Wealth plummets, Private Debt Rises

I chose April Fool’s day in 2008 to post the following comments on Blogocracy, but I wasn’t playing a ‘doom and gloom’ prank,  I was deadly serious:

The average price of housing is currently estimated at $470K – taking that figure into account, and lets face it, the housing market has taken off like a rocket since 2000 – then I’d have to say its time for the brakes to be applied because if it’s beyond average Australians to afford and beyond the banks and other lending institutions willingness to lend, what hope is  there that prices will continue to rise at traditional rates.

Recent figures also claimed that for each $1.00 of income people were earning they also carry $1.60 worth of debt on average.

My other concern is that along with overpriced housing we’re also having to contend with a stock market that continues to shed billions in value and a level of consumer debt never experienced before.

In the past many investors have usually had the luxury of entering and exiting either market when growth slowed or reversed in the other.  There seems to be little escape now except for pulling out of both markets and placing gains in a savings account, and then there are some whose personal wealth has been badly mauled by the stock market declines.

My point?  It could get much worse before it gets better and expectations based on what has happened in the past may not be the case this time around (i.e 1929 and 1987). Will things get much worse before they start getting better?  I suspect this may be the case.

Today my concerns have been affirmed and this may only be just the beginning unfortunately:

THE wealth of average Australians has plummeted by a record 9 per cent – or about $19,000 for every man, woman and child – as the global financial crisis bites. New figures show national wealth in property, shares and other assets sank to $4956 billion in third quarter of last year, from $5281 billion 12 months ago.

The average Australian is now worth about $231,000, down from a high of $250,000 in September 2007.

The massive financial toll comes amid predictions of a looming recession which would wipe even more off battler’s bank balances.

Fears of mass layoffs were fueled yesterday with the announcement by mining giant BHP Billiton that it would axe 3300 Australian jobs.

“What we are seeing today is a sober reminder of the unwinding of the mining boom, caused by the global financial crisis and in particular the slowing of the economy in China,” Treasurer Wayne Swan said.

The Government is now under increasing pressure to unveil its second round of stimulus measures to keep the economy ticking over.

CommSec said the Federal Government should respond to the drastic circumstances by temporarily cutting the GST and bringing forward scheduled tax cuts to March.

Prime Minister Kevin Rudd yesterday vowed to be frank with Australians on the impact of the financial crisis. “I don’t intend to guild the lilly one bit,” he said.

“What I intend to do is to be upfront about the impact of this global financial crisis on the economy and on jobs all the way through.

” But despite promising a week of speeches setting out the Governments plans to deal with the crisis, Mr Rudd offered no new measures to help Australians keep their head above water.

The downgrade in Australian wealth, revealed in Australian Bureau of Statistics data, was the biggest since records began in 1960.

At the same time, private debt was on the rise, up 5 per cent during the September quarter to $616 billion. Per capita debt rose from $27,450 to $28,000.

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158 Responses

  1. The destruction of wealth has been ruthless – what did Howard like to say? “We’ve never had is so good’.

    Market rout wipes out 3 years of super fund gains
    http://www.theaustralian.news.com.au/business/story/0,28124,24947435-15087,00.html
    THE global stock market rout has left Australians with no gains to show for the hundreds of billions of dollars they have been forced to pour into superannuation in the past three years.

    Figures released today by research group SuperRatings reveal that balanced super funds lost an average of 19.7 per cent last year, their worst annual return since the start of compulsory super in the early 1990s.

    Over three years, the balanced funds preferred by most Australians have lost 0.4 per cent, meaning contributions by workers and their companies have evaporated in the face of the international market turmoil.

    Over five, seven and 10 years, annual returns are still holding above 5 per cent.

  2. Is this a “good news” story…JMc?

  3. I’m wondering how John Howard would approach this challenge?
    Kevin Rudd steels nation for economic pain in 2009
    http://www.theaustralian.news.com.au/story/0,25197,24948570-601,00.html
    KEVIN Rudd talked up the resilience of Australians today as he used speeches in Hobart and Melbourne to warn that 2009 would bring economic turmoil to “test the very fabric” of the nation.

    Since returning from leave on Monday, Mr Rudd has travelled to South Australia, Tasmania and Victoria in an apparent attempt to prepare voters for more economic pain.

    “2009 will test us all,” Mr Rudd said today at an Australia Day lunch in Melbourne. “It will test governments _ national, state and local. It will test unions, it will test business. It will test families, it will test individuals.”

    “It will test communities and charitable organisations. It will test the very fabric of who we are as nation. The good thing about this country is we are a resilient lot.”

    His comments, picking up a theme touched on during his visit to Hobart this morning, come the day after BHP announced it would cut 6000 jobs world wide and as The Australian revealed plans for the Government to become a lender of last resort for business.

    Finance Minister Lindsay Tanner also indicated today that temporary tax cuts could be introduced to boost spending. “

  4. TB Queensland, on January 22nd, 2009 at 5:59 pm Said:

    Is this a “good news” story…JMc?

    I’m always the first to add a little cheer TB. Reality sucks.

    You’re going to have to drop the ‘prosper’ out of ‘prosper with integrity’ TB. Even those who have tried to do the right thing are getting hit.

  5. Is Mr Rudd preparing us for calling a State of National Emergency, perhaps (oops! there I go predicting again – people will get mad with me)

    Still a bipartisan approach would be nice – and although Peter Costello was the World’s Greatest Treasurer he did realise he couldn’t count properly and found a “lost” 10 billion or so a couple of years ago…if memory serves…perhaps Mr Swan or Mr Tanner have overlooked something too?

    I note again that tax cuts and improved pensions do nothing for the self funded retirees – who are probably suffering more than most (or will eventually)…

    This government needs to seriously consider a guaranteed income retirement fund similar to many EEC countries … with limited but reasonable returns guaranteed …

  6. TB

    I note again that tax cuts and improved pensions do nothing for the self funded retirees – who are probably suffering more than most (or will eventually)…

    I find this especially disturbing and sad.

  7. So the correction comes and people lose $19,000 worth of their wealth?

    Where did this wealth come from and what was the figure of wealth at the turn of the century?

    Me thinks easy come, easy go.

    Another thing that always puzzled me is this shift from government debt to public debt by the last government…people are responsible for their financial circumstances in my opinion.

    I’m not falling for that BHP crap either…they just want to maintain their over the top profit margins due to their greed at the expense of peoples lively-hoods.

  8. You’re going to have to drop the ‘prosper’ out of ‘prosper with integrity’ TB. Even those who have tried to do the right thing are getting hit.

    Haven’t I posted before JMc that none of us will escape the wrath of the worst economic crisis the world has ever seen…yep, I have also posted that this will be worse than The Great Depression … this time around there are more greedy, cocky, arsholes, I affectionately refer to as – The Robber Barons!

    These bastards don’t even have the decency to jump out of the bloody window – they don’t think they have done anything wrong!

    Anyway, prosperity will return – in a couple of years…

    Lets hope they understand…

    —————————
    Prosperity With Integrity!

  9. g’day, scaper!

    Yeah, I thought the Intel, shedding of 6000 jobs was a bit like OPEC controlling production output to maintain – The Profit…(all bow)…

    Here’s a question I’ve been asking my (other 🙂 ) friends, what is a resonable rate of return for an investment in a free market economy? and..

    How would you calculate it, and/or reach that “reasonable return”?

    ———————————-

    On another tack, will big business eventually destroy our society?

  10. Worse than that TB, not only do they believe they have done nothing wrong they are lining up in their droves for public handouts whilst not sacrificing one bit of their lifestyles or remuneration packages, some are even getting pay rises from the tax payers money given to them whilst they demand wage freezes and sack thousands.

  11. Yes, Adrian, but I’m a firm believer that history continues and continues to repeat itself – only a hundred years ago the ordinary folk were conned into a War is Good mentality – these days The Robber Barons see us not as “cannon fodder” but “profit fodder”…

    I can’t help but chuckle as we post back and forth that a century ago we would be considered traitors writing sedition and if cought subject to the noose…

    I’ve always said that I have had a pretty good life – nup, a very good life – my only regret is that I won’t be able to see the future of our society (and more particularly my kids and grandkids) – life is so short it must be “lived”…but not at the expense of others…

  12. “Where did this wealth come from and what was the figure of wealth at the turn of the century?’

    Good point scaper. Are you suggesting that the bulk of these losses are paper losses only, and that the previous gains were merely paper gains?

    I tend to think that no asset is lost until that asset is liquidated, then we might say “last year that asset was worth $500k but when sold I could only realise $475k, so on paper I lost $25k. But I purchased that asset in 1999 for $250k so essentially that asset made me $225k”.

