Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Economy

The Oracle’s Market Update (Evening): No money left …

Most of Australia’s GFC stimulus money was spent on empty school halls and plasma screen televisions.

Europe and America took a different approach, bailing out financial institutions and car manufacturers. Ironic, given the banks started the rot in the first place.

Neither strategy worked.

After today, there’s little doubt there’s no real underlying strength in first world economies, and no money left to pump prime the system. So we get money flooding out of the sharemarket.

The All Ordinaries lived up to its name, with just a handful of the 500 stocks in the index finishing above even. In total, the fall was 183 points – the sort of carnage we haven’t seen since American banks started imploding three years ago.

Australian banks, who depend on foreign debt markets for funding, fell way beyond fair value as assessed by most analysts, but when things turn to shit in the sharemarket, common sense goes out the window. It might get worse, too.

American non-farm payroll numbers, which everybody thinks hold the key to tonight’s Wall Street session, will be woeful. It doesn’t take a Government statistician to work out that too many people are out of work in the US. Things aren’t as bad in Australia, partly due to the existence of the Disability Pension which supports a few hundred thousand work-shy fatties, but our economy isn’t perfect either.

We don’t have whole cities full of urban slums here, just the odd area like some of Launceston’s northern suburbs, so the signs of industrial decline aren’t as apparent. That doesn’t mean we’re not an economy in transition.

There’s no chance of further stimulus in Australia, unless Gillard decides to put the country even more in hock, so for now, we’re dependent on what happens overseas. That’s not an inspiring thought.

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12 Comments

12 Comments

  1. Barnaby Drake

    August 7, 2011 at 5:54 am

    Seeing that Greg L’Strange has been doing such a wonderful job as a quasi-Receiver in arranging fire sales of all Gunns assets, do you think he will still get his $1 million bonus?

  2. Simon Warriner

    August 6, 2011 at 10:02 am

    Shaun, I get the central thrust of your arguement but have a couple of observations. I am guessing you live somewhere other than around Burnie,and in general, the NW of the state, where there is a very significant industry making worlds best mining equipment, a mining boom of sorts, and an increasing range of elaborately transformed agricultural products being produced at a range of scales. (most unfortunately for an external market) I won’t pretend it is all boom, but we need to acknowledge it is not all bust either.
    I suspect your 3 solutions are going to be the natural responses to current trending of events’
    We will get to experience the end of the current debt fueled madness as the system is collapsed to protect the theives, but we need to ensure it is not the theives running the next system.
    The shift away from fossil fuels will be triggered by peak oil, because the oil and gas industry won’t run with out fuel oil or lubricants and there is inadequate scale in the alternatives to replace them on anything like the amounts currently consumed
    Globalisation will falter and fail as the transport systems that underpin it drive costs of imports to the point where local manufacture again makes sense. Whether that ends the transnational corporatist paradigm is another matter and is harder to predict. Pricing carbon migh also alter the economics of global supply chains but it is unclear at present whether the varying regimes will interelate in that manner.
    Your presription lacks one vital ingrediant though. You need a political leadership that is vaccinated against the corruptions riddling our body politic. Mechanisms that inhibit the growth of political parties, and prevent the purchase of power and influence are required. Otherwise we are doomed to rinse and repeat.

  3. Barnaby Drake

    August 6, 2011 at 7:52 am

    The biggest problem with the Western World is that it is fashionable to control labour and the natural markets. Many years ago I lived in South Africa next to a fshionable and popular golf course. Every day, young black children queued up at the gates to offer their services as caddies, and they were usually paid the absolute minimum of One Rand to carry the clubs for affluent golfers. With this, they were able to purchase just enough food for their family to survive for the day.
    Then one day, one of the members laid a complaint that these children were being exploited and the club should introduce a minimum fee for caddying. This was adopted by the committe, and twelve caddies were chosen, given a uniform and the fee was raised to ten Rands for a round.
    The net effect of this was to put all the cheap caddies out of work and about twenty to thirty families were denied their daily food. But on the other hand, the price was now so high, that the majority of the golfers bought their own caddy carts and carried their own clubs, and the new uniformed caddies hardly got any work at at all. However, the committee thought that they had done a lot of good and this was an excellent result for the club and the community!

    And this is basically the problem throughout the world where socialism and unions have taken over and influenced government and driven labour costs up to such a level whereby the industry has moved to countries where wages and living standards are still at a low level but the cost of goods remains competitive.

    In Australia they talk about market stimulus but put every obstacle in the way of achieving it. Many times I wanted to employ someone but I found that if I did, i would be innundated with government paperwork, I would be taxed for employing someone, I would be responsible for the future pension and and would be required to make a contribution to his health and welfare. I would also have to give him annual paid leave, and after a long service, I would have to add in a long term holiday clause, and he could take so many sickie days off per year. The unions would see me as ‘the enemy’ and he could make trouble for me at any time, and I would have to put up with inspections of the workplace etc, etc! And, even if he proves to be basically incapable of doing the job, I still have to employ him and have to give him three warnings etc before I can sack him, and he still has every avenue open to him to take me to court for wrongful dismissal.

