Australia Day 1943

Yesterday was Australia Day which has been celebrated by Australians as a holiday since 1939. The above photos feature my late father (deceased 1969) in a group portrait of eight RAAF members of a Glee Party performing at a concert at Australia House, London on Australia Day 1943. My father served as a bomber pilot in the Second World War and information below and the photos have been taken directly from the Australian War Museum archives.

Caption below the first picture : Their concert songs were received with great enthusiasm by the audience. Identified from left to right: pianist Pilot Officer (PO) Hamilton Roland Dacre Budd (pilot) from Broken Hill, NSW (died 1 August 1943 on operations over the Atlantic Ocean); Frank Sutton Walker (observer) from Wellington, NSW; Squadron Leader (Sqn Ldr) Harry Clifford Thrush (chaplain) from Adelaide, South Australia; Sqn Ldr Gordon Gladstone Wood (chaplain) from Wellington, NSW who conducted the choir (died 18 June 1944 in UK); Sergeant (Sgt) Charles Keith Byrnes (pilot) from Moree, NSW; George Claud Notman (observer) from Skipton, Victoria; PO Donald Zalva Pile (pilot) from Melbourne, Victoria (died 26 October 1943 in Scotland); and PO Leslie Walter Roper (pilot) from Melbourne (died 4 September 1943 on operations over Germany).

The subsequent fatalities listed above are a salutary reminder of the high death rate attributable to RAAF command in which my father flew Wellington Bombers. Losses of about 5% per operation gave little chance of survival after a stint of 30 operations.

Earlier on the 3rd January 1943 my father made 6 records for the BBC which took 3 hours to record and included light and popular numbers - ‘I'll Walk Beside You’, ‘Old King Cole’, ‘Pass Me By’ and the beautiful anthem ‘Thou wilt keep him in perfect peace’. The BBC were very pleased and called in some reporter to take pictures for the papers. My father’s diary mentions that Air marshal Williams made a special trip to the studios to hear the records and was very pleased.

In later life the war had influenced my father and my mother knew this and made allowances that today would seem inconceivable. If you would like to read a story about that click on the title or the link icon next to the title.

Walking in the shadows of the mystics.

Introduction

Out of my childhood were mystical memories of dreamy imagined worlds whose characters cast magical spells in the shadows of the giant hypnotic eucalypts which grew in the tranquil peaceful bush land setting behind our family home. At night my bedroom glass window louvers shimmered in the pale light and rattled to the sounds of wind or rain as I listened to the incessant buzz of cicadas or the more strident cry of - “mowpoke! , mowpoke!" of the mowpoke owl before drifting off into sleep.

Although I would consider myself as a more practical and skeptical type person that mystical dreamy imaginative sense has also stayed with me to emerge in later life, prior to any feelings about religiosity, in the form of a recurring day dreaming state from which I imagined nothing whatsoever existed; after a time when the feeling became uncomfortable I would return to my everyday perception.

In Australia over several decades we have seen a minor renaissance in spirituality in contrast to declining church attendances as increased environmental awareness generates more interest in the wisdom streams of ancient societies. Many older cultures although beholden to magic and lacking scientific knowledge nevertheless were more attuned to harmonious co-existence with nature as a consequence of mystic wisdom streams.

But firstly I should define mysticism which is, according to the definition of my Oxford dictionary:

1. Chiefly the Christian church, the beliefs or mental tendencies characteristic of mystics; belief in the possibility of the union with or absorption into GOD by means of contemplation and self surrender; belief in or reliance on the possibility of spiritual apprehension of knowledge inaccessible to the intellect.

2. Religious belief characterized by self delusion or dreamy confusion of thought; belief based on the assumptions on occult qualities or mysterious agencies.

Aboriginal mysticism

In our oldest known continuous culture of the Australian aborigines’ the ancestral origins of mysticism reside in the dreamtime creation where all living things were believed to be made co-dependant and reactive to one another in one inseparable land.

So it was in the beginning the dreamtime was to dominate every facet of their rich life; in mythical creation stories, ceremonial art, music, ritualistic practice; initiation rites into adulthood; and in the repository of knowledge of the law handed down from one generation to another. Within the tribal system adolescents were isolated away from the rest of the tribe under the control of elders who provided tutelage on all matters of their law until they were sufficiently aware to make the positive transition to adulthood which carried with it the responsibility towards their tribe and the environment upon which they were dependant - Charles P Mountford – The Dawn of time.

As a child just before the time of the record –breaking floods which were to submerge our family home in raging floodwater I recall the inexplicable death of the Aborigine named Kinjika from bone pointing for tribal transgressions. Speculation was that his extreme fear caused his untimely death just five days after admission to hospital as medical authorities were unable to find any injury, poison, disease or medical condition that could be held responsible.

Eugene Stockton is a priest who has spent many years with the aboriginals and talks about their tribes gathered around the campfires at night experiencing a mystical oneness with the environment. To read the full article entitled 'Mysticism in the Australian environment: Calls to a new consciousness' click here .

Like many religions aboriginals were interested in the meaning of dreams which unlike other cultures were perceived as a mystical return to the past rather than to interpret the future.
Aboriginal people often interpret dreams as being the memory of things that happened during this Creation Period. Dreams were important because they were considered the time when one was transformed back into prior ancestral time. This linking of dreams to the Creation Period has led people to adopt the general term “The Dreamtime” in order to describe the time of creation in their religion. The term “Dreamtime” in Aboriginal mythology is not really about a person having a dream, but rather, a reference to this Creation Period.