    The downside of course is that many people who have purchased property in the last 12 months now find that the value of the property if sold now will not realise anywhere near what is owed on the property.

    That is only of course, if they sell now or in the near future.

  13. TB

    I’m a firm believer that history continues and continues to repeat itself

    Extracts from “The Great Crash: 1929”, John Kenneth Galbraith, sound familiar?

    “Even in such a time of madness as the late twenties, a great many man in Wall Street remained quite sane. But they also remained very quiet. The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil. Perhaps this is inherent. In a community where the primary concern is making money, one of the necessary rules is to live and let live. To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street are nearly always silent. The foolish thus have the field to themselves. None rebukes them.”

    In the autumn of 1929 the mightiest of Americans were, for a brief time, revealed as human beings. Like most humans, most of the time, they did some very foolish things. All the while, the greater the earlier reputation for omniscience, the more serene the previous idiocy, the greater the foolishness now exposed. Things that in other times were concealed in a heavy facade of dignity now stood exposed, for the panic suddenly, almost obscenely, snatched this facade away. We are seldom vouchsafed a glance behind this barrier; in our society the counterpart of the Kremlin walls is the thickly stuffed shirt. The social historian must always be alert to his opportunities, and there have been few like 1929.

    Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But is has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited. To that the Times, when the real crash came, reported the event with jubilation would be an exaggeration. Nevertheless, it covered it with an unmistakable absence of sorrow.”

    A common feature of all these earlier troubles was that, having happened, they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a recorded 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruiness fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The ruthlessness of its liquidation was, in its own way, equally remarkable.”

    “As noted, it is easier to account for the boom and crash in the market than to explain their bearing on the depression which followed. The causes of the Great Depression are still far from certain. A lack of certainty, it may also be observed, it not evident in the contemporary writing on the subject. Much of it tells what went wrong and why with marked firmness. However, this paradoxically can itself be an indication of uncertainty. When people are least sure they are often most dogmatic. We do not know what the Russians intend, so we state with great assurance what they will do. We compensate for our inability to foretell the consequences of, say rearming Germany by asserting positively just what the consequences will be. So it is in economics. Yet, in explaining what happened in 1929 and after, one can distinguish between explanations that might be right and those that are clearly wrong.”

    Had the economy been fundamentally sound in 1929 the effect of the great stock market crash might have been small. Alternatively, the shock to confidence and the lost of spending by those who were caught in the market might soon have worn off. But business in 1929 was not sound; on the contrary it was exceedingly fragile. It was vulnerable to the kind of blow it received from Wall Street. Those who have emphasized this vulnerability are obviously on strong ground. Yet when a greenhouse succumbs to a hailstorm something more than a purely passive role is normally attributed to the storm. One must accord similar significance to the typhoon which blew out of lower Manhattan in October 1929.”

    Now, as throughout history, financial capacity and political perspicacity are inversely correlated. Long-run salvation by men of business has never been highly regarded if it means disturbance of orderly life and convenience in the present. So inaction will be advocated in the present even though it means deep trouble in the future. Here, at least equally with communism, lies the threat to capitalism. It is what causes men who know that things are going quite wrong to say that things are fundamentally sound.”

  14. Scaper

    “THE wealth of average Australians has plummeted by a record 9 per cent – or about $19,000 for every man, woman and child – as the global financial crisis bites.”

    $21million x $19,000 = ?

  15. JMc – you should not post any more of this doom and gloom – ’cause people will just do what they did 80 years ago anyway…

    What an awful account – and so many links with the present its almost like science fiction, coming true…

    …I find this sentence disturbing…

    The causes of the Great Depression are still far from certain.

    …and the fact that people still don’t understand that The Great Depression (1930) came after The Wall St Crash (1929) – in other words our real “downturn” hasn’t even started yet!

  16. Correction 21million x $19,000 = ?

    Also given so much capital growth has been fueled by debt, there’s no doubting the debt to asset ratio has taken a turn for the worse. How many people now and in the future will be lumbered with assets worth less than their debt?

    Also, I invest $100k of real money into a stocks or a fund and they drop significantly in value – that’s money lost whether realised or unrealised just as so many gains in housing prices and stocks to make up wealth numbers. In the end it’s pretty much a zero sum game and the wealth is usually transfered from those least able to afford the losses to those who knew exactly what was happening and why, yes, insiders.

  17. “What an awful account – and so many links with the present its almost like science fiction, coming true”

    It’s actually freaky because I read the book some years back and when all of the cracks started to appear Galbraith’s account of 1929 came vividly to mind

  18. TB

    I think people will realise in hindsight just how badly they’ve been robbed.

    Retail superannuation funds miss out on $50bn in growth because of poor management, high fees
    http://www.news.com.au/dailytelegraph/money/story/0,26860,24829070-5015795,00.html
    ‘The facts behind the scandal

    * Retail funds pay commision to advisors
    * They have missed $50bn in growth
    * Calls for reforms grow louder

    Retail superannuation funds miss out on $50bn in growth because of poor management, high fees

    IT is the most expensive financial scandal in Australia.

    Retail super funds – usually recommended by financial planners because of their generous commissions – have missed out on $50 billion of investment growth in the past 12 years.

    Research from Industry Super Network (ISN), the super trade body, has revealed that poor investment management, high fees and commissions paid to financial planners has reduced the investment returns on retail super funds by a staggering $20 billion in the past year alone.

    The report, called Australia’s Lost Savings, was written by ISN and reviewed by the University of Canberra using average super fund performance data going back to 1997.

    ISN boss David Whitely is now calling on the Federal Government to reform the financial advice system so that finance planners are forced to act in their clients’ best interests, and not promote products that pay the highest commissions.

    “It is one of the great injustices of our time,” Mr Whitely said. “The current system legitimises financial incentives to salesmen who have no legal obligation to act in our best interests.”

    Under existing regulations, planners have to give only advice that is “appropriate”.

    “That gives far too much leeway for planners and offers insufficient protection for investors,” said Mr White”

  19. “That’s business! nothing personal” as they to like to say.

    Jobless rate set to soar
    http://www.news.com.au/dailytelegraph/story/0,22049,24946748-5014099,00.html
    RATE cuts and government handouts have helped but progress could be derailed as employers brace to shed thousands more jobs.

    An Australian Industry Group/Deloitte survey of chief executives yesterday showed companies are bracing for big jobs cuts as local and offshore demand fades, reports the Herald Sun.

    The report forecast the manufacturing industry will cut 44,000 jobs this year, with 55,000 construction sector jobs likely to go, and about 40,000 service sector jobs to disappear.

    “The global crisis has marked a major turning point in the fortunes of business. While Australia has up until now fared much better than the rest of the world, it is starting to experience a significant slowdown,” the report said.

    Separately, the Westpac-Melbourne Institute’s January survey of consumer confidence showed people were less interested in spending on household items and more pessimistic on the year-ahead outlook for the economy and their own finances.

    The WMI consumer confidence index fell 2.2 per cent to 89.9 points but UBS analysts said the decline was modest and that slashed interest rates, the fiscal stimulus program and cheaper petrol all helped to halt a plunge in consumer confidence.

    UBS expects people will spend about 60 per cent of the cash bonuses by March.

    But UBS economist George Tharenou said more Reserve Bank rate cuts were likely ahead to support consumer confidence in coming months given likely rising job losses.

    JP Morgan said the heaviest weight on consumer sentiment in 2009 is likely to be anxiety about job security, with indicators flagging a “deep labour market adjustment” that could push the jobless rate to 9 per cent by 2010.

    Weakness in share prices will further erode consumers’ confidence. Australian share prices yesterday headed back toward five-year lows, hit by falls in US and European shares, as fears deepen over what’s needed to stabilise US and European banks.

    Having already ploughed $36 billion of taxpayer funds into boosting the economy, Prime Minister Kevin Rudd this week said the Government was ready to get credit flowing to industry should a funding crisis emerge.

    Mr Rudd said Australian businesses face $75 billion in loans to foreign lenders falling due in the next two years. If the now cash-strapped foreign creditors refused refinancing requests, it would leave a funding gap too vast for Australia’s top banks to cover.

  20. John, I will take your musings seriously when you don’t say:

    “It could get much worse before”

    Could get ‘much worse’.? It has, but you were then, and now, having ‘two bob’ each way apparently

    Get serious man. Take a stand.

    And could you make a point without all the verbosity.

  21. Read between the lines Nature5, my money is on it getting much worse.

  22. Also, Nature5 I thought the idea of blogging was to open up to dialogue and feedback? Try to refrain from using the accentuate the positive and eliminate the negative angle though please.

  23. More sobering facts

    The great stall of China
    http://www.smh.com.au/news/world/the-great-stall-of-china-10b-impact/2009/01/22/1232471496219.html
    CHINA may never again power the Australian economy like it has over the past five years, posing huge risks to the local economy, ripping billions from exports, and almost certainly driving the budget into deficit.

