Sunday, December 21

gipsland holiday

Malacoutta and looking out from the jetty which was situated just below our unit.
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Gipsland holiday

We recently took a short holiday to the Gippsland Region in Victoria which is unique for its wilderness, rainforests, beaches, and rich farm land. We stopped off overnight at Bairnsdale, the western gateway to the Lakes and Wilderness region and then went on to stay at Gypsey Point which is only about 15km from the delightful small town of Mallacoota, built on one of the many inlets and home to a thriving abalone industry. The area is surrounded by national parks, with tall forests, ferns, cool clear waters, secluded beaches and quiet rivers. Our accommodation was set within what is a national park. The first picture was taken from the balcony of our unit and next is a picure of a kangaroo with baby joey whose family were frequent vistors. Fishing was obviously particually good as pelicans were in abundance and there was abundant bird life including flocks of rainbow lorikeets and galahs seen above feeding.
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Monday, December 8

IOU’s back in fashion.

California is the 8th largest ranking economy in the world and is about roughly the same size as Australia. I noticed its Governor Arnold Schwarzenegger recently warned about the likelihood of having to issue warrants (IOU’s) to temporarily satisfy amounts due to contractors for landscaping, carpet cleaning, construction and food services as cash reserves dwindle.

IOU’s were once popular measures to tide you over some difficult times but it then involved trifling amounts generally borrowed out of the Petty Cash tin. It reminds me of a time in the early eighties when I attended a conference is the south of England on behalf of my employer. Having a young family and lacking in financial resources I was delighted to be able to substitute one Business class air fare (because of the long journey) entitlement at no additional cost for 2 economy fares which enabled us to travel and enjoy a holiday afterwards. We found a suitable minder for our young children and left her with some initial money on the basis the balances would be settled when we returned.

But there must have been a misunderstanding since our minder tried valiantly to mange on that initial amount until such time it was realized the children were either going to starve to death or emergency funds would have to be sought; in this case a well orchested raid was made on the contents of the Petty Cash Tin at work. The children were all very relieved when we returned and I hurriedly made good the IOU in case my reputation, already tarnished as a ' skin flint’, become too firmly established.

The trip itself was one of the more memorable and as it turned out we did have a blissful holiday. I was rather busy beforehand and my preparation for the conference itself left a lot to be desired. Bear in mind at that time in the early eighties presentations were rather limited and even basics like power point presentations were unknown. So I was only armed with a hastily procured large map of Australia with few coloured pins for locations and butcher paper on which to scribble a few forlorn facts to my large audience. My concern was heightened to near panic when I was asked by the Communication Manager what technical assistance I needed. Some of the other presentations from other countries were stunning and I soon felt rather foolish. There was nothing left but to grin and bear it.

Fortunately I had heard a half decent joke about Aussies getting lost in a hotel the night before which provided an ideal opener and to my immense relief was greeted with hoots of laughter. I didn’t think many people would be so interested on the business side after that (I had been tipped off a few from the UK were interested in emigrating) and so I abandoned my previous presentation material and confined most of the session to vague discussions about Aussies, Ausssieland, business and all about the country in general combined with some questions and answers.
Nobody seemed to notice the presentation wasn’t about what it was supposed to be.

The rest of the stay was wonderful, scuttling around the south of England in a little Fiat I had borrowed from one of the UK divisions on the off touristy season whilst soaking up some of the best scenerary imaginable in a very pleasant autumn season.

Monday, December 1

More urgent land releases needed for Aussie market.

It was interesting to read an article today by Housing Industry Association‘s Chief Economist, Harley Dale which echoes my own thoughts about the need for more land release in Australia if we want to achieve desirable house price affordability. The conclusion reached by Dale for the Australian housing market is it cannot ultimately benefit from the current falling interest rates and a tripling of grants unless more land is released. The past evidence for this conclusion can be found in the compelling statistics which show a rapid increase in land values arising from restrictive land release polices and burgeoning planning delays.

Tomorrow I think we will see our Reserve Bank of Australia make another large interest cut and I am betting on a 100 basis rate cut to add cumulatively to the 200 basic points already announced which has benefited borrowers with corresponding lower home mortgage rates. Concurrent to these official rate cuts the Federal government doubled the first home owner grant paid to recipients for first time home buyers for any existing properties amounting to $14,000, and a tripling to $21,000 for first new home buyers. The cash incentives are part of the government’s $10.4 billion economic stimulus package underpinning a welcome jump in new houses of 6.7 per cent for October.

