Economics in Australia compared to the US

Economists invariably cop the tag of belonging to the pessimistic science since jokingly it is oft said by way of an introductory welcome to the podium …….Please welcome .......... who has successfully predicted 14 of the last two recessions.

Economic reputations suffered a further blow since most failed to predict the global financial crisis or identify sufficiently the consequences of the prior rising bubble.

There are notable exceptions but invariably their prior records are patchy enough to reasonably conclude this was the one prediction they just happened to get right at the right time. This patchiness is not surprising since bubbles don’t figure in economic or monetary theory nor are they included in the sophisticated economic models. Economics was never a science but is the art in dealing with the erratic human behaviors which can routinely make miserable fools of economic forecasters based upon rational outcomes. You spend most of your time looking in the rear vision mirror for any reflections indicative of the way forward.

I remember early student days full of debate on contemporary issues such as tariffs, subsidies, basic wage increases, international trade and regulatory issues for a banking system and so on. Today there is far more complexity and global interaction to consider, but I remember then many appalling decisions made in Australasia when life was simpler. Neverthless there are always lessons you can learn from studying past trade cycles, even to go far back to the great depression.

One aspect worth noting about the great depression is the assumed degree of speculation attributed by governments of the day and subsequent commentators. But if you undergo a thorough analysis of the prior trading conditions you find speculation was not nearly as rife as is commonly assumed. By way of example if you take the various PE ratios ( earnings to stock price ratios) for companies in the various industry sectors just before the massive fall in stock values you find a degree of normality that today would not cause undue concern. Lurking behind the bland facade however was the leveraged investment companies with their investments in overly valued utility companies which caused all of the havoc. Once values and profits fell in that one industry sector alone highly leveraged investments companies had to sell their shares to pay the margin lender. The same pattern happened with the individual investors in the Management Investments whose worthless investments meant they had to sell their remaining stock holdings in other sectors to cover their margin lending. Then the government talked simplistically about all of the greedy speculators as the only cause for an overvalued market which helped perpetuate the next downward spiral famously known (and still fearded )double dip. Most of the self perpetuating downward spirals were driven by leverage and subsequant sentiment but not substance that culminated in a collective fall of 89% with all of its accompanying misery.

After my studies and during my subsequent career I have almost always been responsible for forecasting economic indices and have endeavored as far as possible to follow economics which I have found both to be very interesting but equally frustrating.

When I first studied Keynes and Samuelson dominated our textbooks.
Keynes was one of the first philosophical economists who insisted economic theories must lead to fairer more ethical outcome for everyone. Keynes’ views were no doubt forged from his desire to avoid a repeat of the great depression where he held onto his shares and subsequently lost his fortune along with many others. Throughout his life he remained a colourful witty character devoted to the arts, nature and conservation to the extent he was miles ahead of his time. His highly developed mathematics gave way to theories suggesting the need for the creation of a strong regulatory regime to prudently effectively use both monetary (supply of money and interest rates) and fiscal policy (government spending and taxation) to help iron out inevitable economic imbalances were adopted in Australia.

In the USA Economics was to eventually turn away from Keynes to a different route with the rise in power of the economic monetarists who suggested you only need to vary the volume of money in circulation (money, bank deposits in demand and related interbank deposits with overnight liquidity)and interest rates to effectively control imbalances between supply and demand.This suited successive governments and business since it involved less regulatory resources and ensuing compliance as was proposed by Keynes and others. These ideas inevitably filtered through to Australia as the economy in the USA seemed to be traveling well.Subsequently the USA rode out the Savings and Loan fiasco and the Dotcom bubble but only at the expense of a burgeoning debt burden.

However fortuitously our economy in Austrtalia was to benefit enormously from increased taxation revenue derived from a mining boom wisely squirreled away in reserves for a rainy day,( some since released for a number of stimulatory measures) our close ties to the expanding Asian region and because we invested in a more effective regulatory regime following our largest corporate collapse in Australia - the demise of HIH.

At that time officials at APRA – The Australian Prudential Regulatory Authority correctly concluded that any large bank, financial, insurance or related entity could fail and with sufficient negative sentiment bring down the entire economy with them. They set about regularity changes to improve and more closely monitor solvency ratios and risk management practices with quarterly reporting requirements for all of our major institutions which caused a considerable amount of angst within the business community. These factors, inclusive of the tyranny of distance aspect which separated us from the sharper end of the pencil where all of the sub prime action was taking place ensured our lucky escape so far to date.