    In figures significantly worse than the Rudd Government was anticipating, China’s National Bureau of Statistics yesterday said annual growth almost halved from 13 per cent in 2007 to 6.8 per cent in the year to December – below the arbitrary 8 per cent threshold that Chinese leaders say creates risks of social instability.

  24. Contrary to what you may think Nature5, I didn’t cause this crisis with my thinking, TB did.

    It was always going to be more than a simple financial and economic crisis.
    Job losses prompt cries for help across Australia
    http://www.news.com.au/dailytelegraph/story/0,22049,24950388-5005941,00.html

    THE sliding economy and threats of mass job losses has resulted in a spike in the number of depressed workers seeking help.
    Calls to a men’s helpline rose by a third last month, with experts predicting an increase as the global credit crisis deepens.
    Those seeking help include a small but growing number of workers from the finance industry.
    National Financial Counsellors co-ordinator Jennifer Gracie said accountant and financial adviser clients were growing in number.
    But it’s not only advice on how to prop up personal fortunes diminishing under the impact of the global financial crisis which has counselling switchboards in meltdown.
    The pressures are taking a toll on personal lives too.
    “A lot of bankers are coming through the door with marital breakdowns and depression from financial stress,” clinical psychologist Dr Indi Kaur said.
    Some are so broke they ask for a $20 reduction in fees so Medicare will cover the cost of a session.
    Suicide-related calls to Mensline Australia spiked 34 per cent in the two months to December, with the services receiving 13 calls a week in December.
    Prime Minister Kevin Rudd and Treasurer Wayne Swan yesterday assured nervous workers the Federal Government was doing all it could to stem job losses. The Australian Council of Trade Unions warned that unless the Federal Government intervened, up to 250,000 jobs could be lost over the next 12 months.
    “We’ve said that we’ve got all options on the table,” Mr Swan said.
    “We are now in the midst of a global recession caused by the global financial crisis. The global financial crisis does not respect any border.
    “Fortunately for Australia, there are underlying strengths here which give us greater capacity to respond, but we’re certainly not immune.”
    Mr Rudd, on a visit to Tasmania, said the Federal Government has a strategy to preserve jobs, but warned of tough times ahead.
    Mr Rudd the Government was spending $36 billion to create tens of thousands of jobs, helping business to retain employees and doing everything it could to support the jobless.

  25. John, take no notice of the troll as he rarely contributes to discussion…only criticises and corrects peoples spelling and grammar as if it is an intellectual victory.

    I enjoy reading your posts in the entirety and it is not your problem if the troll has a short attention span.

    Keep them coming, mate.

  26. John
    # I didn’t cause this crisis with my thinking, TB did.

    lol

  27. TB @7.29pm

    Regarding the acceptable return for a company, I believe it should operate like this.

    I have picked 6% as this is the return that usually increases companies in value without the boom and bust profits and plunges.

    Acceptable return level 6% net profit per annum. You are however free to make whatever profit you like with the following conditions.

    1) For every 1 % you exceed the acceptable profit you employ an extra 1% of staff numbers with the minimum being one additional staff member.

    2) If your increase in net profit in excess of 6% is insufficient to employ an additional staff member then you pay extra taxation equivalent to the income tax paid by the CEO on wages paid by the company.

    This way there is actually no restriction on how much profit you can make, but you as a company will help support the country as a whole if you expect to make more than the accepted profit through your own greedy expectations.

  28. scaper – I agree….

  29. Greetings from 1931 (and not 1937)…spotted this piece of the game in my travels…Obama says China manipulating currency

  30. shaneinqld, on January 23rd, 2009 at 8:17 am

    An intriguing system…perhaps something like it could be applied transnationally.

  31. Greetings Legion, interesting piece in this puzzle. If the US can do it why not China. Desperate times call for desperate measures.

    Thanks scaper, joni, and crew – It’s funny but Nature5’s comments motivate me even more to keep them coming (lol).

    Aquanut ” # I didn’t cause this crisis with my thinking, TB did.” I had a good belly laugh when I wrote it.

  32. Legion

    Interesting article. There certainly are options that will fix the problem. The problem is we have no politicians prepared to stick it to big business.

    The ones that do are branded communists and all manners of bile are piled on them.

    Problem is once it goes too far you then have elections like they are having in south america where socialist governments are being elected and the assets of big business being nationalised. This is a result of the massive distribution of the countries wealth to either their own rich or overseas companies.

    Big business never seems to know when they have it good because they always want more. Big business also fails to realise that in every country in the world there are more workers than bosses and in the end if the balance tilts too far the result can be more catastrophic for them than to swallow their pride and accept less than total domination and control of their market and money.

    People tell me that it won’t happen here. What we need to remember is that we are very young country and in the future anything can happen.

  33. TB

    I suggest you call the PM and tell him you weren’t serious about all this stuff (wink). Don’t worry I’ll co -sign it (wink)

    PM risks attack from Nature5 economy
    http://www.theaustralian.news.com.au/story/0,25197,24950544-5015664,00.html

    Like new US President Barack Obama, Rudd is likely to become increasingly grim when discussing the economy in coming weeks and to attempt to mobilise a stoic acceptance among Australians that the economy will continue to worsen before it improves. He will also do everything possible to convince Australians he has done everything in his power to minimise the effects of the slowdown, aware that he will become vulnerable to Nature5’s attack.

  34. Rudd becoming grim.

    He has already stopped smiling and I expect Barack will do the same after a few months in office. While they may be excited at being in government it is like being thrown into a swimming pool cess pit of filth with one chux and some ajax. A damn lot of hard work a long time and some wringing of the cloth to eventually get the job done

  35. John, I better email the PM’s office now to warn him of the impending attack!

    I can see the cabinet burning the midnight oil tonight to formulate a strategy to counter the abuse from jebus croupe…LOL!

  36. Scaper…. you want cabinet to burn Peter Garrett?

    I know you have some issues with him but isn’t that going a bit too far?

  37. Legion

    And an excellent article

    Keynes is innocent: the toxic spawn of Bretton Woods was no plan of his
    http://www.guardian.co.uk/commentisfree/2008/nov/18/lord-keynes-international-monetary-fund
    The economist’s dream was blocked for an IMF serving the rich. Reforms proposed by G20 leaders are too little, too late

    One of the reasons for financial crises is the imbalance of trade between nations. Countries accumulate debt partly as a result of sustaining a trade deficit. They can easily become trapped in a vicious spiral: the bigger their debt, the harder it is to generate a trade surplus. International debt wrecks people’s development, trashes the environment and threatens the global system with periodic crises.

    As Keynes recognised, there is not much the debtor nations can do. Only the countries that maintain a trade surplus have real agency, so it is they who must be obliged to change their policies. His solution was an ingenious system for persuading the creditor nations to spend their surplus money back into the economies of the debtor nations.

  38. Picture the apple in the mouth on the rotisserie to appreciate the vision.

  39. Thanks scaper

    The PM will thank you and the country will thank you…You might even get a VC for your bravery under fire (lol).

  40. Reminds me of the joke that John Cleese tells.

    Q. What is black and white, black and off-white, black and tan, black and brown, black and black?

    A. A nun on a spit.

    (Disclaimer – I am not advocating anyone putting nun’s on a spit. It is in humane and not nice…. the best way to cook them would be to poach them)

  41. Love the ‘Disclaimer’ joni, I’ve heard poaching isn’t much good as well. Any more suggestions?

  42. I reckon deep fry them because we call them penguins and we usually deep fry birds.

  43. for some unknown reason Nuns always wanted to measure me with these long rulers maily on the back of the legs, they were so desperate to measure my bits they came in fast and landed the ruler with force.

    i was so scared of nuns, but after reading Joni’s post i can have my sausages, salad and nun on the side.

  44. Shane

    You’ve got nuns confused with bankers, I think (wink)

    Major Australian banks earn $2 billion in fees and charges from their customers
    http://www.news.com.au/dailytelegraph/money/story/0,26860,24839723-5015795,00.html
    THE major Australian banks earned $2 billion more in fees and charges from their customers while hiking interest rates independently of the Reserve Bank. New research published yesterday showed that in the year to June, the most recent figures available, banks accrued income from fees and commissions of $22.6 billion.

    The result was well up on $20.48 billion they earned in the previous year and came as they were lifting, of their own accord, rates on mortgages, credit cards and personal loans, The Australian reports.

    The spate of rate hikes started in January when each major bank moved independently of the Reserve Bank, blaming the global financial crisis for increasing wholesale funding costs.

    The round of rate hikes occurred on top of the Reserve Bank’s two upward movements in official rates in Feb ruary and March.