To read more about aboriginal culture and religion click here

Ineffable mysticism and reverence for life

In modern day terms the divide between mysticism in religion and philosophy has become blurred for although the experiences of mysticism may be claimed to be ineffable (Incapable of being expressed; indescribable or unutterable), nevertheless for those traditions to take root and be successfully handed down from one generation to the next required a teacher able to coherently convey what is meant to ensure a future survival.

In the Taoist religion “The Tao” was considered with such reverence that any references made could no longer be considered the true Tao-Lao Tzu (Taoist), since such supremacy in spirit is also ineffable.

For more on the philosopher Lao Tzu click here

GOD was also ineffable in early Judaism

In early Judaism coherency in teachings was described by reference to GOD’S ways or actions in the mystical stories of the Old Testament. The Jewish approach to mysticism is complicated but generally it is agreed the mystics are to be interpreted in terms of allegory and imagination, a not dissimilar view held by scholars today in relation to the parables contained in the New Testament.

In the end any inherent complexity must become mundane for its future survival, as the old story goes of the student and his understanding of the various contemplative mysteries of the mountain whose enlightened state reveals it is a mountain.

In more recent times the definition of mysticism has also tended to be expanded to include the ecstatic experience of oneness found in Indian religions such as Hinduism or Sufism in Islam which aims at unity or absorption of the divine.

In turn the idea of a oneness has also influenced other philosophers such as Albert Schweitzer who said the “Brahmins, taught as a great secret the mysticism of the identity of the souls of all beings and all things with the Universal Soul. According to this mysticism all that is of the nature of soul belongs to the Universal Soul. Man carries the Universal Soul within him. And because the Universal Soul dwells in all Being, it finds its own self again in all Being, in the life of plants as in the life of gods. This is the meaning of the famous Tat twam asi (That thou art thyself) of the Upanishads."

Schweitzer whilst in the midst of a calm river setting in Africa gazing at a grazing hippopotamus, experienced his mystical insight into the principle of reverence for life, which proved to be ‘ manna from heaven’ for a war ravaged weary world, striking a chord that subsequently led to his Nobel peace prize in 1952.

A similar theme is evident In Tathagatagarbha Buddhism to proffer the idea of an enlightened indestructible nature for all beings, obscured by moral and mental contamination but whose enlightened essence is the Buddha Nature, present also in Tibetan Buddhist texts and traditions. Nothingness does not mean an absence of anything but rather the enlightened state from which attachments bringing moral and mental contamination are removed.

Christian mysticism

Turning to Christian mysticism we find an amazing labyrinth of different strands from the medieval Christian mystics included St. Augustine, St. Bernard of Clairvaux, St. Teresa of Avilia and Meister Eckhart and all of the other successors.

But by far the greatest of all of the Christian mystics is the apostle St Paul whose 13 letters make up half of the New Testament, although most scholars contend that only 7 were actually written or under the direction of Paul. Paul was a scholar, sail maker and mystic whose epic journeys established Christendom throughout the Mediterranean and ensured its spread throughout the world. Paul was seen as an apostle for the gentile’s yet in typical Judaist tradition frequently uses allegory by way of Old Testament references in his letters to the recently established infant communities.

Paul remains an enigmatically unique character – virtually unknown in a historical sense other than to be remembered in Jewish disagreements amongst followers, but one who professes to be willing to understand all things and become ‘as one’ to all men to further the cause of being “in Christ” which arose from his mystical experience on the road to Damascus. I think this factor had led many to interpret his work in a more complicated manner than need be the case.

The phrase ‘In Christ” has prompted many different interpretations and Schweitzer in his work ‘The Mysticism of Paul the Apostle’ on page 380 provides his view

"For him [Paul], believers are redeemed by entering already, through the union with Christ, by means of a mystical dying and rising again with him during the continuance of the natural world-era into a supernatural state of existence, this state being that which they are to possess in the kingdom of God. Through Christ we are removed out of this world and transferred into the state of existence proper to the kingdom of God, notwithstanding the fact that it has not yet appeared. “

Much has been made of the abstract nature of Pauline theology as a bridge from the more individualistic Judaism into Christianity with the idea of justification by faith but I think the primary aim of Paul was one of universal freedom from the law under the Jewish covenant about which he disagreed with Peter. His letters are best read simply as letters, not necessarily to be held as always Paul’s specific views but more to be understood as an encouragement and call to the fledgling communities to co-exist with love and respect for one another without the need for the prior ritualistic imposition of Jewish law.

St Paul is of significant interest to secular philosophers because his ideas carry with them the idea of a universal unencumbered system of unity which presupposes through grace existential philosophical aspects to life; to hold our life existence as sacred, to ascertain and acknowledge ones gifts for the benefit of the whole community, to joyfully exist in a state of grace without fear of death, to be free and remain free from guilt, to share in all things and to place love and affection ahead of all other known things. In the process Paul acknowledges our humanity and the imperfect cradle of existence which will continue to see communities straddle the idealism that is encapsulated in their new understanding and freedom from their law only to fall prey to the usual earthly failings.

