Why Pacific Brands Has Been A Ticking Time – Bomb

Back in September 2008, SMH’s Ian Verrander wrote an article highlighting the time bomb that is ‘private equity’ deals.  The idea  is to take out huge loans to buy companies (or buy the existing shareholders out), gut them or reorgnise them, load them up with debt and sell them into a booming stockmarket. Nice work if you can get it.

Nasty business aimed at making the deal makers very wealthy whilst lumbering the company and it’s future shareholders with all the debt. Continue reading

The Global Financial Crisis is a Hoax.

In what will come as a bit of a surprise, to say the least, there is a growing voice originating from the USA, that, if evidence is anything to go by, can longer no be ignored – “The Global Financial crisis” has been nothing other than a media beat-up or an elaborate hoax.

In sharp contrast to the relentless doomsayers and economic pessimists, Successful US investor Jack Miller maintains that the global economy is on the brink of a major resurgence.

All world stock markets are raging. The US economic recession has been a severe blow to the world. Financial analysts say that the USA is the main reason behind all financial problems in the world. Many of them say that it is only the beginning of the crisis.

However, other specialists simply laugh at those who panic. They believe that there is no recession in the US and there cannot be any. Nevertheless, they see a positive side about the present panic: best shares in the world are now available at very low prices, which is an extremely low occasion.

Successful U.S. investor Jack Miller feels certain about it. He receives great profits from fluctuating markets and recalls US post-war history of the USA.

During the past 50 years the USA suffered eleven crises acknowledged as recessions. They were caused by significant factors, and their consequences were much more serious than the present ones.

The 1945 recession was caused by the end of World War II, from which the American industry profited openly. The war ended, and former soldiers turned into the unemployed. Later the American economy suffered from the Cold War (together with expectations of the nuclear apocalypse), the Korean and Vietnam Wars, which was disastrous for the USA.

The rising prices of oil created economic crises in the USA in 1973-1974, 1979-1980 and 1981-1982. The recessions in 1990-1991 and 2000-2001 were associated with the investment crisis, or in other words, with the unjustified hopes of investors.

Peculiar features of recession include the rising unemployment factor and the decline of production.

The previous crisis between the two centuries (which is considered a mild crisis) was characterized with the six-percent reduction of the industrial output. The current situation shows that the production in the past quarter increased by two percent, it did not drop at all.

Jack Miller also calls attention to the unemployment rate. A rise in unemployment by basis points (up to five percent) at the end of 2007 caused a drop in stock markets before the New Year holidays. However, everyone chose to forget that for the past 50 years the average unemployment rate equaled 5.6 percent, and during the crisis it fell up to 7.6 percent at the most.

This cannot be considered a recession, claims Jack Miller looking at the fundamental rates. The air traffic performance is rising, which the investor considers to be the major index of the economic and consumer activity.

Experts say that the expectance of falling consumer costs is the factor of the forthcoming recession. It resembles the statement that the general hankering for diets will urge the average American to lose ten kilograms, says Miller.

Personal incomes rise as jobs increase. We can hope for that due to the rising industrial production.

Miller associates the present fluctuations on the world stock markets with usual economic cycles. The overheated economy of China and oil-making countries is slowing down, which means we are about to experience another rising cycle. Jack Miller recommends buying cheap shares right now, because soon their prices will restore.

Actually, the USA seems to benefit from this recession that “never happened”. As we have already been assured, the fundamental economy indexes are going up. However, the Fed cut its rates down to 3.5 percent and caused unusual global approval. It may cut them down to 2-2.25 percent, thus giving American businesses and consumers very cheap credits.

Besides, such action will inevitably result in the weak dollar (now it remains in the pre-crisis against other currencies, and this makes the US currency required) and in great advantages for foreign exporters.

Already now the US export-oriented companies are counting new profits. Thanks to the cheap dollar, the US economy managed to first start reducing the foreign trade deficit. It should be mentioned that the USA could not redeem the credit balance of the foreign trade.