    The figures published by the Australian Prudential Regulatory Authority did not show the impact of the 300 basis points in cuts ordered by the Reserve Bank in the past four months.

    However, some of the banks have not passed on the full cuts to customers, with ANZ and Westpac keeping some of of the reduction from the 100-basis point cut by the RBA this month in their profit margins.

    The level of account fees paid by Australian customers has reached a record high, with at least $1.4 billion spent in the June quarter on transaction and lending activity.

    MWE Consulting analyst Mike Ebstein, an independent researcher, said the increase in fees came as customers placed more money with the major banks.

    “The year end June total is up on the year end of June 2007,” Mr Ebstein said.

    “But the last quarter went against the annual trend and the 10.4 per cent growth in fees and commissions was well below the growth in assets and deposits.”

    Despite the increase in fees, Australians have turned into fiscal conservatives, choosing to hoard cash out of the volatile financial markets.

    Before the recent interest rate cuts, banks were offering deposit rates above 8 per cent in a bid to reduce their reliance on volatile funding markets. However, as official rates have been cut, deposit rates have been slashed.

  45. Aquanut, you’re one sick puppy, but who can blame you.

    Rumour has it that it was really nuns who caused this crisis, not sure about that but that’s what Dubbya has allegedly been saying…along with all the usual suspects, Iran, China, AlQaeda, and TB. Not free-market capitalism though.

  46. I think I know who Nature5 really is..Lloyd Christmas
    http://au.youtube.com/watch?v=UnkefjCES-4

  47. (bad pun alert)

    Well, nun have taken responsibility for the crisis yet.

    And we were talking about the “discovery” of nun ealier in the week.

    I will stop now. It’s been a long week.

  48. Joni, i’ll have nun off that.

  49. They wonder why I am bitter.

    Got a general meeting/proxy form today from one of the companies I own shares in which is in the ASX top 200.

    I purchased these shares for $1.14 on 29/01/08. At the moment they are trading at 13.5c a loss of 88.16% in less than 12 months.

    The proxy requests the following.

    Increase in directors remuneration by 37.5%

    Increase in CEO remuneration by 13.64%

    Increase in other directors remuneration by 25%

    When will this stop.

  50. Aqua

    I will try to stop making a habit of this.

  51. Joni

    dont you dare or was that a joke that went over my head.

  52. nuns – habits….

  53. shaneinqld, on January 23rd, 2009 at 8:17 am

    Thanks Shane, another good idea!

    Another answer I got was 1% on CPI – my problem with this is that the CPI can be manipulated…although…

    …if we can attempt to fix the inflation rate (2-3%) why not the profit margin? (and I agree 6-7% seems good)

    Anything over the “Profit Margin” increases tax for society – mmm….

  54. (bangs head on the nearest hard object)

  55. TB

    I also maintain that if businesses are making more than a 6% year on year return then there is not enough competition and the government has allowed monopolies to gain control.

  56. Why didn’t the fat lady become a nun?

    She couldn’t get into the habit?

  57. scaper…, on January 22nd, 2009 at 6:26
    …Another thing that always puzzled me is this shift from government debt to public debt by the last government…people are responsible for their financial circumstances in my opinion.

    Government debt IS public debt isn’t it scaper – doesn’t the taxpayer fund governments? Do you mean the shift from public debt to private debt? You seem to be in agreement with private debt but I don’t like it.

    Steve Keen’s Oz Debtwatch

    …Central Banks, under the misguidance of conventional economic theory, ignored the role of private debt in the economic system. They instead reinterpreted their charters–which emphasised full employment–as a mandate to keep inflation low…

    …With its Neoclassical eyes fixated on the rate of inflation, it ignored the expansion of private debt–as did its equivalents at Central Banks around the world, as did government Treasuries, and as did international economic agencies. This is why the sudden collapse of the world economic order took economists by surprise. They were looking at their mathematical models, which ignore private debt (and indeed money!), rather than at the real world, where debt is king…

    Looking at the transcript of the TV show DoO (below), the voices of reason seem to me to be Eva Cox, Stephen Mayne and John Hewson. The real hardliner is Sinclair Davidson who is obviously the free market/pro individual zealot whose ideology is responsible for today’s financial mess.

    Difference of Opinion – What will be the effect on Australia’s long-term future?

    PROFESSOR SINCLAIR DAVIDSON: People choose to spend their money. How they choose to spend their money is their own business.

    EVA COX: They choose to spend their money because they are scared shitless by the fact the Government keeps removing the props so they feel they’ve got to own things, they’ve got to have the money. They’ve got to borrow the money.

    JOHN HEWSON: The debate about public sector debt has become quite distorted. It’s become some political sort of…

    EVA COX: Game.

    JOHN HEWSON: ..fascination that we have to eliminate all public sector debt. Some public sector debt may be fundamentally important to rebuilding the nation.

    and

    …EVA COX: I think if we don’t recognise it, the reason we invented government was so that collectively we would be able to do the things we need to do collectively. That means we need to spend the taxes on getting betterment for us all for the common good, and not for the individual benefit.

  58. Sorry for coming in late on this one Joni, but you cannot poach a Nun either.

    It is well known that they all play for the same team.

  59. TomR

    Very very good!

  60. Shane

    “When will this stop”

    This is absolutely insulting – To the point I had to take a second look just to try and work out if you were pulling our legs. Dirty rotten scoundrels doesn’t come close to describing these people.

  61. I’ve been hearing more and more about this and how the influx from private schools to public schools is taking a toll on an already overburdened public system.

    Debt collectors chasing unpaid school fees
    http://www.theaustralian.news.com.au/story/0,25197,24951834-12377,00.html
    THE impact of the economic downturn has moved from the boardroom to the classroom, with a big jump in the number of parents unable to pay school fees.

    Bankruptcy hearings over unpaid school fees have risen 25 per cent, said chief of Prushka Fast Debt Recovery Roger Mendelson.

    Prushka, Australia’s biggest privately-owned debt collector, is employed by many schools to chase up bad debts.

    Many households overspent during the Christmas period and are now paying the price, said Mr Mendelson.

    “A number of schools are currently seeking unpaid fees through Prushka, including one debt for over $70,000, which is currently being paid off by instalments,” said Mr Mendelson.

    Private schools are also showing a greater willingness to pursue debts, he said.

    “It is quite an early affect of the downturn,” Mr Mendelson said.

    “I think most private schools are finding it a lot tougher, particularly with the expectation of dropping enrolments and, particularly in Victoria, the salary of teachers going up quite dramatically,” he said.

    Students whose parents were unable to pay were usually allowed to finish a term or academic year before being kicked out of a school, he said.

  62. That is very disconcerting news johnmcphilbin

    After all, for the last 10 years, the private schools have been subsidised at the expense of the public

    Is this another case where we, the taxpayer, will have to fork out and pay private companies to maintain education levels?

    Is this just another failed neo-con experiment?

  63. Are private schools another ABC Learning?

  64. John

    The shares code is TIM the proposal is also in the messages online

  65. And of course private schools always have option to sell off their assets, which compares with public schools…a lamington raffle?

  66. Whoops..I mean a lamington drive. However, if things do get desperate one may indeed have to raffle those lamingtons.

  67. Thats why I was sent to a catholic school. Unless their rules have changed they cannot deny a christened catholic education based on the inability to pay. They can deny non catholics but they cannot deny catholics a catholic education on the basis the family cannot pay school fees.

  68. I believe that this is still the case shane. Our lot went to public schools as hubby was against sending the kids to anything private, and especially to a catholic school. Hubby suffered severely at the hands of those tartars aka the nuns such as for punishment they used to take his calipers away so that he couldn’t walk. A great crew those nuns.

  69. Min

    I experienced many things as well. However I must admit especially from the high school years at boarding school the absolute devotion to teaching by the religious staff of the college.

    Nothing was too hard, if you did not understand you were tutored privately after school until you did understand ,no matter how long it took. Those that were more intelligent then the rest of us were left to progress through the exercises while the teacher went over it again and again until we all comprehended what was being taught.

    I give them total credit for teaching me what I know because I know myself that I would have not studied half as hard if the discipline was not there.

  70. So if it is still true regarding catholics, then the catholic parents at least need not worry about the education of their children at a catholic school if they so choose.

  71. Shane..and it’s the same in public schools. At my kids’ former high school (and a very big YAY to Mullumbimby High School) teachers did the exact same thing, arriving at 7am to instruct extension mathematics for example.

    Hubby likes to relate the story that half of his class at Our Lady’s are now in prison. Shane, the former is just a little leg pulling as my 2nd cousin is a priest.

    Min becomes serious. It obviously doesn’t matter the form of education but the important components are teachers, children and parents and when these come together for the betterment of the middle mentioned item, then all is well.