In the same way as Schweitzer was to say he knew only Jesus of Nazareth; Paul sends his letters of encouragement and hope in the expectation that the experience of freedom from the law will bring joy to existential living to transcend earthly suffering and sorrow.

From a letter written by Albert Schweitzer to his future wife Helene, dated May 1, 1904, "Sometimes it seems to me as if I had arrived beyond the clouds and the stars, and could see the world in the most wonderful clarity, and therefore have the right to be a heretic. To know only Jesus of Nazareth; to continue his work as the only religion, not to have to bear anymore what Christianity has absorbed over the years in vulgarity. Not to be afraid of hell, not to strive for the joys of heaven, not to live in false fear, and the false submission that has become an essential part of our religion--and yet to understand the one Great One, and to know that one is his disciple."

CONCLUSIONS

Mystical experiences have been crucial in providing the creative imagination which helps shape our philosophies and give us that sense of self that gives rise to our humanity.

What is strikingly apparent from many of the mystics is the similarity in ideas about oneness and interdependence for all living things. Another is the wonderful philosophies which are suggested, through grace, as being available to all regardless of belief, to be simply experienced by engagement in mind and spirit. To find your own meaning to life (as opposed to seeking a meaning for life) as I see it in the use of one’s gifts in the way that was intended for a more complete and energised happy life for oneself and community. In that respect secular philosophers’ views often unintentionally reflect religiosity just as the more skeptical views of some religious commentators can be more secular than religious.

In another sense, in a more generalized universal viewpoint my personal philosophy leads me to believe that all life is sacred. We can learn from the mystics but ultimately we all determine what philosophy and life meaning we personally adopt. If you agree with me that all life is sacred then a call to arms must always be viewed with suspicion except in extraordinary circumstances.

Our forgotten flora – magical mushrooms

After rainy periods in the country as a child I remember seeing the magical sprinkling of white dots barely visible amongst the pastures beside a tranquil river which meandered behind our family home- the arrival of mushrooms! Alone in the company of early morning dews at daybreak I would fill my billycan for a tasty breakfast. There was that special feeling of responsibility in distinguishing between edible and dangerous toxic varieties.

The mushroom has captured our imagination from antiquity when the consumption of ‘magic mushrooms’ containing the chemical hallucinogen (psilocybin) engendered mystical religious type feelings. Some toxic varieties in Australia when consumed can potentially be fatal or cause permanent liver damage. However mushrooms undoubtedly are best known as an attractive nutritional addition to our diet, being high in carbohydrates and providing more protein than green vegetables. Mushrooms belong to the fungi family and although fungi’s cause the majority of plant and crop diseases we can thank the smaller types which are used effectively for the production of bread, beer, wine, cheese, vitamins and penicillin.

The biology of fungi is interesting on a number of counts in terms of composition and evolution. Fungi represent the first life form to colonise the earth, well before the emergence of land based plants. Unlike plants which have leaves representative of a vascular system and which can reproduce via flowers and seeds, fungi reproduce through spores. They vary enormously in size and rely mainly on dead and dying organisms for their food supply. Their DNA is more closely aligned to animals than to plants.

Mushrooms researchers are increasingly becoming excited over the many exciting possibilities in their applications such as treating cancer or in cleaning up toxic wastes.

You can read more about just a brief smattering of some more recent discoveries on Science Daily by clicking here or by simply reading my extracted summaries below.

Treating cancer

Dr Cornelia de Moor of The University of Nottingham and her team have investigated a drug called cordycepin, which was originally extracted from a rare kind of wild mushroom called cordyceps and is now prepared from a cultivated form. Dr de Moor said: “Our discovery will open up the possibility of investigating the range of different cancers that could be treated with cordycepin.

More discoveries of Mushrooms that glow in the dark

San Francisco State University Biology Professor Dennis Desjardin and colleagues discovered the fungi in Belize, Brazil, Dominican Republic, Jamaica, Japan, Malaysia and Puerto Rico. The discoveries include four species new to science and three new reports of luminescence in known species. Three quarters of glowing mushrooms, including the species described in the study, belong to the Mycena genus, a group of mushrooms that feed off and decompose organic matter as a source of nutrients to sustain their growth.

"What interests us is that within Mycena, the luminescent species come from 16 different lineages, which suggests that luminescence evolved at a single point and some species later lost the ability to glow," said Desjardin, lead author of the study. He believes that some fungi glow in order to attract nocturnal animals that aid in the dispersal of the mushroom's spores which are similar to seeds and are capable of growing into new organisms.

Mushrooms may also prove effective to cleaning up toxic contaminations in land areas.
This type of mushroom carries out an indiscriminate acid attack on the mineral particles of the soil and absorbs elements in quantities relative to the mineralogical composition of the soil. "In some contaminated soils, or those with particular mineralogical characteristics, the mushrooms collected can reach such high concentrations of toxic elements that their consumption would be unadvisable," reveals the researcher

Chernobyl tragedy teaches us that Fungus Feeds on Radiation
Researchers at the Albert Einstein College of Medicine (AEC) have found evidence that the fungi possess another talent beyond their ability to decompose matter, the capacity to use radioactivity as an energy source for making food and spurring their growth.

Detailing the research in Public Library of Science ONE, AEC's Arturo Casadevall said his interest was piqued five years ago when he read about how a robot sent into the still-highly-radioactive Chernobyl reactor had returned with samples of black, melanin-rich fungi that were growing on the ruined reactor's walls. "I found that very interesting and began discussing with colleagues whether these fungi might be using the radiation emissions as an energy source," explained Casadevall.

