Tag Archives: China

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

18 Feb

The Australian Dollar.

It is way too high relative to all our major trading partners’ currencies.

About 30% too high, in fact.

No Malcolm Farr, it does not prove that the Aussie Dollar is a “safe haven”.

No Wayne Swan, it is not because we have an economy that is “the envy of the world”.

Yes Alan Kohler, it is because speculators are borrowing billions in Zero Interest Rate Policy (ZIRP) money in the USA, UK, EU et al, and using it to gamble on the relatively high interest rate Aussie Dollar. To make easy, fast profits.

It is called the “carry trade”.

Or “hot money”.

And it seems that no one … repeat NO ONE … in Australian politics has the brains to recognise that fact. Or, the balls to do anything about it.

Except Bob Katter.

Now, let me be the first to say that I do not agree with how Bob wants to weaken the currency.

He advocates forcing the RBA to slash interest rates to 2%.

I think we should follow the lead of China … and Switzerland … and introduce a currency peg.

Nevertheless, despite this difference in preferred method, the simple fact that Bob has loudly proclaimed that he wants to weaken the dollar, and, that he is prepared to dismantle the RBA if necessary in order to do so, places him a country mile ahead of any other politician in the nation.

(Yes, including my beloved debt-warning prophet Barnaby Joyce, whose office has to date not even responded to my communications on this matter. He has been very busy with a drowned home town though, so we shall wait and see…)

A little historical background on our present currency dilemma.

Remember the year prior to the GFC crescendo in September-October 2008?

Remember how the AUD turned sharply down in July 2007, falling 9c (10%) in less than a month, when the warning signs began in the USA with the collapse of two Bear Stearns’ hedge funds? And remember how the AUD turned sharply up again, when the RBA lifted interest rates for the first time in 9 months, in August 2007?

GFC begins July 2007 in USA | Click to enlarge

Remember how the RBA kept raising interest rates into the teeth of the oncoming storm, and the AUD climbed from less than 80c US in August 2007, to nearly 98c US in July 2008 … a 21% appreciation in less than a year?

Remember how the AUD fell off a cliff when the GFC peaked? Indeed, it fell so far so fast – a near 40% collapse from 98c to 60c in just a few months – that the RBA intervened in foreign exchange markets to prop up the dollar:

Click to enlarge

“Safe haven” currency, you say (Malcolm Farr)?

Utter ignorant nonsense!

The Aussie Dollar is a “speculative play”.

A profit-seekers’ gamble.

That rushing tide of “hot money” driving up the AUD exchange rate is just as likely to race out again, exactly as it did in the GFC.

But until it does, and the AUD returns to a reasonable and sustainable level, vital sectors of the Australian economy are rapidly being white-anted … and jobs destroyed in the process.

Manufacturing. Tourism. Retail. Education (ie, foreign students). To name but a few.

Many of those industries and the jobs they provide, once lost, will never come back.

And despite this disaster occurring all around us right now, both “sides” of Australian politics have done a Pontius Pilate impersonation, washing their hands of the problem, proclaiming that there’s “nothing we can do” about the dollar. That’s up to the “independent” RBA, you see. And woe betide anyone daring to question the sanctity of the RBA’s “independence”. So instead, we have an escalating, puerile argument over whether or not (and how much) to financially support affected industries.

With more borrowed money, of course.

Idiots. Invertebrates. Sans testicles.

In stark demonstration of the clueless eunuch status of both “sides” of Australian politics – and indeed, of the “independent” Reserve Bank of Australia – on the matter of dealing with a speculator-driven appreciation in your national currency, let us examine a favourite example of mine.

Norway.

Unlike the RBA’s Glenn Stevens, the Norwegian central bank governor recognises the dangers of a government over-relying on the nation’s commodities wealth, spending too much money, and putting its manufacturing industry at risk (sound familiar?):

Feb. 16 (Bloomberg) — Norway’s central bank Governor Oeystein Olsen told the government to spend less of the country’s oil money and avoid an over-reliance on its commodities wealth or risk killing manufacturing jobs.

The government should tighten its fiscal policy guidelines and limit the use of petroleum revenue to 3 percent of Norway’s sovereign wealth fund from the current 4 percent, Olsen said today in the text of his annual speech on the economy and monetary policy.

