Archive | March, 2010

China Biggest Worry For Markets

17 Mar

Fromt the Wall Street Journal:

Nervousness is growing in the financial markets about China, which might seem odd when there are so many other places to worry about.

There’s still Greece, for example, which is likely to be the focus of this week’s meetings of European finance ministers. There’s Germany, and its trade surplus. And there’s the U.S., the U.K. and all the other places with triple-A-rated debt that may not be rated triple-A for much longer.

So why the focus on China, where shares closed Monday at their lowest in five weeks, with the benchmark Shanghai Composite ending below 3000 at its weakest since Feb. 9? Well, as one bank put it on Monday: “Are we facing a ‘growth miracle’ or will China be the next bubble to burst?”

Even the markets are more cautious on China than Australia’s financial powers, the RBA and the Treasury department. They still believe we are headed for 40 years of “unprecedented prosperity” on the back of a new China-fueled mining boom.

Tags: , , , , , , , , ,

Joyce With Coalition On Parental Leave

16 Mar

Media Release – Senator Barnaby Joyce, 16 March 2010:

Senator Barnaby Joyce rejects claims that he has “broken ranks” with the Coalition on the Paid Parental Scheme.

Senator Joyce said, “I support the Coalition’s Paid Parental Leave scheme. Unlike Rudd’s Mickey Mouse, re-badged baby bonus, our scheme delivers direct and real financial security for families, not just more forms to fill out.

“Realistically, you cannot compare the effect of a small, modest levy on big businesses with the Government’s ‘great big new tax’ of an ETS. The Government’s ETS will cost $42 billion in the first four years alone. $42 billion to do what? It won’t give us anything like the benefits of achieving greater participation in the workforce by women. It won’t give families the income stability to raise a family.”

Larger businesses have the capacity to absorb this levy in the best interest of the nation. As many members of the Coalition have stated, after we have sorted out Labor’s debt problem, and after we’ve been able to reduce personal tax, the Coalition will seek to reduce the rate of company tax over time.

More information- Jenny Swan 0438 578402

Tags: , , , ,

RBA Concerned About Greece

16 Mar

And about time too!

From The Australian:

The Reserve Bank lifted the cash rate to 4 per cent in early March in response to two months of data suggesting the economy might be growing at or close to trend.

But board members expressed concern that the fallout from the Greek financial crisis might have implications for the Australian economy, the minutes of the RBA’s March 2 board meeting say.

The minutes show the central bank was concerned about the possibility of contagion, that the Greek problem could spread to other parts of Europe.

“The main risk was the possibility of contagion to other sovereigns and perhaps other markets, primarily in the euro area.

“Members agreed the fiscal problems in Europe, if not resolved satisfactorily, could result in renewed turmoil in markets and fresh weakness in the global economy, which could have implications for Australia.

However, the RBA’s wishful thinking remains strong:

“But while that outcome could not be ruled out, it was not the most likely one.”

I would like to see RBA Governor Glenn Stevens and his cohorts called before the Senate, and forced to actually justify their crystal-ball gazing confidence  by producing real evidence.

They completely failed to predict the GFC.  That EPIC failure cost Australians literally billions in lost retirement savings and investments.

Why should we believe the RBA’s judgement is correct now?

Especially when there are ever-growing contrary views rolling in daily, from all around the world.  Many from those who did predict the GFC!

And they do not share the RBA’s judgement.

Tags: , , , ,

US, UK To Lose AAA Credit Ratings

16 Mar

From Bloomberg:

The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose, according to Moody’s Investors Service.

“Those economies have been caught in a crisis while they are highly leveraged,” (Moody’s managing director sovereign risk in London, Pierre) Cailleteau said, referring to the level of private and public debt as a percentage of gross domestic product.

Visit the website of Australian Professor Steve Keen, to learn why unprecedented private debt is huge threat to the Australian economy. Even greater than the Rudd government’s ever-growing public debt.

* On April 15th through 23rd, I will be joining Professor Keen in his 230km “Keenwalk” from Parliament House to Mount Kosciuszko, in protest against Australia’s property mania that has been driven directly by insane – and in my personal opinion, immoral – Federal Government and RBA policies, that have enticed hundreds of thousands of financially vulnerable Australians to take on large mortgage debts.

Please consider joining us, for the whole trek or even just for an afternoon section of the walk.

If you’d care to assist a genuinely worthy cause, then please consider sponsoring Professor Keen, or indeed myself. Funds raised will support the wonderful charity Swags For Homeless.

Thanks!

Tags: , , , , , , , , , , ,

Is Mr Stutchbury Waking Up?

16 Mar

On February 28th I firmly criticised The Australian’s economics editor Michael Stutchbury’s column, “Chinese Can Fund Our Boom” (see my article here).

Well, it seems Mr Stutchbury may be (reluctantly) waking up to reality, if his column today is anything to go by. Though he cannot yet bring himself to let go of the fantasy entirely:

China Won’t Boom Forever

The big risk now is that, having escaped the global crisis, the Lucky Country thinks it’s bulletproof and the rebound in our iron ore and coal export prices means there is no penalty for bad policy.