Casadevall and his co-researchers then set about performing a variety of tests using several different fungi. Two types - one that was induced to make melanin (Crytococcus neoformans) and another that naturally contains it (Wangiella dermatitidis) - were exposed to levels of ionizing radiation approximately 500 times higher than background levels. Both of these melanin-containing species grew significantly faster than when exposed to standard background radiation.

"Just as the pigment chlorophyll converts sunlight into chemical energy that allows green plants to live and grow, our research suggests that melanin can use a different portion of the electromagnetic spectrum - ionizing radiation - to benefit the fungi containing it," said co-researcher Ekaterina Dadachova.

Investigating further, the researchers measured the electron spin resonance signal after melanin was exposed to ionizing radiation and found that radiation interacts with melanin to alter its electron structure. This, they believe, is an essential step for capturing radiation and converting it into a different form of energy to make food. Until now, melanin's biological role in fungi - if any - had been a mystery. Interestingly, the melanin in fungi is no different chemically from the melanin in our skin, leading Casadevall to speculate that melanin could be providing energy to skin cells.

And radiation-munching fungi could be on the menu for future space missions. "Since ionizing radiation is prevalent in outer space, astronauts might be able to rely on fungi as an inexhaustible food source on long missions or for colonizing other planets," noted Dadachova.

Click here for this reference.

BRIGHT STAR

New Zealand’s Oscar winning film director, Jane Campion who directed ‘The Piano’-one I particularly liked- has returned after a few years absence with the critically acclaimed film BRIGHT STAR. This bitter sweet screen epic combines John Keats’s letters with his romantic entanglement to the 18 year old impetuous seamstress Fanny Brawne stylishly played by Abbie Cornish. Fanny first meets Keats as her neighbour but soon opens wide the romantic doorway to his heart and subsequent betrothal in flagrant disrespect to a Victorian era evident in the practical words but not actions of Fanny’s compassionate mother.

The film is a moving feast for the eyes, heart and mind set in idyllic eastern England, but laced with humour and pathos for the penniless young Keats whose agonizing life compromises are in deference to the reality he relies on the generosity of others but particularly that of his close friend Brown whose antipathy toward Fanny adds yet another dimension of unanswered questions.

BRIGHT STAR leaves you aware that the words of one of the greatest romanticised poets were only recognised for their eloquence, exquisite beauty and romanticism after his tragic early death. His words continue to be spoken today just as they were spoken out aloud in the woods for many years afterwards by a grieving but no less inspired Fanny Brawne.

Click here for NY Times review

The philosophy of money

Australian Aboriginals lacked an independent currency, but like other indigenous groups traded ceremonial artifacts, grinding stones, sea shells, ochre’s, shields, axe heads, spears and even ‘water rights’ along their trade routes marked by permanent waterways. Trade was a ‘United Nations’ of affinity to the land where scarce resources in one region were exchanged for another’s as one Australian nation shared nature’s bounty. The tribes all spoke different dialects and relied on carved symbolic message on a message stick accompanied by translators to negotiate trade agreements. Their existence as the longest uninterrupted culture for 60,000 years or more bears testament to their idea that the land owns us rather than we own the land-the only real wealth upon which we all depend.

Elsewhere in the globe as an independent currency money was created philosophers debated its merits and use. The philosopher Aristotle (340 BC) asserted money was best understood as a duality; to procure necessary goods or services of which he approved and as an accumulated corruptible means to obtain one’s fortune. His extreme view proved a reliable sage as money has bedevilled humanity in whatever form was adopted be it capitalism, socialism, communism or a mixture as is evident in modern day China.

It was the era of modernism around 1500 that heralded inventive trade to follow the advancements in science. The puritan work ethic from the Reformation cast money in a more favorable light to coincide with the idea hard work was virtuous. Oliver Cromwell subsequently enacted laws to bolster the 'mercantilist' system to give preference to the British enterprise and shipping companies. Although historically we have many monetary empires dating back to the fall of the Roman Empire none rivaled the Industrial Revolution in England from 1740- 1780, - a logical melting pot given the recently discovered Newtonian mechanistic world - as suggested by John Gribbin in ‘Science a History 1543- 2001’

The industrial revolution became the catalyst for western world industrialization, but was a two edged sword in terms of benefits. Whilst inventiveness, division of labor and productivity supported vastly improved living standards capable of supporting a much bigger population it was at the expense of massive exploitation of people and land- to become the genesis of our current ecological disaster.
During the Victorian era philosopher and moral ethicist Adam Smith published in 1776 his influential classical economic work entitled ‘Wealth of Nations’ to criticize the 'mercantilist' system. Smith articulated the view that money as the invisible hand of free markets will produce a satisfactory price return for land, labor and capital because the self interest in any free market benefits the whole of society as competition keeps prices low. Smith was aware any concentration in power would distort a free market and pointed out Merchants wielded monopolistic power afforded them as a consequence of bans on foreign competition. Mercantilism was also associated with a monetary system which used exported bullion to pay for imports- mainly from Asia- which reduced money supply to exert downward pressure on prices and economic activity at the expense of impoverished workers.

