing next to his 3 attractive daughters and wife he seemed to have everything that Gillard did not.  My pity is about some of his policies. But he has re-invigorated conservative politics in Australia and my side of politics owes him a debt for that.

I voted Green in the House of Representatives with second preference to the Liberals but voted for the Liberal ticket in the Senate – in the end I could not go through with my commitment to vote for the Greens. I was a bit disloyal but not much as the Liberals effectively got my vote and I registered a protest via the Greens vote in regard to bad Liberal policies on climate change and mining taxes.  If Abbott becomes PM and appoints Malcolm Turnbull to a senior front bench role and takes serious steps to upgrade his climate change policies I will return to the fold. Otherwise more fence-sitting.

The mineral exists mainly in deep mine deposits in various countries but some of the world’s largest known potash deposits are in Saskatchewan, Canada.

Yesterday BHP-Billiton made a $US38.56b all cash bid for Potash Corporation of Saskatchewan, to secure ownership of one such deposit.  It would enjoy synergies with the nearby Jensen deposit that it already owns. It recently bought a nearby junior Canadian potash company Athabasca Potash. 

These are early days and Potash Corporation have rejected the bid – the final price might go to $US 60b.

It is a stunning move – the current bid is about equal to one-third of BHP-Billiton’s market capitalisation or, to provide perspective, more than the estimated cost of Australia’s proposed high speed broadband network.  The move while not as big as the (fortunately) failed bid for Rio Tinto it is still enormous.  In the press it is variously described as a merger/takeover.

I’ll watch developments but the planned takeover probably reflects expectations of strong continued growth in global food demands.   As the developing world develops it will not only want steel, coal and concrete – it will also want to feed itself better.

This quote from the Australian says it all:

People in Asia eat only 27.8kg of meat per head each year, compared with 123.2kg in North America and 74.3kg in Europe. As Asians become richer, their consumption of meat is expected to rise, and so more wheat and grain will be needed to raise cattle.

It has been estimated that it takes 7kg of grain to produce every kilo of beef. The population of the world is also expected to increase by half to more than nine billion by 2050, putting further pressure on food production.

Fruit and vegetable consumption is forecast to rise by a quarter to 2 billion tonnes a year in the next decade, while demand for grains and oilseed is expected to rise by a fifth.

With the supply of agricultural land declining in some areas as a result of rapid urbanisation, existing land will have to become more productive. Countries such as India and China are therefore expected to use much more fertiliser, increasing demand for potash, nitrogen and phosphates.

I think both potential leaders – Gillard and Abbott – are better politicians than their actions and words in this campaign suggest. Perhaps neither have the requisite leadership skills and they feel pressured enough to pursue ‘party-minder’ strategies.

The decision on the party to support is a difficult one. Labor seems to me an incompetent government that does nor deserve re-election. That Rudd was replaced by his own party confirms this. My traditional sympathies have been with the Liberal Party primarily because it has historically supported markets rather than politician-bureaucrat driven policy outcomes.  This is a questionable distinction these days. For example, it is Labor who are supporting the use of market-driven incentives for dealing with climate change and the Liberals who are opposing this.  This form of opposition seems devoid of principle and motivated by a vulgar populism. 

I have been a long-standing supporter of Tony Abbott and I regret that I don’t feel able to give him whole-hearted support on this occasion. On the other hand the Labor Party does no better. Julia Gillard is an appalling leader, part of the incompetent Rudd team, who has failed every test since she took over the leadership role (asylum seekers, climate change, mining tax). Labor’s claims that a 1.5% increase in the company tax rate as proposed by Abbott will drive up prices is a deliberate lie.

In the House of Representatives I’ll vote 1 Greens but probably give my preferences to the Liberals which, in my electorate, means a vote for the conservatives.  My local member is Jenny Macklin who is a weak Labor parliamentary performer but who will probably win.  In the Senate I’ll vote for the Greens - that might help to have a useful impact. In addition, I feel compelled to vote for the opposition as a response to this letter that had precisely the opposite effect on me to that it surely intended.   Thus my miserably unimportant vote will go to the Liberals where it won’t affect anything.

The notion that dealing with the massive public debt can occur after addressing shorter term economic weaknesses seems increasingly unrealistic.

I excerpt (the bold is mine):

“…….closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Such a tax hike would leave the U.S. running a surplus equal to 5% of GDP this year, rather than a 9% deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

Is the IMF bonkers?

No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

‘Unofficial’ Liabilities

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions “loans” and called our future benefits “repayment of these loans less an old age tax,” with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.

The fiscal gap isn’t affected by fiscal labeling. It’s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.

$4 Trillion Bill

How can the fiscal gap be so enormous?

Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.

This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.

Herb Stein, chairman of the Council of Economic Advisers under US President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.

And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

Worse Than Greece

Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.

Some doctrinaire Keynesian economists would say any stimulus over the next few years won’t affect our ability to deal with deficits in the long run.

This is wrong as a simple matter of arithmetic. The fiscal gap is the government’s credit-card bill and each year’s 14% of GDP is the interest on that bill. If it doesn’t pay this year’s interest, it will be added to the balance.

Demand-siders say forgoing this year’s 14% fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.

My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain “solutions.””

Kotlikoffs ‘unpleasant arithmetic’ is rejected by James Galbraith in this Economist article. The substance of his argument seems to be that the US can always inflate away its debt. If this occurs there will be a bout of world-wide inflation and geared-up debt holders generally will be advantaged.