Thursday, February 12, 2009

Deja Vu All Over Again

Jennifer Marohasy blogged before the catastrophic Victorian fires that we'd been here before.

Then the fires came.

What is interesting is her blog reported cyclones striking Townsville and 40C in Melbourne.

"IT has been very hot in southern Australia. I have been waiting to hear someone blame global warming and it came, but only today, and I’ve only heard it from Climate Change Minister Penny Wong: ”The scorching weather across southern Australia proved the accuracy of warnings by climate change scientists.”

Of course it’s been hot before in southern Australia.

“THE oppressive heat was a major talking point of the vast and drought stricken country of Australia.

“While cyclonic winds have been lashing the coast off Townsville, the temperature today soared to 112 degrees Fahrenheit (44.4 C) in Adelaide and Broken Hill, and 104 (40C) in Melbourne.

“So dry is much of Australia that the riverboats on the Murray have come to a stand still. On a cattle station in central Queensland, it is reported that the kangaroos are too weak to hop and the kookaburras can no longer fly.

“In Western Australia, Victoria and Tasmania, the New Year sees these State’s battling to recover after recent bushfires. But if its not fires it would be floods, and if not floods it would be drought.

“In the north the odd cyclone adds a bit of interest by knocking down a few towns, or sinking the fishing fleet. Australians are used to having nature knock them off their feet every so often.

“The country has battled through the long droughts, and seen the downturn in the bush rush right to the doors of the city banks. But the crashes of the nineties are behind as the New Year comes near.”

The date of the excerpt she quotes from - The text was published on January 1, 1900.

Monday, February 02, 2009

Turnbull Turns the Hose on Rudd

In a refreshing resonance with today's Brash Op-Ed piece mentioned earlier, Australia's Opposition Leader Malcom Turnbull excoriates the Australian PM Kevin Rudd for his latest attempt to respond to the global economic turmoil.

Turnbull with typical and apposite bluntness says - doing something is not doing anything.

Rudd has proposed setting up "Ruddbank" - a joint venture between the four Australian trading banks and the Australian Government where the Government takes up the facility extended by foreign lenders on commercial property if the lender wants to exit the loan. Yep - it's as simple as that a - preferred position for Australian commercial property and the Aussie banks. They get to maintain their "value" throuigh the sohistry of the arrangement - explain that to the thousands of equity holders in companies and the superannuation scheme operators who are writing down their investments to market prices. It seems like a mad scheme.

The reality Turnbull points out is to transfer commercial property risk directly from the lenders and building owners to the taxpayer. Simple as that. Why?

The conflicts are enormous. Consider a syndicated loan secured on an Australian office building. Valuations have declined in line with the market and in the normal course of events the lenders are likely to choose to stay with the credit rather than risk forcing a sale and a possible loss on their loans.

However, thanks to Ruddbank, the foreign lender knows that if he demands his money back and threatens to force a sale the Australian lenders will lean on their Government partner to secure a replacement loan from Ruddbank.

After all, the Australian banks don't want a forced sale because they might lose money. Better to get the Government to take out the foreign bank and ensure a lower value for the building is not realised with all of the implications that may have for their other property loans.

In the commercial world in circumstances like these, "new money" has a lot of leverage and can demand priority over existing loans. But in Ruddbank the "new money" of the Government is going to be guided by the conflicting vested interests of the "old money" of the big four banks.

It's a game in which the taxpayer is being set up to lose.

Rudd's Government appears to have learnt nothing from its initial foray into interfering in the market.

After all, it is only a few months ago that Rudd gave an unlimited guarantee of all bank deposits. He did so without discussing the proposal with the Reserve Bank and within days governor Glenn Stevens was pointing out the growing dislocation in financial markets the rash decision had created and begging the Government to impose a cap "the lower the better".

The dislocation was considerable and has not been reversed. Some 250,000 Australians saw their investments in mortgage funds and cash management trusts frozen. Finance companies were unable to raise short term finance with the consequence they could not continue to finance car dealers.

To fix the dislocation and destruction of the retail car industry Rudd said they would set up a finance company to extend loans to car about law of unintended consequences ...however;

And so the Government moved to set up a finance company to provide finance to the vehicle retailers. Nearly two months later it is yet to start financing and car dealers around Australia are struggling to stay in business.