    I have a problem with private education (with the exception of the Micks) in that it is a money making machine prone to over exaggeration re achievements, much as previously suggested, like ABC.

  72. Min

    I agree with your last paragraph but mainly over the last 10 to 15 years as private schools have been popping up all over the place with one aim and that is to make money.

    The original true private schools were set up for education ( albeit with religion thrown in). It is only over the last say 20 years that the funding has been skewed so badly and that we have profit making enterprises.

    Then again we have profit making nursing homes and many other things as well now, just goes to show the thing we value most.

  73. And when the nursing homes were governed by churches no abuse occurred?

    Certainly no shareholders to hold one accountable but the bishops lived in mansions swilling their brandy.

  74. Min

    Why the rush to attack.

    Abuses happened everywhere and not just in religious institutions. You do not want other groups judged by the bad few, how about you also ackowledge the good many did not the bad of a few.

    Many nursing homes were also owned by state bodies and other charities not just religious bodies.

  75. Shane. As you well know I was just responding to your inputs. As nobody else responded to you, I thought that I would.

    No probs..you are obviously getting hot under the collar about this issue.

    I attacked whom or what?? Catholic nuns? My 2nd cousin is a Catholic priest. Perhaps you had better get stuck into other posters and not just me.

    My last statement was: Min becomes serious. It obviously doesn’t matter the form of education but the important components are teachers, children and parents and when these come together for the betterment of the middle mentioned item, then all is well.

    Anyway..shane..squishy hugs. Must choof as hubby is due home early and I promised him a crackly pork roast.

  76. Min squishy hugs too except your last statements were

    “And when the nursing homes were governed by churches no abuse occurred?

    Certainly no shareholders to hold one accountable but the bishops lived in mansions swilling their brandy.”

  77. Shane

    This stock has seen previous prices as high as $3 and $4 and looking at it’s history reveals some major highs and lows. Cyclical type stocks tend to behave like that – it’s earnings have been less than predictable also (going back to when they were listed in 96). They’ve had earnings per share as high as 28c and as low as 0c

    My guess is that investors have viewed it as a potential goldmine and at various times, but frankly it’s done nothing but disappoint. Now that conditions have changed in the economy I’d say investors have simply fled to safer ground.

    As for the proposed salary increases, they’re an absolute joke. I’d say, that the managers and directors are more focused on their own cut of profit than those of shareholders.

  78. Shares hit new 5-year low, and so continues the destruction of wealth

    Aussie shares are battered again, losing about 4% and dragging the main index to the lowest close since February 2004

  79. Shane

    At a quick glance at their financials for 2008, they also carry a lot of project expenses – far too many costs.

    I guess the only thing you now need to assess is whether this company will go under or survive and hope there’s a rebound in their price and fortunes so you can recoup your losses.

    Claim it as a capital loss perhaps via tax is another option I’d think, not sure about how much you’d be likely to recover.

  80. You’d think people would act more sensibly, but that’s just not the case. Here’s another area that has grown considerably during the boom years. What happens when people no long have the spare cash to gamble like they have been?

    Rudd bonus ‘went on record pokie spree’
    http://www.theaustralian.news.com.au/story/0,25197,24953191-12377,00.html
    VICTORIANS have set a new gambling record and the Federal Government’s pre-Christmas bonuses are being blamed.

    Figures released by the Victorian Commission for Gambling Regulation show just over $248m was put through gaming machines in December last year.

    That is a $24m increase on the previous month’s expenditure, and $29m more than December 2007.

    Anti-pokies campaigner Tim Costello says there is “no question” the massive increase is a result of the Federal Government’s December cash injection to pensioners, carers and low-income families.

    All those eligible were given a one-off $1000 payment in a government attempt to stimulate the economy.

    “We know how these things work … and rather than going into people’s pockets, there’s a direct causal connection with obscenely rich figures going into the pockets of gaming companies and boosts such as the Government’s grant,” Mr Costello said.

    He said it was a “badly missed opportunity on creating jobs” and the same thing happened when the baby bonus was introduced.

  81. “At a quick glance at their financials for 2008, they also carry a lot of project expenses – far too many costs”- John McPhilbin

    What absolute BOLLOCKS. You call yourself a business analyst. Well thank God by the naivety of your statements you clearly are not one.

    The Beta Ratio of Timbercorp is currently at 2 ( do you understand that John ?), Debt Equity Ratio is 139%. The problem with this organization has absolutely nothing to do with its “project expenses” carried forward as stated by you.

    Shane,

    TIM’s problems are that In 2004 TIM switched from forestry into horticulture. The problem was that the Fed Govt withdrew tax incentives for horticulture yet kept forestry tax incentives. At the same time superannuation incentives were introduced in 2006 so it took another hit. Plus combined with a drought and climbing interest rates. Well we know about that.

    It’s current problem is that it needs to refinance in a very uncertain environment ( and has probably been shorted) and due to its share price an equity raising is out of the question. In this regard you will note from their 2008 financials that they are seeking to raise $ via asset sales. Fortunately its cash burn has slowed.

    “Claim it as a capital loss perhaps via tax is another option I’d think, not sure about how much you’d be likely to recover” – John McPhilbin

    A business analyst would know the correct answer.

    Shane,
    I assume you invested in your own name. You will be able to claim a loss on sale against any profits on other investments sold this year ( Capital Gains Tax Events). If you do sell you can carry forward that loss to offset against other Capital Gains Tax Events in the future. Plus do not forget the 50% discount that applies to assets held in excess of 12 months.

    Oh and John, I too, like Nature 5, find your posts to be predictable and boring. What no second finance minister of Zambia for you to quote this week ? You never did answer my other questions on that other thread I noticed.

    And no I’m not Nature 5

  82. M1+M2+M3=M3 Squared

    And here I’ve been labouring under the illusion that the GFC was sparked, in part, by inherent deficiencies of CAPM modelling, precisely as Roll’s critique describes. How are you measuring beta, and unobservable risky bits of the market, again? LOL

  83. Beta is as variable as anything else at the moment Legion. I was just stating what the current measured volatility is.

    Frankly I enjoy your rather strange posts, I’m new here. I just cant stand people holding themselves out as experts when they are clearly unable to tell me how they qualify as such and also continually criticize anyone from the finance sector.

    I mean a selective follower of Minski. Oh please. If you know anything about economic modelling it would know you either embrace the entire model or basically NIL of it. You cannot embrace half of an equation plus the equals sign if you know what I mean. Anyway have to go as I have a call from London in 15 which I’m ill prepared for.

    Have a nice weekend Legion

  84. M1+M2+M3=M3 Squared,

    You’re a know nothing charlatan – a chartist? My god! What a joke!

    Of course it’s carrying too much debt and yes, variable expenses and the cylical nature of the business make it even more prone to volatile price swings based on erratic earnings bla bla bla.

  85. Fortunately my call has been delayed. You really are just plain weird arent you John.

    All you do all day is Cut and Paste Cut and Paste. Oh the third finance minister of Fiji says “the current floods are due to GFC”. Well I must post that.

    I’m certainly not a chartist.

    So Do you have a job ? What are your qualifications ?

    You strangely refuse to answer very fundamental questions.

    Who is the “charlatan”? You cant even answer a simple tax question properly. You are the joke on here.

  86. M1+M2+M3=M3 Squared,

    Here’s another thing dopey, a cursory glance tells you that TIM is not on sound ground.

    Please feel free to show your wisdom and post a thread of your own. I look forward to critiquing it.

  87. I’ve never lodged a claim for a capital loss so I can’t tell you off hand exactly what the entitlement would be.

  88. M1+M2+M3=M3 Squared,

    Here’s another thing, I wasn’t telling Shane anything he wouldn’t have known already. I simply wouldn’t try to insult his intelligence.

    And, having never come across your user name to date and your claim you’ve been hanging around makes me wonder why have you been afraid to speak up until now?

    I’m sure joni will give you a shot at posting something we can all enjoy and savour. Come on, we’re all a friendly bunch here, so have a go.

  89. Legion

    Look what we missed (lol) Shit! Didn’t see this coming.

    Murerwa quote the Corninthians by saying “For I know the thoughts that I think toward you, thoughts of peace not of evil but to give a future and a hope.”

    During his last budget in 2007, Murerwa closed his speech with another quote from 2 Corinthians Chapter 4 verses 16 and 17. But whatever he might have wanted to infer basing on the good word, he lost it.

    http://www.thezimbabweindependent.com/business/21860-chinamasa-faces-daunting-task-in-presenting-budget-.html
    LAST year former Finance minister Samuel Mumbengegwi made a record devaluation of the Zimbabwean dollar when he presented his budget.