Mercantilism also adversely affected the colonies which were forced to use English ships, pay duties and only trade in commodities whose prices were set by the British Empire to effectively create an underclass of colonial citizens - a significant factor that led to world war and eventual American independence. The classical economics of Smith overturned the mercantilist system and his free market ideas remained popular up until the great depression of the 1930’s.

But the period afterwards saw the inevitable boom and bust cycles continue in tandem with the growth of the larger financial institutions such as banks whose occasional lending sprees exceeded loanable funds beyond the level of maintainable voluntary savings to cause social dislocations.

During the depression years in the 1930’s, John Maynard Keynes was to present a new radically different system to offer hope we could avoid recurrences of the painful boom bust trade cycles that had come to haunt modern day societies and brought upon an unsuspecting pre boom population the horror of the great depression. His theory was we cannot rely on markets to automatically adjust to ensure full employment so long as workers remained flexible in their demands. Rather his theory saw an active role for government intervention with both fiscal (taxation and spending measures) and monetary policy (control over the level of interest rates) to ensure economic growth and stability. Banks were to be regulated but enjoy ‘Lender of last resort’ from a reserve to ensure confidence was maintained in the system.

Keynesians thought it was imperative for government action during severe economic cycles to introduce government spending, tax breaks and reductions in interest rates during recessions but to reverse the situation during highly expansionary times. In other words to increase those same levers during inflationary times.
Following the outbreak of World War II Keynes's ideas were universally adopted throughout the western world with commensurate success so that by the time we reached the mid fifties all western capitalist nations mirrored his views to share in the relatively strong, stable economic fortunes of the immediate post war era.

Keynes's influence however began to wane from the 1970s, with the emergence of renowned economist Milton Friedman who was skeptical over the ability of governments to effectively regulate the economy with fiscal policy as suggested by Keynes, explaining that such measures were prone to be both costly and ineffective. Freidman relied on tight control of money to maintain price stability. His elegant theory was easily understood and very appealing at a time of high inflation but selectively seized upon by vested interests promoting a free market economy. Concurrent to that change in economic focus was a type of philosophical materialism which had taken firmer root to assert our wellbeing or happiness is only measurable in terms of money. This became linked to fundamentalist type religions who promised future wealth as if synonymous with salvation. Simply put -‘if it doesn’t make money it doesn’t matter’! A type of economic fundamentalism persuasively joined forces with branded religion to present a rather potent cocktail of political inspiration based upon a minimalist role for regulation, suggesting markets are sufficient as the sole arbitrator except for control over the money supply.

Economic fundamentalism gained traction from the power of entrenched interests under either party to be incorporated into decades of government policy reaching its zenith in more recent times. However the recent stimulatory moves made by Obama, Gordon Brown in England and Kevin Rudd in Australia may well have been taken directly from a Keynesian handbook which is likely to rekindle resurgence in renewed interest in his economics.

Conclusion

Any measures that might help avoid the sizeable crashes of 1987, 1997 and 2007- the latter coming perilously close to emulating a great depression, will, as would be anticipated represent the best of the old and new way of thinking. But ultimately you cannot legislate effectively morality but rather I think one can ensure a system is both transparent and fair. I think it would be fair to say the free market envisaged long before by Adam Smith bears little resemblance to the one now championed as free. The championed free market today in reality is so encumbered with a concentration in monetary power and sufficiently lacking in transparency to necessarily distort the beneficial outcomes envisaged by Smith.

Freidman’s ideas about the advantages of smaller government and reliance on monetary controls have been selectively seized upon to give credence to an economic fundamentalism. What we have witnessed has been a very loose monetary policy which made the cost of money (money being currency and easily liquefied bank deposits) very cheap and acted as a catalyst for the excessive leveraging of corporations whose failure precipitated a financial collapse of grand proportions. I agree with Economist Paul Krugman who suggests we will, going forward, increasingly revert to a Keynesian style of economics in preference to one grounded purely on monetarism.

That is not to say a need arises for a larger government sector or even for more legislation. In fact I think we are in danger of over-acting and imposing such increased regulatory controls with proposed increases in new capital ratios and stricter lending requirements as to risk curtailment of any recovery by inducing a reduction in liquidity just as stimulatory measures globally must be wound back.


What are needed in my view are more descriptive type provisions in tandem with improved regulation, coupled with transparency. Large financial institutions need to have their mainstay commercial business and consumer lending areas separated
into different entities to those involved in derivatives and any proprietary trading.

Additionally markets all need to be afforded transparency so that any derivative trading – particularly in relation to Hedge Funds – can be determined for markets to be informed and not left in the dark as was past practice.

The type of philosophical materialism which led to the idea that the stock exchange represents preferred repositories of money making entities which require freedom from regulation in order for those entities to create the wealth necessary to sustain our economies was always a discredited theory. However to the extent those stocks do represent a sustainable linkage of goods or services that may indeed be true. But because of the remoteness and lack of transparency to many of the corporate inputs the actual outcomes are oft far removed from such a reality. Sucked into a vortex of a money making machine where investors in AAA rated securities (and those securities derivations )were so far removed from those who actually owned the properties,it was hard to grasp initially how such schemes were concocted in the first place. Any renegotiation after default was thwarted by intermediaries who had no interest in any renegotiation or were restrained through legalities. The lack of regulatory oversight and need for improved transparency needs no further elaboration on my part. Any system which trades purely on the expectation of another’s failure is doomed to eventual failure, since integrity never envisaged insurance was to benefit from another’s failure or that one could make a profit from insurance.