Harley Dale said “Both new home sales and building approvals fell sharply over the first nine months of 2008. It will be a long road back, but it is hoped that an improvement in new home sales in October could mark the beginning of a stabilization followed by improvement in leading housing indicators over 2009,” Harley Dale then said. “The unfortunate and avoidable caveat is that any housing recovery that emerges over 2009 will be constrained by a lack of readily available land, planning delays, and the excessive cost of state and local government taxation on new homes”

Personally I think the highest level of dissatisfaction must be reserved for successive administrations over our country areas which gave little thought to new land releases to encourage a much higher proportion of migrant (up to 150,000 to 180,000 people arrive each year largely made up of the skilled migrants) intake to settle in the country rather than our overcrowded cites by investing in infrastructure and incentives for planned land development with co ordinated business regionalization

Australia is one of the most highly urbanized countries in the world. This situation is not sustainable.

Conservatism has prevented us from implementing the bold new initiatives which would immediately make land more affordable by addressing the lack of supply and give sensible consideration to relief from excessive imposts. Hence both residential and rural land in Australia is over valued and subject to unwieldy beurocracies who impose unnecessary restrictions and impose revenue targeted imposts.

In the longer term subsidies for first home buyers will simply increase a demand for land without a corresponding increase in supply. Hence Federal initiatives in consultation with existing state governments and their local councils need to implement policies which the remove self imposed supply restraints, eliminate bureaucratic restrictions and reduce the tax imposts if we are to avoid future rapid real land price escalation.

If you restrict anything so it underlying supply can never meet an underlying demand then the inevitable consequence must be a rise in real prices due to the operation of the price mechanism. It is clear that this purely relates to the land cost as the actual cost of building material and labor has remained constant in real terms over the past 30 years.

I do not imply the desirability of unrestricted releases of large landholdings or that you even need to own it, (since you could lease it) but rather I am drawing attention to the fact that in Australia our long term lack of affordability for housing has as it’s nemesis the self imposed artificial supply restraint on land acquisition with its labyrinth of unnecessary restrictions and unrelated revenue generating imposts.

Tuesday, November 25

Australian market wrap

Against a backdrop of modest declining business profits, combined with a marked slowdown in global production and falling sales, economic forecasters are becoming more and more bearish and dire as each day passes. However as individuals and corporate save more, the slack in investment can be ameliorated to some degree by increased spending from reserves by the government sector on any number of very worthwhile investment projects which will have beneficial multiplier impact on their local communities. Hence it is in an excellent position to ensure large scale initiatives start to make some impact in countering the daily swag of negative thinking. The purpose of this posting is to examine the current state of play in the Australian economy and its effect on sentiment in our markets.

Risk of a housing price collapse

One identified risk relates to the relatively high level of private and consumer debt (linked to existing high house prices) and the adverse effects of a severe diminution or collapse in house prices on the solvency of our lending institutions. Lending by our instructions has for the most part been responsible and our defaulting provisions allow mortgagors in bankruptcy (unlike the USA where mortgagees are only linked to the property which was the subject of the mortgage) to pursue all defaulter assets in any recovery action. Hence mortgagees are much more likely to try and keep their homes during periods of economic hardship. Mortgages are also predominantly written on the basis of variable type interest rates which are currently declining rapidly. The risk of higher unemployment will cause concerns of course but there is also a severe shortage of housing stock supply which ensures any increase in stocks can comfortably remain below underlying sustainable demand.

It’s much more likely there is a softening in house prices in the order of say an annual decline of 5%. If that was to continue over the next 5-10 years it would be ideal (although unlikely) to ensure housing affordability was restored to more sensible sustainable levels.

Risk of a Business Lending collapse

The danger on the business front would be if banks shut off existing lending for investment projects to the extent such action might turn a recession into a depression. At the moment considerable press coverage is devoted to concerns about whether companies or individuals will continue to be financed. This is despite the fact our banks remain in good shape and are rated amongst the top in the world. The fear about lending being terminated or cut back is not borne out by any data or reported by any viable companies, but rather it is all about why it might happen.

