Tag Archives: AUD

“Australian Dollar Is Not A Sacred Cow”

9 May

Barnaby Joyce writes for the Canberra Times:

National Party Senator Barnaby Joyce droving a mob of cattle west of Longreach, Queensland. Photo: Peter Rae

National Party Senator Barnaby Joyce droving a mob of cattle west of Longreach, Queensland. Photo: Peter Rae

Government has left cattle industry out in the cold

Fred Pascoe’s family goes back a fair way in the Gulf, possibly about 40,000 years.

His family didn’t meet a “whitefella” until 1904. That was his great-great grandfather, “Kangaroo”. In Fred’s words a “lusty” fellow who had seven wives. Fred jokes with a smirk that unfortunately that part of the family genes did not flow down.

Fred’s great-grandfather started working the cattle that have been a fixture of the Gulf ever since. His love of the country was too strong for the city. He died six days after moving to town in retirement.

Now Fred manages his own cattle property. Cattle have given Fred and his family a additional connection to his country. Cattle are now part of their culture.

Cattle are part of the nation’s culture too. The economy of the north depends on cattle. The truck drivers depend on them, the stock and station agents depend on them and even the local show and rodeo would not exist without them.

That’s what makes the government’s bungling of the live cattle saga a few years ago so galling. It was an attack on a culture. A culture that has been built up over more than 100 years, and now threatened by a combination of government incompetence, the roaring of money printing presses in other countries and the failure of monsoonal rains.

We can’t do much about that rain. I will leave that one to the local graziers and their God. We can, however, stop making bad policy decisions and start a debate about the high Australian dollar.

When we shut down the live cattle trade, we affect the food supply to a nation of more than 250 million people next door. Because of the undisputed barbaric acts of a small number of people in a very large industry we impugned an entire nation’s culture. The message was implicit but clear: we don’t trust you enough to provide you with food anymore.

Our government engaged in a prejudicial policy condemning the many based on the actions of a few. Since then the Government has made little attempt to support our own domestic cattle industry or make amends with our largest neighbour.

Because governments caused these problems, there is a moral obligation on them to help solve these problems. On Tuesday, I attended a beef crisis forum in Richmond. In a town of only 500 people in the Gulf, a crowd of 500 turned up, in a mood, not to vent frustrations, but to propose solutions and to look for leadership.

One of those solutions was for the government to purchase 100,000 head of cattle to put an immediate floor price in the market. Because the live cattle trade fiasco has dropped demand by about 300,000 head of cattle a year, beef prices are plummeting. In Longreach, cattle sold for $20 per head last week. That’s the equivalent of buying your scotch fillet for 10 ¢ a kilogram.

But the price of the dollar means our beef is still expensive to those overseas. More than 30 foreign central banks now hold Australian dollars, along with Google, Apple and Berkshire Hathaway.

The Botswana central bank is not diversifying into the Australian dollar because they share our love of a sunburnt country and wide, open plains, but because we are becoming a “safe haven” currency. Our exporters are paying their insurance policy.

Our terms of trade have fallen by 15 per cent, and economic growth is being downgraded. Still, our dollar remains relatively high.

The Reserve Bank recognised this on Tuesday by cutting interest rates, in part aimed at the high dollar. The Australian dollar is not a sacred cow.

The RBA has clearly announced that its monetary policy is now looking to target the dollar, and we have intervened directly in foreign exchange markets on 35 separate times in the past 24 years, including eight times since 1997.

Other nations are not as restrained as we are. The United States is now delivering quantitative easing at a rate of $85 billion a month. The Swiss have imposed a ceiling on their currency, and the new Shinzo Abe government in Japan is actively adopting policies to devalue its currency, by 20 per cent since last December.

Meanwhile, we are keeping our innocence and making life near impossible for those who we are relying on to figure ourselves out of our current financial mess. What’s the good of being pure, if you end up broke?

Regular readers know that I have written on this topic of the over-valued Australian dollar (due incoming “hot money” from other, currency-depreciating nations) since late 2011 –

Australia’s Debt Dreamtime

Bob’s No Mad Katter On RBA “Independence”

The Single Biggest Reason Why I Will Vote For Bob Katter’s Australian Party

Queenslander! This Is Why You Are A Complete Idiot If You Don’t Vote KAP Today

It’s wonderful – if all too belated – to finally see a politician from one of the so-called “major” parties speaking truthfully about the AUD exchange rate, and the close-mindedness on the part of our economic mandarins which has caused so much damage to Australian businesses (and thus, the economy) over the past couple of years.