Everything leads us to believe that the USA will overcome this crisis, or recession whatever, and will become even stronger than a year ago. At least it looks set to suffer fewer losses than the rest of the world.

Meet me at the Watercooler…

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Hello and welcome to our beginning of the working week thread.

I thought it would be interesting to start this week in a socially responsible, health conscious way.

And then I changed my mind.

Off your face. What are some of the strangest things you’ve ever done when you’ve been smashed?

I can recall, vaguely, a few things:

1. Doing some “performance art – interpretive dance movements” to a group of buskers doing Elvis Presley songs on King Street, Newtown at about 2.00am. A crowd formed and started cheering me on and throwing coins!

2. Driving through Marrickville (as a passenger) in my friend’s BMW. I was leaning out of the sunroof and ‘blessing’ everyone in “pope mobile” fashion.

3. Waking up underneath a shrub in my front garden after not quite making it to the front steps after a black tie function.

4. Getting up on stage at the Lane Cove Club, grabbing the microphone, while the band was having a break and performing an acapella rendition of “Tiny Bubbles” to a generally unnapreciative audience. Getting back up on stage and doing “interpretive dance’ accompaniement to said same band.

And last but not least:

5. Being asked to leave a karaoke club by the Management due to the volume of complaints by other customers. How humiliating. I think it was my rendition of Brown Sugar, complete with Mick Jagger impersonation that did it.

I refuse to be drawn.

A lot of people worry about things. Don’t they? Any thing. Many things, or just one or two things.

But what really is the point? I ask you.

We hear so much doom and gloom these days. It’s everywhere. On the news, in the papers, online web sites, and even here, there are constant posts about how everything is so fundamentally rooted and how it’s all going to get worse.

It’s like everywhere we are all whipping ourselves up into a collective apocalyptic lather of doom and devastation where the only glimmer of hopes lies in aliens descending to whip “the true believers” away or to gag back a cup of orange cordial.

Andy Warhol, the 1960’s alternative pop icon attracted a crowd of down and out ‘follower’s at his New York art studio, come apartment, come nightclub, each with their own sad tale to tell.

“So what” was Andy’s stock standard response. Hippies would arrive at “The Factory” and describe how they had to run away from home “so what” would reply Andy, or couldn’t find somewhere to sleep “so what” he’d say, or were sad and lonely “so what,” or just wanted to be part of what was going on at the Factory. Big deal. So what.

When things got tough, Andy would just trot out another painting and that would keep the “hangers on” in food, drugs and alcohol for another few months.

I always thought that modern psychologists could’ve learned a lot from Andy’s “so what” refrain.

Everyone’s got a hard luck story. Some people wear it on their sleeves, others keep it hidden. Others don’t even know they’re living it until one day they wake up with a wife (or husband) three kids and a McMortgage and wonder how TF did I get here?

Meanwhile there are people struggling to make a bowl of rice, working knee-deep in mud all day every day, who have no idea what life is like outside of a 15 kilometre radius of where they were born and probably never will. What financial crisis?

Apparently Australian viewers are turning away from “reality TV” in droves. Instead preferring the more true-to-life “unreality” of quality shows like ‘Home and Away”.

It’s disturbing to think that the reality of “reality TV” had become so distasteful. The vile putredeness of teenage adults behaving badly suddenly became obvious to the entire population of Australia. As if a sleeping audience woke up to themselves, realised the ugliness of it all and simply switched to more mindless garbage with a synthetic veneer.

Was I missing something, or are we all just meant to stand around staring at each other like something out of The Invasion?

Meanwhile some health-kick poster screams “ARE YOU HAPPY WITH YOUR LIFE?” My Life? I’m not even sure about this sausage roll…!

And Harvey Norman wants me to buy a thousand dollars worth of shit I don’t need for a thousand days interest free! I can’t even count to a thousand without stopping to think about it for a moment, or to walk into another room, come back, and wonder what I was doing there in the first place.

Yesterday I re-arranged some bamboo.

It will probably be there when I get home.

It’ll probably be there tomorrow.