“Even though petroleum revenues are phased in gradually, a phasing out of manufacturing and other private industries may not be as smooth,” he said. “Entire industries could be lost. If spending proves to be excessive, such structural changes may be difficult, or impossible, to reverse.”

The world’s seventh-largest oil exporter, which boasts the biggest budget surplus of any AAA rated nation, has largely been shielded from the global financial crisis, in part after spending a record amount of its oil money.

Witness the stark contrast to our own Reserve Bank board of governors.

They have repeatedly indicated that they believe in crowding out (ie, screwing) the rest of the economy, to “make room” for the mining boom. Your non-mining industry and job be damned.

The high Australian dollar is actually great news to the RBA. It is helping their goal of hollowing out the rest of the economy, to “make room” for more mining.

And the high dollar is also great news to the village idiot of our national government, Treasurer Wayne Swan. With little else of substance to boast of, he proudly and deceitfully points to the high dollar as somehow representing “proof” of his own wonderful economic management!

But it is not just concerns about how the government is running the country, short-sightedly squandering its natural advantages, that show parallels between Australia and Norway.

The Norwegians too, have been faced with the problem of speculator-driven “hot money” driving up the value of their currency.

Thanks to the ongoing European debt crisis, in 2010-11 “investors” (read also, “speculators”) had been selling (borrowing) the near zero-interest-rate Euro currency, and investing (speculating) in the traditional “safe haven” currency, the Swiss Franc.  As a result, the Swiss Franc had been rising precipitously, causing problems for their economy. So, in September last year, the Swiss central bank acted to protect their economy, by pegging the value of the Franc to the Euro.

Result?

With the Swiss central bank effectively having put a cap on their potential profits, the European “hot money” went looking for profits elsewhere. They turned to Norway, with their strong economy, budget surpluses, vast nationalised commodities wealth, and AAA rating.

Now, witness the contrast between Norway’s central bank response to “hot money” flowing their way, and our RBA’s response to exactly the same situation:

Feb. 17 (Bloomberg) — Norway’s central bank is monitoring the krone after its recent gains and remains ready to act should the currency’s appreciation warrant a response, Governor Oeystein Olsen said.

“We follow closely the krone developments,” he said yesterday in an interview in Oslo. “We have observed, of course, the recent development of the krone, we’re close to the level” in September, when it touched an eight-year high, he said.

The central bank, which in December lowered its main rate by half a percentage point to 1.75 percent, will respond to krone swings to the extent that they affect inflation. The currency this week touched the highest level since Sept. 8, when the Swiss National Bank’s decision to peg the franc to the euro prompted investors to seek alternative havens…

The exchange rate continues to be a “challenge” for the government, Trade Minister Trond Giske said Feb. 13. The central bank in September signaled it was ready to take steps to curb the krone’s appreciation. Those comments helped weaken the exchange rate, triggering a 4.8 percent decline from a Sept. 8 peak through a trough two weeks later.

The Norwegian central bank acted promptly, to “talk down” the Krone back in September. It worked, for a little while.  Then they slashed interest rates by an effective 22.2% (2.25 to 1.75) in one hit in December. And now that their currency is appreciating again, they are attempting to “talk down” their currency, by reminding markets that they stand ready to act again, to protect local jobs and industry.

Our central bank is doing nothing.

Indeed, they are happy that we have an over-valued dollar that is squeezing (ie, wiping out) the “old economy” sectors.

Because it wants the non-mining sectors of the economy to shrink (ie, die), in order to “make room” for mining, which the RBA mistakenly believes will enjoy a multi-decade boom.

This is your rapidly approaching future, dear reader.

Gillard’s “New Economy”.

Australia. “Poor white trash” quarry to the world.

There are some in the Australian (alternative) financial media who have written on this problem.

The estimable “Houses and Holes” – whose clever nom de plume sardonically depicts the long-running economic policy/vision of both “sides” of Australian politics – and his team at Macro Business is a standout example.

Unfortunately, it is apparent to this humble blogger that few if any in the mainstream financial commentariat have any greater “vision” than the clueless eunuchs in Canberra for whom they act as Press agents.

So if anything is going to be done about the Aussie Dollar, it will only happen if you, dear reader, are concerned enough about the future of this country (and your job) to take action yourself.

You can start by doing as I have been doing.

Contact the invertebrates in Canberra.

Educate.

Inform.

Complain.

Harass.

Abuse.