  90. John McPhilbin:

    “You’re a know nothing charlatan – a chartist?

    Personally, I wouldn’t know. But while the allegation was clear, there was no supporting evidence to support same Then again maybe evidence is not important? Lol.

    But we have M1+M2+M3=M3 Squared denying being a chartist, claiming:

    “All you do all day is Cut and Paste Cut and Paste.”

    Even the owners of the site have noticed that. Lol

    Also we have John saying:

    “Here’s another thing dopey”

    Dopey? Maybe? But based on what I have read to date that description doesn’t seem to fit, Indeed the available evidence suggests otherwise. Then we have ‘dopey’s’ assertion:

    “You strangely refuse to answer very fundamental questions.”

    I have noticed that also. But:

    “You are the joke on here.”

    M1+M2+M3=M3 Squared, Not true! Certainly not the ‘is’ but maybe the ‘ought’? Lol.

    M1+M2+M3=M3 Squared, Clearly you are a troll! Or at least you will soon be labelled as same.

    But hang around. Ee are inthe realm of financial experts here

    Anyone care to dispute that?

  91. John,

    You dont need to have the tax problem to be able to answer the question. Hello would you like me to repeat that.

    You still wont answer those “other” questions will you John.

    You call me dopey and a chalatan ? Fine. Resort to your name calling.

    You have that down to a fine art with anyone who dares disagree with you.

    I can live with insults from you

    ANSWER THE QUESTIONS I POSED EARLIER IN THE WEEK.

  92. M1+M2+M3=M3 Squared

    Fair enough, M1.

    Me…I’m always playing with ideas across domains and assert no expertise or qualification to comment on things other than that (I may not even be any good at playing with ideas, but I try) and always welcome the new and new perspectives, so welcome. I quite like John and John’s posts simply because they are what they are…it’s all a contribution, of sorts, in the noosphere, and each is responsible for the integrity and tensegrity of their own node, nodal relations, and permeabilities, I figure.

    Have a nice weekend, also, M1, and I hope that ‘London Calling’ is good to you.

    Nature 5, on January 24th, 2009 at 12:41 am

    Anyone care to dispute that?

    I only work with ideas, financial ideas being a subset of that larger set. As a subset, I like to think that financial ideas are capable of being explored using the usual tools. One of those tools is a scalpel for exposing underlying assumptions. I mentioned Roll’s critique in relation to M1’s post for its ability to cast nasturtiums on the legitimacy of CAPM at the level of that model’s assumptions, even if pragmatism suggests that model yields useful insights within the parameters of those assumptions. Most things can be interrogated at the level of assumption(s). Then it’s down to ‘he says-she says’ about those assumptions, and about the implications for the worths of any frameworks, models, and worldviews built atop them. It’s an interesting meta-study, at the sociological level, about how people who are assumed to be rational will still find utility in the irrational, or at least not perfectly rational, where their base assumptions are involved, especially when challenged, as you observe. And they’re all challengeable at the end of the day, in the absence of perfect information and perfect interpreters of said. And most fun of all is a clash of assumptions.

    (Me, being me, I also try to avoid asserting any kind of specific or professional expertise or dispensing any kind of professional-like advice in casual contexts because I know that indicating particular qualification and dispensing advice may open one up to future claims against those statements of advice.)

  93. Nature 5

    WOW is that a compliment ?

    Well thanks I might hang around every now and then. It’s just that well I just dont have a good pair of scissors to cut and paste as the name caller does.

    Obviously I’m a dope then

    I’ll defend you until you say something fundamentally stupid but even then I wont call you a “charlatan or dopey”.

    Sorry Legion

    But the Capital Asset Pricing Model is not my thing. But yet again I’m off to the thesaurus to work out what you actually did say above.

    Oh ! London is crap apparently for the moment.

    But Economics is 1% mathematical, 98% psychological and 1% unknown. The valuable unknown is the psych bit actually.

    WOW !

    John must have a lot of qualifications as its 2:14am and obviously he’s still getting his resume together for me

  94. M1+M2+M3=M3 Squared

    (lol)Formerly an analyst with a large multi-national company heavily involved in operational performance and labour utilisation, specialty in industrial relations and labour analysis.

    As for my opinions, you think I’m wrong debate them – that’s what this forum is all about.

    The rest I picked up on the way – now, if you’re a financial guru with a major in economics – debate.

  95. One thing I’ve learned about so called qualifications is they don’t amount to squat if you don’t know what you’re talking about.

  96. Oh, and most of my qualifications pertain to behaviour sciences – and no, I won’t be putting up my resume.

    And given psychology/sociology play a central role in economic and business thinking, I guess I have every right to have an opinion.

  97. Shane is eerily absent from this discussion, what’s say you Shane?

  98. What are the chances of Nature5 and Squared playing around on this blog at around the same time, complimenting each other on a job well done. ‘

    I guess we showed him didn’t we’ – MPD (multiple personality disorder perhaps?)

  99. Nature5 and Squared

    Interesting reactions, any thoughts?

    “Fear and panic have led plenty of regulators around the world to inhibit the effective allocation of capital as they have retreated to parochial protection of the companies on their respective markets.”

    Five weeks’ notice for a lucky few will not quash volatility
    http://business.smh.com.au/business/five-weeks-notice-for-a-lucky-few-will-not-quash-volatility-20090123-7oox.html
    The extension on the ban on short selling a select group of stocks, including real estate trusts and financials, is as much an anathema to the free flow of capital in the sharemarket as tariffs are to the free flow of goods in an international economy.

    Fear and panic have led plenty of regulators around the world to inhibit the effective allocation of capital as they have retreated to parochial protection of the companies on their respective markets.

    The Rudd Government has allowed – or indeed encouraged – its financial regulator to engage in this behaviour with the same protective fervour it displayed in bailing out the Australian car industry.

    Tough and uncertain times explain this kind of behaviour, but it doesn’t excuse it.

    The Australian regulator, the Australian Securities and Investments Commission, went one step further this week – it extended the ban on selective short selling for another five weeks in response to yet another sell down around international sharemarkets.

  100. I dunno…more happy chaps spreading the cheer…

    U.K. Economy Shrinks Most Since 1980, in Recession

    Australia May Cut Interest Rate Below 2%, Fraser Says

    “The government’s language has been all doom and gloom: they’re scaring the pants off people and we’re talking ourselves into this recession,” said Fraser….“Things are going to be difficult in the economy for a while,” Fraser said. “It’s only going to get worse and that will be for an extended period of time as other economies around the world slow.”

    So, are things really bad or is it all a matter of talking them into existence? Hard to tell between Bernie’s each way bets and the econometrics accruing at a clip.

  101. ANSWER THE QUESTIONS I POSED EARLIER IN THE WEEK.

    John, it is pretty obvious by the above sentence that you have exposed the MPD…exactly the phrase that ABBA hit me with last year.

    The IP will not be the same as I suspect that ABBA is sending the square posts to a relative to post…very devious!

  102. ABBA+Nature5+M1+M2+M3=M3 Squared=MPD

    I think we’ve cracked it scaper

  103. Sorry to disappoint you but no you have not “cracked it”. I will tell you I am in Sydney which a moderator could confirm for you. In fact in my neck of the woods the Southerly just arrived. Very windy outside.

    Oh and scaper I love the conspiracy but do you really think I can get relatives to post for me at 2 am in the morning ?

    Sorry but you are wrong on that one.

    By the way. Who is Abba ? Where do I find a post from him/her ?

    “As for my opinions, you think I’m wrong debate them – that’s what this forum is all about. – John Mcphilbin

    That’s precisely the problem. All you do is throw insult accusing people of being “charlatans” or “dopey”

    So just grow up John and stop being a bully.

    I’m off to dinner. Goodbye

  104. Holy crap batman

    How did i miss all of that.

  105. By the way id like to say John i thank you for your time to post what you do. I in now way think ill of your postes.

  106. “In no way” (that deserves a correcting)

  107. aquanut

    It’s certainly been fun aquanut . Hey, I enjoy coming here and posting and most people are used to my style.

  108. Nature5/ M1+M2+M3=M3 Squared

    You started with ‘ABSOLUTE BOLLOCKS’ in your initial comments – and that wasn’t your way of tossing the first stone, so please don’t cry when I toss a few back in your direction.

    That’s my style – and you’ll find few (I’d say no one) here, who are intimidated by me or my comments – in fact, I get some really good serves back from people I’ve come to respect and quite frankly it should be part of this forum. Mostly our sarcasm is done in knowing jest.

  109. JMc,

    Not to take sides – well actually, yes, I am taking sides – your posts and comments are never offensive. But if I may offer one – small – criticism: could you please cut down on the *channels Tim Dunlop* long cut-and-paste-jobs.