Recently in the US I was disappointed to see mooted bank regulatory changes are to be confined to increasinging capital requirements rather than ensuring unregulated derivatives are separated out and excluded from cover under their banking licenses.
Even Hedge fund billionaire George Soros and Berkshire Hathaway’s Charlie Manager are calling for urgent limits on credit-default swaps- one of the prior subprime culprits. These instruments are unnecessary since there already exists regulated conventional insurance products able to cover risk. The current banking structure leaves those large institutions in the same vunerable position as existed prior to the crisis. I hope there is change in heart.

Longer term my prediction is for continued weakness in the USA dollar to ultimately lead to higher inflation and inevitably higher interest rates. But in the medium term as Fed Chairman Ben Bernanke (who co incidebtally did his PHD on the trade cycle which involved studying Keynes and the great depresion effects )correctly points out U.S. interest rates will be kept low for quite some time, because of prolonged weakness.

Meanwhile if the American economy does stabilize and begin to give grounds for some genuine hope of a rebound, which I earnestly hope it will, then I also predict there will be an abundance of born-again Keynesians to poke up their heads from under a winters burrow. Link

Information overload

We live in an information age where knowledge grows exponentially. The effect is for an increasingly reliance and trust on a dwindling number of specialized individuals -particularly in science and technology. The potential for large scale crashes and unmitigated disaster is apparent everywhere - just as we saw in what many would regard as feeble regulatory efforts due in part to the inability to understand what was going on and the potential for disaster by a few overwhelmed investigators. The explosion of available and mandated information is reaching plague proportions as we become inundated with larger and larger data bases.In the area of business to day I have seen this explosion and specialization subdivide subjects I once studied with authoritarian texts that might have run to a few hundred pages expanded to dozens of volumes. In our everyday lives we are attempting to avoid the responsibility to trust in the integrity of one another by lengthy product disclosure statements, huge information gathering exercises for prospectuses and in the increased regulatory complexity that impose burdensome reporting on to specialists.In spite of this additional information the same glaring inequalities and injustices continue to exist. We are in danger of thinking the provision of additional information can supplant the central importance of human integrity.

What appears to be enigma in our western culture is we no longer take information from divergent disciplines to inform philosophical debate.The reasons relates to our specialized knowledge based society with its’ esoteric information for each disciplinary area which is not easily applied elsewhere. The growth of knowledge in every discipline means we will soon reach the stages where increased volume will ensure any research effort will involve an extraordinary amount of weeding to finally smell the flowers you are searching for.My conclusion is ironically we are at risk of almost returning to the pre printing press days when few people could read or write – but now because of information overload few know enough to know what to accept about different topics presented by varying experts in that field.
The contextual nature of information to a particular discipline is necessary for its integrity but nevertheless I see a danger in continued specialization to create the potential for a cultural desert within the self perpetuating isolationism of the various schisms’ within such a structured society. Indeed the search for the “facts” and total reliance on independent experts to support government decisions is increasingly becoming popular and neatly sidesteps any obligation to simplify and clarify the benefits to a country and its electorate of any intended changes. It is almost impossible not to make a reference to fairness, value and purpose when debating change if you want to argue philosophically why those changes are needed. Nevertheless such basic aspects are often lost or glossed over in a debate consumed by the veracity or otherwise of information.

In other words who has the correct facts or who is right and who is wrong. Ultimatedly voters like to be able read and understand enough to decide who they trust to make the best and fairest use of our scare resources and information and who they don’t for the reasons of ……….. . As we find leaders who can be trusted than we make real progress just as those leaders find experts who can be trusted and so on. It was always a matter of who could be trusted – or not!

There is a need for those in power to reduce the information overload so that what it made available is in a easily digestible format to support a particular policy, its value and overall purpose. If it’s too complex or difficult to be understood than its back to the drawing board until such time as it’s easily understandable.


