Bad Signs as the CBD Empties

This is a stellar article from the SMH today. Although it points too heavily at the big-end-of-town bonus bankers, without giving a strong enough tint to the army of $80-130K finance slaves also suffering the downturn, if you read the latter into the argument, a very accurate picture of the cascading private and government interventionist errors is woven into the thread.

I've been bemoaning KRudd's mismanagement of the retail spending stimulus measures, not only because of the redundant logic in giving savers billions to merely bank, but that once again, in times of spending turmoil, the sacrificial (no kids, lacking youth), equally as vulnerable (mortgages and share capital exposure), aspirational (study hard, long-term view) class who've been instrumental in using their sweat and their smarts to build this lengthy period of prosperity, receive no support. Moreover, for fear of losing votes at the ignorant hand of the 'working family' Daily Telegraph politcal narrative, this 20 & 30-something workforce are being forced to fund fellow citizens living closer to their humanity (having children, an adolescence not spent in the books, early adulthood not stuck in high-stress offices) who, when all efforts are balanced out, exist on not radically dissimilar salaries - first, via cash grants, second via the tax redistributed from the single middle-class, and thirdly, via the effective disparity in taxing singles vs families.

It's completely insane - if, after all this fiscal crisis, we're still waving the flag of a capitalist system, and in doing so, our economic management requires us to keep blindly consuming, then surely government intervention should also carry that flavour and target the spending class? But once again, the neo-social democratic faux third-way horseshit that staples unsustainable capitalist partiality to an interventionist government desperate to maintain its voting base (unionised working classes) is raping those who, through the Keating and Howard years, have leaked from the old divides of master and worker into a skilled, 21st century, techno-industrial, postmodern culture that doesn't have the time and space to generate 'working families'. These bastards in Canberra, and in capitalist powerbases worldwide, have spent a couple of decades creating my community - schooling our humanity away from us, stressing us with competecy examinations at all stages in our lives, building workers before building people, beaming endless public images into our private spheres, skilling us to become a 'smart country', using our impossible efforts to generate unprecedented (yet globally unbalanced) prospertiy, supressing our bio-psycho-socio-cultural health for economic favour - and it's now time, after all this service, to be served in turn. There is another brand of working class which isn't toiling with body on a factory floor, but rather, exhausing their minds on an office floor - and, in this age of high-priced hyper-consumerism, the power of latter's salary is no longer apparent enough to preclude public generosity in times of trouble...

... you know, I could really use a grand this Christmas too. It'd go a long way to paying for my computer posture to be realligned, or to get glasses for my box eyes, or a gym membership to get muscles like a beach bumb, or a coastal holiday to get a tan (or at least a few sessions in a solarium during my lunchbreak), or a book on workplace psychopathy, maybe even some time with a therapist... hell I could even afford to put a few bucks in a collection plate and pray for someone to save us ;-)

Bad signs as the CBD empties

There's a joke doing the rounds of finance workers in the CBD, given added poignancy by this week's decision by upmarket shirt maker Herringbone to go into voluntary administration. What's the definition of optimism in the finance sector? Answer: ironing five shirts on a Sunday night.

Global financial turmoil is cutting a swathe through Australia's army of finance workers, most of whom call Sydney home. The list of job casualties is beginning to look a veritable who's who of Sydney's city skyline.

In the heart of the city, in the building formerly known as the millionaires' factory, Macquarie Bank is tipped to have axed upwards of 1000 jobs. A few streets over on Phillip Street, there are 150 fewer investment bankers sipping double-shot espressos in the garishly orange foyer of the ABN Amro building.

A block away at Deutsche Bank Place, topped by the famous Lord Norman Foster-designed "goal posts", there are 30 fewer Deutsche bankers to make the daily trip up in its vertiginous glass elevators. Down at Circular Quay, the historic AMP building is 210 AMP employees lighter, while the Axa Australia building has said goodbye to 90 Axa staff.

