Words cannot express the depths of my contempt for the Australian political class but as the Bee Gees song says "words are all I have." I say "political class" because both major parties are no more open to newcomers or new ideas than a Mafia family. The are self perpetuating elites reinforced by funding direct from the taxpayer. If the electors allow themselves to be treated like idiots, then it is natural the contenders for office will treat them as such. Why aren't they discussing the $70 billion deficit and how they will mitigate its effects on the body politic? The deficit can only get worse.
It's hard to say who sees the electorate as the greater fools, Kevin Rudd or Tony Abbott. Rudd flipped out again in Brisbane, inflicting his bile on a poor makeup artist, an incident well reported in the Murdoch papers. It is well known in political circles that Rudd is regarded by his troops as being mentally ill and is said to be suffering from Asperger's Syndrome. As for Tony Abbott, he was back on the box a few days ago doing what he loves best -- acting like a bogan. And no, these are not trival issues. We have no way of knowing what Rudd or Abbott will do in office, all we can do is assess their characters. Until we can recall governments, all he have is a ballotocracy where were stuck with an elective dictatorship for three years.
No party should be making any spending promises. They should say the kitty is empty. Just how deep the Budget black hole is is open to speculation, but it ranges from $30 to $70 billion. Abbott and Rudd should treat the electorate like adults and say it is irresponsible to make spending pledges and talk about the programs they are going to cut. The China boom is over. They should say so.
First among these cuts should be the middle class welfare with which Costello and Howard bribed the electorate to win their string of victories. Howard was like the out-of-town uncle who always turns up with a pocketfull of lollies. Costello was never liked. It is still possible to find copies of his autobiography, heavily discounted, in remainder bins around the city. Costello didn't have Paul Keating's "flash Harry" charm or John Howard's avuncular bedside manner. Costello and Howard used the early returns from the China boom to bribe their way to power. The GST was the means by which they extracted these bribes from the electorate.
Costello and Howard turned the Australian middle class from a group of proud, largely self sufficient people into a class of mendicants, always seeking handouts from the government. Australians have always been keen on getting money from the government and were only too ready to be bribed. But just try taking this money off them.
I once had a very good friend called Bill Moy. Moy was a multimillionaire and among other endeavours, was heavily involved in the Victorian Division of the Liberal Party for many years. Once, during the many games of rummy with which we spend our evenings in Taipei, he asked me "What is the primary aim of a political party?: I answered "To govern well." Moy replied "Not at all. The am of a political party is to win and retain power." That is the way politics works in Australia.
Mainly due to that attitude, I think Australia is beyond saving. Unless someone emerges with the balls, like Bob Hawke and Paul Keating, to tell the Australian people that the party's over, the black hole will only get deeper. As for the Gonski bribes for teachers, the disability scheme and all the rest of the Rudd-Gillard programs -- they were totally irresponsible but you can't expect better from most Labor governments. All you can say is that on current evidence, Tony Abbott will be worse. I am sure Tony Abbott believes in something, but economic rationality is not one of them.
Friday 23 August 2013
Thursday 27 June 2013
Kevin '747' Rudd and Bill 'The Knife' Shorten take power
Politics generates myths. No doubt we will be treated to all sorts of myths about the marvels Julia Gillard would have performed if she could only have stayed in office. The truth is Julia was one of the most cack handed prime ministers of all time.
Take the election date, set for 14 September 2013. Not only is it perilously close to the G20 meeting, which Australia will lead, it's also Yom Kippur, the Day of Atonement, the most solemn day on the Jewish religious calendar. Even most secular Jews will want to go to the synagogue or stay at home. As a Jewish friend of mine said "Maybe Julia thought she had the Jewish vote in the bag already." Kevin Rudd has lived his whole life to show the world how great he is, so he will milk the G20 for all it's worth.
Expect a much later poll date. Kevin doesn't have to go until at least 30 November 2013. He likes being PM, so he doesn't want to rush things. As for the Kevin 747 sobriquet, he loves flying here and there, bringing light to a benighted world, for example Indonesia, to which he will give his helpful advice on stopping the asylum seeker boats. This, of course, will help undo the mess Rudd made when he overturned John Howard's asylum seeker policy, which had stopped the boats. Let's see how that plays in Sydney's western suburbs.
As for Bill "The Knife" Shorten, who knows where he will strike next? Bill is a graduate of Xavier College, the preserve of Melbourne's upper crust Catholics. Xavier is run, as one might expect, by the Jesuits. Bill's Dad however had some dubious friends, among them the leaders of Melbourne's most notorious criminal union, the Painters and Dockers. Few members of the Painters and Dockers did not have an extensive criminal record. His Mum was a clerical worker who went on the earn a law degree and did some teaching.
As far as wielding the knife is concerned, Bill "has form" as they say. He knocked off the sitting member for Maribyrnong (not much of a loss) Bob Sercombe, who was also, rather unusually, a member of the Shadow Cabinet. Then he knifed Kevin 747 to promote Julia Gillard to the Lodge, then he knifed PM Julia Gillard and promoted Kevin 747 back to PM. Who will feel his blade next?
As for Kevin 747, he will be off overseas again, especially as Parliament has risen and he doesn't have pesky things like Question Time to worry about. Some good men like Martin Ferguson have exited Parliament for good. Stephen Smith has returned to the Golden West and will be Canberra bound no more. Smith, who accepted the poisoned chalice of Defence, may have decided discretion is the better part of valour. Why can't Wayne Swan, who couldn't sell a relativley good economy story, take the hint and head back to Bananaland for a well earned rest?
As for the marginal seat holders who thought life with Kevin couldn't be as bad as being out of Parliament forever, just remember that those who live by the sword die by the knife -- sorry, sword.
.
Take the election date, set for 14 September 2013. Not only is it perilously close to the G20 meeting, which Australia will lead, it's also Yom Kippur, the Day of Atonement, the most solemn day on the Jewish religious calendar. Even most secular Jews will want to go to the synagogue or stay at home. As a Jewish friend of mine said "Maybe Julia thought she had the Jewish vote in the bag already." Kevin Rudd has lived his whole life to show the world how great he is, so he will milk the G20 for all it's worth.