However on a more positive note all of the major companies I have studied here in Australia – and from what I understand applies globally – are making strenuous efforts to ensure their business is sustainable and reflects the latest in good governance. Most refer to the savings in carbon reductions per employee and even in relation to their stakeholders. There is realization the old ways are not appropriate and regardless of any inaction by the government, a global transformation is already in full swing. It is also refreshing to read that many of the big banks were dismissive of the overtures of their overseas counterparts when offered trade in collaterised debt securities. That rejection was based upon the unnatural dichotomy between the security holder and the layers of wrapping that preceded the security in the form of the property. Some Banks still like to know who their customers are and to personally evaluate the risk- if you’re unable to do that alarm bells need to go off.

I will close with a link to where I began with the Australian Aboriginals. Money really is only a means of exchange so that we- ideally like our indigenous peoples- share to the extent as is necessary and sustainable.

Similarly our evolution was more dependent upon survival through cooperation - not on survival of the fittest as evolution’s most misquoted quotes suggest- since the way forward so far as our evolution is concerned has always depended upon cooperative efforts.

Best wishes for 2010 – may it offer more hope than the previous decade!

Christ “Hidden Beneath the Whitewash”

There is a story told in Holland, perhaps more mythical than true. It runs this way:
There was an old church. For many years, upon entering it, every-one would stop and bow in the direction of a whitewashed wall. No-body knew exactly why anybody did that, but everyone had been doing it for such a long time that nobody questioned it. It was tradition. Besides, there was something fitting about doing it. It felt right.

One day, the parish decided to renovate the church. Among other things, they began to strip the paint and whitewash off the old walls. While doing this, they discovered traces of a painting on the wall that everyone bowed to. They became very careful and peeled off the paint gently so as not to damage what was beneath it. Slowly, a very beautiful centuries-old painting of Christ emerged. Nobody alive was old enough to have actually seen it before. It had been white-washed over for at least a century. Yet everyone had been bowing to it, not knowing why, but sensing that there was good reason for the reverence.

There is a Christmas lesson in that. Western culture still bows towards the crib of Bethlehem. We may be post-Christian in our beliefs, our attitudes, our ethics, and our policies, but we still celebrate Christmas. Like the people in that church in Holland, we are not really clear any more as to why we are doing what we are doing. There is not much conscious faith left in our Christmas celebrations, just a habitual response to a tradition.

But - as the story of the painting recovered in a church in Holland can teach us - that’s not all bad. It’s better than not bowing to the wall at all. At least we still have the sense that there is something special beneath the whitewash.

If we are among the ones who still know that there is a painting of Christ behind the whitewash, our response should not be one of cynicism. The Christian choice at Christmas is not: do we celebrate or not? Of course we celebrate and we should be happy that the world is still making a big deal out of Christ’s birth, even if it isn’t so clear any more as to why.

Our task is not to stop the bowing or the celebration. Our task is to help peel off the whitewash, to help restore the painting beneath it, and to tell the story of who did the painting and why.

You criticize the bad by the practice of the better. The best way to help our culture to celebrate Christmas properly is not by criticizing how it celebrates, nor by ourselves ceasing to celebrate, but by celebrating in a better way.

Let our joy exceed that of the commercial world! Let our bow be deeper and more aware of the marvellous gift that’s behind the whitewash: the gift of the Incarnation of our God!

Reflection on the Epiphany by the Canadian Oblate priest Ron Rolheiser
Click here for his website

Christian parallels with Buddhism

Both Buddha and Christ preached peaceful co–existence ; the amelioration of suffering by application of an expanded world view for compassion- to present similarities from markedly different cultures. Christ’s Jewish heritage was rooted in the Messianic expectation for the end of the world which leads to his eschatological message whilst Buddha’s concern was over indifference to suffering within a caste based societal system. There remain fundamental differences of substance between the two but personally, on a purely subjective note, I would proffer the view Christ’s sayings also have a distinctive Buddhist flavor to them. Certainly there has been a long history in contemplative Catholicism towards similarity in meditative practices, but I also think there is a tentative link to the way both respond to suffering.

The tenuous parallel link is evident in the expanded compassionate response to suffering. Christ’s ‘sermon on the mount’ was to establish a pacifist society, to end the eye for eye justification and to strive for a universal forgiveness by an active expanded role for compassion. In the Buddhist tradition the release from suffering through Nirvana – by ceasing to will, is the recognizable path to enlightenment. Christ’s account can best be understood by way of eschatology- to establish the spiritual kingdom for righteousness and expanded compassion. That love preached by Jesus was to be universal and to include all people, sufferers, oppressed, those sick, murderers, those found guilty or even your worst enemy. Buddha brought to all sentient creatures that same kindness, friendliness and sympathy but without a personal involvement of heart binded to earthly things.

However, just as the “historical Jesus ‘scarcely exists outside of the Biblical references – except for a fleeting historical reference - so the Buddha also is historically obscure or at least what is attributed to him remains a topic for debate by scholars. Both spent years of monastic contemplation- (Christ may have been a member of the Essenes) prior to a public ministry which attracted disciples and has subsequently spread throughout the world. Their first records and accounts were eventually written down by the disciples and followers. Many Buddhist traditions were orally maintained for over 400 years before any formalization took place. Buddhism may be considered a philosophy or a religion, but more so a religion in my view with Buddhist sacred scriptures and doctrines.