    😉

    peace out

  110. JMc, I just read this thread…well done!

    This post is particularly interesting:

    M1+M2+M3=M3 Squared, on January 24th, 2009 at 6:01 pm

    Why would Squared be concerned about “cracking” his ID – so dumb – hey!

  111. Okay, Tony for you I will try (wink)

  112. JMac! Don’t tell fibs! You won’t try…and you will continue to post BOOKS! DUH! 😛

  113. TB Queensland, on January 24th, 2009 at 8:55 pm Said:
    JMc, I just read this thread…well done!

    This post is particularly interesting:

    M1+M2+M3=M3 Squared, on January 24th, 2009 at 6:01 pm

    Why would Squared be concerned about “cracking” his ID – so dumb – hey!

    No. Not so dumb.

    The reason being is that scaper.. had it wrong in the first place and John swallowed it.

    So why dont the lot of you email a moderator and sort out your weird conspiracy theory once and for all.

    Next I’ll be accused of being the “other guman in the grassy knoll”

    I’m still wondering who Abba is. Can someone enlighten me ?

    OK John so my “bollocks” in retrospect might have been a bit full on. So I apologise. Can we call a truce ?

    But I still reckon if you were in charge on the Titanic you would have advised everyone to go to their rooms lock the door and drown themselves in the bathtub.

  114. Squared

    “OK John so my “bollocks” in retrospect might have been a bit full on. So I apologise. Can we call a truce ?

    But I still reckon if you were in charge on the Titanic you would have advised everyone to go to their rooms lock the door and drown themselves in the bathtub.”

    A bit counter-productive don’t you think. In fact, if you look carefully I probably would have been one of the first to recognise there was a problem. Lets not forget history, everyone on board thought the Titanic was unsinkable’ .

    So, here I’d be saying to you ‘shit! f$#k! bust! we’ve hit an iceberg and there’s every chance could go down, we should prepare for the worst case scenario’ and what would your reply be? ABSOLUTE BOLLOCKS!

  115. Nah !

    My reply would be there is hope.

    And some would escape.

    Your philosophy is a complete despair !

    WHO THE HELL IS ABBA ?????????????

    Besides the obvious

    So shall we draw pistols again at dawn John ?

  116. M1+M2+M3=M3 Squared

    My reply would be there is hope.

    I’d take a different tangent than mere ‘hope’; and, in doing so, I’d take the liberty of drawing on something you said earlier about the ‘other side of the equation’.

    It seems to have become a popular pastime to ‘bash’ financiers and financial economists and their products, and yet the capital products they produce, including many of the fictional capital products which increase the available credit for ventures, can and do contribute to the growth and distribution of ‘commonwealth’. Much of the crying shame, for mine, are the lost opportunities for society involved in those fruitful ventures collapsing. For mine, a social capitalism is still the way to go; and, if there is hope, it is there, not in smashing the lifeboats, nor in panicking that the ship is sinking.

  117. “TB Queensland, on January 24th, 2009 at 8:55 pm Said:
    JMc, I just read this thread…well done!”

    Oh yeh by the way TB what a lovely poisonous flag you actually fly with the Eureka Stokade Flag.

    You actually dont realise how anti Asian it is do you ?

    Typical really !

  118. Well said Legion !

    “Debt” has become a very dirty word around this blog.

    If you follow Minski/Keens it has almost no role to play.

    Bad Debt is something you cannot service.

    For Gods Sake who is this Abba person. I want to read his posts. Can you help Legion ?

  119. M1+M2+M3=M3 Squared

    Umm, I tend to focus on the ideas, not the names/avatars; I don’t really care if anyone has more than one identity, because my usual stomping grounds are filled with multi-people. I’ve only had one occasion to call ‘sockpuppet’ on a blog; and that was where the sockpuppet was the idea; and even the idea-as-sockpuppet was a sockpuppet. (Nevertheless, because I am especially good at spotting sockpuppets, I can also say to the sockpuppet hunters that Annie Barrie is still typing in their midsts, based on syllabic harmonics/cadence and not syntax, just to give them something else to obsess about).

    Now, who is ABBA? I don’t know, but their posts can be found here…

    ABBA at Blogracy (the blog which preceded this forum)

  120. Blogracy Blogocracy

  121. On the entire politics of names, though, I do tend to agree that it is preferable for posters to keep to one name consistently so that there is a pedigree for their ideas.

  122. “Bloody Union Bosses, they are everywhere and always interfering.

    ABBA of Brisbane Fri 28 Sep 07 (11:58am)”

    OK !

    Thanks Legion. Not what I expected. He/She has a problem with Quokas as well ?

    Reading on I can understad why people might have a problem with him.

    BUT I STILL BELIEVE EVERYONE HERE IS ON A PILL

  123. It says a lot about the rest of your beliefs.

  124. John,

    Why keep posting on the financial sector at all? From what I can tell of previous posts here it is all the fault of others anyway? The consumers ran the credit up because we are simply adolescents in mature bodies and so bare no responsibility? How could some possibly grasp the context of your posts if they didn’t know how to add to begin with? We are simply not responsible for any of this didn’t you know? Unless you hopped off the “gravy train” in time that is………….Still reading the Soros stuff by the way.

  125. aquanut, on January 25th, 2009 at 4:37 am

    *Nods and smiles, and takes another red pill, and speculates that each bringing a plate makes for a feast*

  126. Sparta of Phoenix, AZ USA

    Because it’s all about the ‘financial engineering’…and the social engineering??

  127. Legion, on January 25th, 2009 at 5:37 am Said:

    Sparta of Phoenix, AZ USA

    Because it’s all about the ‘financial engineering’…and the social engineering??”

    Go Legion! Spot on

    Nature5, I mean ‘Squared Off’ give it a break, it’s not about despair – it’s about disrepair and repair of the system.

  128. Sparta

    Interesting thing about Soros is the same model he used to make billions exploiting inefficiencies/flaws is the same model he’s now using to explain how this crisis came about.

    You should take some time to read some of his material. Absolutely fascinating and it actually helps to make sense of the chaos the system is now in.

  129. A blast from the past for those interested in a previous incarnation of Soros’ thoughts…The international financial crisis – International Solutions – interview with hedge fund manager George Soros…from ’99.

    Q. Isn’t there a point, however, when even the best proposals will not solve a problem? Some people will argue that nothing could have been done to correct the Russian economic situation, for example. Even if we had the international system you propose, it still might not have worked.

    A. Yes. I agree. One of the things we all have to learn is that there are problems that have no solutions. On the other hand, how we deal with these problems has a great effect on how we live. In Russia, there may actually be no solution. You can make the situation better or worse, however.

  130. Legion

    Great find, same interview 1999

    Q That leads me to your larger concerns. You state that the markets may be more of a threat to open societies than to totalitarian states. What do you mean by this?

    A. I am worried about the political reaction to financial instability. For instance, if the U.S. stock market falls sharply, this could lead to recession. Americans are already spending as much as or more than they earn. If consumers cut back, it could send the United States and the entire world into recession. In the United States, this could lead to a political demand for protectionism. If it succeeded and we limited our imports, that would make it even more difficult for the Asian nations to rebound. In turn, they would not be able to buy the goods the United States produces, which could cause more difficulties here.

  131. …this could lead to a political demand for protectionism

    And guess what is the first thing on the US agenda to which the EU is also reacting to, increasing protectionism to protect local industries from going under.

    I don’t need to iterate what a great negative on the global economy tariffs and protectionism is, and something Australia is particularly vulnerable to (which is why historically we have fought so hard against it).

    Also the folly of FTAs will be realised, especially ones that have not been very carefully framed and all loopholes plugged. I believe ours leak like sieves.

  132. Sparta

    Interestingly enough, I find blogging on the subject I do one of the best forms of research. And the bottom line is not in proving people ‘wrong’ and myself ‘right’ it’s all about getting mutiple views and when put together can be quite satisfying and productive.

    I gave up on believing in either/or (right and wrong, good and evil) long ago. I’m much more interested in either/ and (a combination of thinking and perspectives that often reveals a truer more accurate picture of the way things are and the way they can be if an effort is made).

    In order to achieve this I have to start out with a position I generally believe in and let it evolve from there.

    I find feedback of all types valuable, those that support my argument and those that challenge it. Quite often, more often than not, I’m forced to rethink and refine my own thinking.

    Eventually my aim will be to publish something, which is some way off, but the idea is there.

  133. M1+M2+M3=M3 Squared, on January 24th, 2009 at 10:22 pm Said:

    But I still reckon if you were in charge on the Titanic you would have advised everyone to go to their rooms lock the door and drown themselves in the bathtub.

    This statement shows how little you know JMc.

