Trump, Clinton and the third candidate

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Aussie tourist poses outside Trump World Tower, Manhattan. Photo by Laurel Wilson

Who, except Donald Trump or Hillary Clinton, would want to be leader of a nation today? The manic, 24/7 pressure of life in the top job makes old men (and women) out of youthful candidates in no time. At home, we saw the pressure tell in quick succession on Rudd, Gillard, Abbott and now Malcolm Turnbull, who no longer resembles the debonair bon vivant who aspired to high political station. In the US, Barack Obama’s eight years in the job is etched into his face.

Yet the aspirant leaders keep coming. Hillary wants the top job, even though she saw what it did to her husband, not to mention Monica Lewinsky, these days engaged in anti-bullying campaigns.

Donald Trump wants to make America great again (though no-one has yet proven when the US was ever great). Former Australian PM Tony Abbott was cited (from afar), telling high-ranking people overseas he planned to make a leadership comeback. Whether he did or didn’t say this, on his return, Abbott and Turnbull clashed jousting sticks in the House, prompting gasps and gossip amongst Canberra lobbyists.

Who’d be a world leader? US presidents get asked to make awful decisions, to wit Harry Truman’s decision to drop atomic bombs on two Japanese cities in 1945, killing between 130,000 and 226,000 people. Harry didn’t drop the bombs, but it was his head that nodded when the generals asked him if they should.

Even Australian Prime Ministers are asked to make unpalatable decisions which may come back to haunt future generations. Bob Menzies bowed to pressure from Great Britain, who wanted to test atomic bombs in Australia’s western desert. After all, they could hardly do it in Manchester or Liverpool. People would have complained.

Some impressions of this seldom-scrutinised period in our history are captured in Collisions, an 18-minute multimedia film by Lynette Wallworth. The Monthly’s Quentin Sprague reviewed the ‘immersive’ film which premiered in Adelaide and is playing as a ‘virtual reality experience’ at Melbourne’s Australian Centre for the Moving Image until mid-January. Nyarra Nyarri Morgan, a young man in the 1950s when he witnessed the mushroom cloud above the desert, recalls its impact: “the surrounding waterholes boiled and kangaroos fell to the ground under a drifting blanket of ash.”  Later, when people became sick after eating the fallen kangaroos, they mused: “What god would do such a thing.”

Harry Truman recalls approving the bombing of Hiroshima and Nagasaki. In a biography written by his daughter, Margaret Truman, Harry’s decision to over-rule the general who believed the Japanese would surrender under the onslaught of conventional bombs, was aimed at saving Japanese and American lives. Almost 80,000 died after the firebombing of Tokyo, part of a planned programme of incendiary bombing.

“It was not an easy decision to make,” Truman said. “I did not like the weapon. But I had no qualms if in the long run millions of lives could be saved.”

After a successful testing in New Mexico, Truman approved the bombing of four targets – Hiroshima, Kokura, Niigata and Nagasaki

Given the history, you do wonder about people like Donald Trump, a self-described multi-billionaire who has no material need, apparently, to live in the White House. There are bigger and better mansions and easier jobs than making America great again, or even for the first time.

Why would he want to be the one with the power to pick up the red telephone? There is no guarantee either that Hillary Clinton wouldn’t pick up the red phone.

The media is making much of the Clinton-v-Trump clash, mostly ignoring a third candidate, Libertarian Gary Johnson and his running mate Bill Weld. Johnson and Weld say they have a master plan to sneak the presidency from under the noses of Trump and Clinton.

The Washington Times reported on Monday the pair say they can change history and win the election through a combination of quirky political circumstances, voting variables and polling inaccuracies. Polling data shows Johnson and Weld have greater support in 20 states than the margin between the Republican and the Democrat, neither of whom will find it easy to snare the necessary 270 votes. One or two states could determine the outcome.

Former Republican adviser Bill Whalen agrees there is a scenario where neither Hilary Clinton nor Donald Trump wins the presidency. He told ABC Radio’s Eleanor Hall on Wednesday much hinged on the outcome in Utah, where candidate Evan McMullen has snared enough votes to win that state. It could be that the House of Representatives will decide who is best suited to the Oval Office: Trump could be deemed ‘unsuitable’ and Clinton’s election risky, as it could spark a constitutional crisis if a Federal investigation finds against her. Enter stage left, Evan McMullen, an inscrutable former CIA operative who has a theoretical chance at the White House.