In China philosophical Taoism has influenced Buddhism, but religious Taoism has also been transformed by Buddhism; to include rebirth/ with systems of heavens and hells. (Ching Julia – from Kung Hans and Ching Julia. Christianity and Chinese religions. SCM Press, London 1989) Hans Kung also talks about a kind of Taoist church with priests, monks, cults, feasts, holy water, confession, penance, fasting, legends of saints and even a Taoist Pope. Importantly for both Taoist and Christian thought the innermost essence of Tao and God remains hidden from human beings. (Kung Hans and Ching Julia. Christianity and Chinese religions. SCM Press, London 1989)

Buddhism has been rediscovered in the west and gained popularity as an alternative to secular materialism in philosophy or fundamentalism in religion or for those whose spirituality sits uncomfortably with the various strands of Christianity. Such an interest might seem surprising given for the most part western rationalism which is unaccustomed to discussing such subjects as emptiness, karma, release from suffering through Nirvana – by ceasing to will, illusions of the mind and the idea of death simply taking on a different form of rebirth. But I think the reason Buddhism has gained popularity is it seems less authoritarian and, while its rationality may be debated it does suggest a rational pathway. However, when one examines the mystical bent of all religions and traditional ritual, richness in religious art and the vast body of canonized scripture held by both wisdom streams, I think we all read from the same hymn sheet; to listen to tunes set from fundamentally different cultures but who aspire to the same more positive outcomes.

Economic update

Introduction and risk assessment

As economic trends signal an end to the steep cyclical downturn, future sustained recovery remains problematical amidst conflicting signs. The US economy continues to digest a never ending cocktail of mixed signals to post meager gains which suggest sustainable economic growth is still probably a year or more away.

Globally tentative improvements remain buffeted by stiff headwinds; more conservative capital consuming banks,vulnerability in asset prices,the circumspect consumer and the unwinding of unprecedented monetary and fiscal stimulus packages which increased government indebtedness by 50%. The continued nuclear ambitions for Iran & North Korea also cast a shadow over global outlooks.

The consensus outlook by the Board of the Reserve Bank of Australia is slightly more upbeat for Australia, aided by the resilient economies of China and Asia recovering faster than expected. Australia benefits from these faster growing regional ties and a very modest level of government debt combined with a well regulated banking system. Our risks lie in the relatively high level of household debt secured on residential property; any pronounced weakness in housing prices exerts pressure on a banking system captive to overseas funding. Rising house prices have reduced home ownership affordability by 24% since April this year. Any risk of a pronounced housing price fall is low since housing stock is under supplied and demands continue to flow on from record levels of immigration. Banks reliance on overseas funding leaves the economy vulnerable to any credit squeeze imposed by overseas lenders, because,apart from forced superannuation saving and government surpluses, we remain a nation of spenders not savers. Increased saving remains a key initiative for the country to be more sustainable in the future.

Interest rates

The Reserve Bank of Australia today raised the cash interest rate 25 basis points to 3.75% to record a unprecedented 3rd straight monthly rate increase; expect another rate increase in February 2010 and a cash rates of 5% by 2010. Such increases represent an unwinding of a previous accommodating monetary policy stance in response to the GFC to one that returns to a position of neutrality. The rise in interest rates and in our exchange rate will contain the prices for traded goods and services but dampen growth in the trade-exposed sector of our economy. The Reserve Bank has also expressed some concern over rising house prices and hopes the interest rate increase will dampen consumer sentiment and propensity to continue to pay inflated prices for housing.

The current yield on the Commonwealth Government March 2019 bond is at 5.267 per cent while the yield on the April 2012 bond was at 4.430%.


Currency

Because of the continued weakness of the US dollar speculation is rife the US dollar may lose the world’s currency reserve status. Throughout the 18th and 19th century the English pound enjoyed reserve status before an elected dollar came to power, many years after the US had become the world’s largest economy.

Bearing in mind the reluctance for sudden changes, the requirement for deep markets and the need for ease of convertibility you can reliably conclude it will take several decades before any change become feasible.

In the meantime ongoing US Dollar weakness could be a catalyst for continued political and economic tension, particularly if China continues to avoid a Yuan appreciation, although I think fears here are overblown.

Lessons from the great depression and recent GFC after shocks

As the past tumultuous events of the global financial crisis continue to hover in our collective consciousness, inevitable comparisons continue amongst economic commentators and share chartists with the great depression. The great depression was preceded by the roaring twenties which tended to add a flavour of assumed speculation and bubble bursting scenarios to most of the economic commentary at the time and subsequently.

However an analysis of stock indices (earnings to stock price ratios) just prior to the massive falls of the thirties reveals stock price was not excessive except for one industry sector. That sector was the popular leveraged Investment companies whose specialty was utility stocks. As inevitably more realistic profit reports undermined inflated values of utility stocks the leveraged investments companies were forced to sell their entire share holdings to satisfy liabilities to margin lenders. That event triggered a train reaction as investors in their now defunct management investment companies were forced to sell their entire shareholdings to satisfy their margin lenders.

The operative lesson is the extreme danger of gearing. The final straw during the depression that led to the now famous double dip in stock prices was governments action taken to stem perceived greedy speculators initiated by tightening credit which caused widespread panic selling and subsequent larger scale insolvencies due to lack of liquidity.