Expect a much later poll date. Kevin doesn't have to go until at least 30 November 2013. He likes being PM, so he doesn't want to rush things. As for the Kevin 747 sobriquet, he loves flying here and there, bringing light to a benighted world, for example Indonesia, to which he will give his helpful advice on stopping the asylum seeker boats. This, of course, will help undo the mess Rudd made when he overturned John Howard's asylum seeker policy, which had stopped the boats. Let's see how that plays in Sydney's western suburbs.
As for Bill "The Knife" Shorten, who knows where he will strike next? Bill is a graduate of Xavier College, the preserve of Melbourne's upper crust Catholics. Xavier is run, as one might expect, by the Jesuits. Bill's Dad however had some dubious friends, among them the leaders of Melbourne's most notorious criminal union, the Painters and Dockers. Few members of the Painters and Dockers did not have an extensive criminal record. His Mum was a clerical worker who went on the earn a law degree and did some teaching.
As far as wielding the knife is concerned, Bill "has form" as they say. He knocked off the sitting member for Maribyrnong (not much of a loss) Bob Sercombe, who was also, rather unusually, a member of the Shadow Cabinet. Then he knifed Kevin 747 to promote Julia Gillard to the Lodge, then he knifed PM Julia Gillard and promoted Kevin 747 back to PM. Who will feel his blade next?
As for Kevin 747, he will be off overseas again, especially as Parliament has risen and he doesn't have pesky things like Question Time to worry about. Some good men like Martin Ferguson have exited Parliament for good. Stephen Smith has returned to the Golden West and will be Canberra bound no more. Smith, who accepted the poisoned chalice of Defence, may have decided discretion is the better part of valour. Why can't Wayne Swan, who couldn't sell a relativley good economy story, take the hint and head back to Bananaland for a well earned rest?
As for the marginal seat holders who thought life with Kevin couldn't be as bad as being out of Parliament forever, just remember that those who live by the sword die by the knife -- sorry, sword.
.
Wednesday 26 June 2013
Kevin Rudd returns as PM
Kevin Rudd, the man the Labor Party caucus vowed it could never work with again, has returned as Prime Minister of Australia. He's already up to his old tricks, keeping the nation waiting for more than 20 minutes until he delivered his acceptance speech. Can a leopard change its spots? I think not. His tardiness and micromanaging is notorious
According to a Roy Morgan snap poll on Wednesday 26 June, the night of the coup, the vote is now ALP 49.5%, vs Liberal-National Party 50.5% -- too close to call an election result, the pollsters say.
I am deeply ashamed to say the man who ratted on Julia Gillard is my local member, Bill Shorten. He swung the numbers. In end, the stage managed result came out as predicted -- 57 for Rudd, 45 for Gillard, with Anthony Albanese as deputy PM. Albanese, who always looks close to tears at big moments, is from the Left, while Rudd is from the Right. Penny Wong, who is also from the Left, was elected unanimously as government Senate leader -- figure that one out.
Many non Australians find it hard to understand Australian politics because the positions of both major parties are almost identical. As I tell my American friends, there is no equivalent to Republican Party in Australia, just the Labor Party, which is liberal, and the Liberal Party, which is liberal. Both would fit into the US Democratic Party quite comfortably.
Numerous politicians commenting on the Rudd coup went on about the "life of service" that draws people to politics. I have known politicians since I was in my early teens. Politicians have an agenda to push or an organisation to represent. That is not service, it is self interest. Labor people are by far the worst when it comes squealing about their life of service, I don't see any of them returning their very generous taxpayer funded pensions.
Chief executioner was Bill Shorten. First he put Kevin Rudd in power, then knifed him to put Julia Gillard in power. Then he knifed Julia to return Kevin to power, just in time for Kevin to take leadership of the G20, which will surely be a highlight of Kevin's life. Not that Julia is beloved, even by her own constituents. The reporter for the government broadcaster, the ABC, seemed near tears when no Gillard supporters would go on camera to say what a lovely lady we was, while several residents said she was not much of a local member and wasn't well liked.
My wife, who is an immigrant, told me to write that after viewing almost an entire evening of Kevin's coup she has concluded that politicians have no idea of how ordinary people like us -- that is, electors -- think. She says Australians are good at playing politics, except that it is like an audience watching clowns. "A tale told by an idiot, full of sound and fury, signifying nothing."
As for the hatchet man, Bill Shorten, will we see him in years to come roaming the arid halls of New Parliament House like Lady Macbeth muttering "Out, damned spot! Hell is murky! Yet who would have thought the old man to have had so much blood in him?" Or her. Or both. Who next will feel Bill's blade? And they say this man will be prime minister one day.
According to a Roy Morgan snap poll on Wednesday 26 June, the night of the coup, the vote is now ALP 49.5%, vs Liberal-National Party 50.5% -- too close to call an election result, the pollsters say.
I am deeply ashamed to say the man who ratted on Julia Gillard is my local member, Bill Shorten. He swung the numbers. In end, the stage managed result came out as predicted -- 57 for Rudd, 45 for Gillard, with Anthony Albanese as deputy PM. Albanese, who always looks close to tears at big moments, is from the Left, while Rudd is from the Right. Penny Wong, who is also from the Left, was elected unanimously as government Senate leader -- figure that one out.
Many non Australians find it hard to understand Australian politics because the positions of both major parties are almost identical. As I tell my American friends, there is no equivalent to Republican Party in Australia, just the Labor Party, which is liberal, and the Liberal Party, which is liberal. Both would fit into the US Democratic Party quite comfortably.
Numerous politicians commenting on the Rudd coup went on about the "life of service" that draws people to politics. I have known politicians since I was in my early teens. Politicians have an agenda to push or an organisation to represent. That is not service, it is self interest. Labor people are by far the worst when it comes squealing about their life of service, I don't see any of them returning their very generous taxpayer funded pensions.
Chief executioner was Bill Shorten. First he put Kevin Rudd in power, then knifed him to put Julia Gillard in power. Then he knifed Julia to return Kevin to power, just in time for Kevin to take leadership of the G20, which will surely be a highlight of Kevin's life. Not that Julia is beloved, even by her own constituents. The reporter for the government broadcaster, the ABC, seemed near tears when no Gillard supporters would go on camera to say what a lovely lady we was, while several residents said she was not much of a local member and wasn't well liked.