Rudd is keen to be seen to be doing something about the global financial crisis, but that is no excuse for doing anything.

Rudd says it will save 50, 000 jobs. It is difficult to see what jobs will be saved - except maybe Rudd's and that of his erstwhile Treasurer Wayne Swan.
Don Brash with a few home truths

There is an excellent Op-Ed in today's NZ Herald by former Reserve Bank Governor Don Brash, in response to the recent article by Dr Bryan Gould, former British Labour Party member and ex VC of Waikato University.

Gould's thesis is to blame the global economic turmoil on the market system and in particular its lack of regulation. ..."Gould implies that the crisis was caused by "free" and unregulated markets, especially in the financial sector.

Brash is withering in his attack -

"This [blaming the "unregulated financial sector" for the global woe] is quite simply nonsense. Banks may be relatively lightly regulated in New Zealand (where there is no banking crisis), but they have been highly regulated in the United States and Europe for many years."
Government agencies specify minimum capital levels that banks must maintain, enforce a wide range of rules and restrictions, including limits on concentration of credit risk, limits on net foreign exchange positions and much more. They have monitored those rules by regular on-site inspections.

"In many ways, this intensive supervision by official agencies made matters worse by leading bank customers to assume that banks were effectively "guaranteed" by Government, thereby enabling banks to operate with levels of capital well below those regarded as prudent in earlier decades. Perhaps even more serious, intensive supervision led some bank directors to suspend their own judgment, and believe that they were behaving prudently provided they were observing all the rules.

Gould seems not to have noticed that the crisis emerged not in the essentially unregulated hedge fund industry,
or even among private equity funds,

but in the most highly regulated part of the financial sector, namely banking.

Gould argues that "Government involvement in the management of the economy is essential", implying that that has not been the case in recent decades. Again, that could hardly be further from the truth.

Government taxation and spending make up some 40 per cent of total economic activity in most developed countries, and in all developed countries regulations of one kind or another tightly control what businesses can do.

This is well worth the read.

Friday, January 30, 2009

Obama's Achievement of Change in Washington has so far come to zip

The stimulis package has passed through the House and despite The One's oratory he blew his first chance at genuine consensus politics. Not one Republican voted for it. 11 Democrats voted against it. That is big news. Not one squidgy Republican crossed the line.

Obama met with Republicans prior to negotiate a consensus and to sell the package. Some salesman - He made no changes following those discussions. The result is that Obama and the DNC will completely own the result.

Thursday, January 29, 2009

Gore Still Lying His Way South

Gore's opening statement before the Senate Foreign Relations Committee today:

We are here today to talk about how we as Americans and how the United States of America as part of the global community should address the dangerous and growing threat of the climate crisis.

The weather in Washington on arrival...20 dead and many frozen.

Gore's fellow alarmist James Hansen of NASA has been punk'd by his former supervisor at NASA, Dr John S. Theon: “As Chief of several of NASA Headquarters’ programs (1982-94), an SES position, I was responsible for all weather and climate research in the entire agency, including the research work by James Hansen, Roy Spencer, Joanne Simpson, and several hundred other scientists at NASA field centers, in academia, and in the private sector who worked on climate research,” Theon wrote of his career.

Theon has publicly declared he is in the rapidly growing ranks of the Skeptics.

Now remember...
Arctic sea ice growth finished the year in 2008 at the same level as 1979.
The oceans have been cooling since 2003.
Sea ice is growing at the fastest pace on record.
A rare 50 year arctic blast is cooling the west coast.
Greenland's glaciers are stabilizing.
There are growing fears of a coming freeze worse than the ice age.
Alaskan Sea Glaciers are advancing for the first time in 250 years.
And, for the second straight year the Earth is, in fact, cooling... not warming.

Brilliant O is is not infallible after all

Having endured endless mocking on Letterman amongst others of Dubya trying the locked door in Beijing as "proof" of his inability to be Pres I have been rewarded with The One not able to remember the door to his own office. I'll bet this doesn't get the coverage Dubya got. Just proves the misogyny of the media.

The door is on the left Bam!

Hat tip: Gateway Pundit