Central bank governor Glenn Stevens summed it up well in a speech last Wednesday night in his relatively upbeat assessment of Australia's economic prospects ………….."Given that we have that scope, and given the underlying strengths of the economy, about the biggest mistake we could make would be to talk ourselves into unnecessary economic weakness,"

What’s causing our market downturn to mirror the USA?

Share markets in Australia continue to plunge. Australian shares have fallen nearly 50% from its peak last year without corresponding falls in profits. Many large Fund Managers see the nexus between reduced demand from the USA (confirmed to be in the middle of a very deep recession expected to last at least until the 3rd quarter of 2009) and the flow on effect to the Asian region including very adverse effects for Australia.

There seems little appreciation of the fact that in many of our service, manufacturing and exporting industries price contracts with customers are negotiated either on a yearly basis or even over several years and hence the dire predictions are simply not possible within the short periods anticipated. Asian economies such as Japan and Honk Kong are currently in recession whilst others are in decline which has not helped sentiment about the Australian economy.

Nevertheless I think it’s been just one factor amongst many that has caused Fund mangers outside Australian to dump Australian stock indiscriminately across the board. We represent only a small proportion of the total world market and hence it’s relatively easy for it to be oversold within a simplistic regional response to risk.

Listed below are other factors weighing against the Australia market.

Effect of an Aussie weakening dollar-The situation is also not helped by the weaker Aussie dollar, (historically it has always been linked to commodity prices and hence rises and falls with commodity price movements ) acting as a temporary catalyst to defer overseas investors investing in stocks here, until such time as the currency confidently stabilizes. Although we have seen commodity prices collapse the lower Aussie dollar also translates into much larger export receipts which offset what otherwise would translate into reduced export earnings.

Further reductions in interest rates- Australia will be further reducing our interest rates which puts a floor under any currency movement to the upside. This reduces buyer interest in our stock, fuelled by unsubstantiated fears of offsetting currency deterioration. If the currency was to temporarily reduce to below the rate of 60cents US than the Reserve Bank has already indicated its intention to become buyer until such time as it regains its value.

Inflation and the danger of stagflation -Our annual inflation was five per cent in the September quarter and will remain high because of our falling dollar which has reduced from a high of 98.49 US cents in mid-July to a 5 year low to around 62 to 64 US cents. Consequently this means lower fuel prices arising from the reduced cost of oil will not be fully passed on at the bowser price. Also that reduction will be offset by increased food and imported price rises as consequence of the exchange rate. Hence the danger for stagflation is zero.

In a nutshell the fall in the USA mirrors adverse economic developments whilst those same falls (in terms of magnitude) on the Australian market are largely anticipatory. The danger is what is anticipated may turn out to be a self fulfilling prophesies.

Margin selling –The market is also being held down by a surge in margin calls (Margin lending refers to loans to buy stock where the loan is not to exceed certain percentage of the current value of the stock – usually the loan is to be a maximum of 60/70%) in good quality stocks when there is insufficient confidence for the bargain hunters to enter the market and buy up those stocks at bargain basement prices. Paradoxically it is the better quality companies who have sustainable responsible operations which were subject to the initial margin lending proposals which perversely, by virtue if that strength now bear the brunt of indiscriminate forced selling.

So in conclusion I return to the statement by our Reserve bank governor, which I fully endorse ‘"Given that we have that scope, and given the underlying strengths of the economy, about the biggest mistake we could make would be to talk ourselves into unnecessary economic weakness,"

Notwithstanding I think (as a consequence of the recent considerable financial wealth destruction, combined with falls in commodity prices flowing from recessionary impacts in the USA, Europe and Asia ) it maybe difficult to avoid a very short recession in Australia but it need not be anywhere near as bad as is feared. In the meantime we could still see further weakness in our share market driven largely by anticipatory fears until there is a return of confidence and a return to uncommon common sense.

There is also an irrational view that successful businesses and sustainability depends upon continual growth for any prosperity, similar to that other equally perverse idea that you have to populate or you will perish. Nothing could be further from the truth.

If I have only learnt one thing in business it is this; success is not dependant upon size or growth or coups or cleverness but has more to do with being in the right place at the right time. When your not there your success is contingent on being able to hard peddle and adapt to both changing circumstances and the environment whilst understanding what your core competences are and how they are attractive to customers. In fact that has always been the case and in essence it is not that much different to nature which we attempt to mimic in many different subtle ways.