Here is yet another reason to cite The Simpsons. “Citizen Kang(season 8), still rules as the best piss-take of the two-party political system. Homer is abducted by aliens Kang and Kodos who demand he takes them to his leader. When Homer explains about the (1996) election, the aliens kidnap presidential candidates Bob Dole and Bill Clinton, placing them in suspended animation and assuming their forms through “bio-duplication.” The one-eyed aliens plan to ensure one of them will become the next leader succeeds, despite their alienating habits of walking hand in hand, drooling green slime and talking in robotic voices (“Klin-ton”). Kang is subsequently elected, enslaving humanity into building a giant ray gun, to be aimed at an un-specified planet:

Meanwhile, the global media obsession with Trump vs Clinton, which promises to continue until January, provides perfect cover for our conniving government, which seems intent on homogenising the arts and making sure people who tried to get to Australia by boat go (somewhere else), and never return. Comedian Lucy Valentine suggested they should make this law retrospective to 1788.

Of lesser significance, maybe, but mean-spirited nevertheless, Education Minister Simon Birmingham announced cuts to student loan funding for 57 creative arts diploma courses including circus, screen acting, stained glass, art therapy and jewellery. Additionally, the government capped loans for creative diplomas to $10,000 compared to $15,000 for agriculture and engineering.

Birmingham said the changes were made to focus on courses which would ‘benefit Australia economically in the 21st century’.

“Currently there are far too many courses that are being subsidised that are used simply to boost enrolments, or provide “lifestyle” choices, but don’t lead to work.”

Predictably, this decision brought forth a torrent of commentary on social media, ranging from reasoned debate to outright vitriol.

This issue, however, has slipped behind the international smokescreen which is the US presidential election campaign; a litany of (alleged) lies and counter-lies, insults and counter insults, accusations of defamation and one lawyer’s letter, published in the New York Times, which is very much worth reading.

If Donald Trump does not win the election, he has promised to sue everyone who has accused him of behaviour unbecoming of a US presidential candidate. It will be a long list.

He should probably just go back to building high-rise towers, hotels and golf courses and making money. He claims to be pretty good at that.

Housing bubbles here and abroad

(New housing in Pokeno, 57 kms south of Auckland city. Risky motorway photo taken by Bob, who will go to any length for FOMM readers!)

Kiwis and Aussies aged 45 and over share one obsessive thought at this moment in time: how will our kids ever be able to afford their own home? Unless the housing bubble bursts, they probably never will be able to, even when the Boomers die off and leave their kids a residual estate.

The housing market both here and in Aotearoa has got away from humble wage earners. On my all-too quick visit to the old country, Auckland’s steaming hot housing market was all anyone could talk about. After a January dip in median prices (a reaction to new tax laws introduced in late 2015), the March figures revealed a $100k hike in the median price to $820,000.

Stories abound of people who bought a cottage in a then-dowdy Auckland suburb for $100k or less in the 1980s and sold last week for $1 million. The New Zealand Herald’s front page on April 13 proclaimed “Here we go again” to head a story about Auckland’s median house price. The story continued on page 3 where Labour Housing spokesman Phil Twyford said the $70k increase in the median price in just one month was almost one and a half times the median income in Auckland.

Not surprisingly, investors accounted for 44% of the 3000+ sales used to determine this alarming figure. This is similar to the Australian trend, where for the past two years just over 50% of housing loans have been made to investors.

Buyers with cash and/or equity are surging into the Auckland housing market and many pundits feel it is inevitable that it will join Sydney in having a $1 million median house price.

Everyone I spoke to told me that Auckland/New Zealand has the highest income to mortgage ratio in the world. The crusty old journo in me demanded that this be verified. The International Monetary Fund, which keeps track of housing costs vs income, indeed placed New Zealand 1st, ahead of Germany, Estonia and Austria. In sixth place came the UK and in 9th place Australia.