Understandably I think whilst Science is fascinating, enhanced by books which lead the bestseller lists, there is equally the danger of a community backlash to derail its advances to a retreat into fundamentalism - unless information is presented in an easily understandable way - to include how it is to be used to enhance fairness value and purpose. Link

"The God Delusion “by Richard Dawkins

Review of the book “The God Delusion “by Richard Dawkins

In his book “The God Delusion” Dawkins distances himself from pantheism (the idea God is in everything) and Buddhism but singles out for criticism the traditional fundamentalist interpretation of a theistic GOD representative of the Abrahamic based faiths of Judaism, Christianity and Islam. His approach is to first define the GOD hypothesis from which to argue against GOD’s existence, the religious philosophy of omnipotence outlined by Aquinas, the non relevance for a vengeful God and how morality is unconnected with religion.

I found his book lacking in philosophical challenge.

Here is my review:

The problem for me with Dawkin’s reasoning is that many of his concerns about fundamentalism in religion are equally shared by non fundamentalists who have no problem in retaining a belief in GOD. All of his philosophical rebuttals are also reliant on the philosophical materialism that undewrites all of modern science. Aquinas put the idea of God succinctly as “BEING” – unrelated to any form of materialism.

Dawkins takes issue with Aquinas on the omnipotence of GOD, but Astrophysicist Jesuit George Coyne explores the ideas of continued creation in a different way - “A theologian already poses the concept of God’s continuous creation with which to explore the implications of modern science for religious belief. GOD is working with the universe, the universe has a certain vitality of its own like a child does, and it has the ability to respond to words of endearment and encouragement. Coyne rejects the idea of the omnipotent and omniscient GOD of old – “The universe is not GOD and it cannot exist independently of GOD. Neither pantheism nor naturalism is true. But, if we confront what we know of our origins scientifically with religious faith in GOD the Creator –if, that is , we take the results of modern science seriously –it is difficult to believe that GOD is omnipotent and omniscient in the sense of many of the scholastic philosophers. For the believer, science tells us of a GOD who must be very much different from a GOD as seen by them.”

Dawkin’s has no doubt forgotten more of evolutionary biology than I can remember-what one would expect from the culmination of a life’s study and efforts in one’s chosen endeavors. It is not this scholastic record that I question since I accept and trust what he has to say about biology is true. He is also at odds with dozens of eminent evolutionary biologists that do believe in GOD- but that is not my point, rather my issue is his emphatic assertion any debate in relation to the existence of GOD must remain within the province of science and evidentiary material proof.

The problem with this assertion is apparent as modern science refuses to talk about value, purpose or consciousness- under which such a belief would be debated. Dawkins does make some references but never really strays too far from his original premise to demand scientific evidence to argue against his atheistic views.

Science only talks about the theories in relation to physical objects supported by observation and mathematics. It cannot purport to understand ultimate reality since there is no evidence to support or calculate its definitive nature or existence. Likwise we cannot say what it is any more than we say what it is not - but Dawkins insists we can say what it is not- it cannot be spiritual - it can only be physical, since it is only the physical things that we can study.

Dawkins refuses to step outside his narrow reference, yet warns sternly against ’absolutism’ which I endorse – but it seems to me his ideas that nothing is possible outside sciences’ materialistic philosophy is an absolute statement. – A denial of the possibility of anything spiritual. Dawkins insists science comes up trumps – the best fitted shoe for any philosophical logical argument despite the fact the vast majority of scientific studies and discoveries have all been counter intuitive. Even possibly the greatest - Einstein’s theory of general relativity may yet need to be modified should we ever develop a coherent theory for quantum gravity.

Even so, on many occasions, we rightly put our faith in science- until another theory can be proven. However, within Dawkin’s own field of expertise – biology - the Holy Grail of Darwinian evolution which underpinned scientific belief is under challenge. It is acknowledged our early earth temperatures, following the “big bang” at 300 degrees Celsius were a very hostile environment for any primitive life but we have now discovered bacteria ( bacteria has DNA ) continuing to exist in the heart of volcanoes, where conditions replicate those first earliest conditions. It seems plausible many uncoded molelcular forms with the potential to self replicate binded together and under natural selection evolved into the coded RNA and DNA molecules that drive the functioning and reproduction of all living cells.