My wife, who is an immigrant, told me to write that after viewing almost an entire evening of Kevin's coup she has concluded that politicians have no idea of how ordinary people like us -- that is, electors -- think. She says Australians are good at playing politics, except that it is like an audience watching clowns. "A tale told by an idiot, full of sound and fury, signifying nothing."
As for the hatchet man, Bill Shorten, will we see him in years to come roaming the arid halls of New Parliament House like Lady Macbeth muttering "Out, damned spot! Hell is murky! Yet who would have thought the old man to have had so much blood in him?" Or her. Or both. Who next will feel Bill's blade? And they say this man will be prime minister one day.
Wednesday 29 May 2013
Why shareholders own the company
If you are a shareholder, you are one of the owners of the company. You are not a lender, you are not a stakeholder, you are the ultimate owner. Why? Because the buck ends with you. You are the first person to lose money if the company goes under. If the company goes under, you will probably never see your money again unless you can find someone to fund a class action against the former board. Often a dubious proposition.
I have recently had a dispute with Westpac Banking Corporation. My wife, who is also involved in the transaction, is a shareholder in Westpac. Westpac at one time referred to its shareholders as "proprietors". I was for many years a Westpac "proprietor" and did well out of it. Westpac is the oldest bank in Australia. After several near death experiences, it is no longer the largest bank in Australia. Westpac was once known as a "can do" bank but now seems to be bogged down in red tape and incompetence.
As a result of my unsatisactory experience, I suggested to my wife that she write to "her bank." She said that was a ridiculous idea; why should they take any notice of her? I pointed out that she was an owner of the bank and that she should make her feelings known to the management.
To be a stockholder is to own a "share" in a business. You are not buying a bond, on which interest is paid regularly but gives no ownership privileges. You have become a part owner of a business. Your liability for the company's debts is limited to your shareholding. This is the essense of a limited liability company. You will normally be entitled to any dividends paid by the company, but not to a regular payment such as interest, as paid on a bond. In the old days, investors could be bankrupted by "calls" on shares which were partially paid. That is why many small Australian mining companies were, until recently called NL or "no liability" companies. Holders in NL companies were not liable for calls.
As a holder, you have a number of rights. You can vote for directors. This is the most important right. The directors exist to protect the holders' rights and look after their interests. The managers exist to manage the company. Management also has rights. All public companies should have independent directors who are not beholden to the management or majority shareholders. This is especially pertinent where one person, family or group of people dominates the share registry, as for example rag trader Solomon Lew does in Premier Investments. The most common view of people in Lew's situation is that they don't even try to make the shareholders like them, because it doesn't matter if they do or not. As long as they make money, the shareholders won't complain.
Being a holder doesn't entitle you to go into HQ and pick up a few pens. Shareholder discounts have a checkered history. Institutional shareholders don't like them, because they can't benefit. Their economic utility to the company is doubtful. In some cases, such as former Coles ultra discount offshoot Bi-Lo, the shareholder discount was actually costing the Coles Group money on each transaction. Treasury Wine Estates offers their shareholders some very good discounts on top quality Penfolds wines, but they are in the minority. Usually, the management will say, as do Wesfarmers, the owner of Coles, that they aim to maximisae profits and dividends so all holders benefit. Some companies, such as Bendigo Bank, have peculiar ownership structures where the customers part own some branches. It's a great way of getting a new branch off the ground, but it'makes it hard to shutter loss makers.
Public companies are usually listed on the stock exchange. They have certain legal rights and obligations. They can raise money from the public. As they are "limited" companies, and the liability of the holders is limited to the value of the shares they hold. Public companies also have certain reporting obligations and must be audited by professional auditors. Seeing the men with the green pens move in is an annual rite of passage for a public company. A reputable public company is likely to get a positive hearing from the bank than $2 proprietor limited tax shelter. The auditors assure the holders that the management hasn't been up to monkey business.
Do the shareholders own the company? No-one else does, but the management has legally defined rights as well. These days, the managers are likely to hold shares in the company, to give them an incentive to "create shareholder value." Or to translate, to get the shareprice up, which benefits everyone. Much attention is given to "stakeholders". These are entities like employees, unions, the community where the company is located, suppliers -- even charitable groups to which the company donates. They are not owners. The ones who take the rap, as they used to say in gangster movies, are the owners. They are the people who have risked their money and they are entitled to reap the rewards of their investment. If their investment goes bad, they lose their money.
I have recently had a dispute with Westpac Banking Corporation. My wife, who is also involved in the transaction, is a shareholder in Westpac. Westpac at one time referred to its shareholders as "proprietors". I was for many years a Westpac "proprietor" and did well out of it. Westpac is the oldest bank in Australia. After several near death experiences, it is no longer the largest bank in Australia. Westpac was once known as a "can do" bank but now seems to be bogged down in red tape and incompetence.
As a result of my unsatisactory experience, I suggested to my wife that she write to "her bank." She said that was a ridiculous idea; why should they take any notice of her? I pointed out that she was an owner of the bank and that she should make her feelings known to the management.
To be a stockholder is to own a "share" in a business. You are not buying a bond, on which interest is paid regularly but gives no ownership privileges. You have become a part owner of a business. Your liability for the company's debts is limited to your shareholding. This is the essense of a limited liability company. You will normally be entitled to any dividends paid by the company, but not to a regular payment such as interest, as paid on a bond. In the old days, investors could be bankrupted by "calls" on shares which were partially paid. That is why many small Australian mining companies were, until recently called NL or "no liability" companies. Holders in NL companies were not liable for calls.
As a holder, you have a number of rights. You can vote for directors. This is the most important right. The directors exist to protect the holders' rights and look after their interests. The managers exist to manage the company. Management also has rights. All public companies should have independent directors who are not beholden to the management or majority shareholders. This is especially pertinent where one person, family or group of people dominates the share registry, as for example rag trader Solomon Lew does in Premier Investments. The most common view of people in Lew's situation is that they don't even try to make the shareholders like them, because it doesn't matter if they do or not. As long as they make money, the shareholders won't complain.