The ratio compares housing valuations to average income, the higher rankings showing that house prices have risen much faster than income. (Conversely, if you can score a job in Spain, where unemployment is still running at 22%, you can buy a cheap apartment and go running with the bulls in Pamplona).

If you were wondering how this is relevant, Spain’s economy went pear-shaped after their real estate market tanked in 2008. Caveat emptor!

The problem when housing markets get hot is the price rises are not matched by the prospective buyers’ incomes. In 2015, the median house price in Auckland increased $83,000, against a median income of $46,800. The data for this NZ Herald story, headed “Does your house earn more than you do?” was sourced from NZ Work and Income and the New Zealand Real Estate Institute.

In Sydney’s over-heated market, house prices are up to 12 times median income, according to a Sydney Morning Herald report in November. In mid-2015, the median Sydney house price was a headline $1,004,767, against a median household income of $85,067.

Meanwhile in Aotearoa, those determined to get their toe on the first rung of the housing ladder are fleeing south, as far as Huntly (a former mining town 97.2 km from the big smoke on State Highway 1), and north to Wellsford 77.3kms away. The plan is to buy, commute, save and over time upgrade closer to Auckland.

Pokeno, once a small Waikato hamlet just outside Auckland city limits, is now a forest of houses, if not nestling, then sprawling over the once green rolling hills. New housing is evident on both sides of the four-lane motorway which now extends to Hamilton and beyond. I had a trawl through real estate.com and was unable to find much new in Pokeno under $600k. So the early birds have already got their worms and now it is just another suburb of Auckland, a 57 km commute to the city.

Others have absconded to small towns like Te Aroha, Wairoa and Dannevirke, where a decent house and block of land (known as a ‘sixtion’) can be had for less than $150k.

New Zealand has few barriers in the way of investors – until recently there was no capital gains tax (as such) and no inheritance tax. Prime Minister John Keys introduced new measures in last year’s Budget, one of which was a tax payable if the (investment) property was sold within two years of purchase. Keys refused to call this a capital gains tax, saying New Zealand already had one, but the government has to prove “intent” to make a profit.

New Zealand also tightened its foreign investment rules and now requires all foreign buyers to declare a tax identification number from their home country. Kiwis don’t call it negative gearing, but as in Australia, expenses relating to investment housing (depreciation, interest, maintenance etc) can be offset against rental income.

Those who support a continuation of negative gearing in Australia claim that if it was abolished the property market would collapse. The Real Estate Institute of Queensland (REIQ) said 79% of its members and landlord clients believed that investors would abandon the strategy if Labor’s negative gearing changes were brought in. (Labor proposes to restrict negative gearing to new homes and ‘grandfather’ or exempt existing investment houses.)

REIQ Chairman Rob Honeycombe said the findings confirmed that changes to negative gearing would be disastrous for the Queensland property market.

“That will have a crippling effect on house values and on the rental market, where the private rental market plays such a critical role in keeping rents affordable,” he said.Prime Minister Malcolm Turnbull, no doubt sensing the pre-election atmosphere, has declared he will make no changes to negative gearing in next week’s Budget. The estimated 1.5 million people who invest in residential property would be sure to vote for the politician with the least disagreeable tax policy.

Meanwhile, the 25-44 age group, once the heart of the first home buyer cohort, is struggling to save for a deposit, faced by high rents and stiff competition for affordable housing. Assuming they could find a house in Sydney or Auckland for $700,000, it still means they have to save $140,000 for a deposit (about 14 years at $200 a week).

Their plight creates a dilemma for well-intentioned property investors, those who have simply decided that bricks and mortar is the best form of investment. Sure, they get the tax breaks, but they also have to take the investment risk in the first place and then the secondary risk that they might get the tenants from hell. The third risk may be a Pamplona-type charge for the exits if Labor gets up and changes the rules.

Part of the solution lies with the 814,000 Australians (2011 estimate), who have paid off their mortgages. Whatever their circumstances, they are the only people who, either by gifting money or using their equity for a loan, can help their adult children buy a house. Waiting for the bubble to burst is another option. Or you could move to Spain…there are apartments in Pamplona priced from 39,000 euros (about $A58,000). Buena suerte con eso

 (Thanks to Laurel (She Who Also Sometimes Writes) for being a splendid substitute when I was abroad )