We are going through a deleveraging period to return us eventually to a more sustainable economic position which means we will be less reliant on credit and more on investing from a savings pool, not a borrowed one.

Within that context companies and individuals can prosper just as markets will finally mirror that prospect.

Tuesday, November 18


Joseph had the blessing of his father’s hands
Always at his loving side
Brothers jealously could not stay inside
Emotions were a rising tide

It was that fateful day, Joseph at play,
Lured him away and sold him on to slavery
To be at Pharaohs feet
Dipped his coat in wild animal blood
And lay at his weeping father’s feet

But with Pharaohs dream he did foretell
Released from his binding chains
To rule over all his lands and his stock
While shepherds tend their grazing flocks

It was that fateful day, Joseph at play,
Lured him away and sold him on to slavery
To be at Pharaohs feet
Dipped his coat in wild animal blood
And lay at his weeping father’s feet

Joseph’s graineries all overflowed
For the days were coming he foretold
When a mighty famine would grip the land
Nations will come, to beg at his feet

It was that fateful day, Joseph at play,
Lured him away and sold him on to slavery
To be at Pharaohs feet
Dipped his coat in wild animal blood
And lay at his weeping father’s feet

When his brothers came in mortal shame
To beg at their younger brother’s feet
He forgave them all and rejoiced
As they flourished in pharaohs promised land

It was that fateful day, Joseph at play,
Lured him away and sold him on to slavery
To be at Pharaohs feet
Dipped his coat in wild animal blood
And lay at his weeping father’s feet

His fathers joyful tears, like raindrops
Washed away all their fears
And to renew the human race

It was that fateful day, Joseph at play,
Lured him away and sold him on to slavery
To be at Pharaohs feet
Dipped his coat in wild animal blood
And lay at his weeping father’s feet

Thursday, November 13

oil pricing

At the present price of around $57 per barrel the oil price has fallen quicker than I would have anticipated which is due maybe to futures traders activities, or perhaps more likely to be a combination of weaker demand and speculative trading in oils non transparent traders market. A trader need only put down a very small amount and borrow the rest to create the highly leveraged position which can help either drive prices up or down.

I don’t believe speculators serve any useful purpose other than to profit by manipulating a market at the expense of normal supply and demand principles. In turn this makes sensible investment decisions virtually impossible which is much more damaging than most folk realize. I think we need to clamp down on these jokers instead of just blaming oil producer nations for high prices that may have nothing to do with them. Bear in mind also the current oil price is 60% below its long term inflation adjusted price.

In so far as the speculation is concerned I think even the hardest headed economists can no longer be in denial, they must now all freely admit to the huge price distortions that have permeated markets for some considerable time. The speculators had the added advantage that many were lulled into a false sense of certainty about the inevitability or rising oil prices. Many advocating the ‘peak oil theory’ confirmed authoritatively we had reached the so called tipping point (falling supply could no longer satisfy existing demand) so it was virtually impossible for prices to diminish. Well so much for the immeadiacey of that theory; it looks like the price has fallen by 67%. The speculators also knew that we don’t have the information about the worlds known reserves as most producer countries refuse to divulge them. We don’t even know what the stockpiles of oil are applicable except in the USA. Even so, personally, I think oil will increase in a few years.

But before investors are asked to fork out their hard earned money into alternative energy enterprises by way of direct investment in shares or governments concede substantial subsidies for consumer to pay higher utility costs for government funded alternatives they also need to make sensible estimates about the long term price of oil. Make a wrong guess and it will bankrupt many investments whose prospectuses are reliant on false assumptions or severely disadvantage consumers in some countries should oil be so much cheaper than what was estimated. Anyone betting on $35 a barrel?

A long time ago Allan Greenspan argued very strongly to congress against any form of regulation of derivatives trading for the relatively newly formed but growing insurance derivatives called credit default swaps. Hence the market for these insurance based derivitives were never transparent nor was it regulated.

If there is one golden rule that has since been learnt about markets during the current unprecedented turmoil it is the critical need for transparency and regulation in all markets, including oil.

Simply put the need to know what’s going on so as you give yourself the opportunity to intervene, (as undoubtedly you will need to do) and have needed to do in all of the so called free markets from time in memorial.

