Month: April 2010

Aussie Housing blowing Bubbles

I’m extremly busy at the moment. I’ll provide an update soon, but it the meantime I’m going to just link to some interesting things I would have written about if I had the time.

2 bubbles remain

from the Daily Reckoning- Australia

The Australian housing bubble seems to be getting a lot of press lately. The World Socialist Web Site (WSWS) has thrown a real left ball* with its article on the matter:

“Household debt in Australia is now a higher percentage of GDP than in the US. If Australia has so far dodged the worst effects of the global crisis, this is because its private sector has not yet-in stark contrast to the rest of the world-deleveraged, that is, reduced its ratio of debt to assets. Such a development could be triggered by a significant fall in house prices, the first signs of which might be now emerging. Despite the housing bubble, the number of mortgages entered into by owner-occupiers (as opposed to investors) fell for a fifth consecutive month in February and was 22 percent down from the June 2009 peak.”

* cross between “coming out of left field” and “throwing a curve ball”

Wednesday’s Daily Reckoning pointed out that even the heroic International Monetary Fund has decided to have its two cents on Australian property:

“In its Global Financial Stability Report published last night Australia time, the IMF wrote that, “The dramatic rise in residential property prices in recent years, especially in Australia, Ireland, the Netherlands, Spain and the United Kingdom has heightened concerns of an asset price bubble and thus the likelihood of a sharp price correction.”

A more reliable evaluation comes from Jeremy Grantham, who has done a detailed study of bubbles and concluded that two remain: The UK and Australian housing bubbles. Check out an interview of him here – but be warned the interviewer is awful. Grantham also has some harsh words for central bankers, which makes the interview doubly worth watching.

Gen Y is coming to their property buying senses and may be the first to stop buying into the sucker’s game of relying on capital gains and ignoring cash flows. But it may not be by choice. The Age reports:

“More young Australians see themselves as lifelong renters as the dream of home ownership fades, a new survey has found.

“The prospect of onerous debt has soured the hopes of more than half of generation Y members surveyed in a poll of new home buyers and perspective purchasers this month.”

Regardless of whether it’s a rational response to unaffordable housing, or just the end of a bubble, homeowners could soon be hit hard if Gen Y doesn’t start buying. Especially overleveraged and invested “home” owners. Funnily enough, gen Y might find themselves with relatively affordable housing when it’s all over. Hopefully the bubble mentality will have disappeared for good.

Lest We Forget

They shall grow not old, as we that are left grow old:
Age shall not weary them, nor the years condemn.
At the going down of the sun and in the morning
We will remember them.
Lest We Forget

April 25th is ANZAC Day, a national day of remembrance in Australia and New Zealand, so name for the men of the Australia and New Zealand Army Corps (ANZAC) who fought at Gallipoli, Turkey in World War I.

In 1915, Australian and New Zealand soldiers formed part of an Allied expedition that set out to capture the Gallipoli Peninsula, under a plan by Winston Churchill to open the way to the Black Sea for the Allied navies. The ANZAC force landed at Gallipoli on 25 April, meeting fierce resistance from the Turkish Army. What had been planned as a bold strike to knock Turkey out of the war quickly became a stalemate, and the campaign dragged on for eight months. News of the landing at Gallipoli made a profound impact on Australians and New Zealanders at home and 25 April quickly became the day on which they remembered the sacrifice of those who had died in war.

Every year, all around the world Aussies (Australians) and Kiwis (New Zealanders) will pause for a day and remember the sacrifice made by those who have gone to war. Many people make something of a pilgrimage to the site of the original battle in Turkey. As suggested on Sam in Oz’s blog, it would be like the descendants of the Japanese pilots who bombed Pearl Harbor holding an emotional service beneath the Japanese flag in Hawaii each year.

For me, ANZAC day is profoundly sad. The dawn service is haunting, but meaningful. It is a day that people of all generations come together. You’ll see old diggers (soldiers) sharing a beer with younger people and later in the day, a rowdy game of two-up will begin. ANZAC day then becomes a celebration of mateship, something the Aussie culture values over most everything else.

Having lived in California for the last few years, I witness many of the cultural differences between America and Australia. One of the most obvious is how each country remembers war. American will remember the grand victories and the war heroes. Australians will commemorate a massive military defeat where mateship and courage are more important than the winning. One of Australia’s most remembered war heroes was Simpson, the man with a donkey. At Gallipoli he used a donkey to carry wounded soldiers to the dressing station and gained a reputation for being undaunted by enemy fire. On 19 May 1915 he was killed, and though he was mentioned in orders of the day and despatches, he received no bravery award. The myth-making began almost immediately after his death, and he soon became one of the best-known images of the ANZAC experience.

Here in San Diego we will be holding a service for ANZAC day and we will be heading to the pub for two-up afterwards. I will be giving my thanks to those men and women who died in the service of their country, and I will be hoping that we never have to witness the horrors of war again. Unfortunately, that is not how human nature is.