Being a holder doesn't entitle you to go into HQ and pick up a few pens. Shareholder discounts have a checkered history. Institutional shareholders don't like them, because they can't benefit. Their economic utility to the company is doubtful. In some cases, such as former Coles ultra discount offshoot Bi-Lo, the shareholder discount was actually costing the Coles Group money on each transaction. Treasury Wine Estates offers their shareholders some very good discounts on top quality Penfolds wines, but they are in the minority. Usually, the management will say, as do Wesfarmers, the owner of Coles, that they aim to maximisae profits and dividends so all holders benefit. Some companies, such as Bendigo Bank, have peculiar ownership structures where the customers part own some branches. It's a great way of getting a new branch off the ground, but it'makes it hard to shutter loss makers.
Public companies are usually listed on the stock exchange. They have certain legal rights and obligations. They can raise money from the public. As they are "limited" companies, and the liability of the holders is limited to the value of the shares they hold. Public companies also have certain reporting obligations and must be audited by professional auditors. Seeing the men with the green pens move in is an annual rite of passage for a public company. A reputable public company is likely to get a positive hearing from the bank than $2 proprietor limited tax shelter. The auditors assure the holders that the management hasn't been up to monkey business.
Do the shareholders own the company? No-one else does, but the management has legally defined rights as well. These days, the managers are likely to hold shares in the company, to give them an incentive to "create shareholder value." Or to translate, to get the shareprice up, which benefits everyone. Much attention is given to "stakeholders". These are entities like employees, unions, the community where the company is located, suppliers -- even charitable groups to which the company donates. They are not owners. The ones who take the rap, as they used to say in gangster movies, are the owners. They are the people who have risked their money and they are entitled to reap the rewards of their investment. If their investment goes bad, they lose their money.
Saturday 18 May 2013
Democracy is not working
Democracy is not working. It is not working in the United States, it is not working in Europe and it is not working in Australia.
America is suffering from legislative gridlock. The Congress was intended to work on consensus. What the American's call "partisanship" has taken over. In other words, the ill feeling between the Democrats and Republicans has reached the point where legislation vital to the functioning of the United States is not passed. America is crawling out of its economic black hole, slowly, but the process of governing is going from bad to worse.
European economies are ceasing to function, hamstrung by "cradle to the grave" welfare states. Germany is prospering because its manufacturers dominate the European Union due to an effectively devalued European currency. Pathetic minnows like Cyprus are simply crushed to suit the dominant European powers and the "European project."
Australia has had the best terms of trade in a hundred years, yet the Federal Government, led by Labor Prime Ministers Kevin Rudd and Julia Gillard, has run budget deficits for the last six years that collectively amount to $100 billion or more. Liberal Prime Minister John "The Rodent" Howard bought off the electorate with with bucket loads of middle class welfare, effectively squandering the early returns from the China boom. The Liberals are no better, and are some ways worse, than the ALP.
We must therefore ask Lenin's question: "What is to be done?" When I say democracy is not working, I mean democracy is not working in its present form. I do not believe there an alternative to some form of elective democracy to running a sophisticated state. China, for example, works after a fashion, but it is still far poorer than the Western powers in every way. Thus, the question is should we have less democracy or more democracy?
I can still remember my parents proudly marching off to vote for their preferred candidate in the Western Australian Legislative Council. They had become owners of a property of sufficient value for them to meet the property franchaise. Thus, within living memory, property qualifications have been imposed on voting in Australia.
Similarly, Mitt Romney, Republican candidate in the 2012 US presidential election',was described as "scary" and "narrow minded" because he told a private meeting that America could be divided into "producers" and "consumers". Romney never overcame the "weird" factor and lost to Barak Obama
It is my belief that Australia and Europe are beyond saving because parties compete to buy off electors and interest groups. Much as conservatives lament America's plunge towards a welfare state, the US has gone nowhere near as far in this direction as other Western democracies. Indeed, I think Obama's health plan is good, in theory at least. What makes Obamacare bad are peculiarly American characteristics such as wanting the best, immediately, forever, no matter what the cost.
Bearing in mind Mitt Romney's experience, I do not believe it is possible to restrict the franchise to only producers or property owners. The non-producers would simply revolt, and they can vote. Ideally, anyone in receipt of a payment from the Crown should be denied a vote. But this is, politically, a "bridge too far."
So, we come to the alternative, more democracy. This is both feasible and desirable. What we have now is not a democracy, but a ballotocracy. We elect a parliament and the parliament can doing anything it likes for the term of the parliament. The only way to get rid of a parliament is for it to be defeated on the floor of the parliament or for the prime minister to seek an early dissolution of the House from the Governor General. It is not a democracy, it is an elective dictatorship. Once a Bill passes both Houses and approved by the Governor General, it can only be overturned by the High Court.
The alternative is for the people -- us -- to be able to recall parliament. We could kick out failed regimes like the Gillard Government. Critics say the government would be unable to to implement its policies. Great! That's what 75% of Australians want to do. We should also be able conduct referendums to overturn legislation we don't like.
We can't have less democracy but we can have more democracy. It could save us from ruin. Let's do it!
America is suffering from legislative gridlock. The Congress was intended to work on consensus. What the American's call "partisanship" has taken over. In other words, the ill feeling between the Democrats and Republicans has reached the point where legislation vital to the functioning of the United States is not passed. America is crawling out of its economic black hole, slowly, but the process of governing is going from bad to worse.
European economies are ceasing to function, hamstrung by "cradle to the grave" welfare states. Germany is prospering because its manufacturers dominate the European Union due to an effectively devalued European currency. Pathetic minnows like Cyprus are simply crushed to suit the dominant European powers and the "European project."
Australia has had the best terms of trade in a hundred years, yet the Federal Government, led by Labor Prime Ministers Kevin Rudd and Julia Gillard, has run budget deficits for the last six years that collectively amount to $100 billion or more. Liberal Prime Minister John "The Rodent" Howard bought off the electorate with with bucket loads of middle class welfare, effectively squandering the early returns from the China boom. The Liberals are no better, and are some ways worse, than the ALP.
We must therefore ask Lenin's question: "What is to be done?" When I say democracy is not working, I mean democracy is not working in its present form. I do not believe there an alternative to some form of elective democracy to running a sophisticated state. China, for example, works after a fashion, but it is still far poorer than the Western powers in every way. Thus, the question is should we have less democracy or more democracy?
I can still remember my parents proudly marching off to vote for their preferred candidate in the Western Australian Legislative Council. They had become owners of a property of sufficient value for them to meet the property franchaise. Thus, within living memory, property qualifications have been imposed on voting in Australia.