Barnaby for PM.

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“You CAN Influence The Price Of The Dollar, If You Actually Want To” – Barnaby

7 May

black-check-mark-hi

Bookmark this post, dear reader. This is historic.

Once again, Barnaby Joyce is the first major party politician (to my knowledge) to speak truth to power concerning a(nother) vital economic parameter.

In late 2009 and early 2010 – before new Opposition Leader Tony Abbott wilted like a week-old lettuce leaf and sacked him – then Opposition Finance spokesman Barnaby warned of the dangers of Australia’s rising Federal and State government debt trajectories.  Only in recent weeks, some three years later, leading economists have begun to acknowledge that Barnaby was right.

Today, 7 May 2013, appearing on radio 2GB, he is the first major party politician to state that the government can bring down the exchange rate value of the Australian dollar, and tell the plain truth about why they (the ALP, Treasury, and RBA) have not done so:

The dollar, if you actually want to, you can actually affect it. It’s not written on tablets of stone and presented from Mount Sinai. You can influence the price of the dollar down if there is real motivation and desire to do so. One of the reasons they don’t do it is because they want to be economically pure. The way we’re going at the moment we’re going to be pure in debt, economically dead, so let’s make sure we keep our industry going.

Just so.

Over the past few years, our great economic leaders – the World’s Greatest Treasurer Wayne Swan, and the Million Dollar Man, RBA Governor Glenn Stevens – have deliberately chosen a policy of not joining the global currency wars.  Of deliberately allowing the AUD to rise and rise versus other currencies, and to remain at unprecedented elevated levels. Why?  In order to “make room for the mining boom”.

In other words, because of the inflationary impact of the mining (investment) boom, they have chosen to let a far-too-high AUD deflate the rest of the economy … to “make room for the mining boom”.

(Yes, the same mining boom that is now ending; the one that they so confidently believed would give Australia a period of “unprecedented prosperity”, a China-funded “golden age” lasting “to 2050”, according to former Treasury Secretary Ken Henry).

They have pursued an economic policy of allowing the rest of the Australian economy to be hollowed out, white-ant style, so that their precious little (bogus) economic performance figures for “inflation” (ie, the CPI) would not get too far beyond their arbitrary boundaries of preference.

While the rest of the country (except mining and related industries) has watched countless businesses, and whole industry sectors such as manufacturing, slowly getting squeezed towards, and in a record number of cases, into bankruptcy, our ivory-towered boffins have sat back applauding themselves for their ideological purity, self-congratulating for their not acting to influence the AUD exchange rate.

Despite the fact that practically every other nation in the world who can, is.

As usual, it takes the little ol’ bush accountant to bell the cat.

Barnaby for PM.

He’s the only one with both brains, and b***s.

Paul Howes Is A Right Extremist

12 Apr

Remember when Barnaby Joyce was subjected to a torrent of daily abuse and personal ridicule by everyone – the PM, the Treasurer, the Assistant Treasurer, the Finance Minister, the Treasury Secretary, the RBA Governor, and of course, the mainstream Australian media – for his “extremist” warnings about rising US and Australian debt levels, and his calls for Australia to reduce wasteful spending and prepare a “contingency plan” for further financial turmoil impacting us from abroad?

Double standards alert.

From the SMH:

THE Australian Workers Union wants the government to expand its minerals resources rent tax to slow the mining boom, lower the value of the dollar and alleviate the worsening crisis gripping the steel and manufacturing sectors.

The proposal to embrace the original and more comprehensive resources super profits tax is among several controversial ideas, including pegging the dollar to another currency, aimed at depreciating the dollar contained in a report by the AWU national secretary, Paul Howes.

The proposed ”potential policy options” to lower the value of the dollar also include pressuring the Reserve Bank to cut interest rates by between 0.25 and 0.5 percentage points. This, the AWU argues, would not be large enough to cause an inflation outbreak but would bring the cash rate closer to those of other nations and help depreciate the dollar.

Debatable.

The AWU also argues that by pegging the dollar to another currency, it would ”move up and down relative to the performance of other currencies”.

Our biggest trading partner (China) does it.

That traditional paragon of financial virtue Switzerland has now done it too, when faced with exactly the same problem Australia has (speculator-driven international “hot money” driving up the currency, thanks to endless central bankster money printing in the USA, UK, and EU … which they are doing to prop up their insolvent banks and drive down the value of their currencies!).

The RBA, and our Labor Government, and the Coalition, have all explicitly and steadfastly refused to do the same.