    And they wonder why Tasmania and the rest of Australia is in the doldrums!

  4. Barnaby Drake

    August 6, 2011 at 12:57 am

    “International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” the commentary said. BBC News

    I have been advocating just this for a couple of years now, and most recently on TT here:-

    http://oldtt.pixelkey.biz/index.php?/weblog/article/the-question-/

    The world will be a much safer place financially if they do, and it will curtail many of the activities that caused the problem time and time again. It would mean that we are no longer subject to any country’s financial woes affecting us or the rest of the world. Trade would be safe, pensions would be safe, international debt would be under control and there would be restraint upon the wild excesses of stock market and financial traders.

    The danger is, that for these very reasons, these measures will not be popular with all those who are currently in control of the world finances. It limits their ability to ‘make’ money, rather than earn it.

  5. Barnaby Drake

    August 5, 2011 at 1:47 am

    ‘So we get money flooding out of the sharemarket.’
    ‘Australian banks, who depend on foreign debt markets for funding, fell way beyond fair value…’
    ‘It might get worse, too.’

    I have a small problem understanding some of these statements.

    Where does this money go once it has ‘flooded out of the share markets’? Does it ‘flood’ into something else or does it simply go down the plughole and disappear? Is is still there somewhere hidden away from sight or are we left just holding worthless bits of paper?

    Does the cash in your pocket or in the bank suddenly become valueless overnight if the ‘market’ crashes?

    If it does, then it means that the money had no value in the first place and was merely an artificial prop.

    When governments talk about debts of billions of Dollars, do these Dollars actually exist in any form other than a book entry somewhere in sombody else’s accounts. They talk about ‘money being in short supply’, but how can it be in short supply if every Dollar they owe or are owed is actually physically there as a bank note? It is not the same number of Dollars or whatever as before the crash. So where are they?

    Or is the entire edifice a house of cards created by banks and financial institutions with the help of complicit governments who print money for them and create ‘wealth’ for the few, so that they can trade with each other and gamble in the world’s largest casino and live the rich life style based on nothing but an illusion? And when this illusion or mirage fades away, the whole world suffers as a result because there is actually nothing of any real value there, and they find that all the contributions that the common people have been making for their future well-being from their hard earned wages or small business have been raided and gobbled up by these toxic entities, and they are now facing an economic ruin and an impoverished life-style well into their old age.

    I think it is possibly so!

  6. Barnaby Drake

    August 5, 2011 at 1:00 am

    5.Unfortunately, even the best of the ponzie schemes come to a sticky end.

    The ‘Ponzie’s’ are a race apart. They all have three arms and four hands. Two arms on the left for receiving and one small one on the right for paying out. The other hand is positioned out of sight behind their back for administering small tributes to authorities.

    Unfortunately they generally only have a short life-expectancy, oft-times under the protection of Her Majesty.

  7. Barnaby Drake

    August 5, 2011 at 12:36 am

    Daddy, I have five dollars in my piggy bank. What can I buy with it?

    On Monday I can take you to the shop and you can either get five gobstoppers, three bananas, two pints of milk or the whole of Gunns.

  8. Peter Smith

    August 4, 2011 at 11:45 pm

    Unfortunately, even the best of the ponzie schemes come to a sticky end. Still, some will make a killing, while the rest will get done over

    Editor’s note: minor edit for language –please see point 2 in the TT code http://oldtt.pixelkey.biz/index.php/pages/legalbits

  9. Russell

    August 4, 2011 at 11:03 pm

    Meanwhile, Gillard and Giddings want to give away millions more of our money to another not-for-profit industry this weekend.

    Will they ever learn, or are they intentionally sinking the Australian and Tasmanian economies?

  10. Mike

    August 4, 2011 at 10:44 pm

    Look on the bright side – those genuine depression-era flat screen plasma television sets might be collectables if you can hold onto them for another 60 years…

  11. John Alford

    August 4, 2011 at 9:35 pm

    The tenor of some of your comments here brings to mind Frank Hardy’s claim that he didn’t mind being in gaol; he met a better class of person whilst residing at Her Majesty’s pleasure.

    Your withering insight about the “urban slums” of Launceston’s northern suburbs and “work-shy fatties” on disability pensions may reveal your prejudice, but do not belie the fact that these people are largely the victims of, and not the cause, of the rape and pillage of our collective wealth, privatised into a few greedy and grasping hands.

    I happen to work in the northern suburbs of Launceston, and in my experience, I tend to meet a better class of person there than I do in Battery Point or Blackstone Heights.

  12. mpd

    August 4, 2011 at 9:20 pm

    “Most of Australia’s GFC stimulus money was spent on empty school halls and plasma screen televisions. Europe and America took a different approach, bailing out financial institutions and car manufacturers.”

    Fair call. Stimuli in both scenarios failed to pass the second key test that should have been applied to all requests for assistance. They all passed test one, “will this keep people employed” but few passed test two, which should have been “will this money help people stay employed after the money runs out”, ie how will this assistance help Australia’s future competetive position?

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