Similarly, Mitt Romney, Republican candidate in the 2012 US presidential election',was described as "scary" and "narrow minded" because he told a private meeting that America could be divided into "producers" and "consumers". Romney never overcame the "weird" factor and lost to Barak Obama
It is my belief that Australia and Europe are beyond saving because parties compete to buy off electors and interest groups. Much as conservatives lament America's plunge towards a welfare state, the US has gone nowhere near as far in this direction as other Western democracies. Indeed, I think Obama's health plan is good, in theory at least. What makes Obamacare bad are peculiarly American characteristics such as wanting the best, immediately, forever, no matter what the cost.
Bearing in mind Mitt Romney's experience, I do not believe it is possible to restrict the franchise to only producers or property owners. The non-producers would simply revolt, and they can vote. Ideally, anyone in receipt of a payment from the Crown should be denied a vote. But this is, politically, a "bridge too far."
So, we come to the alternative, more democracy. This is both feasible and desirable. What we have now is not a democracy, but a ballotocracy. We elect a parliament and the parliament can doing anything it likes for the term of the parliament. The only way to get rid of a parliament is for it to be defeated on the floor of the parliament or for the prime minister to seek an early dissolution of the House from the Governor General. It is not a democracy, it is an elective dictatorship. Once a Bill passes both Houses and approved by the Governor General, it can only be overturned by the High Court.
The alternative is for the people -- us -- to be able to recall parliament. We could kick out failed regimes like the Gillard Government. Critics say the government would be unable to to implement its policies. Great! That's what 75% of Australians want to do. We should also be able conduct referendums to overturn legislation we don't like.
We can't have less democracy but we can have more democracy. It could save us from ruin. Let's do it!
Tuesday 2 April 2013
Cyprus and its banks: killing a chicken to frighten a tiger
The Panorama Coffee Shop is situated in Keilor Road, Niddrie, a fairly typical shopping strip in Melbourne's suburbs. The coffee shop is run by a hardworking Greek woman from Cyprus named Soula. It has great cakes, good coffee but it is very hard work. Last year, a branch of the Bank of Cyprus opened down the street. I cautioned Soula against depositing her hard earned money there. Late last year, the Bank Of Cyprus's Australian operation was taken over by the Bendigo and Adelaide Bank and rebadged.
You didn't exactly have to be a financial genius to realise that Cyprus's banking system, based on shonky Russian depositors, was not long for this world. Cyprus is also a safe haven for Israelis who don't want the government of the Jewish state taking too close an interest in their affairs.
Now, what is the difference between Switzerland, which runs a very similar operation, and Cyprus? The difference is Switzerland is run by Swiss and Cyprus is run by Cypriots, or to be more exact, Greeks.
The EU has chopped off the head of the Cyprus chicken to warn other bigger operators that neither the IMF or the EU will bail them out if they get into trouble. Moreover, they are getting everything they deserve. The Cyprus banking system simply grew too big for the underlying economy. The government of Cyprus couldn't bail out the Cypriot banking system even if it wanted to. The banking system was simply too big to be saved. The same applies to other European states -- Switzerland, Luxembourg among other so called "tax havens" that have no economic base apart from manipulating the international tax system. This could even be said of the City of London. EU countries such as France and Germany regard the Cyprus crisis as a chance to get revenge on tax havens that have been siphoning off their tax revenues.
Should Cyprus have ever been part of the "European project?" Probably not. But the EU is like the Hotel California: you can't leave, you can only check out. Or as they used to say in Vietnam about "hearts and minds" operations -- "if you have them by the balls, their hearts and minds will surely follow." And Angela Merkel has Cyprus by the balls.
Do I feel sorry for the Cypriots? Not at all. Notwithstanding the fact that I have little say in the matter, I do pay my taxes. My surplus capital is invested in stocks listed on the Australian Stock Exchange, not sitting in a tax haven bank account, although I could quite easily do this. As for the Russians who stand to lose a substantial part of their deposits, I do, strangely enough, have a degree of sympathy. If someone wants to keep some their hard earned money out of the hands of Putin's kleptocrat Mafia state, I think that is simply being prudent.
Just to clarify my headline, the phrase to "kill a chicken to frighten a tiger (or sometimes, monkey)" is an ancient Chinese saying about demonstrating to the relevant party the desirability of following a certain course of action by inflicting harm on a lesser, usually related, victim.
Cyprus is a small, pathetic victim -- a prime example of someone getting in over their head. The Cypriots will be suffering from their naivete for a long, long time.
You didn't exactly have to be a financial genius to realise that Cyprus's banking system, based on shonky Russian depositors, was not long for this world. Cyprus is also a safe haven for Israelis who don't want the government of the Jewish state taking too close an interest in their affairs.
Now, what is the difference between Switzerland, which runs a very similar operation, and Cyprus? The difference is Switzerland is run by Swiss and Cyprus is run by Cypriots, or to be more exact, Greeks.
The EU has chopped off the head of the Cyprus chicken to warn other bigger operators that neither the IMF or the EU will bail them out if they get into trouble. Moreover, they are getting everything they deserve. The Cyprus banking system simply grew too big for the underlying economy. The government of Cyprus couldn't bail out the Cypriot banking system even if it wanted to. The banking system was simply too big to be saved. The same applies to other European states -- Switzerland, Luxembourg among other so called "tax havens" that have no economic base apart from manipulating the international tax system. This could even be said of the City of London. EU countries such as France and Germany regard the Cyprus crisis as a chance to get revenge on tax havens that have been siphoning off their tax revenues.
Should Cyprus have ever been part of the "European project?" Probably not. But the EU is like the Hotel California: you can't leave, you can only check out. Or as they used to say in Vietnam about "hearts and minds" operations -- "if you have them by the balls, their hearts and minds will surely follow." And Angela Merkel has Cyprus by the balls.
Do I feel sorry for the Cypriots? Not at all. Notwithstanding the fact that I have little say in the matter, I do pay my taxes. My surplus capital is invested in stocks listed on the Australian Stock Exchange, not sitting in a tax haven bank account, although I could quite easily do this. As for the Russians who stand to lose a substantial part of their deposits, I do, strangely enough, have a degree of sympathy. If someone wants to keep some their hard earned money out of the hands of Putin's kleptocrat Mafia state, I think that is simply being prudent.