Point out to the self-interested, overpaid, trough swilling imbeciles on both “sides” of Australian politics that there is no excuse … none … for Australia’s government and Reserve Bank deliberately failing to act to address the root of the problem – a speculator-driven AUD exchange rate.

Other “safe havens” have done it.

Switzerland has done it.

Norway has done it.

Indeed, one of the keys to China’s economic success story, has been its use of an adjustable currency peg, which has allowed their industries time to adapt to changing economic and market conditions:

Click to enlarge

You see, dear reader, our politicians, Treasury bureaucrats (looking at you, Martin “Mini-me” Parkinson!), and Reserve Bank governors are simply too beholden to flawed and failed economic ideologies.

Neo-Keynesianism.

Laissez faire capitalism.

“Free trade”.

“Free markets”.

Globalisation.

“Government debts don’t matter, if you have your own currency … you can just print, and inflate your debts away”.

They fail to recognise that the world has fundamentally changed since 2008.

Thirty-plus years of global debt-binging is over.

The masses have had their long overdue big fright … and have begun to wake up.

Debt is not the new black. It is the old red.©

And as a result, an over-leveraged debt-laden world economy, is now de-leveraging.

And in the inevitable race to the bottom, “currency wars” (ie, devaluing your currency) are a key factor.

Australia’s major trading partners are Japan and China. Both protect local industry, with a weak currency. Zero Interest Rate Policy (ZIRP) for Japan. A currency peg for China.

The USA, UK, and the European Union are all trying to protect their economies, to support and restore their manufacturing sectors, by weakening their currencies through ZIRP, QE (Quantitative Easing ie, printing money), and similar schemes via their central banks.

As usual, Australia is roughly 3 years behind the rest of the world.

But the currency wars is not a game that one can win by coming from way way behind.

Accept no excuses from our political “servants”.

Every other major “developed economy” on the planet is supporting local industry and jobs, by acting to ensure and maintain a weak currency.

Only Australia is doing nothing.

Call, write, or email our politicians now.

And if they give you the same (indeed, any) pathetic, close-minded, imbecilic excuses for not acting on the over-valued, speculator-driven Aussie dollar?

KAP the useless bastards.

Vote 1 Bob Katter.

Vote 1 Katter’s Australian Party.

If the “old” parties won’t act on the most urgent issues facing the nation … I will vote for someone who will.

And will loudly proclaim my intent, all the way to the next election.

UPDATE:

By the way … do not fall for the Coalition’s line, that job losses and business shutdowns are due to businesses preparing for the carbon “tax”. Regular readers know that I have been and remain a vehement opponent of the banksters’ CO2 derivatives scam … and even I don’t buy that bullshit.

Sure, job losses will inevitably mount when the derivatives scam launches.

But right now, job losses and business shutdowns are primarily a result of the speculator-driven AUD:

Death knell looms for Caltex jobs

The global dance of death could come quickly to Caltex’s two refineries after it slashed the value of its refining assets by $1.5 billion due to a confluence of factors strangling profits in this part of its business.

It is another example of Australia’s manufacturing going to the wall due to the strong Australian dollar, rising costs and stiff competition from Asia.

The rise of big Asian refineries with an overcapacity of product is turning the screws for local operators and has prompted Caltex management to announce a strategic review of two key refineries of its own – the Kurnell plant in Sydney and Lytton in Brisbane.

And this comes on the heels of Caltex closing one of its petrol-making units at Kurnell last year.

The review was instigated six months ago and is expected to take another six months before investors and customers know the verdict, which could include the sale, closure or further investment in the business.

Given today’s writedown of $1.5 billion of assets due to expectations of a prolonged period of pain, the market is expecting the review will recommend closure of at least one of these two plants which convert oil into petrol and diesel.

Indeed, Caltex supplies one third of Australia’s transport fuels, so the review will need to make sure it does not adversely impact its customers.

Soon, we will not only have given up our food security, by selling the farm to foreigners.

We will not only have sold off our mineral wealth and sent the profits abroad, thanks to a disaster-in-waiting “mining tax” that will actually help the Big 3 multi-national miners to grow their oligopoly.

Soon, we will have given up fuel security too.

And with no manufacturing sector left either, well, any future war would be fun, wouldn’t it?

Carbon permit face-slapping, anyone?  To the death?

Oh wait … they’re not even paper.

They’re just electronic digits.

Exactly like your “cash” in the bank.