With no serious critical analysis of that entrenched ideological policy position by journalists.

&^#$%@! the lot of them.

In particular, &^#$%@! all of the &^#$%@! in the so-called “Left-leaning” mainstream media, who delight in labelling, criticising, and tearing down so-called “extreme Right” politicians such as self-proclaimed agrarian socialist Barnaby Joyce and Bob Katter for their advocating so-called “protectionist” policies.

Question.

Will the likes of Laura Tingle, Stephen Koukoulas, George Megalogenis et al, and all the “political heavyweight” journalists like Paul Bongiorno and similarly nausea-inducing arrogant imagine-they-know-it-all &^#$%@! now tear strips off the star of the union movement Paul Howes, label him as “extreme Right”, and ridicule his intelligence for daring to advocate a classic form of “protectionism”?

Of course not.

I have a brief message for all the purveyors of rank double standards and exemplars of “extreme” cognitive flaccidity in the Australian Parliament, Treasury, RBA, and especially, the media:

……………………./´./)
………………….,/¯../
…………………/…./
…………./´¯/’…’/´¯¯`¸
………./’/…/…./……/¨¯\
……..(‘(…´…´…. ¯~/’…’)
………\……………..’…../
………..\………….. _.·´
…………\…………..(
…………..\………….\
……………\…………..\
…………….\…………..\
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Dollar Shoots A Hole In Farmers’ Confidence

30 Mar

Stock & Land has more on how the too-high Aussie Dollar is impacting the rural sector:

AUSTRALIA’S shooting star dollar has shot a hole in rural sector morale.

Despite good seasonal prospects, farmer confidence is deflating as exports fail to deliver much farmgate price value because our high flying dollar is hovering uncompetitively above parity with the US exchange rate.

Faltering farm commodity prices in the past five months – particularly in the grain trade – have also hit farmer confidence hard.

“Not surprisingly farmers are becoming more concerned with the strong Australian dollar’s knock-on effect on the competitiveness of our exporters,” said Rabobank’s rural general manager, Peter Knoblanche.

NSW farm supplies retailer Greg Rout summed up the mood saying farmers were “a bit disillusioned and frustrated with the way prices are going against them at the moment”.

Although farmers have emerged from the past decade’s drought with plenty of soil moisture and stored water supplies, Rabobank’s latest quarterly rural confidence survey results are dipping into negative territory.

Producers who now expected farming conditions to deteriorate in the year ahead outnumbered those who saw improvements, according to Rabobank’s findings.

Mr Knoblanche said about 28 per cent expected the farm economy to worsen in the next 12 months, compared to 20pc just three months ago.

“Mixed farmers tend to be happier than the grain-only guys but most people are still spending cautiously,” said CRT retailer Mr Rout, who owns Central West AgriCentres at Parkes, Forbes and Peak Hill.

“I wouldn’t say anybody’s beaming with confidence – even after a couple of good seasons – but I’d put the general consensus around 60 out of 100, which isn’t too bad.”

According to Rabo only about 30pc of farmers expected an improved business performance or higher incomes in the coming year – down from about 39pc in December.

About 55pc tipped business performance to be the same.

It’s study of about 1200 farmers Australia-wide found 40pc of those expecting farm economic conditions to slide primarily blamed the dollar and 32pc nominated falling commodity prices.

Although it dipped last week well below recent highs around the $US1.07 mark, the seemingly bullet-proof Aussie dollar was again back above $US1.05 early this week and forecasters tip it will stay strong against the US greenback for at least a year.

However, while Rabobank expected strong investment into Australia would keep the dollar to be above parity “for the foreseeable future”, Mr Knoblanche believed it would soften by mid year on the back of a strengthening US currency and lower terms of trade.

The high exchange rate’s competitive advantage for machinery importers helped drive a burst of machinery investment last year, but newly-elected Tractor and Machinery Association (TMA) chairman, Steve Wright, believed a lower dollar would be best for the farm sector’s long term health.

“Buyer inquiry levels are generally still strong and I think the low dollar will help make 2012 a strong year for machinery sales, but buying commitment has definitely eased lately,” Mr Wright said.

“The dollar’s taken the shine off farm returns and grain prices are not as good as farmers are wanting to see before they commit to ordering new gear.

“And with growers reluctant to sell at recent lower prices, a lot of last season’s crop is still in storage which means they haven’t been paid for their grain yet.”

This is just one of many reasons why your humble blogger has advocated voting for the KAP.