The airbag of a US50c-US60c dollar cushioned the economy from the 1997 Asian financial crisis and the 2000 Wall Street tech-wreck. Our new China fortune pulled us out of last year’s global recession.

As a result, Australia is about to enter its 19th straight year of economic expansion, possibly the longest unbroken growth in our history. We appear to be heading into a bountiful decade or two of high commodity export prices driven by the rise of China and India.

But now, no doubt in reaction to Chinese Premier Wen Jiabao’s warning yesterday of a global double-dip recession, Stutchbury hedges just a little on his previous blind confidence:

But this new growth phase is bound to be volatile. And there is a smaller probability but higher impact risk that the mega China boom – like the 1980s Japanese bubble, the 90s Asian boom, the technology boom or the US housing bubble – could burst. We can’t count on being able to avoid a fair dinkum recession during the next decade.

Indeed. The fact is, many authorities around the world are predicting the China bubble may burst by 2012. Including some, like former chief economist for the IMF Ken Rogoff, who did predict the GFC in the first place.

I wonder how long it will take for Mr Stutchbury – and many others in the Australian mainstream economic media – to stop publishing reactions to the latest proclamation by an “authority”, and start researching widely in order to  think for themselves?

Perhaps he might take a lead from the Sydney Morning Herald’s Paul Sheehan, and his excellent and insightful article yesterday.

Tags: , , , , , , ,

Batten The Hatches

16 Mar

From the Sydney Morning Herald:

The ominous word ”boom” appeared last week, in large type, on the front page of the local newspaper. Given the nature of this paper, the word could only refer to one thing: property. While the signals from the property market are mixed, it appears we are springing back to normalcy without absorbing the reality: the global financial crisis is far from over. All the elements are in place for a second crash.

The world has become an economically unstable place, with enormous unresolved issues. Australia’s economy is fundamentally sound, but the global economy is fundamentally unsound. Even a good boat can be swamped by a bad sea and Australia, as a middling economy, will be buffeted by forces beyond its control unfolding in the United States, the European Community and Asia.

The Bank for International Settlements, the central bank for central banks, is warning of ”unstable dynamics”. Ominous language. The International Monetary Fund estimates the world’s 20 largest economies, the G20, will have a combined debt equal to 118 per cent of their combined gross domestic product by 2014, meaning debt will have exploded by 50 per cent in just seven years. To fund what? In Australia, debt is being used for expansion of the mining sector, which is good, but also for the ill-disciplined spending of the Rudd government and the chronically overpriced housing sector. As a result, Australia’s economy is more vulnerable to economic stress from abroad…

While the obvious and prudent response of government in a financial crisis is to provide social and economic shock absorbers by increased spending and borrowing, it is also important not to overreact. If you believe the global financial crisis is still unfolding, the key is not to overshoot, but to conserve resources and policy options.

The Rudd government, as it has proved in every area of major policy, overspent. It threw money around with undisciplined panic when faced with the global economic crisis.

A must read article.

Perhaps Mr Sheehan might like to point all this out to the overpaid, short-sighted, know-it-all idiots in the Treasury department, and at the Reserve Bank of Australia.

They all failed to see and forewarn of the GFC.  So, thanks to their incompetence, millions of Australian citizens lost literally billions in retirement savings and investments during late 2007 through to early 2009.

Now they are saying that the GFC is “over”, and that we are set for a multi-decade China-fueled mining boom that will provide a “period of unprecedented prosperity”.

Sack Ken Henry. Sack Glenn Stevens.

And abolish the RBA.

Tags: , , , , , , , , , ,

Joyce Stops Labor’s Mad Cow

15 Mar

Media Release – Senator Barnaby Joyce, 15 March 2010:

Coalition Stops the Labor Mad Cow

Today the Senate overwhelmingly endorsed the Food Importation (Bovine Meat Standards) Bill introduced by Senators Colbeck and Joyce. This legislation will ensure that meat from countries with Mad Cow Disease (BSE) will undergo the same rigorous standards as Australian beef.

Even though the Minister for Agriculture Tony Burke performed one of the greatest feats of aerial gymnastics, worthy of a Winter Olympic gold medal, Labor’s conceit in the Senate precluded them from supporting this bill. The Labor Party have back-flipped on the decisions, but they did not have the conviction to put it into legislation. The coalition has delivered a real and tangible action plan to stop the importation of beef without proper risk analysis, labelling and traceability.

Once more the Australian public have found the Labor Party wanting on their desires to keep out Mad Cow Disease, just as the public found them non-responsive to stopping the ETS… a massive new tax on every working family.

The Bill now goes back to the House of Representatives and it will be interesting to see if they have the conviction to give the public the assurances they want on country of origin labelling and traceability.

This result demonstrates the merit of having an upper house that not only reviews but introduces legislation for the betterment of the Nation.