Sunday, November 9

What’s the long term price of oil?

In a matter of a few short few months as oil prices skyrocketed to peak at $150 a barrel, there was no shortage of expert analysis suggesting the world was on the cusp of the end of the oil age.

What was envisaged by many pundits was the world was to suffer from dwindling supplies and continue to be buffeted by price increases of the order of $200 to $250 barrel and beyond. At that time when I last revisited the ‘peak oil Theory” in my post in August this year I concluded there wasn’t enough empirical data available to reach any reliable conclusions, but if anything prices were likely to reduce to somewhere below the $100 per barrel in the shorter term although the overall peak oil theory remained creditable enough longer term.

But since then oil has tumbled to currently test $60 barrel, and may even fall as low as $50. Recessionary fears have had an effect but are insufficient in themselves to justify a 67% decline. Rather it has been the speculative investment in commodities, including oil,(seen as a hedge against inflation and a weak dollar) that caused both its rapid increase and subsequent collapse as commodities sunk. Hence the collapse of commodities precipitated an unwinding of these positions which accounted for most of the initial recent rapid price decrease just as its reverse impacted similarly on oils previous upward price spiral.

Oil is also not subject to the usual price mechanism, e.g. as prices rise supply will increase to meet the demand and as prices fall supply will decrease. That’s because many of the larger producer countries economies are so dependant upon oil incomes that they will continue to pump oil regardless of falling prices and may even accelerate production( with the exception of OPEC) during periods of declining prices to make up for the shortfall in income by increasing volume. Hence it can fall more than the fundmentals would suggest.

So it would seem we are now somewhere near its long term price (which is well below the long term rate of inflation) but it will decline in the short term as recessionary impacts further curtail demand

However when there is a sufficiently large enough rise in its price previously uneconomic fields become feasible and this is true for much of the heavy shale mining which is now prevalent in Canada.

Cart who has a particular inertest in Canada , having resided there recently, sent me this article - Ironically, As Price Per Barrel Drops, American Oil Supply From Canada Imperiled
which further highlights the intricate web of supply that make price predictions under the 'peak oil' theory problematic.

Thursday, October 30

Parish Musical Fun Night

We recently attended a parish Musical Fun Night which included questions from 14 tracks previously available for those attending. It was a great nights entertaining, complete with a succulent 4 course Slovenian cuisine by courtesy of our gracious hosts, one chef and an extroverted husband who created our night’s entertainment; MC/ Quizmaster/ Music master. Progressive scores were paraded throughout the night with prizes given out mixed with good cheer and boundless hilarity.
At a cost of $32 per person where would one go to have a 4 course meal, whilst having so much fun amongst good company? But from those modest contributions the night still raised over $600 to be spread equally among 3 of our very active parish groups, namely the Social Justice group, St Vincent’s de Paul and the Malawi Support Group.
The tracks from which the questions or suitable lines / imitations requested were taken from :
Octopus garden – The Beatles
When I’m 64-The Beatles
A Backstage Pass – Johnny Cash
The Battle of New Orleans – Johnny Horton
Cotton eyed Joe-The chieftains
Home Among the Gum Trees –John Williamson
The Little White Duck –Burl Ives
The Red Rose Café. The Fureys
What’s up –Beccy Cole
Happy Jack – The Who
Old dogs, Children & Watermelon Wine -Tom T Hall
Sultan of swing –Dire Straits
Penny Lane- The Beatles
Okie from Muskogee - Merle Haggard

Above are some photos of some of the happy folk.
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Monday, October 27

More Photos of our 50th year celebrations





More Photos of our 50th year celebration; singers in colourful garb and another once disrobed with musicians and producer, planting a commemorative tree and pictures drawn by the school children in the art competition.
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Sunday, October 19

Revelling in Religious Reminiscences

As part of our 50th year parish celebrations we staged a light hearted evening of catholic bingo and refreshments followed by a floor show. After the Bingo and suitably refreshed we all changed into appropriate colorful garb to sing all of the old hymns up to the present day interspersed with some jokes and lively banter.

An overhead power point presentation provided the words for most of the hyms so that the audience could join in.
One segment involved singing in Latin and during this segment I sang Panis Angelicas with my wife. The recording is rough, taken on the night from a digital camera and we both look rather comic in our overweight costumes but it does give you a flavor to the evening. Imagine 5 other singers in the same attire.