I think you could liken it to a form of evolved intelligent design or creation or biological evolution- ( call it whatever you wish) arising effortlessly over many billions of years. The remarkable sequential life giving events give rise to a possibility of another form of intelligence, which is outside of material matter and energy to created it (nothingness or GOD) or that which was necessarily and preceded its existence.(nothingness or GOD)

For acclaimed physicist and mathematician Stephen Wolfram, life complexity, intrinsic to physics is not only driven by natural selection but more from the ability of non complex life forms to quickly become complex. Wolfram contends wherever one sees complexity-say in the shape of a leaf –its form is not just generated because of some particular purpose by some sophisticated process. He has indicated in his experiments biology expands into complexity from even very simple rules of growth- even in complex species evident in the fluidity of parallel cell development.

I think the creative element exists within evolution which nevertheless remains an important milestone in helping us better understand how we came to be whom we are. We have only recently evolved our “consciousness” allowing us to ask the big metaphysical questions. Modern science is not philosophy- since it remains a helpful tool to relay layers of light to guide our path, just as religiosity with metaphors, analogies and old stories from differing cultural backgrounds illuminate ones beliefs.

All of the arguments against a belief in GOD presented by Dawkins with much aplomb are self refuting. You can argue until you are black in the face and it won’t make an a iota of difference - our existence gives rise to a much stronger philosophical arguments that appeals to another’s existence and so on back to the original singularity which transcends our understanding. In every day of our adult life we make an estimated 2 billion judgments with only the very tiniest slither ever entering our consciousness. To assume such a tiny slither makes our scientific undertanding the irrefutable be all of everything seems to me to be in the exact same vein as Dawkins assertions against the fundamentalist GOD delusion. All of his assertions, once debated philosophically, expose the weak ineffectual nature of such non existential arguments.

Dawkins also makes a point of the possibility of linking violence to religion. I don’t wish to defend the indefensible – past atrocities committed in the name of religion remain atrocities, but I think religion is often the lever which would be easily substituted for another secular one to suit the purpose of its murderous perpetrators should it be convenient within a particular country or region. In other words I think the desire and will to power which consumes some in an “ecstasy of violence” does not need religion to power its explosive fuel. There have been any number of commensurate psychopaths in many countries in which religion was not a good lever but whose rule precipitated untold death and misery – some of the worst in modern history had no need for religion to underpin such pathways.

The idea of a reconciliation, and for justice to finally prevail are not pie in the sky romantic notions of a flowery religion, but viable alternatives for hope that transcends a miserable materialistic philosopy of science. That hope in goodness in turn depends upon the actions and the philosophy we adopt in this world today. Atheists, humanists, agnostics and believers equally can all do very good work, since good is not dependent upon belief although it may influence what you do and why we do it.

As Dawkins attempts to tear down the old theistic idols he reveals his passion for science and for science’s ability to make sense of much of the material world for us – one that I share with him – but I also think his atheistic passion borders on the equivalent of the religious zealot so consumed by his belief that one is unable to ascertain his own life philosopy - except for the one lonely point – He does not believe in GOD. Link

Food – glorious food

I recently gave another more comprehensive presentation with a DVD about my visit to Malawi which was followed by a lunch prepared by the support group members with the emphasis on Malawian flavours. Those who attended gave generous donations. One member – by courtesy of Wikipedia- also presented his research findings about Malawian food just before we sampled all of the delicious dishes. His presentation is listed below for those who may be interested:

Malawian Food

Despite its natural riches, Malawi remains a very poor country. In this little country most people are subsistence farmers. This means they grow most of their own food in small gardens. If a family has extra food, they take it to market to trade for other necessities. Malawi cuisine has remained largely free of culinary influences from the outside world, until the late 19th century, with the exception of the use of cassava, Peanut, and chilli pepper plants which arrived along with the slave trade during the early 1500s. These foodstuffs have had a large influence on the local cuisine, but less on the preparation methods. Malawi cooking has remained mostly traditional. The staple food in Malawi is Nsima (which is the Malawian equivalent of Zambian Nshima and is made either from cornmeal, maize or ground, dried, cassava.) Nsima is a thick porridge that can be moulded into patties and served with either beans, meat, or vegetables collectively called Ndiwo. Other Malawian dishes are prepared with rice, cassava or potatoes. However, the keystone of any traditional Malawian meal is starch; the relish is a secondary element intended to give flavour to the food. Because the Malawi people have always been farmers, this meal is highly regarded because it gives the necessary energy to work in the field all day.

