Building the mortgage revolution

Most Australian households take home less than $50K a year. That’s not average wages, that’s average income per household. There are plenty of households, and people, that don’t pull a wage. See ABS stats if you’re curious.

Despite this, the vast majority of those households manage to acquit themselves financially. It’s called surviving, and the alternative is homelessness.

This is in stark contrast to the recent track record of the well-rewarded employees of some of the world’s largest banks during the global financial crisis.

I don’t capitalize the global financial crisis, because logic is hardly a proper noun.

It’s a banking crisis. It started when a whole bunch of people, a lot of them coked to the eyeballs, played pass-the-parcel with a whole lot of other people’s debt. They bundled these debts up and sold them as a bet – that the debts would be paid off.

Some very large banks bought into the bet and did their dough big time.

Corporate culture is wholly set against bad news. Bad news meant the sack, or at best, a transfer to somewhere harmless, and less lucrative. At the very least you were risking your bonus, which, as IPO shares picked up in contra deals with institutional investors – our superannuation, were almost certainly going to be a cashable asset, at a profit; certainly worth more than $50K a year.

So we leave a bunch of overpaid junkies in charge of this section and they all smile and nod and rake in the cash – then it all goes to shit.

The commodity was fundamentally flawed. It came from a drive to raise a whole pile of debt, and pass it on. It was a scam; a Ponzi Scheme (now there’s a proper noun!); a screw-up, and most certainly a poorly researched asset.

It came off the back of an explosion in credit for people previously considered a marginal security proposition, which morphed from easily available credit cards to mortgages on marginal housing acquisition; marginal in the sense that it relied on a housing bubble for people to make money and repay their mortgages. Joe Bageant was writing about it 2005. It was hardly a secret.

So the US housing bubble bursts and a chunk of assets are worthless. The debtors walk away from the wreckage and move to a trainer park outside Toledo. The banks stop giving each other money to get people into debt to make money to get people into dept to make money..,

As Kurt Vonnegut Jr. was wont to say: and so it goes.

In Australia we have four main banks. Outside of them there are a range of outfits from credit unions (some of which have aggregated over the last decade), community banks (which are more than Jimmy Stewart in It's A Wonderful Life telling everyone that their money was invested in their lives), to payday lenders and swarthy chaps in dark cars in supermarket car parks.

When the money dried up internationally the Rudd Government moved quickly to shore up the four main banks, the spine of Australia’s financial system. Our money.

Some people thought we would hit the wall hard, Steve Keen the most celebrated example. Australia was a country that has slashed employment in traditional primary industries, let its manufacturing industry roam free across Southeast Asia and kicked on with digging up rocks and a service economy which relies on the money churning around.

The Australia’s big four banks injected a lot of money into the Australian economy by borrowing quick money, and lots of it, and lending it to people. That was where the American banks came in. Problem was the American Banks had run out of dosh. Unless the Australian banks got money, and got it fast, the whole joint was going to end up like a Steinbeck novel.

The Rudd Government, or more accurately Treasury, put together a plan that was equal parts devious and genius.

The Rudd government couldn’t give the banks cash, because this was a free-market economy and the banks were at the epicenter of free-enterprise through offering credit. At the very least they were creating money that people needed to pay the bills and make Gerry Norman richer, etc.

The government gave the banks a AAA credit rating, underwriting them and making them a safe haven for what money was still in circulation internationally, which was still substantial despite its epicenter, Wall street, watching its assets diminish daily.

And they gave a lot of money, something around the size of the entire NSW budget, to households.

Ken Henry said go big, and go households. And they did, and why wouldn’t they, politicians love to spend money, but for the last thirty years they’ve been no good at raising it.

Most Australian households earn less than $50K a year after tax. They get along by running a continuing line of credit with financial institutions. In recent years it has ballooned to over 100 per cent of disposable income. So the households gave it to the banks.

We are a service economy. A lot of people run around in white vans with ladders, and utes, while a whole pile of invisible others cram into trains and buses from 6am onwards in our capital cities. It has been pretty much business-as-usual for this part of the economy. The concerns they had in 2007 are pretty much the same concerns they have now.