I don’t think we are in danger of following that same fearful path today but the risk nevertheless remains, particularly whilst the US banking system (unlike Australian) is not adequately regulated and could still inflate a bubble from excess liquidity and leverage.

However Banks in Europe are 25% and in the US 20% bigger now than pre 2007 crash levels -when the cry was heard too big to fail ! This scenario provides is an ongoing challenge to regulators in relation to capital adequacey and to internal risk managers who need to be given authority to influence bank practices and policies.

Another lesson learnt in recent times was it only took the huge indebtedness of one tiny nation - Iceland to undermine the house of cards that had enveloped the globe. Investors are now more recently worried about Dubai; since it has borrowings of $US80billion to finance a 4 -year construction boom now subject to a pronounced property slump. Dubai world surprised markets when it called for a halt on paying back $US60 billion debt until next year. Dubai's debt problems will be well contained, but expect a few more surprises like this over the next year or so until we reach a point of renewed confidence.

US Banking system still inadequate in regulation.

Federal lawmakers and regulatory officials continue to grapple with what new regulations are needed to be introduced to avoid a repetition of the conditions that led to the Global Financial Crisis. Policies and proposed recommendations remain bogged down within the political process with the administration unable to obtain a bipartisan approach. The current US policy settings which ensure the benchmark interest rate remain near zero, carries the risk such an accommodating monetary policy setting, will fuel a surge in assets and the so called “carry trade” risks another bubble occurring. The unwinding of this “carry trade” would not be pretty. The Fed itself is aiming to better identify risks, drawing on its 220 PHD qualified economists to be more effective in identifying potential bubbles and improve regulatory oversight according to a recent article appearing on Bloomberg.

Federal Reserve Chairman Ben S. Bernanke said he doesn’t rule out using monetary policy to pop asset-price bubbles, while stressing that financial regulation is his preferred approach.

Corporate Profits

Disregarding the US fragile banking system the one bright feature is the recovery in corporate profits largely driven by cost cutting and stabilization in inventory levels previously slashed in response to faltering weak demand. However the cost has been high in widespread human misery and unemployment to leaves a continued deep scar well into the future. Given this caveat and apart from the banking sector, most of the corporate sector (with a few notable exceptions) are in relatively good shape and should continue to improve. Historically current stock price earnings ratios are only slightly in excess of long term historical averages to assume an inbuilt profit improvement inherent in 2010, which is also true for Australia and most of the western world.

Conclusion

You cannot legislate morality or a perfect a set of banking indices which alienate risk. Rather, what is needed is for regulators to be prepared through improved training - to get their hands dirty and carry out periodic due diligence's and exercise a common sense regulatory service which demands transparency.
If you can’t understand what is going on that is usually a clear signal that something is fundamentally wrong. If you’re subject to a financial services or banking license it is preposterous to think a company’s operations can rely on a complex computer generated model which generates huge profits and counterparty risk but whose risk profile remains unintelligible or a mystery to inexperienced regulators.

“Banking should be boring – it is boring. When banking becomes exciting, then it becomes very dangerous “

Quote from Mike Smith - ANZ's chief executive who operates one the largest and most profitable successful banks in the world today-'In the black' -December 2009

Gearing ratios vary according to the quality of the risk – if you’re gearing to invest in government bonds ratios of 20 or 30 to 1 won’t matter – if your investments are risky 4 to 1 may be far too much leverage. I am afraid there is no easy answer but a return to integrity and the constant need to evaluate different scenarios with industry experience.

Financial services as an industry also needs to ensure fees and charges are transparent and easy to undestand, just as regulators can incorporate such requirements into sensible regulatory oversight.

Insofar as transparency for operations are concerned free enterprise markets always needed to be transparent to be effective and equitable and nowhere is this more apparent than in the derivatives market. Since the crash we have merely increased market liquidity sufficiently by massive injections of funds to substitute existing counterparty risk with increased liquidity.

There also needs to be more regulatory measures for boards of directors of public entities to set sensible remuneration limits – particularly in relation to draw backs on share options arising in the event of subsequent failed results.

Classic Bank Run

President Barack Obama has blamed compensation tied to excessive risk-taking for fueling the deepest financial crisis since the Great Depression. The administration has named a special master to approve compensation packages at firms that have received the biggest government bailouts.

Monsalvat

 

On Thursday with Gary & Anna we visited Monsalvat, located close to where I live in Eltham. Monsalvat is a sprawling mixture of buildings set on 12 acres in an idyllic setting. Artist and architect Justin Jorgensen together with a dedicated group of volunteers purchased the land in 1934 with a view to establishing an artist’s colony of painters, sculptors, poets and musicians. Building materials used were rescued from old beautiful buildings being demolished in Melbourne to make way for modernization, locally produced mud bricks, rammed earth, mud stone, bush timbers and slate flooring combined with beautifully crafted stained glass windows. The artists operated a dairy and a small farm so that the community was largely self sufficient.
Many of the descendants of the original community today inhabit the adjoining cottages as sculptor’s painters and musicians. The appearance resemembles a European Castle with its adjoining chapel and surrounded by artist’s residences; once stables and storehouses.
The picture is of Gary and myself outside the castle and below are other pictures of adjoining buildings.

Monsalvat