Just to clarify my headline, the phrase to "kill a chicken to frighten a tiger (or sometimes, monkey)" is an ancient Chinese saying about demonstrating to the relevant party the desirability of following a certain course of action by inflicting harm on a lesser, usually related, victim.
Cyprus is a small, pathetic victim -- a prime example of someone getting in over their head. The Cypriots will be suffering from their naivete for a long, long time.
Great questions of our age
My wife is Chinese. She is from Taiwan, but her parents were from mainland China. As a husband, I am only required to produce two things -- a pay packet and children. Between us, we have produced three children, all of whom could be described as outstanding scholars. That part is OK.
The pay packet is the problem. I am a writer. Writers do not get pay packets. Writers are, by definition, self employed. You might have a job as a professor at a good university which requires you to publish the occasional short story or journal article and teach about six hours a week for 20 weeks of the year. For this you will get a very handsome salary and a job from which you are effectively unsackable. I do not regard such a person as being a writer. Or you may get a gig (increasingly rare) on one of the Sun King's flagship publications that Uncle Rupert doesn't require to produce one of those vulgar things called a profit. Such publications are about as rare as a sober Irishman on St Patrick's Day, but they do exist. I do not call such a person a professional writer.
I call a professional writer someone who makes average weekly earnings plus 25% to allow for lack of holidays and so on. That would mean approximately $90,000 gross, not allowing for the great many tax deductions any resourceful self employed person can find. That is, an average sort of income. I know many
writers. I don't know of any, including the famous ones, who earn even this modest income. I estimate, and others agree, that there are about ten professional writers in Australia who have met and overcome this financial hurdle consistently for ten years. One of my friends, who I consider to be one of Australia's outstanding literary stylists, asked me how much the Adam Smith Club Newsletter paid its contributors. I am not usually so crass as to burst out laughing in my friends' faces, but this time I couldn't help myself.
I have one very good friend who I have known for many years who could reasonably be described as internationally famous. He likes to project an image of prosperity but when he gets a decent cheque he blows it on an overseas trip or something similar and he is returned to poverty.
My wife is contemptuous of the fee I get from the main publication I write for, News Weekly. News Weekly is vaguely associated with the Catholic Church and has a degree of influence, but all she is interested in is the pay packet, which unfortunately News Weekly is unable to produce. That's better than when I started writing for them. I was paid nothing until the late B A Santamaria, founder of the National Civic Council, decided it was unfair for me to be paid nothing when I was writing every fortnight. It was a small amount, but it was useful.
No-one in my family has any interest in my writing at all. My daughter, who is a self-described feminist, is offended by News Weekly's pro-life stance. Our family is half Irish Catholic. Unfortunately, my mother doesn't like Catholics -- she comes from the Protestant side of the family. My mother is a millionaire but she is unwilling to spend the $25 or so to subscribe to News Weekly. My mother's logic regarding money is best seen in the following example. Last August was my mother's 90th birthday. I paid for a ticket from Melbourne to Perth for her party, which cost me over $400. I also paid for my two youngest children, who flew Qantas, which cost more, as their elder brother, who is a mergers and acquisitions banker, decide to fly Qantas. When, after the "cosy" family dinner at an expensive restaurant, I exploded and said I'd paid $400 out of my own pocket to attend her party, she replied that without my sister's loyalty card, the dinner would have cost her OVER $400!
To return to the great questions of our age. We were at the supermarket. My wife had finally decided to spend $8 on a bottle of Brown Bothers Moscato at Coles. I had just finished writing an article speculating on the possibility of armed conflict between China and Australia, including its allies, such as the US. My wife told me to stop talking nonsense, as she had her mind on important things -- she had two overripe zucchinis in the fridge. Should should she by some eggs and make zucchini slice, or buy a can of tomatoes and make ratatouille?
The pay packet is the problem. I am a writer. Writers do not get pay packets. Writers are, by definition, self employed. You might have a job as a professor at a good university which requires you to publish the occasional short story or journal article and teach about six hours a week for 20 weeks of the year. For this you will get a very handsome salary and a job from which you are effectively unsackable. I do not regard such a person as being a writer. Or you may get a gig (increasingly rare) on one of the Sun King's flagship publications that Uncle Rupert doesn't require to produce one of those vulgar things called a profit. Such publications are about as rare as a sober Irishman on St Patrick's Day, but they do exist. I do not call such a person a professional writer.
I call a professional writer someone who makes average weekly earnings plus 25% to allow for lack of holidays and so on. That would mean approximately $90,000 gross, not allowing for the great many tax deductions any resourceful self employed person can find. That is, an average sort of income. I know many
writers. I don't know of any, including the famous ones, who earn even this modest income. I estimate, and others agree, that there are about ten professional writers in Australia who have met and overcome this financial hurdle consistently for ten years. One of my friends, who I consider to be one of Australia's outstanding literary stylists, asked me how much the Adam Smith Club Newsletter paid its contributors. I am not usually so crass as to burst out laughing in my friends' faces, but this time I couldn't help myself.
I have one very good friend who I have known for many years who could reasonably be described as internationally famous. He likes to project an image of prosperity but when he gets a decent cheque he blows it on an overseas trip or something similar and he is returned to poverty.
My wife is contemptuous of the fee I get from the main publication I write for, News Weekly. News Weekly is vaguely associated with the Catholic Church and has a degree of influence, but all she is interested in is the pay packet, which unfortunately News Weekly is unable to produce. That's better than when I started writing for them. I was paid nothing until the late B A Santamaria, founder of the National Civic Council, decided it was unfair for me to be paid nothing when I was writing every fortnight. It was a small amount, but it was useful.
No-one in my family has any interest in my writing at all. My daughter, who is a self-described feminist, is offended by News Weekly's pro-life stance. Our family is half Irish Catholic. Unfortunately, my mother doesn't like Catholics -- she comes from the Protestant side of the family. My mother is a millionaire but she is unwilling to spend the $25 or so to subscribe to News Weekly. My mother's logic regarding money is best seen in the following example. Last August was my mother's 90th birthday. I paid for a ticket from Melbourne to Perth for her party, which cost me over $400. I also paid for my two youngest children, who flew Qantas, which cost more, as their elder brother, who is a mergers and acquisitions banker, decide to fly Qantas. When, after the "cosy" family dinner at an expensive restaurant, I exploded and said I'd paid $400 out of my own pocket to attend her party, she replied that without my sister's loyalty card, the dinner would have cost her OVER $400!