The Rudd government decided to call this Keynesian act of largesse to the major banks names like The Building the Education Revolution, and the Home Insulation Scheme, and so forth. There’s probably a pile of others – all with the same object, getting people who have mortgages paying their mortgage. By a good old-fashioned bit of pump priming, jobs for blokes with utes and ladders popped up like mushrooms.

Even those that don’t have mortgages have helped by creating a jobs boom at our retail oligopolies. And those people with the name badge at K mart certainly have a mortgage, or want one. You must really need money if you’re prepared to work retail for it.

This explains why the Rudd government has seemed distracted about the detail of the implementation side of all this spending, because its not about the project – it’s about making sure the money go round continues, with the bottom sink, or sump, being the banks.

It’s the reverse trickle down effect and it has worked a treat. It’s objective was to shore up the financial sector, and its done that in spades.

Meanwhile, the structural problems – infrastructure bottlenecks, skills shortages, overpriced housing, bubble merrily along as if nothing has happened.

And for people on $50K a year and less, nothing has.

Debt and Destruction

Figures released in the silly season reveal that Australians are up to their ears and beyond in hock.

Figures released by the Reserve bank show that debt held by the household sector is somewhere north of a trillion dollars (That's $1,200,000,000,000.00), equaling our (very) Gross Domestic Product.

I predicted back in January 2008, incorrectly as it turns out, that the Global Financial Crisis would deliver a credit squeeze. The bailout of the banking sector didn't allow this, and the short term stimulus activity meant people could keep on racking up debt. This has continued to fuel an asset bubble. People are *over* the GFC, and, despite sluggish seasonal sales figures, appear to be tucking into business as usual with "no interest and nothing to pay until 2011", as Gerry Harvey puts it.

How long they expect this to go on before it begins to cause serious pain in the household sector is beyond me. We have created a population bonded in servitude to credit providers. The household sector is now owned by (largely) the big four banks - and, Australians being Australians, they will do what they are told.

We are two nations. A corporate nation and a household nation. The corporate nation drives the political and economic agenda and the household nation is left sucking on the social agenda.

When Rudd beams his message into wide screen TVs bought on easy credit into the loungerooms of the country he talks in the language of the social agenda. He says things that households want to hear. It's all very fluffy and aimed at Mr and Mrs McMansion and their 2.2 kids.

When he acts, he acts on behalf of the corporate nation, and delivers on an economic agenda that addresses the needs of the corporate nation. Bank guarantees, award stripping (or "streamlining" as the neo-liberal Gillard calls it), uranium mining and handouts for polluters in the name of carbon reduction are all par for the course. Add to this a looming assault on the nation's underclass through a tightening of welfare and runaway grocery prices and you start to see a picture where Rudd is no friend to the working stiffs, and possibly the best successor Howard's supporters from the big end of town could have hoped for.

Unfortunately their partisan blindness paints Rudd as a dangerous Marxist, so they are left with the debilitating Tony Abbott as their champion. But even Turnbull could see Rudd was open to some very accommodating, corporate friendly politics.

So households end up with three fifths of sweet truck all while much largesse is divested to our friends in the ASX 200, and any number of overseas multinationals.

And because Rudd is brand ALP there are many traitorous swine on the left that will suck it up while every month it becomes harder and harder to keep the good people at Visa happy.

Oh, for a champion of the household nation.