Job losses so far this year among Australia's big four retail banks now stand at 1000 for ANZ, 179 at NAB and 450 at Westpac, according to the Finance Sector Union. Other big name casualties include Babcock and Brown (850 people), Insurance Australia Group (600), UBS (50), Merrill Lynch (20) and Goldman Sachs (10).

All up, the FSU estimates there have been almost 5000 jobs lost in the finance industry since the start of the year, most of them in Sydney. Surprisingly, it appears even this may be an understatement. The chief economist at JPMorgan, Stephen Walters, puts the losses at closer to 19,000, based on company briefings to analysts and media reports.

As the CBD vacates, there is a lingering sense of unreality about it all. Job losses are like the elephant in the room that everyone is gossiping about but no one wants to talk about publicly. Those still ironing shirts are keen to avoid the spotlight, while the newly unemployed, instead of protesting on the street, are quietly going about the business of putting the Mosman home on the market, auctioning the Audi and offloading the holiday house at Palm Beach. Tail between legs, they're retreating homewards to start living the simple life, or start writing that novel they always knew they had in them.

It's the silent recession, which, unlike other recent recessions, is coming from the top down, rather than the bottom up. But it in the end it will catch up with everyone.

Just as the sharemarket tends to lead the real economy, with stock prices plunging well before real activity does, job losses in the finance sector are likely to be a precursor to wider job losses in the rest of the economy. It is already happening, with Gerry Harvey announcing the closure of up to 10 loss-making stores next year and Qantas announcing it will axe more than 1000 positions.

The cyclical downturn in the broader economy is about to catch up with the financial downturn and one will probably amplify the other. Interest rates are falling at their fastest pace since the last recession but they spent six months of this year at 12-year highs as the Reserve Bank, after 17 years of continuous growth, attempted to keep the economy from exceeding its speed limits.
Heavily indebted households have been burnt and consumers in general have a new appreciation of the dangers of debt. It will take at least six months for interest rate cuts to begin to work their way through to help boost the economy.

Meanwhile, Australia has lost some of its biggest spenders. Fewer corporate luncheons mean fewer waiters and chefs. Fewer people catching taxis in the CBD means fewer taxi drivers.

Fewer luxury purchases means fewer retail assistants and so on.

These former high-flyers also played an important role in inflating and maintaining property prices in well-located inner-city areas. It is not clear how much longer house prices in these areas can hold up against the tide of new properties coming on to the market. There are 312 properties currently listed for sale in Mosman, complete with their own "French Provincial-inspired terrace" and "breathtaking Middle Harbour views". One three-bedroom villa is advertised ominously as "for definite sale".

Enter the Government's hastily constructed "economic security strategy", consisting mostly of pre-Christmas cash bonuses for families and pensioners. It is a multibillion-dollar attempt to prime the economy's pump. Problem is, it works best if the money is spent.

Pensioners, with their relatively low levels of debt and higher proportionate spending on food, are likely to spend most of it but a large amount of the goodies for families are likely to go straight into paying off credit card or mortgage debt.

A long-standing political tradition for targeting cash handouts at so called "battler" families with large mortgages, and ignoring young singles, may well have backfired. If the Rudd Government was really serious about encouraging spending, it should have given $1000 bonuses to young singles, or couples with no kids, to spend on the latest iPhone, coffee machine or a degustation dinner at Tetsuya's.

The truth is that no one really knows for sure how much will be spent. Official figures on retail sales won't be available until February. It will be March before we know the impact on economic growth.

Meanwhile, January and February are shaping up as crunch months for the Australian economy. This is customarily a quiet time for business so, if the Government's spending package fails to lift consumer spirits, it's likely to be a prime time for retailers and other consumer-dependent employers to announce further job cuts.

So enjoy your Christmas and New Year parties. When the fireworks cease after midnight on December 31, we're in for one hell of a hangover.