To return to the great questions of our age. We were at the supermarket. My wife had finally decided to spend $8 on a bottle of Brown Bothers Moscato at Coles. I had just finished writing an article speculating on the possibility of armed conflict between China and Australia, including its allies, such as the US. My wife told me to stop talking nonsense, as she had her mind on important things -- she had two overripe zucchinis in the fridge. Should should she by some eggs and make zucchini slice, or buy a can of tomatoes and make ratatouille?
Friday 22 February 2013
Medibank Private heading for IPO
One of the first initiatives of the newly elected Whitlam Labor government in 1972 was the nationalisation of the Australian health care system. Every doctor in Australia was bleating about "the doctor-patient relationship", when it was obvious the only relationship the doctors were interested in was the relationship between the patient's wallet and the doctor's bank account. The health system didn't implode as the doctors had predicted, but it did cost them money.
Compared to the US system, the Australia health care system is a model of sanity. No-one asks, if you have a heart attack, who is your insurer? Everyone is covered for these events. However, if you have private insurance, which is subsidised by the government, you will go to the head of the queue for elective surgery, such as hip replacements, knee operations and so on. Thus, private insurance is a discretionary item.
The Australian healthcare system is a mixture of public and private. It is impossible to meet the demand for health care, as it is always expanding. As the population ages, as in Australia, health outlays will grow and the demands on the healthcare system, especially for elective surgery, will expand. Having a vigorous private health system makes good economic and political sense.
For many years, Australia has had a strong private health insurance industry. Most states had a major insurer, usually mutually owned, such as the Hospital Benefit Fund (HBF) in Western Australia. In other words, it was a not-for-profit model. Now, the health insurance sector operates on a profit based model. Some of the main players are BUPA from the UK and the acquisitive NIB.
Medibank Private was established in 1976 to provide competition to the private sector insurers. No government would dare interfere with the basic model of health care in Australia. That would be political poison. The doctors whine they don't make enough money, but I haven't seen any of them claiming low income benefits at Centrelink. Medicine is like anything else. Stars like ophthalmic surgeons make a motza while the average general practitioner can make around $250,000 if he or she is in a high volume practice.
Shadow Treasurer Joe Hockey announced in February 2010 that Medibank Private, which is wholly government owned, would be sold off by an incoming Coalition government. Medibank Private is the government's ;private health insurance company. The incoming Liberal Treasurer needs to find $60 billion fast. As for the Libs so called "razor gang" finding this sort of money through savings in the bureaucracy, having seen several in action, I have three things to say -- "ha ha ha". To do this, they would have to find savings equivalent to abolishing the Department of Defense, the biggest department in the federal government. If you believe the razor gang can find these sorts of savings, I have a nice near-new bridge going cheap.
Medibank Private is a profit maximising entity. The substantial annual dividend it pays to the government is very much appreciated. No reason exists why the government should own it. From personal communication, Medibank Private does not attempt to restrict premium increases to the rate of inflation. Premiums are increasing at about twice the rate of inflation. Due to the "community rating" model, policy holders liable to catastrophic injuries due to the nature of their employment or recreation, such as professional sportsmen and skiers, pay the same premiums as everybody else. Changing this would open a can or worms no-one would like to confront. The private health sector is one of those things Labor "doesn't like" because "rich people" use it to jump the queue. Queues are the essence of socialism. Private health will get a much better deal from the Coalition.
If Joe Hockey were wise, he would aim for an initial public offering (IPO) rather than a trade sale. A trade sale to industry would raise a lot of money quickly, but it would put the noses of millions of policy holders -- or "members" as Medibank Private prefers to call them -- out of joint. A float along the lines of the Commonwealth Bank of Australia IPO would make Joe Hockey a very popular man.
Compared to the US system, the Australia health care system is a model of sanity. No-one asks, if you have a heart attack, who is your insurer? Everyone is covered for these events. However, if you have private insurance, which is subsidised by the government, you will go to the head of the queue for elective surgery, such as hip replacements, knee operations and so on. Thus, private insurance is a discretionary item.
The Australian healthcare system is a mixture of public and private. It is impossible to meet the demand for health care, as it is always expanding. As the population ages, as in Australia, health outlays will grow and the demands on the healthcare system, especially for elective surgery, will expand. Having a vigorous private health system makes good economic and political sense.
For many years, Australia has had a strong private health insurance industry. Most states had a major insurer, usually mutually owned, such as the Hospital Benefit Fund (HBF) in Western Australia. In other words, it was a not-for-profit model. Now, the health insurance sector operates on a profit based model. Some of the main players are BUPA from the UK and the acquisitive NIB.
Medibank Private was established in 1976 to provide competition to the private sector insurers. No government would dare interfere with the basic model of health care in Australia. That would be political poison. The doctors whine they don't make enough money, but I haven't seen any of them claiming low income benefits at Centrelink. Medicine is like anything else. Stars like ophthalmic surgeons make a motza while the average general practitioner can make around $250,000 if he or she is in a high volume practice.
Shadow Treasurer Joe Hockey announced in February 2010 that Medibank Private, which is wholly government owned, would be sold off by an incoming Coalition government. Medibank Private is the government's ;private health insurance company. The incoming Liberal Treasurer needs to find $60 billion fast. As for the Libs so called "razor gang" finding this sort of money through savings in the bureaucracy, having seen several in action, I have three things to say -- "ha ha ha". To do this, they would have to find savings equivalent to abolishing the Department of Defense, the biggest department in the federal government. If you believe the razor gang can find these sorts of savings, I have a nice near-new bridge going cheap.
Medibank Private is a profit maximising entity. The substantial annual dividend it pays to the government is very much appreciated. No reason exists why the government should own it. From personal communication, Medibank Private does not attempt to restrict premium increases to the rate of inflation. Premiums are increasing at about twice the rate of inflation. Due to the "community rating" model, policy holders liable to catastrophic injuries due to the nature of their employment or recreation, such as professional sportsmen and skiers, pay the same premiums as everybody else. Changing this would open a can or worms no-one would like to confront. The private health sector is one of those things Labor "doesn't like" because "rich people" use it to jump the queue. Queues are the essence of socialism. Private health will get a much better deal from the Coalition.