Photo by: State Library of Queensland

We Are Getting Away From It All

After a horrible week, Brendan and I are getting away for the weekend. We’ve both been so busy that we haven’t had time to plan anything. We are therefore going to do something we rarely do….be spontaneous. We are going to get into the car tomorrow, pack some clothes, pack the bug-out-bag in case we can’t find accommodation and go somewhere. The car rarely gets used these days, so Brendan has checked it for functionality 🙂

The general plan is to go in search of California Wildflowers which are apparently quite spectacular after all this rain we’ve been having. Other than that….who knows.

In the mean time, hopefully we can escape the SoCal seismic activity for a while. It’s starting to bug us.

We’ll be back next week. Have a great weekend.

How Will We Cope When Systems Begin to Fail?

First of all….let me say Wow! Thanks to everyone for the illuminating discussion on my previous post. I’m still digesting all of your comments and haven’t had the chance to add my two cents worth yet because today has been ‘one of those days!’ Prepare for me to vent.

On Friday my work computer came down with a symptom I like to call The Blue Screen of Death. It was taken away to whereabouts unknown and then returned to me today. I eagerly booted it up, keen to recover the ever so important essay I had been working on like a crazy woman for the last few weeks. It was at that point that I discovered that everything is gone….lost….deleted. I could have cried (in fact I might have a little). I’m ok (sort of) losing the everyday work stuff because I can ask people to resend me everything I lost. I am however, devastated to lose the essay I had put long days into researching. All that research is gone and I have to start again.

But that is not what I want to talk about today. I want to talk about my reaction to losing EVERYTHING on my computer. After a couple of glasses of wine and a few hours of hindsight, I’m prepared to dissect it.

So….. I lost all the data on my computer. Nobody died. I didn’t lose a limb. A piece of technology failed me…..That is all. So why did I react like my world was coming to an end?

This got me to thinking.

How would we react if all the bank’s computers died? How would we get our money? How would we know how much money we had? Where does our ‘wealth’ go?

How would we react if we had rolling electricity blackouts in our district? How could we pump gas (petrol)? How would water get pumped to our house? How would our effluent get pumped away and treated? How would we cook our food?

How would we react if a foreign country denied us access to oil? How would we get food from the supermarket if the trucks don’t come? How do we get to work to earn our money if we can’t fill the tanks of our cars?

It got me to thinking….We are so reliant on ‘the system’. The system is so reliant on technology. Technology is so reliant on energy.

It got me to thinking….How will we (as a society) cope when systems begin to fail?

Photo by: StarrGazr

What on Earth is to Become of the Next Generation?

Photos collated by pardeshi on flickr

I discovered this essay on Automatic Earth yesterday. The author is VK, a 23 year old man who lives in Nairobi, Kenya. I found his essay to be interesting because it is indicative of the generational rift that is forming. It’s something I’ve been observing and began commenting on it in my post on Baby Boomer retirement. He says a lot of things the Millennial’s (born 1982-200?) and younger Gen X’s (born 1961-1981) are obviously feeling. While it is just words for now, I do wonder how angry this young generation might get when they realise they’ve been dealt the scraps of industrial civilisation.

VK: I was thinking of writing something about the age of consequences that we have entered. With the world going all topsy turvy and unending chaos. I wanted to write something about the decline of complexity, an age of payback or blowback but before I do that, I reckon I want to thank the old farts who got us here. I mean the baby boomers -and gen X’ers to some extent-. No really, I want to thank you from the bottom of my heart from Gen Y. It is not even conceivable how ridiculously spoilt the boomers and Gen X’ers are.

You had everything, and you give us nothing. Now that’s a gift worth giving isn’t it?

Where to begin on the gifts that just keep taking from us. You saddle us with your debt burdens, your legacy costs. You use our names and paint little bullseyes on our dreams and hopes and shatter them with the gift of debt. Trillions upon trillions you’ve saddled upon us to save your McMansions, your stocks, your portfolios and your yachts. Thanks for that.

Youth unemployment across much of Europe and the US is hovering between 20-25% with Spain at 45%. This doesn’t even count underemployment, where the youth have been even worse hit. Unemployment and underemployment among young people could be as high as 40-50% in much of the world. So you gift us with debt as well as with no jobs and low wages!

Why do I feel like a PhD in Greece who’s serving fat tourists on a beach earning €700 a month, or maybe the Italian kids who can’t afford to buy their own house or maybe the Australian kid who was sold out by his government into buying houses that (s)he can’t even afford, in an effort to prop up ridiculously over-valued home prices. Or maybe it was the American kid who got out of college with a huge debt burden and now can’t find a job or even get a start in life because of your reckless greed and exuberance to party. Thank you, you’re so kind and gentle and giving.