WorkChoices Is Dead; Long Live WorkChoices

In what is looming to be a tactical victory for the Rudd Government, with accidental benefits for working Australians, Kevin Rudd has made dismantling WorkChoices a "priority". The announcement came out of Yesterday's (December 18) Cabinet meeting, where the reality of the Your Rights At Work campaign must have been laid bare for even the technocrats to understand. The Liberals are, of course, all over the place on the issue. Wets like Chris Pyne are glad to see the back of it, while Joe Hockey has declared it "dead" -meanwhile The Dead Rev, Kevin Andrews, has sprung out of his coffin to declare that it's all the way with WorkChoices still. "[Is] what we believed was for the good of Australia is no longer the case," was The Dead Kevs rhetorical question, to which this blogger poses the rhetorical answer "was WorkChoices good for any country?". The answer, of course, being no. The wrong Kevin will discover that the people have spoken if he only refers to a copy of any newspaper dated on or after November 25. It's a brilliant bit of work by Rudd & Coy. The Libs will either be wedged and forever known as the party that backs paying 16 year olds $3 an hour, or they roll over and let his, admittedly limited, roll-back go through the senate. The Libs best bet is to refer it to a senate committee in the hope that some sections of the union movement use that as an opportunity to embarrass Rudd and Coy. and expose just how many problems for working people they are leaving on the statute books. The crux of the issue is that there is a great deal of WorkChoices that will remain - the prohibition on union right of entry being the most glaring one - while many other areas; such as unfair dismissal laws, prohibited award content and the Gestapo-like Building and Construction Commission; will receive a partial, limited and delayed roll-back, if at all. We won't be going back to the lifestyle our parents enjoyed. So the inexorable trudge towards a third world lifestyle continues apace. In twenty five years of employment I've had one paid vacation, and this will become the norm for my generation and those that come after. It's pretty obvious we're going backwards. While the Liberal Party wanted to kill organised labour it appears the modern ALP is happy to watch us die by the death of a thousand prohibitive sub-clauses. Wouldn't it be great if the unions got together and formed a party to act in the interests of working people? Oh, I see we've already tried that. Well, plan B anyone?

"When we said we'd rip up WorkChoices, what we really meant was..."

On the Monday prior to the recent election John Howard said he was happy for the 2007 poll to be a referendum on WorkChoices. It was good that he was happy, because that is exactly what it had become by then anyway. The Your Rights At Work campaign showed that community campaigns do work; if the community is engaged. Just over 12,500 people across NSW got involved in the campaign. These were people, separate from the ALP, who came from all walks of life - many who had never been involved in a political campaign in their lives - who took the fight for rights at work to the streets, shopping centres, train stations, festivals and community events of our nation. If you weren't engaged at some stage by the Your Rights At Work campaign you simply weren't living in Australia for the last 18 months. It was a brand that was everywhere. And what carried that brand? Ordinary people. And many of these people had borne the brunt of WorkChoices - they'd had their incomes slashed, been sacked unfairly, had their rosters go all over the place and been bullied and intimidated by employers that took Howard's laws as a green light for bastadry. If you want examples I have heaps and am happy to share them. Which is what makes Julia Gillard's statements about not being in a rush and being "careful and measured" so sickening. Those same employers will read this gutlessness as a further green light to continue to treat human beings like shovels to be picked up and put down when needed. We are seeing this already, most notably with Telstra. What part of the phrase 'rip up WorkChoices' doesn't the Rudd-Gillard government understand?

• A credible survey has shown that WorkChoices was the reason why 5.6 percent of voters shifted their vote to the ALP
• It is highly unlikely that Kevin Rudd would be Prime Minister now if it wasn't for the Your Rights At Work campaign.
• Neither Kevin Rudd, Julia Gillard or any other ALP politician has mentioned the Your Rights At Work campaign in any report since the election, let alone thank and acknowledge both the people and the community campaign that worked incredibly hard put them where they are today.

This is, of course, being aided and abetted by the ignorant ostriches in our pathetic media, who must live in some parallel universe where the Your Rights At Work campaign never happened. The Your Rights At Work campaign WILL continue. We are not going away just so that Krudd and Gillard can schmooze the Australian business community - the community we live in comes first.