If Joe Hockey were wise, he would aim for an initial public offering (IPO) rather than a trade sale. A trade sale to industry would raise a lot of money quickly, but it would put the noses of millions of policy holders -- or "members" as Medibank Private prefers to call them -- out of joint. A float along the lines of the Commonwealth Bank of Australia IPO would make Joe Hockey a very popular man.
Friday 8 February 2013
Why Melbourne doesn't have an airport rail link
Transurban has one good asset -- its CityLink system. CityLink is a good system, it provides quick and reliable freeway transport for motorists across Melbourne. The rest of its assets are a pack of dogs. Without CityLink, Transurban would be a dog too, not the steady earner beloved of pension funds. Or a "dog with fleas" as Gordon Gekko said.
The absence of a rail link to Melbourne Airport suits Transurban fine, because you can only get to Melbourne Airport by car, taxi or bus. The SkyBus service costs $17 one way. Taxis cost around $50 from the airport to the city. A rail link would mean Transurban would lose a great many of these customers. Transurban operates toll roads, so it makes sense for them to maximise traffic.
Tansurban is not alone in applauding the lack of an airport rail link. Australia Pacific Airports, which operates the airport, has just completed a multimillion dollar upgrade of its parking facilities. It costs around $20 just to park long enough to pick someone up. It is almost impossible to pick someone up from the curb at the airport. Melbourne Airport's parking fees are said to be among the highest in the world. Australian Pacific Airports would be very upset by an airport rail link, which would see much of their business disappear. Even a recent suggestion there should be a dedicated bus lane on the freeway to the airport caused barely concealed alarm.
Transurban, the taxi industry and Australian Pacific Airports are what economists call "rent seekers". Who would benefit from an airport rail link? Only the consumers. And who cares about them? Certainly the Baillieu Government doesn't, because they could change the "no rail link" policy with the stroke of a pen. Good old "Do Nothing Ted" is maintaining his reputation.
The absence of a rail link to Melbourne Airport suits Transurban fine, because you can only get to Melbourne Airport by car, taxi or bus. The SkyBus service costs $17 one way. Taxis cost around $50 from the airport to the city. A rail link would mean Transurban would lose a great many of these customers. Transurban operates toll roads, so it makes sense for them to maximise traffic.
Tansurban is not alone in applauding the lack of an airport rail link. Australia Pacific Airports, which operates the airport, has just completed a multimillion dollar upgrade of its parking facilities. It costs around $20 just to park long enough to pick someone up. It is almost impossible to pick someone up from the curb at the airport. Melbourne Airport's parking fees are said to be among the highest in the world. Australian Pacific Airports would be very upset by an airport rail link, which would see much of their business disappear. Even a recent suggestion there should be a dedicated bus lane on the freeway to the airport caused barely concealed alarm.
Transurban, the taxi industry and Australian Pacific Airports are what economists call "rent seekers". Who would benefit from an airport rail link? Only the consumers. And who cares about them? Certainly the Baillieu Government doesn't, because they could change the "no rail link" policy with the stroke of a pen. Good old "Do Nothing Ted" is maintaining his reputation.
US shale gas makes life hard for Australia
Canada has announced its third export gas project aimed at the Asian market. Another export gas project in Texas is likely to get the go-ahead soon. The hopes of US gas consumers for a captive market have been dashed. The availability of low cost feedstocks has revolutionised the US chemical industry but there is just so much shale gas around in the US it would be silly not to take advantage of the current seller's market in Asia.
Australian gas producers have a window of about five years before US gas projects come on stream but after that the market will become very competitive. When the Panama Canal is widened in 2015, it will be economic to ship Texas Gulf coast gas to Asia. That will really set the cat amongst the pigeons. As predicted in my post "Dump Australian Gas Stocks" (16 Nov. 2012) Australian producers, who are committed to multibillion dollar gas trains, are getting nervous about US competition. Australian gas users as seeking some form of reservation for local use but that bird is unlikely to fly, at least on the terms they are seeking. Also, with shale gas being flared off in the US, it makes no sense not to export it. And the US is a much more reliable supplier than than Oman.
Australian gas producers seem to be getting edgy about missing the market. With major Australian projects way over budget, Shell has said they will build a floating platform for their Browse project, which will be made in Korea, or some similar country, where workers actually work. Of course, Shell is too smart to say "Australian workers are just too expensive and strike prone" but as Bob Dylan said "You don't have to be weatherman to see which way the wind is blowing." Western Australian state Premier Colin Barnett is pushing hard for a land-based facility for Browse, but insiders say he is unlikely to win on this one.
Several other US shale gas export plants are awaiting approval, often with similar stake holders to the Australian projects, for example Shell. It's going to be an interesting couple of years. As for the coal seam gas to be produced in Queensland, it's an inferior product and the wells sunk on agricultural land make it very unpopular with farmers.
Australian gas producers have a window of about five years before US gas projects come on stream but after that the market will become very competitive. When the Panama Canal is widened in 2015, it will be economic to ship Texas Gulf coast gas to Asia. That will really set the cat amongst the pigeons. As predicted in my post "Dump Australian Gas Stocks" (16 Nov. 2012) Australian producers, who are committed to multibillion dollar gas trains, are getting nervous about US competition. Australian gas users as seeking some form of reservation for local use but that bird is unlikely to fly, at least on the terms they are seeking. Also, with shale gas being flared off in the US, it makes no sense not to export it. And the US is a much more reliable supplier than than Oman.
Australian gas producers seem to be getting edgy about missing the market. With major Australian projects way over budget, Shell has said they will build a floating platform for their Browse project, which will be made in Korea, or some similar country, where workers actually work. Of course, Shell is too smart to say "Australian workers are just too expensive and strike prone" but as Bob Dylan said "You don't have to be weatherman to see which way the wind is blowing." Western Australian state Premier Colin Barnett is pushing hard for a land-based facility for Browse, but insiders say he is unlikely to win on this one.
Several other US shale gas export plants are awaiting approval, often with similar stake holders to the Australian projects, for example Shell. It's going to be an interesting couple of years. As for the coal seam gas to be produced in Queensland, it's an inferior product and the wells sunk on agricultural land make it very unpopular with farmers.
Subscribe to:
Posts (Atom)