I thank you also for the environmental gifts you have given, pollutants, CFC’s, methane and carbon. Dirty rivers and smogged-up cities. Dead babies and frankenseeds. Thank you so much, we’re well past the climate change tipping point at 350ppm, the permafrost meltdown will come to us, from Russia with love, adding god knows how much methane into the atmosphere.

Thanks for the making Australia potentially uninhabitable in a few decades thanks to your desire to garden your quarter acre of suburbia, thanks for ripping Alberta apart, thanks for damming the rivers, for the need to wear face masks in cities just to breathe and turning the Pacific and the Atlantic into great big giant garbage patches.

The rivers will dry, the seasons will alter, add on top of that top soil depletion, phosphate production decline and a smattering of freak weather incidents and we’re all set to have a rocking good time. Thanks. It’s great to know that because you couldn’t live without your iPhone, your double cheese burger and holidays to Florida, you have given a gift that will just keep on giving for multiple centuries.

It’s also great to know that since you couldn’t understand urban planning and build right rail and tax people for driving cars and provide subsidies and incentives for bicycling. You were just too hard headed and stubborn, you wanted it all. You still are and you still do.

No limits, fast muscle cars and cruising to your local drive-in with that hot guy/ gal who turned fat 3 years or 3 decades later on a steady bloated diet of fructose syrup and is kept alive seated, forget standing, with prozac and cialis. You wanted it all! You didn’t want to understand either peak oil or its effects on generations ahead. Let me say it simply, the world is finite. Hence logically it has finite resources. Technology can only do so much, without hitting the brick wall known as the laws of thermodynamics.

You came up with all sorts of excuses, in the 1970’s it was,”This is bullshit, there are no limits”, in the 1980’s you said, “there might be limits, but the market will solve them”, in the 1990’s you said, “markets can be inefficient, but technology will save us, magic bullets people!” and in the naughties you said, “Do I look like I care about you? we’ll all get rich selling houses to each other and stealing our kids futures, they suck anyway”

So thanks, for this gift, you used up the easiest and most precious finite resources discovered by man in about 1000 years, the last 50 have seen you grab and squabble harder than ever before. Thanks for leaving us with all the hard to find, tough to extract energy sources with such low marginal rates of return that civilization might not survive. You’re all heart and a bag of gold to boot.

So thank you really, you had a blast, a great time. You had Elvis, the Beatles, Dylan, free love, cheap oil and free money. You leave us a bitter ponzi scheme. A world burdened with nearly 7 billion people as you couldn’t stop shagging each other now could you? You leave us a world so polluted and so close to the edge that we’ll wonder where to get our next meal from. A world so saturated with debt and bleak employment outcomes, we’ll be servicing your debts forever and then some more.

You’ve sent your kids to die. In wars where rich men argue. You’ve sent your kids to the abyss. With environmental recklessness and greed. You’ve sent your kids to the house of pain and broken dreams. With your ponzi finance schemes. You’ve sold us off to satisfy your strange urges and feelings, your own inadequacies and insecurities and misgivings. Thanks a quadrillion for that! I know you did it all for us, to make us feel better and to give us a bright promising future!

Now please, let the kids sort things out. You geezers should take a hike. Quite literally, go to a park, go trekking, like try the Great Beyond. You’ve done enough damage as it is.

Where in the World? Aircraft Boneyard, Arizona, USA

In 2008 I visited the place where military aircraft go to die. It’s called the 309th Aerospace Maintenance and Regeneration Group (AMARG), but it’s more commonly known as the ‘Boneyard’. It houses at least one of every plane flown by the U.S. armed forces since WWII and it’s believed to be the largest airplane graveyard in the United States.

You can also see some pictures from Google Earth which show the amazing variety of aircraft here.

I wonder how I’ll explain these aircraft to my grandchildren. They might never get to experience what it is to fly. And here I am, an Aerospace engineer taking it all for granted. Somedays, it does my head in.

Check out more photos from my travels

Independence Days – Everyone’s in a house buyin’ frenzy

Photo by: mugley

Lately I’ve been having quite a few Aussies asking my advice about buying a house. I’ve been telling them that I think that the Aussie housing market is in a giant bubble and due to correct sometime in the not too distant future, but mostly that’s not what they want to hear.

I understand why they ask my opinion, since I have bought and sold a few houses in the last decade. What I don’t understand is why they ask my opinion if they’ve already made their mind up to buy the house. Is this just a case of people only hearing what they want to hear? Do they just want me to tell them they are doing the right thing? Do they figure since I bought properties in the past that I think that buying property is always the right thing to do?

During one conversation I was told, “But everyone on TV says the property market is going to go through the roof in the next couple of years!” And I guess this gets to the center of the issue. House buying mania has come to Australia. The media is sprouting on about how the market is just going to keep going up and if you don’t get in now, you’ll miss out. People buy into this, literally. The fact that a number of people in my life have contacted me this month is simply an indication that the mania has spread far and wide.