So all over Malawi, the meal is composed of two main dishes: the starch (Nsima) and the relish (Ndiwo). While the recipe for starch is mostly the same all over Malawi, the relish is very different from region to region. In the east of Malawi, it is made mostly from vegetables, as meat is expensive and most people can’t afford it. The basic ingredients in this region are rice and foutou (massed plantain and cassava) and fufu (fermented cassava). A variety of local ingredients are used while preparing other dishes like spinach stew, cooked with tomato, peppers, chillies, onions and Peanut butter. Cassava (manioc) plants are also consumed as green salad. A traditional recipe for the basic vegetable Ndiwo includes Onion, tomatoes and green vegetables, especially cassava.

The Malawi Lake, located in the eastern regions of Malawi, is a great source of various types of Fish. The main types are Chambo, Mlamba (Catfish), Usipa, and Kampango. The people that live around the lake use the fish to cook delicious relishes and other foods. A traditional Ndiwo made from fish is the Curried Chambo fish. The main ingredients for this dish are: fish fillets, lemon juice, flour, onions, curry powder, fruit chutney and carrots. Chambo (Tilapia fish) is the country’s speciality and the main lake delicacy. Another traditional food is Wali wa samaki, made from salmon, vermicelli, Onion, carrots, rice and seasonings.

In Malawian cuisine there are some exotic recipes based on insects. These dishes have different preparation methods than other dishes. Ana a Njuchi (wild bee larvae) are dried and then fried with salt and dried again. They are served as a relish or appetizer. To cook bwamnoni (large green bush crickets) you have to remove wings and horned part of legs. After that, boil them in water for five minutes, then dry in the sun. Fry with a little salt and a little fat if desired. This dish is served as an Ndiwo relish. The nsensenya (shield bugs) are washed and fried with a little salt until they are brown and also served as a relish.

Special Equipment for Malawian Cooking

The Malawian cooking methods are basic ones and you don’t need any special equipment to cook any of the dishes in the Malawi cuisine. Your everyday cooking pots and pans are enough to cook a complete Malawian meal. However, if you want a true Malawian food experience, you should know that cooking is still done the traditional way in Malawi. In the vast majority of Malawian homes, food is cooked over a wood fire using a tripod made of three supporting stones. Women (and children helpers) are responsible for everything concerning the food from market shopping to dish washing. As Nshima is eaten with the hands, everyone washes in a communal bowl before and after the meal. Many Malawians have mud stoves outside of the house, where they cook bread. Since Nshima and Ndiwo are the essential elements of the Malawian cuisine, there are some special tools used when cooking these dishes. One of these tools is mthiko, the cooking stick that is specially made for cooking Nshima and Ndiwo.

Masterchef & Musical Fun Night

I was also privileged during the following weeks to attend a fun novelty music night with the added attraction of our own community Master chefs who produced an Entree, Main course and Dessert. We all voted to determine first prize.

Profit after expenses all went towards Sanctuary Victoria to provide help for a most deserving refugee family.

The music, sing alongs (such as The Lion sleeps to night, The Pub with no Beer etc), and musical questions for added prizes all made for a convivial evening.

To give you flavour here are a few of the questions about golden oldies – see if you’re familiar with any of these songs and can answer the questions?

How old was the Naughty Lady of Shady Lane – sung by Dean Martin?

Wobbly Boot – Slim Dusty
Do you know what a wobbly boot is and what is a galoot?

Lily the Pink- The Scaffold
What did medicinal compound do for everyone?

Little Boxes – Pete Seeger
What is ticky tacky?


What are all these songs all about?

Rivers of Babylon – Steve Earle
True Blue – John Williamson
Okie From Muskogee – Merle Haggard


Matilda, Matilda – Harry Belafonte
Who was Matilda?

The rules were there were no rules except to relax and enjoy yourself and laugh. Correct and clever answers , good and and not so good guesses , those attempting to sing a few lines and impersonations received varying scores with prizes awarded according to perceived levels of agreement and enthusiasm.

What more could you ask for a good nights entertainment. Link