    If you have followed his posts and predictions for a long time you know that John would have checked out the Titanic before it sailed, told everyone there is no such thing as an unsinkable ship and for the people not to sail on it as there are inadequate lifeboats and life vests if it does sink.

    He would then make hundreds of very long posts, copying and pasting reams of data, on why the Titanic did sink, how it was very predicable it would sink and why it was foolish for people to believe it was unsinkable.

  134. JMc Watch the QandA on ABC1 at this very moment.

  135. Just read an interesting fact:

    Average length of a recession in the US: 11 months

    Average length of an expansion: 6 years

  136. Adrian

    “This statement shows how little you know JMc.

    If you have followed his posts and predictions for a long time you know that John would have checked out the Titanic before it sailed, told everyone there is no such thing as an unsinkable ship and for the people not to sail on it as there are inadequate lifeboats and life vests if it does sink.

    He would then make hundreds of very long posts, copying and pasting reams of data, on why the Titanic did sink, how it was very predicable it would sink and why it was foolish for people to believe it was unsinkable.”

    I’ve got to say Adrian, that is probably the best description of what my motivation has been that I’ve ever come across. Damn, you know me better than I know myself. I find it really satisfying to get that type of feedback from you. In fact, I see similar qualities in yourself and a few others which is probably why I enjoy contributing so much.

    “Those who don’t learn from history are doomed to repeat it” is another way of describing the lesson that keeps being ignored and mainly due to political and financial indifference. Problem is, ‘those’ means were’re all affected, even if many of us are well aware of the lessons that need to be learned in order to avoid crises..

    Cheers

  137. Tony of South Yarra, on January 25th, 2009 at 9:17 am Said:

    Just read an interesting fact:

    Average length of a recession in the US: 11 months

    Average length of an expansion: 6 years”

    These statistics will be interesting to watch as to whether they will play out now. I have my doubts given the magnitude of current problems. I’ve had a few friends who have been quoting similar statistics. I’m betting there could be a lengthy delay on this occasion. However, the fact remains, it’s not the end of the world just because some painful adjustments need to be made.

  138. And how does that pertain to the current situation, especially if the US goes into depression?

    I don’t find it an interesting fact at all, just a fact.

    Some recessions went for a long time, others for a short time and the average comes out at 11 months.

    Of course expansion is long after a recession as money (debt) and resources are poured in to rebuild, which takes a long time, yet the lesson of the previous recession is nearly always forgotten.

  139. Adrian of Nowra, on January 25th, 2009 at 9:03 am Said:

    JMc Watch the QandA on ABC1 at this very moment.

    Can’t get there Adrian, what’s the topic?

  140. It’s a repeat with Abbott and Maxine McKew on the panel and its about the first nine months of the Rudd government. Lot’s of topics from finance to euthanasia, Nelson, Turnbull (who had just taken the leadership) and Costello.

    Fanny Mae and some other US institutions had just gone under and a lot of the discussion was on an upcoming financial crisis and its effect on Australia. It is very telling how much in denial the Libs on the panel were on any real financial problems, especially for Australia, and especially Abbott. Listening to them you would have believed at that time that because of the great economic managers they were for 11.5 years Australia was mostly invulnerable to the crisis but it was just the Labor government causing the crisis in Australia.

    Some of the commentators though made the same points you have been stating for a little while now.

  141. I don’t find it an interesting fact at all, just a fact.

    Do you go out of your way to be rude, Adrian, or does it just come naturally?

    /No need to answer.

  142. I will answer.

    So now I’m not allowed to post an opinion. I don’t find it an interesting fact at all. It’s just an average of the lengths of recessions and expansions in the US, and if you think about it makes a lot common sense on how their economy normally operates.

    As the current problem is in a large part due to things not being done as usual in the US then these averages will be blown out. Will that be an interesting fact?

  143. Tony

    I tend to agree that there will be a rather large blow-out in recovery time against the historical average, so much so that it will create a new average.

    The historical average is of interest to me simply because it provide a good measure of the the mean. Just like the stock market recovery back to its record high in 1929 took roughly 24 years and the market bottom occurred in 1932. Can we expect a similar recovery period? I certainly hope not.

    As for Adrian’s rudeness, he does get a little excitable and can be blunt with his opinions at times but I don’t think it was intended be personal at all.

  144. I’m inclined to agree with Adrian – the average is just that – an average – this economic mess has no precedent – history is being made as we watch it unfold – and it has a long way to go yet!

    I’m also inclined to agree with JMc – re Adrian – ToSY…I’m sure Adrian meant nothing… we often cross swords but – I beleive – we remain Blogocrat friends…

    I was likening the present situation to almost being at war, to my son the other day, and he asked who we were fighting – pretty simple really – The Robber Barons…till they are brought to justice and held in check – these “economic cycles” will continue and the development of international society will be stunted…

    Two steps forward, one step back…

  145. Very dramatic stuff in the UK. I’m sure all kinds of records are going to fall.

    “The economy entered recession with an almighty bang in the fourth quarter of 2008,” said Howard Archer of Global Insight.

    Britain plunges into recession
    http://business.smh.com.au/business/britain-plunges-into-recession-20090124-7oy5.html
    Britain’s economy shrank at its fastest pace in nearly three decades at the end of last year, sending the economy into recession for the first time since 1991 as the financial crisis hit even harder than expected.

    Friday’s bleak data piles pressure on Prime Minister Gordon Brown, under fire after massive job losses, banking sector turmoil and a plummeting currency knocked Britons’ faith in his ability to deal with the global economic downturn.

    The Office for National Statistics said the economy shrank by 1.5% in the fourth quarter of last year, the biggest drop since 1980. That followed a 0.6% fall in the third quarter, fulfilling the technical definition of recession.”

    The figures drove the pound down to a fresh 23-year low against the dollar, and the FTSE-100 share index fell below the psychologically important 4000 mark for the first time in more than a month as investors realised Britain was in for a deep and prolonged downturn.

  146. Thanks Mac and TB, there was nothing personal, I honest didn’t find the fact “interesting” and said so. I just found it a statistic that has little bearing on the current situation as there is no precedent for what is occurring.

    Time will eventually add to the statistics and a whole new set of statistics will be tabled. Those would be interesting.

  147. JohN

    The sooner you email a moderator to confirm I am not Nature 5 or Abba the better you’ll feel.

    I mean dont you enjoy lots of enemies (philisophical that is) and not just the one ?

    Far more fun dont you think ?

  148. OK, sorry Adrian and others. (I might have been a bit hungover when I wrote that.)

    😳

  149. Nothing to apologise over Tony, reading it back I could have been more diplomatic in the way I put it as it does read as a put down to you when my intention was to point out I didn’t find it interesting in comparison to the current situation, which will dramatically alter the stats and garner a whole new set.

  150. Adrian of Nowra, on January 25th, 2009 at 8:51 am Said:

    Yeh well by going via that philosophy no one would ever take a risk.

    But then again you do choose to live in one of the most mediocre towns in the country. It must suit you fine.

    In fact just looking at your photo I doubt you have even ventured out of your cave today. Far too risky for you isnt it.

  151. M1+M2+M3=M3 Squared, on January 25th, 2009 at 1:00 pm

    And yet…the intermeddling of risk, and the undervaluing of risk, demonstrably sits at the heart of the systemic failures which spawned the current crisis. Would those who built themselves caves atop the canyons of Wall Street not have a case to answer in your worldview, or is there some middle ground between under-reaching and over-reaching in the boom-bust cycle?

  152. Keep the insults coming Squared, your credibility is plummeting.

  153. Nowra, beautiful place actually.

  154. That’s why it doesn’t worry me John, just meaningless drivel from an obviously more intelligent person than they are letting on.

    If someone wants to make out they are more baseless than they really are then that’s their problem, noone else’s. What it achieves or proves I don’t know, it doesn’t even establish they can insult all that well.

  155. Has it’s pluses and minuses John and it’s only a hop and skip to some of the best places in NSW.

  156. M1+M2+M3=M3 Squared, on January 25th, 2009 at 1:00 pm

    I guess the question that I’m raising, and John has been raising for quite some time here and other places, is how to build a better ship. Part of that task is diagnostic; part of it is prognostic; and yet another part is philosophical/ideological…what Soros refers to as building in ‘morality’, of one kind or another and that’s always debatable, in relation to amoral markets (assuming that markets aren’t ipso facto ‘good’ in themselves).

  157. Sorry meant Legion in the first para.

  158. Adrian, one favorite Aussie place. Nambucca Heads, or at least as it used to be 10 years ago. The big decision for the day was which beach to go to? The rock pools, the sheltered surf beach, the tidal river..and that was fun, just a pair of goggles and flippers and coast for miles.

    With apologies for being off topic..just had to mention when Adrian stated the best places in NSW.

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