Silence Speaks Volumes

The ongoing silence from the new powers that be doesn't auger well for working stiffs, as Rick Kuhn points out in today's Canberra Times. If it can be pointed out in a Rural Press flagship then the ongoing triumphalism of the spin doctors bobbing up in pieces like this one from Andrew West in the SMH can be even more depressing for the footsoldiers in the Your Rights At Work army. Focus groups are all well in good in fashioning your message - and it is a lucrative way to fill the carpet bag - but it all counts for nothing if you can't then get that message out. This is where the tens of thousands of word-of-mouth activists came in. Focussed on 24 marginal seats they, as I pointed out on Monday, won 22 with one still in doubt. And they did this as volunteers - giving up hundreds and thousands of hours for free, reaching into parts of society where the ALP's message couldn't go - at least not in that one-on-one sense that proved so valuable. This campaign had it's TV ads and T shirts - make no mistake they made a difference - but at its core was thousands of conversations between ordinary Australians, where Your Rights At Work activists went one on one with neighbours, family, friends and strangers alike to ensure the message sunk in. For the first time in a long time the union movement started speaking out into the community. As a result the campaign attracted many non-union members as supporters - concerned about the impact of these laws on their families and communities. It's a good time for the Labour Movement as a whole to realise that it's great strength is not a few spin doctors, operators and policy wonks - but it is actually a far more powerful group - thousands of ordinary people organised into a cohesive and effective voice. It's little wonder that those so seduced by power would be reluctant to acknowledge such a strong force even if it put them where they are today. A force like that could really derail the gravy train if they, quite rightfully, demanded the government address their concerns. No, better to pretend they didn't exist - or if they did then play down their role. Remind them of what power they do have and they might start to use it. In the end Kuhn may be right - and we may all discover that Rudd is nothing but a four letter word* * An idea courtesy of Tog's Place

If you can't beat 'em

...join 'em. Despite being very cynical about the worth of a citizen journalism, my even greater cynicism about my chances of getting published in this lifetime have led me to join the blogocracy. http://distressedasset.blogspot.com/ I am concerned about where this Rudd business might lead, and whether or not he will act in our immediate best interests. I'm also considering giving a running commentary on the usefulness, or otherwise, in giving a fat rat's clacker about Anyone who says they are here to govern for all Australians has a very charitable view about Piers Ackerman and Ivan Milat. It's also a good opportunity to resurrect that great Friday evening tradition - the Tool Of The Week. Enjoy it - for what it's worth - and pop back as often as you're up for an entertaining inventory of the inspiring cesspool that is Australian politics.

Rewriting History

"It's time for a new page to be written in our nation's history." Kevin Rudd, November 24, 2007.

In the lead up to the 2007 Federal Election tens of thousands of ordinary Australians mobilised into a concerted campaign to change a government. These people re-wrote Australian history.

Yet, as soon as that victory was achieved, their efforts were all but ignored by, not just vast swathes of the media, but also by the ultimate beneficiaries, the incoming government.

The strength of the Your Rights At Work campaign comes from its acknowledgement by the defeated Liberal Party - federal director, Brian Loughnane, told media on the Sunday after the election that Work Choices had cost the Coalition key support, a statement echoed by Liberal MP and campaign spokesman, Andrew Robb.

ALP campaign director Tim Gartrell described WorkChoices as “the most important issue of the campaign”.

“It would have been more difficult to win without it.”

"I mean look at these young guys at the gate - you'd have been dragging them in here to vote last time,” said Graham Perrett, ALP Candidate for Moreton, while visiting a polling booth on election day. "This time they're here handing out cards on the rights at work issue.”

In the marginal seat of Eden-Monaro big swings were recorded in communities west of the great divide where WorkChoices was seen as a threat.

Polling done for the ACTU showed a 5.7% shift from Howard to Labor motivated by industrial relations as the key issue.

None of this would have happened without a concerted grass roots campaign - this was no astroturfing exercise - that saw the ACTU gather an email database of 180,000 addresses, from which a popular localised word of mouth campaign spread.

For over two years the Your Rights At Work campaign has been beavering away, under the radar, in 24 targeted coalition held seats.

Whether leafleting, letterboxing, doorknocking, forwarding emails, holding a street stall or collecting signatures, an army of campaigners braved everything from Darwin’s tropical storms to the snows of the Great Dividing Range to make sure that the impact of WorkChoices became issue number one across a vast swathe of middle Australians in marginal seats.

The Your Rights at Work bumper stickers, T-shirts and later house signs, became eponymous. These people were shifting voter sentiment where it mattered. Some media dismissed it as a cynical Trade Union scare campaign or stunt at best. The rest ignored it.

But the people involved in the campaign came from an extraordinary array of union and non-union backgrounds. There were the usual suspects, but there were more, many more, that became involved in a community campaign for the first time in their lives.

Many of these people took to it with a gusto lacking in the rank and file of both major parties. This is a newly politicised group of Australians, and they threw up some amazing champions.