Because Katter’s Australian Party is the only political party in the nation (that I know of) that has demonstrated a firm willingness to take on the clueless blinkered ideologues in the Treasury and the RBA, in order to follow the lead of other “advanced” economies such as Switzerland and Norway, and directly address the problem of a speculator-driven Aussie dollar hollowing out vast swathes of the Australian economy. From agriculture, to tourism, foreign education, manufacturing, and retail.

Journalist and presenter Peter van Onselen recently hit the nail on the head, when he described the AUD exchange rate as “Australia’s most pressing dilemma”.

The “major” parties are unforgivably negligent, and incompetent, in their spineless, mindless obeisance to the RBA and Treasury doctrinal line.

On this single issue alone, they are all wholly unworthy of your vote.

In my firm opinion.

Late Surge For Thinking KAP

24 Mar

From the Australian:

A LATE surge in support for Bob Katter’s Australian Party has set the stage for it to win seats today in One Nation’s former heartland of regional Queensland.

The party has lifted its support to 9 per cent statewide in today’s Newspoll, nearly double what it registered at the start of the campaign.

KAP’s base vote spikes to 12 per cent outside Brisbane, putting it in the running to win up to five non-metropolitan seats, said Newspoll chief executive Martin O’Shannessy.

This suggests Mr Katter has attracted part of the blue-collar base of Labor in the regions as well as more conservative supporters of the Liberal National Party.

Hmmmm.

“Blue collar base of Labor”.

“More conservative supporters of the LNP”.

Salt of the earth.

Go QUEENSLANDERS!

UPDATE:

From the hustings –

Mr Katter, who was handing out how-to-vote cards with his son and Mount Isa candidate Rob, said he was impressed with the progress his party had made since it was formed less than a year ago.

“About a week ago I realised that we’ve got a huge, powerful machine out there,” he told AAP.

“It’s working now completely independently of me. It was a bit of a ramshackle thing put together on my back, but it’s not now.

“Every poll that comes out, our vote has increased. There’s some that have us on nine per cent, there’s some that have us on 28 per cent.”

Mr Katter said his party was now a legitimate option for voters.

The important thing is to provide Australia with an alternative to the free trader or traitor policies of the major parties,” he said.

“It may well be that they get rid of the ALP today, but they won’t get rid of the ALP policies.”

Federal Liberal MP George Christensen tweets:

An insightful observation, and a perfect analogy:

[KAP state leader] Mr McLindon said it was now up to the voters but he hoped they would put into State Parliament a corrective against the expected overwhelming force of a new LNP government.

“Do the people really want a massive LNP government breaking promises the way they are doing in NSW?” Mr McLindon said.

“‘Or do they want a band of people in there like the KAP who will keep the bastards honest?”

Bob Katter, who will be in Brisbane tonight, said his aim in trying to establish a third political force was to break out of the “Woolies and Coles” cycle of Australian politics.

Queenslander! This Is Why You Are A Complete Idiot If You Don’t Vote KAP Today

24 Mar

Following is possibly the best, most needed column written by a mainstream journalist that I have read in 2012.

Read it all.

And then, remember that only one (1) politician and political party in the entire nation has pledged to do anything about it.

While all the rest have declared that they will do nothing.

From The Australian (reproduced in full, my bold emphasis added):

DISCUSSION surrounding the importance of the mining tax to government revenue streams is a red herring, a distraction from the biggest issue facing policymakers, arising partly out of the commodities boom, partly out of the global economic downturn.

That issue is the high Australian dollar and its impact on the economy. This is Australia’s most pressing dilemma: prosperity butting up against industries under pressure, and the challenge of a multi-speed economy.

The notion of the two-speed economy suggests a fast lane and a slow lane. But evidence this week from retailer David Jones and ongoing problems with domestic industries removed from the mining boom makes the slow lane look more like oncoming traffic.

There are many problems with Labor’s mining tax, including the concept behind the tax itself. But we should not let the debate distract from how domestic industries, including manufacturing and tourism, are able to cope with a high dollar. The government needs to give serious attention to what, if anything, can be done to put downward pressure on the dollar, albeit while being wary of too much market interference.

Currencies do not trade in a vacuum. Our dollar is trading against currencies such as the US dollar, the euro and the British pound, where their value is being deliberately distorted downwards (by printing money) to stimulate economic growth and inflate state debt away.

The debate over the mining tax is a red herring because even if Treasury is right, it still will reap only between $3 billion to $4bn each year for government coffers. That’s in its watered-down form, representing less than 1 per cent of annual government revenue. And the miners say on their figures they expect to pay far less tax anyway. It is hardly the panacea for structural deficits caused by too much spending on middle-class welfare, for example.