UPDATE 2:

Lighthouse Securities’ Greg McKenna, aka “Deus Forex Machina” at Macro Business, has written an excellent overview on this problem too:

The Australian Dollar is higher than it has been in decades. Indeed it is more than 30 cents higher than the average since it was floated in December 1983. Yet while we see businesses constantly in the news contemplating or actualising job losses and off shoring the arms of government and policy makers here in Australia can’t, won’t or don’t want to do anything about it.

This is at a time when most countries in the globe seem intent on manipulating there currency to the best advantage that they can.

I still call the Aussie Dollar “the battler” – its a legacy of it past when it always caught pneumonia at the first signs of the slightest global cold. But back then we didn’t have China, a mining boom and a central bank, our beloved RBA, with a structural bias to tighten in a world necessitating the exact opposite for most countries ( if you are interested why here’s a blog I did last April which explains why the RBA has a bias to tighten ).

It doesn’t battle much anymore though does it, well except for supremacy.

But what to do?

We know the RBA and Australian Treasury are on Board with a multi-decade China boom but do they really want to napalm the rest of the economy and just leave us with an economy full of houses and holes.

I hope not but I fear so.

Please read his article. Greg agrees that action to alleviate the impacts of the high AUD is vital. He also has some important insights on the views expressed by Treasury Secretary Martin “Mini-me” Parkinson. But (unlike myself) Greg does not favour a currency peg, and instead prefers and explains an alternative solution.

This is a debate that must be had. And urgently.

I thank Greg for his contributions to stoking the fires of that discussion.

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There’ll Be No EU Bailouts From China’s Empty Pockets

25 Nov

For weeks … months in fact … there’s been plenty of fevered speculative commentary about China sailing to Europe’s rescue, by using their vast foreign exchange reserves to buy up European sovereign debt that the markets increasingly distrust (thus, ever spiking interest rates).

Problem.

China’s vast foreign exchange reserves may not be so vast after all.

From Reuters via The China Post (h/t ZeroHedge):

Analysts suspect China’s forex may be weaker than perceived

Europeans searching for a bazooka to blast away eurozone debt problems might well eye China’s US$3.2 trillion foreign exchange arsenal with envy, but Beijing has far less firepower available than many assume.

Most of money in the world’s biggest store of foreign exchange reserves is prudently kept in near-cash instruments to fund import and debt service bills in the event of an unforeseen domestic emergency, or invested in long-term assets that, if sold in size to help Europe, would spark panic on global financial markets.

In fact, analysts reckon China’s armory has only about US$100 billion to spare.

“The sheer size of China’s foreign exchange reserves is massive, but the actual amount of money available for investing in Europe each year isn’t that big,” said Wang Jun, an economist at CCIEE, a top government think tank in Beijing.

A crucial constraint is China’s existing holdings of U.S. Treasury securities. Beijing is by far the biggest foreign owner, with an estimated 70 percent of the nation’s reserves held in U.S. government bills, bonds and other dollar assets.

Turn outright seller and the market value of the remaining holdings is likely to plunge.

That’s not a great investment strategy given the Chinese public’s unhappiness about the roughly 38 percent decline in the nominal value of the dollar in the last 10 years.

The government also may have to set aside some foreign exchange reserves to bailout the banking system if piles of loans to local governments and the property sector turn sour.

China injected nearly US$80 billion in reserves into its big state banks from 2003 to 2008 to help them clean up their balance sheets so they could float shares.

Shrinking Exports, Smaller Surplus

Meanwhile, China’s trade surplus, essentially the money it has to invest overseas, is shrinking as Beijing does what critics in the developed world have been urging for years and rebalances its economy away from exports.

Imports surged 28.7 percent year on year in October and the surplus of US$17 billion was well short of the US$24.9 billion forecast by economists.

Beijing holds an estimated one-quarter of its reserves in euro-denominated assets, so keeping that steady implies a US$117.5 billion increase this year if the country’s foreign exchange reserves grow by the US$470 billion estimated in 2011.

That’s roughly the amount economists expect China to invest in Europe in 2012.

“Assuming the FX reserve accumulation does not slow significantly, I think China will put at least US$80-100 billion in euro assets per year in the next two years,” said Wei Yao, China economist at Societe Generale in Hong Kong.

China recycles foreign exchange assets into overseas investments so outflows of cash roughly track inflows.