One such example was Jo Jacobson, an articulate and savvy health worker who became the public face of the opposition to WorkChoices in the Penrith based seat of Lindsay long before the ALP had even settled on a candidate.

Many campaigners took to one-on-one conversations with their peers. In marginal Macquarie a ripped off hotel worker named Steve Eisenberger made a habit of wearing his Your Rights At Work T-shirt around his blue-collar mates - winning over a small coterie who had previously backed Howard over what are euphemistically referred to as ‘security’ issues.

There were thousands of Steve Eisenburgers operating across all sorts of groups - social, sporting, civic and cultural - to get the message out.

The word of mouth message cut through to an increasing number of Australians while Howard and Barbara Bennett remained as background white noise, drowned out by the wise words of their Your Rights At Work neighbour and their own experiences.

The community campaign was backed up by a shoestring (compared to the Federal Government’s) advertising campaign that re-enforced the word-of-mouth message.

Despite (or possibly because of) widespread support, many Your Rights At Work signs were stolen or defaced, as well as threats and acts of vandalism aimed at Your Rights At Work activists.

Still, the thousands of volunteers didn’t complain - instead they handed out their own How To Vote card on election day, separate from the major parties - in the rain, the sun, the heat, the wind. They made sure that WorkChoices was on the forefront of voter’s minds where it mattered.

Of the 24 targeted coalition held seats, the ALP won 20 and 3 are currently too close to call.

It’s an extraordinary achievement in anyone’s reckoning - so where is the acknowledgement to these Australians by either the media or the man holding the trophy, Kevin Rudd?

There was no direct mention of either WorkChoices or the Your Rights At Work campaign in the Hawker-Brittonesque pfaff that passed as Rudd’s acceptance speech.

Not much of a run in the media either. A bit of a go over at the SMAge, with Andrew West providing a bit of background in the SMH and a puff piece on the ACTU’s spin-doctors in the Age, while Mark Bahnisch and Wayne Errington in Crikey both nominated WorkChoices as a killer issue for the Coalition.

The last time a Prime Minister lost his seat - Stanley Melbourne Bruce in 1929 - it was to the secretary of the Victorian Trades Hall in a foretaste of the Your Rights At Work Campaign.

One of the key issues in 1929 was Bruce’s dream of smashing the union movement and regulated working arrangements based on fairness.

Australia said no to individual contracts in droves, and there was a landslide win to Labor. The depression hit and two years later Scullin’s Labor Government dissolved into dissent, panic and scandal.

The Rudd Government will now be faced with a plethora of conflicting policy objectives - one of which will be to screw down the price of labour. We all know that this will be borne by those least able to afford a cut in their living standards.

As early as the Sunday morning after the election Australian Business Council head Greg Bailey dismissed “fears” the union movement may hold sway over a Rudd government.

“If you listened to Kevin Rudd last night that is not an impression you would have got,” Bailey told the ABC, while over at Forbes Magazine CommSec chief equities economist Craig James said the Australian business community had been prepared for a Labor victory.

“In terms of economic policy, nothing really changes too much,” said James, in an observation that would have been news last week.

Rudd was on the 7.30 report blaming the Liberals “from day one” for threatening to be obstructive over repealing WorkChoices. They’ve already set up the fall guy and an alibi - the Senate.

Labor is said to be keen to recall Parliament to introduce its legislation to change the Howard Government's Work Choices laws, but just how keen remains to be seen.

"I hate to say it, but Costello was right when he said the new government will start rewriting history," Unions NSW secretary John Robertson told the SMH on Monday. "It's already begun and Rudd and company are out there saying it was health or education or climate change. Sure, it was a bit of all those, but the biggest issue was Work Choices."

I got a nice email from Sharan Burrow and Jeff Lawrence at the ACTU for my support for the Your Rights At Work campaign.

”Well done,” they said. “You have helped make history.”

Just like those who took on Stanley Melbourne Bruce did nearly eighty years ago.

Yes, Kevin Rudd - and the media - appears to want to write a new page in Australia’s History - a page where it is as if the tens of thousands of ordinary hard working Australians, who banded together as the Your Rights At Work Campaign and changed a government, never existed.

But after the success of our campaign so far, we are highly unlikely to go away.