I’m afraid we are both getting too old to reliably remember all of it in Latin, so we had our music on hand for just this number.

You might think singing all of the old hymns and few modern extracts from religious musicals might be a tad boring but from all accounts everyone thoroughly enjoyed themselves.

Wednesday, October 15

Banking on the community

One thing is certain; things will never be the same. The model of Wall Street investment banking is no longer viable. None of the previous top 5 Investment Banks now exist, except Goldman Sachs which is now operates as a traditional bank within regulatory constraints. Whilst excessive compensation has not been eliminated its means has been curtailed since borrowing capacity has been reduced by 67% as average leverages reduce from 30 to 10, a principal driver in credit markets turmoil.

Future banking is now more of the old garden variety of taking deposits and lending them back at higher rate of interest, augmented by banking services.

Hence the successful model of the mutualised local bank, where local communities own the bank and lend locally can flourish in a similar way to the big banks whose global services will continue to service the larger populated areas. I see no reason why the mutualistion process for banks will not accelerate and particularly in the developing world such as China. Maybe as the Chinese economy is pausing for breath, due to the tightening of the government’s monetary policy, it might be well advised to consider alternative models available.

A good example in Australia of a viable alternative is the Bandito Bank which operates 350 branches, with over 220+ Community Bank branches, the latter 100% owned by each local community. These community banks pay modest fees for their infrastructure and systems support but take full responsibility for loan approvals and the integrity of all of the banking services.

How does it work?

Let’s say I am part of a community which is not serviced by one of the big banks and I have to drive to the nearest regional centre for banking requirements. After a meeting you find there are many people willing to invest the minimum of $1,000 each for a shareholding and a few willing to outlay say $10,000 which soon adds up to the requirement to raise say at least $ 300,000 for it to become a viable local bank.
The next step is to incorporate the Company, set up the facilities, recruits staff and soon you’re open for business.
The bank can undertake all of the traditional banking services using existing banking infrastructure but the owners (the community) take responsibility for its integrity and services.
It’s banking on the community.

The same principals apply to just about every activity where a service is required, the incorporated mutual venture can set up a secretariat or administarion and leverage from the infrastructure already created by the larger entities. It means like minded folk of modest means can prosper through local co operatives where they are not represented or poorly serviced by the larger institutions.

Monday, October 6

Where to next

Following on from my previous post, and, after noting approval of the $700 billion rescue package, the question arises ‘where to next?’ The Rescue package itself will not materially have any effect for several months and in the meantime gloomy economic news will dominate commentaries.

So we witness the NY stock exchange emulate a series of ‘dead cat bounces’ which are quickly soured by woeful economic news such as 159,000 jobs lost last month, capping off 9 consecutive monthly reductions.

The Government has also admitted the economy in the USA is in recession, evidenced by 760,000 jobs lost so far this year. Its contagion spreads to overseas markets captive to this continued gloomy sentiment and building in expectations of a severe downturn.

In fact in a sample of the 88 largest economies the USA is ranked 22nd in terms of market indices, ahead of countries like Australia whose economies remain resilient and well regulated according to the International Monetary Fund. But markets are driven by sentiment not logic and panic sellers build in future reserves of anticipated gloom and doom, to cause minor apoplexy over here since most retirement schemes for all workers are generally heavily market linked.

We continue to see markets and consumers rattled and worried about a run on the banks simultaneously in many different countries. I notice Germanys Finance Minister Peer Steinbrueck has announced an unlimited guarantee for all personal savings and checking accounts. It was designed to win back confidence as the global financial crisis spreads and equates to about $1 trillion. A moral hazard? bear in mind that perhaps in that country it was too much of a reminder of those similiar events of the great depression; run on the banks and unrest that enabled the Nazis to come to power.

Hopefully all of this interventionist’s actions should help avoid past mistakes such as what happened to Japan in the 1990’s. Japan's reckless lending during the eighties led to the Asian crises but its Ministry of Finance failed to intervene. Many thought its banking system was insolvent, but the Banks refused to acknowledge their portfolio of non performing loans and write off the bad debts. What followed was an unnecessarily long period of vicious stagflation, which saw a 3 fold increase in unemployment and misery with property prices reduced by 70%, until it finally recovered a few years ago.