Apart from that, I think I know very little about anything. I try to avoid people who think – or like to think – that they do. And even if someone did, and it were true, I’m not sure I’d really want to know.

I quite like it that way.

Would you like curry with your chips?

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Sometimes the choice between candidates, the balance between the expertise of each requires considerable thought.

IT could be game on for Pauline Hanson as former AFL star Warwick Capper looks set to run against her in the Queensland election.

You just cannot make this stuff up!

*Thanks Min for the tip.

China’s Implosion Could See Re-Run Of Great Depression

WARNING THE FOLLOWING MAY CONTAIN INFORMATION AND OPINION THAT SOME MAY FIND DISTURBING:
So much for our robust economy, but what about a speedy recovery?      The bursting of the commodities bubble and a softening Asian economy on top of a sea of personal debt doesn’t make for a robust economy.  But that’s not the really bad news.

First, some really bad news about our export market:

China steel lockdown hits exports

DOZENS of freighters carrying Australian iron ore are stalled outside Chinese ports amid a collapse in demand for steel, dashing hopes that Chinese industrial demand will protect Australia from the worst of the global recession.

Tumbling Chinese exports and renewed stock market lethargy indicate that efforts by Chinese leaders to defy the global economic crisis are struggling.

Instead of being used in new office buildings, factories and bridges, steel is being stockpiled, driving an 8.6 per cent fall in Chinese steel prices in the past fortnight.

The situation bodes ill for pivotal annual iron ore contract negotiations between Australia’s big iron ore miners and China’s steel mills.

The emerging weakness in China will weigh on the Reserve Bank board, which is meeting in Sydney tomorrow to consider a recommendation from the RBA management to halt its run of interest rate cuts.

Although Chinese authorities hope they can hold the decline in the country’s growth rate to 8 per cent, the IMF is forecasting 6.5 per cent and private analysts are suggesting it could be considerably lower.

In January I posted this prediction Societe Generale strategist Albert Edwards, which pointed to major problems with the Chinese economy and the implications globally, especially for the US:

Super bear warns on US and China

“In 2009 it is not the mounting risk of depression in developed economies that will come as a major surprise,” Mr Edwards wrote in a note to clients, “it is economic implosion in China and the global and geopolitical risk thereof.”

In forecasting a depression in the US, Mr Edwards means that he believes the US will see a peak-to-trough decline in its gross domestic product of more than 10 per cent.

In China, Mr Edwards expects the worst domestic upheaval since the Tiananmen Square protests in 1989 may cause the Chinese authorities to undertake a “mega-devaluation” of the Chinese currency, the yuan, in an effort to stay in power, as “the very survival of the regime depends on growth”.

A devaluation of the yuan would cause the rest of the world’s economies to competitively devalue their own currencies in response, Mr Edwards said, sparking a “1930’s-style trade war” that “could see a rerun of the Great Depression”.

Only last week I indicated the importance of US and China relations and the important role China plays in supporting US efforts to stabilise their economy:

Clinton’s recent visit to China is SIGNIFICANT

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Secretary of State, Hillary Clinton’s recent visit to China is a significant event in U.S – Chinese relations and the implications are sure to effect the future direction of the global economy and world markets.

Global markets have every reason to be jittery. In the last few years, Japan  and China have bought into US treasury bonds and hold large significant US currency reserves. Why? To keep the value of the dollar high so the US can continue buying lots of their exports. What would the dollar be worth if they were not propping it up? What will it be worth when they can buy no more?

This seems to be the question being asked by investors on Wall Street

What does this all mean? If the Chinese economy implodes the consequences will have far reaching effects on the global economy and financial markets, not to mention the potential political upheaval it will cause.

We’ve seen our largest trading partner, Japan’s economy tank and now if our resource exports to China should fail badly, there’s little room for our government to successfully guide us into calmer waters.

I sincerely wish I were seeing it in a more optimistic light but it’s simply not the case at the moment.   All we can do now is cross our fingers and hope China’s fortunes turn.

Over to you

UPDATE: ASX HITS 5 YEAR LOW

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