Bah! What do I know? I’m not on TV. I hope for everyone’s sake that I’m wrong. I really do. I’d like to be wrong about so many things, but I guess only time will tell.

Preparedness

  • We had an interesting office function on Friday. It was an ‘Earthquake Preparedness and Team Building’ event. That earthquake last weekend has people here rattled (so to speak). Even long time Californians who are used to the Earth shaking said that they were scared by that 7.2. Most of them take Earthquakes for granted and I think I’m the only one in the office who has an emergency kit already prepared. Obviously we Aussies are not quiet so blasé about Earthquakes since they are rare on our continent. Anyway, the point is: After Friday, everyone has agreed to pool resources and put together a 72-hour kit for the office. This is great! I didn’t even need to be the one to suggest it. I think they already think I’m a little weird, but mostly they put that down to cultural differences 🙂

Grow some food

  • I’ve been so slack in the garden lately. Watering, weeding and harvesting are all I’ve managed this week. I really should be sowing our Summer crops. Motivation…..Where are you?

Reducing Energy Dependence

  • I think I briefly mentioned a few weeks ago that Brendan has been doing some consultancy work for a start-up renewable energy company here in SoCal. He has been designing a complete off-grid system to run some equipment for a large company. It’s been a big learning curve for him, but very worthwhile. He asked me last night whether we can go off-grid for electricity when we get back to Australia. Umm…..of course! I always planned to get off-grid solutions set up as much as possible. We’ll likely be renting for some time when we get back, so we’ll probably just set up a small, portable solution to power essentials like a chest freezer, some cooking, lighting and a laptop.

Hedge against disaster

  • I’ve been reminding my friends here in America to make sure they have some cash out of the bank and on hand in case of emergency. I have an uneasy feeling about the US currency and the banking sector here. It is always a good idea to have some cash on hand in case the banks declare a bank holiday (it happened during the first great depression) or the ATMs stop working due to power failure. News from Citigroup just confirms that something is up:

Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change. Read more

Links – Week 14, 2010

Photo by: mugley

I haven’t been doing much general reading this week because I’ve been focussed on writing this essay on how peak oil is going to effect my organisation. It had become bigger than Ben Hur…….and then my computer crashed and hasn’t recovered. I’m trying not to panic about losing all that work….so you’ll have to forgive me if I’ve been a little distracted.

Regardless….here are a couple of things I found interesting around the interwebs this week.

The population debate in Australia seems to be heating up. I think this may well be the issue the next election is won or lost over. We’ll see.

When Size does matter – The PM needs to put flesh on his population policy before the issue explodes.

That 35 million-plus number has hung out there in the interim without much supporting architecture, mobilising people who are not instinctively culture warriors on immigration, or zero-population-growth environmentalists; people who struggle to maintain quality of life in Australian cities, where infrastructure is already straining to meet the needs of the existing population. People who would recoil from the idea of such an increase. Sensible people who vote.

This is an interesting article on the intersection between Climate change and Peak Oil. Venezuala, one of the major exporters of Crude oil to the US may be struggling to meet it’s production targets because of drought.

The Peak Oil Crisis: Countdown at the Guri

Now, if you are wondering why a falling water level in the Venezuelan highlands should be if interest to Americans, the answer is easy. Despite years of political tensions between the Chavez government and Washington, the U.S. is still importing some 800,000 barrels a day of crude from Venezuela. Should these imports go away, it is likely to come suddenly – shipping oil from Venezuela to Louisiana only takes two days — we are going to see an instantaneous jump in gasoline prices. Given that the U.S. is at the top of President Chavez’s least favorite countries list, it does not take much imagination to figure out who would be shut off first if exports have to be curtailed.


Pessimism; Optimism; Realism

“The pessimist complains about the wind;

the optimist expects it to change;

the realist adjusts the sails.”

~ William Arthur Ward

I came across this quote the other day and thought it explained perfectly how I see my view of the world. People often think I’m a pessimist because I talk and write about unpleasant things. I guess they think the way to deal with unpleasant things is to ignore them, and ‘hope’ they go away. Unfortunately, expecting the woes of the world to be magically fixed is not necessarily the best way to deal with the predicaments we are facing. I think that a better solution would be to acknowledge the situation as it is, and then work towards living a life that will be rich and meaningful even if these events do come to pass.

Knowing which way the wind is blowing and having an idea of where it will be blowing in the future allows us to adjust our sails so we are productively moving in the right direction, no matter what.  If we simply sit by and complain about the wind or hope that it will change, we risk being buffeted by the enormous storm coming our way. So, plot your course, keep an eye on which way the wind is blowing,  set your sails and enjoy the ride.

Photo by: wili hybrid