The build-up in FX reserves, a result of the central bank’s intervention to limit the yuan’s appreciation, tends to fuel inflation pressures even as the central bank issues bills to mop up the amount of local currency it pumps into the economy.

And it explains why foreign reserves cannot easily be used for domestic spending on infrastructure or shoring up pension systems, since simply converting the cash risks driving up both inflation and the value of the yuan currency.

This revelation comes hot on the heels of a similar one from a well-known Chinese economist and TV personality, who recently told a private audience that China is nearly bankrupt.

In his own words:

“Every province in China is Greece”

Could This Be Gillard’s Biggest, Most Epic Fail Yet?

21 Nov

Remember how your humble blogger described the Gillard “deal” to base US troops in Northern Australia?

In just a few words … “This Will End Well”:

More brilliant strategy from our government.

Ill-considered.

Counterproductive.

Dangerous.

Unnecessary.

And sure enough, barely four days later, and it is already becoming clear that I was right.

What has been achieved, is another Labor epic FAIL.

They have antagonised not only China, but Indonesia as well.

Not that you would think so from the government and media “spin” lies about those nations’ reactions:

Smith downplays US-China crossfire claim

Defence Minister Stephen Smith has downplayed suggestions of China’s displeasure with a new military arrangement between Australia and the United States, saying the official response has been measured and appropriate.

Under the new arrangements announced during US president Barack Obama’s visit to Australia, US marines will start training in the Northern Territory from next year, increasing to a force of 2500 by 2016.

Liu Weimin, a spokesman of China’s ministry of foreign affairs, said the move may not be in the interest of countries in the region and questioned the expansion of military ties while global economics were still shaky.

But an editorial in China’s state-run People’s Daily goes further, saying if Australia uses its military bases to help the US hurt Chinese interests, then “one thing is certain … Australia itself will be caught in the crossfire”.

Mr Smith said media commentary should be “divorced” from China’s official response.

“And the official response has quite frankly been a measured one,” he told Network Ten on Sunday.

“It hasn’t been over the top.”

Ahhhh … Steve, ‘ol son. Two points.

One. The Chinese are famously circumspect in their language. An official response saying that our government’s decision “may not be in the best interest of countries in the region” is a pretty big red flag.

Two. The People’s Daily is state-run. The regime can, will, and does, make clearer statements in its media organs, than it ever does in official diplomatic comments. So you can probably take as gospel that if The People’s Daily speaks of Australia being caught in “crossfire”, that is exactly what the regime is really thinking.

Indeed, they said a little more than that, didn’t they?

A strongly-worded editorial in the state-owned People’s Daily said the new Australian-US defence pact posed a security threat to Australia.

“Australia surely cannot play China for a fool. It is impossible for China to remain detached, no matter what Australia does to undermine its security,” it said.

“If Australia uses its military bases to help the US harm Chinese interests, then Australia itself will be caught in the crossfire.”

The editorial admonished Australia for relying on China for its economic interests while turning to the United States for political and security purposes.

No question about it.

You have antagonised the Chinese. Best get yourself a copy of Sun Tzu’s “Art Of War”, Mr Smith. It might help you get a clue.

And what about Indonesia? We’ve long had a tetchy relationship with them.

Did our government consider the possibility of “blowback” from our nearest big neighbour?

Gillard reassures Indonesia in bilateral talks

Prime Minister Julia Gillard says the Indonesian president understands Australia’s growing military ties with the United States are not a threat.

Ms Gillard says she discussed the issue with president Susilo Bambang Yudhoyono on the sidelines of yesterday’s East Asia Summit and during their bilateral meeting in Bali today.

Yesterday Mr Yudhoyono told reporters that both Ms Gillard and the US President, Barack Obama, had guaranteed they had no intention of disturbing Australia’s neighbours.

Ms Gillard says Indonesia has no reason to be concerned.

“President Yudhoyono certainly understands that this is a step forward in our defence cooperation with the United States,” she said.

“We are a long-term ally of the United States. That this step forward in our defence cooperation is not aimed at any nation in our region.”

The very fact that reassurances have had to be given, proves two things.

1. The prospect of a US-Australia military deal was not discussed with the Chinese or the Indonesians prior to announcing it. FAIL.

2. They are concerned … else there’d be no need for reassurances. FAIL.

This grandstanding decision by Gillard, part and parcel of nauseatingly brown-nosing the warmongering Peace Prize winner Obama during his flying visit Downunder in order to get a desperately-needed lift in the polls and save her leadership during “killing season”, may very well turn out to be Gillard’s biggest, most epic fail yet.