If we continue to toss money into domestic industries in a piecemeal fashion because they are struggling with a high dollar (such as the $275 million handout to Holden announced on Thursday), mining tax revenue will quickly evaporate.

The Holden handout was poor public policy if ever I have seen it. What makes Holden worthier than services industries across the land – especially in the tourism sector – which are struggling to attract clientele?

Labor likes to compare the number of Australians employed in the (often unionised) manufacturing sector to the (increasingly deunionised) resources sector. But what about the services industry? It employs more Australians than any other sector and the tourism component is its most important sub-grouping.

How the government can justify propping up an industry with no track record of innovation and no proven edge in a competitive global market is beyond me.

Unfortunately the intense nature of the partisan debate in this country makes it very hard for the main parties to float ideas (especially innovative ones) without being lampooned by their opponents. This is a bipartisan criticism, and with the demise of the Australian Democrats we don’t have a centrist third force in Australian politics capable of positing new mainstream ideas either.

In the months to come, politicians and policy leaders on all sides are going to be forced to debate what, if anything, can be done to address the fallout from the high dollar. While it may help keep a lid on petrol prices, and imported flat-screen TVs are cheaper than ever, the consumer upsides to cheaper imports matter little when domestic industries employing most Australians become uncompetitive, costing people their jobs. A cheaper holiday to Europe is relevant only when you still have a job.

Perhaps the two easiest ways downward pressure can be put on the dollar are for governments to borrow less and interest rates to be lowered. Both make the dollar more expensive when countries such as the US and Britain are printing money to stimulate their economies, free of the fear that doing so will jack up rates.

Government borrowing less is something the opposition has long been calling for, such as winding up the still ongoing stimulus spending from the global financial crisis.

A government borrowing $100m a day is distorting the price of the Australian dollar. It is already a disproportionately traded currency (the fifth most traded in the world) courtesy of our resources sector, meaning that in currency terms it gets treated like a proxy for commodities trading. With the boom expected to last for the foreseeable future, the dollar is set to remain high unless steps are taken to keep it down.

Lowering interest rates is a decision for the Reserve Bank of Australia. It is worried that dropping rates would put too much pressure on inflation. But West Australian Treasurer Christian Porter, for one, thinks the time has come for the RBA to act, despite the booming sectors in his home state and in Queensland. He told me higher interest rates in this country were attracting too much overseas capital looking for a good return, thus pushing the dollar north.

The Australian economy is not built for a currency trading at between $US1.05 and $US1.10. And large chunks of the economy right now are not able to operate profitably with interest costs of 7 per cent to 12 per cent. If you believe in the free market, the myriad more off-beat ideas to take the heat out of the dollar may seem more than a little unappealing; for example, removing the float altogether, capping the dollar, using superannuation incentives to push investments abroad, printing money or the Reserve Bank buying up overseas currencies. Many of these possible mechanisms for halting the dollar’s climb create their own unintended consequences, such as pushing up inflation, regulatory complications and regressive micro-economic policy, just for starters.

Capping (or “pegging”) the Aussie dollar is the preferred solution frequently advocated by your humble blogger. That is what Switzerland has done, when faced with exactly the same problem – “hot money” from international currency speculators pushing up the Swiss Franc, wiping out local industry. And China has a pegged currency too.

Manipulating the currency market is complicated and requires serious thought before doing so. Nevertheless, the time is upon us to think outside the square about our high dollar, and lift the importance of the debate about what, if anything, can be done ahead of the high-profile partisan fights we see now over the mining tax and the carbon tax.

This truly is the great debate our nation has to have.

Peter van Onselen is right.

And only Katter’s Australian Party has pledged to act on the AUD.

Even if that means disbanding the RBA, or taking away their “independence”, if they refuse to cooperate.

Vote 1 KAP.

UPDATE:

The excellent Tim Colebatch in today’s The Age (my bold added):

THE high dollar is ravaging the competitiveness of Australian business. Global consulting firm KPMG reports that Australia has become the second most expensive place to do business among the major economies, behind Japan.

In its survey of global business costs, Competitive Alternatives, KPMG finds that since 2010, costs have risen more in Australia than in any other country. Most of that is due to the sharp rise of the Australian dollar against the US dollar, which has pushed up costs in every area.

Read it all.

Put on your thinking KAP.

And vote with your head.

Put On Your Thinking KAP

23 Mar

From today.

Put down your biases, prejudices, stereotypes … and your Ego.

Put on your thinking KAP.

And listen up:

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