More information- Jenny Swan 0438 578402

Tags: , , , , , ,

China Warns of Double-Dip Recession

15 Mar

From The Australian today:

China’s Premier, Wen Jiabao, has warned that the world risks sliding back into recession and says his country faces a difficult year trying to maintain economic growth and spur development.

“The unemployment rate of the world’s main economy is still high, some countries’ debt crises are still deepening, and the world’s commodity prices and exchange rates are not stable, which are most likely to become the cause of any setback in the economic recovery,” Mr Wen said yesterday in Beijing’s Great Hall of the People.

China’s and Australia’s economies have become more intertwined in recent years: the country is now our largest trading partner with two-way trade surging to $83 billion in the year ending last June 30, and in December it passed Japan as our largest export market.

Any trouble in China’s economy would quickly resonate in Australia.

Perhaps Treasury Secretary Ken Henry might care to revise his recent declaration that the GFC is ‘over’?

Perhaps Henry, along with RBA Governor Glenn Stevens, and all their many mindless cheerleaders in the media, might pause to reconsider their claims that ‘the risk of serious contraction‘ has passed, and that Australia is now set to enjoy a multi-decade China-fueled mining boom?  One that will fix the massive Rudd hole in the Budget, and provide a “period of unprecedented prosperity” for Australia?

Please… inform yourself.  Understand what is really going on in the financial world. Unlike the lazy, short-sighted economic illiterates who are running this country.

Please browse through the posts on this blog, and follow the links that catch your eye.

You will find references and links to literally dozens of articles from around the world.  You will see that international economists, investors, financiers, world leaders, and many others, have been increasingly warning of the many threats to the global economy. And thus, to Australia’s economy too.

Our Australian economic “authorities” are living in La la land.

Only Barnaby is on the ball.

Rudd Labor, Ken Henry, RBA and friends

Tags: , , , , , , , , , ,

Eurozone Faces ‘Sovereign Debt Explosion’

15 Mar

From the UK’s Telegraph:

Europe’s governments are at increasing risk of an interest rate shock this year as the lingering effects of the Great Recession drive debt issuance to record levels and saturate bond markets, according to Standard & Poor’s.

The warning comes as bond giant PIMCO spoke of a “sovereign debt explosion” that has taken the world into uncharted waters and poses a major threat to economic stability. “Our sense is that the importance of the shock to public finances in advanced economies is not yet sufficiently appreciated and understood,” said Mohamed El-Erian, the group’s chief executive.

Mr El-Erian said most analysts are still using “backward-looking models” that fail to grasp the full magnitude of what has taken place in world affairs since the crisis. Some 40pc of the global economy is in countries where governments are running deficits above 10pc of GDP, with no easy way out.

Australia too, is issuing government debt at record levels – $1.6bn last week, another $2.1bn scheduled for this week.

See the Australian Office of Financial Management’s website.

Tags: , , , , , , ,

Only Barnaby On the Ball

15 Mar

From the Sydney Morning Herald:

How could our leaders have made changes designed to “better target and strengthen the application of capital gains tax” without seeing they would later allow companies associated with the misleadingly-named Texas Pacific Group to make a billion or so dollars in profit from the sale of Myer capital-gains-tax-free because they were registered not in somewhere like Texas but in the tax havens of Luxembourg and the Cayman Islands?

Barnaby Joyce was one of the very few to point to the emperor’s clothes.

“It is quite clear that not only are we about to pass a piece of legislation that discriminates against Australians but we are doing it at the behest of other people in other corners of the globe,” he told the Senate. “This legislation is going to be sneaked through. Do you know that today we have overseas equity firms that in the United States have put in a bid for Home Depot of $100 billion? They have the ability to remove $100 billion from the share market and the Labor Party is quite happy for that investment to be tax free.”

Both parties were happy about it. They said other countries exempted foreign investors from Capital Gains Tax in the belief that they would pay it in their country of residence.

It seems not to have occurred to them that that country of residence could be somewhere like Luxembourg, without Capital Gains Tax.

It occurred to Barnaby.

“I will give you one place. It is not very far away and people might have heard of it: New Zealand. New Zealand has no capital gains tax, so you can launch from New Zealand, come into Australia, buy up Coles, hold it for a year, sell Coles, put your money in your pocket, take it back to New Zealand and not pay one cent of tax – and that is something you are agreeing to today.”

Barnaby Joyce is the subject of near-universal derision and smearing by Rudd Labor and the mainstream media when it comes to so-called “economic credibility”.

Yet, he is far better qualified than the entire Labor economic team. And he has shown time and again, that he may be the only Australian politician with any basic, practical commonsense.  He is always right on the economic ball.

Quite unlike economic illiterates such as Finance Minister Lindsay Tanner, who does not even bother to keep track of Australia’s public debt position – he recently got it wrong by $6bn in an interview – and claimed that he did not have time to “dot i’s and cross t’s” in the disastrous home insulation debacle.

Barnaby is right.

Tags: , , , , , , , , ,

← Older Entries
Newer Entries →

Design a site like this with WordPress.com
Get started