Big call.

But then, so is pissing off (1) your biggest customer, (2) your biggest creditor, and (3) your biggest neighbour, all just to lift your own beleaguered standing within your own party.

This Will End Well

17 Nov

From the Australian:

China reproaches Australia over strengthened US defence ties

CHINA has strongly reproached Canberra over strengthened US defence ties, warning Australia may be “caught in the crossfire” if the United States uses new Australian-based military forces to threaten its interests

A strongly-worded editorial in the state-owned People’s Daily said the new Australian-US defence pact posed a security threat to Australia.

“Australia surely cannot play China for a fool. It is impossible for China to remain detached, no matter what Australia does to undermine its security,” it said.

“If Australia uses its military bases to help the US harm Chinese interests, then Australia itself will be caught in the crossfire.”

The editorial admonished Australia for relying on China for its economic interests while turning to the United States for political and security purposes.

“Gillard may be ignoring something – their economic co-operation with China does not pose any threat to the US, whereas the Australia-US military alliance serves to counter China,” it said.

More brilliant strategy from our government.

Ill-considered.

Counterproductive.

Dangerous.

Unnecessary.

UPDATE:  My sycophant/brown-noser post yesterday becomes all the more apropos. See me scowl.

Abbott to out-do Labor, build new joint US base on Australian soil

TONY Abbott has sought to trump Julia Gillard’s commitments to the US, offering to establish a new joint facility on Australian soil.

Welcoming President Barack Obama to parliament today, Opposition leader Tony Abbott lauded the United States saying “no country on the earth has done more for the world”.

He offered his support for the posting of US troops in Darwin, but said a Coalition government would go even further.

“The Coalition welcomes the presence of up to 2500 US marines in Darwin and would be happy to see the establishment of another joint facility so that these arrangements could become more permanent,” Mr Abbott said.

It got worse:

Mr Abbott said the US was “the most benign, the least self-interested superpower” the world had seen, and the first and greatest nation founded on the dream of life, liberty and the pursuit of happiness.

Bucket please.

For me.

And some toilet paper.

For our leaders’ proboscides.

Try Asking 1.3 Billion Stomachs Armed With Nukes To Give Our Food Back

6 Jul

The latest sellout of an Australian food producer?

Tully Sugar:

As another chunk of Australian agribusiness shifted into foreign ownership yesterday with the sale of a giant north Queensland sugar mill, Alf Cristaudo said sadly: “The Chinese think long-term, we think short-term.”

Mr Cristaudo, a third-generation sugar farmer and boss of industry association Cane-growers Australia, has no issue with the nationality of the Tully mill’s buyer, the state-owned China Oil and Food Company. His concern is that Australia is selling off its food-producing capacity, piece-by-piece, without thinking through the implications of what foreign ownership means.

And as with the Great Global Warming Hoax, it is seemingly only those who actually have feet firmly planted on the ground – those who actually live in nature, rather than concrete – who are aware of the very real threat to Australian’s independent sustainability as a sovereign nation.

From the Australian (emphasis added):

Food security the fear as foreign investors rush in

The peak farmers group has warned that increased global demand for food is leading to a new wave of foreign investment in Australian agriculture that could stifle competition and compromise national food security.

The warning was backed by a leading food security authority and Nationals Senate Leader Barnaby Joyce, who warned too much foreign ownership could lead to a “clash of sovereignty” and diplomatic tensions with a range of foreign governments, including China.

National Farmers Federation president Jock Laurie warns in an opinion piece for The Australian today that foreign investment has entered a new phase over the past four years. He says there is potential for foreign state-owned enterprises to undercut Australian farmers by using their land acquisitions to ship produce back to feed their home populations.

“This raises the question of transparency in the supply chain, potentially jeopardising competition at the farm gate and depressing the local market. At an extreme level, this could also lead to Australia’s own food security goals being compromised,” he writes.

Food security expert and author Julian Cribb backed the NFF’s concerns. “China is trying to shore up its own position. It’s using its new wealth to buy up resources, which includes food. And yes, it might imperil our food security,” he said. “If farmers are getting screwed in the marketplace for the price paid for their produce, they have less money to invest in better and more sustainable farming systems.”

Senator Barnaby Joyce has been a consistent advocate and loud warning voice on this issue. Here’s what he had to say in the same article:

Senator Joyce said yesterday that he had “serious issues” with investment from any foreign state-owned enterprise, because it could lead to diplomatic fallout “one thousand” times greater than that with Indonesia over the ban on live cattle exports.

“You get a clash of sovereignties. You might take an individual to court or a corporation to court. But I think you’ll be very concerned if you take a country to court especially when that country is far bigger and can choose to be far nastier than the one you live in,” he said.

“When the person you’re taking to court has nuclear weapons, you better be a little bit cautious about what you say next.”

Barnaby is right.

Again.

And he seems to have a greater intuitive grasp of foreign policy risk issues than the current band of roving disasters.

Barnaby for PM … Treasurer … and Foreign Minister?

Don’t miss Barnaby’s must-read article in the Canberra Times, concerning Australia’s future food security –

“Selling The Farm Will Hurt All Of Us”

And be inspired to take action, by this brilliant Aussie bush poem by an Author unknown –

“Wake Up Time!”

Former ALP Minister Debunks Dodgy Carbon Data

29 Apr

Former ALP minister and Bachelor of Economics, Gary Johns, attacks the ALP’s dodgy use of data in propagandising for a carbon (dioxide) tax.  And agrees with my own conclusion that We Used To Care, But Things Have Changed.

From The Australian:

Having cost the political lives of one prime minister (Kevin Rudd) and two opposition leaders (Brendan Nelson and Malcolm Turnbull), Australia is now in the end game for pricing carbon. Pricing seemed like a good idea 10 years ago: it is now looking very sick.

Ask an economist the most cost-effective way to abate carbon and they will tell you market pricing. Right answer, wrong question. Ask an economist the most cost-effective way to prepare for the risk of climate change and you will get answers about priorities and adaptation. You hear about research and development, and spending money on things to make people (especially in developing countries) more able to cope with change: health infrastructure, skills, cheap energy.

Instead, the Gillard government walks headlong to its political death with its Climate Change Minister Greg Combet spruiking nonsense. For example, Combet is softening up the electorate for Labor’s carbon tax by arguing China puts a higher price on carbon than Australia.

Combet, on ABC’s Lateline this year, cited the Chinese and Australian implicit price for carbon from the 2010 Vivid Economics report for The Climate Institute: $8 per tonne for China and $2 per tonne for Australia. The idea is to tell Australians they are not pulling their weight. The Chinese must think Gillard a fool. Vivid Economics has been colourful with its analysis. They wildly overstate China’s and wildly understate Australia’s implicit carbon price. For a start, Chinese energy policies have not been developed with the aim of promoting greenhouse gas emission reductions.

The primary effort is to harness energy to create jobs and deliver improved living standards. The majority of renewable energy being built in China is large-scale hydro. Chinese power companies are interested in harnessing energy. Greenhouse gas abatement rarely rates a mention. Moreover, the Chinese subsidise coal fuel. As most new generation in China is coal, this implies that at the margin, China has a negative carbon price. Combet, the Climate Institute, and the Climate Change Department are knowingly feeding the electorate complete bunkum.

And Johns’ conclusion?

The electorate is becoming less enamoured with the climate change cause. Once they sniff brumby figures, Gillard will be the fourth political life lost to carbon abatement.

China Bubble Ready To Pop

26 Mar

From the Financial Post (Canada):

The Chinese economy is a financial bubble that will inevitably pop, says Edward Chancellor, author of the classic text on financial manias, Devil Take the Hindmost. In a new report for GMO, the Boston-based money manager Mr. Chancellor lists 10 signs of a bubble in progress. They range from “blind faith in the competence of the authorities” to “a surge in corruption” to “inappropriately low interest rates.”

He figures the Chinese economy meets all 10 of the criteria. And he has harsh words for some of the cheerleaders for China: “Wall Street … tends to downplay the darker aspects of the Chinese demographic story,” he writes.

“China’s population is set to decline in 2015. The worker participation rate will peak this year. It’s anticipated that the number of people joining the workforce will fall off quite rapidly. Yet it’s this section of the population that tends to move to cities and has provided China with an apparently limitless supply of cheap labor.”

Mr. Chancellor figures that if China’s economy slows below Beijing’s 8% growth target, calamity will ensue. Excess capacity will stifle new investment, the real estate bubble will burst and non-performing loans will bring down the banking system.

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