What can be done?

There is no short term fix but I think sensible measures could see a gradual improvement to avoid a fully blown deep recession. The curent crisis provides a catalyst for a systemic change to a better regulated and transparent financial services section, rejected by either political party over prior decades.

What is currently plaguing the system is the scarcity of credit as world wide deleveraging unhinges the ability to continue to trade on the diminished capital base. Overnight facilities, which are the only facilities available to many, are rolled over each day to have a destabilizing effect combined with severe illiquidity as others hoard previouly available cash in the climate of fear.

The $ 700 billion rescue package will help alleviate this unstable situation gradually and help secure more long term facilities underwritten by the improved Balance sheets once the toxic debt is removed. The amount of debt removed should 3/4 times the original value, since the securities to be disposed of through the reverse auction system will be at a fraction of their original value. Bear in mind the same amount has already been written off

So in total in round figures you are eliminating about 6 trillion in value. No small beer!! although this still only represents a fraction of world liabilities. However we should not include derivatives which have a zero sum outcome, (a buyer and seller of an outcome attaching to a security which cancel out to zero if they were simultaneously collapsed) in assessing the extent of these liabilities.

What does remain however is a diminished capital base to undertake the herculean task ahead and hence more help will be required from Central banks and from holders of cash and government securities to invest.

Although Central Banks throughout the world have given the impression they are improving liquidity by increasing the total money supply, official figures indicate this is clearly not the case. The reason they have not acted is out of fear such action will ignite inflation, particularly with loose worldwide monetary policy represented by average inflation of 5.5% versus official interest rates average at 4.5%.

However with weaker demand and a recent hefty fall in commodity prices including oil I think there is ample scope for further easing and injection of much needed liquidity, to coincide with reduced world wide inflation. The easing will mainly be at the behest of those economies outside the USA, to additionally include accelerated technological transfers of expertise to improve employment prospects.

What I also think needs to be done is a further reduction in interest costs to ease the burden with taxpayers on mortgages and on commercial loans. This will be appreciably easier as the inflationary outlook becomes more benign. The spreads that currently exist between the borrowing cost of Freddie and Fannie (Government treasuries and mortgage rates) give ample scope for reduction in interest rates.

So far this year there have been over 2 million foreclosures so it makes sense for these service providers on behalf if their security owners to be more flexible and proactive. Significant progress over and above the 400 000 targeted for help should be possible.

The rebuilding of the USA capital base will require infusion from overseas. This will not happen until Investors are convinced of a more transparent and improved regulatory system. Nether party has announced what it will involve, other than talk about the need for an improved single regulatory authority. Once this happens overseas investors I think will be persuaded to part with their equally hard earn money to invest in the USA.
It should be welcomed as it will add stability and diversity.

Finally from a political point of view there is a need to harmonize respective economic policies between countries, an urgent requirement for the incoming incumbent to the white house.

We are one global village; one that is currently devastated by a tidal wave of worries but can refloated with agreed sensible policies and to avoid the mastakes of the past.

The USA as the world largest economy, with 25 % of worlds trade needs to work with its partners to regulatory reforms and improved economic ties as priority for its hard working citizens and those who are equally affected overseas if we are to avoid a deep recession.

Thursday, October 2

Restoring confidence

The $US300 billion government sponsored program has just kicked off in the USA; swapping current housing loans for more affordable ones.
Lenders have an option to take a loss on the initial loan and accept a new insured loan as effective payment in full for previous indebtedness.

E.g 1. Authorizes FHA to insure up to $300 billion of fixed 30 year refinanced loans up to a max of 90% of current assessed value for those borrowers in arrears from October 1 up to September 2011.

2. Existing mortgage holders take the proceeds of the insured loan in payment in full of all pre-existing indebtedness.

This 3 year legislated program seeks to assist 400,000 households who have negative equity; whose indebtedness exceeds house valuation.

It makes sense but is it too little too late?

This fiasco has created a different structure. In the past the traditional lender and householder would have worked together to avoid foreclosure to renegotiate a compromise or accommodating reset.

But the bundled mortgages transferring ownership to unrelated parties left loan servicing arrangements with trustee companies. So far these service providers appear to be lagging in their efforts and in the early days adopted the role as disinterested reactive foreclosure processors.

Here are some extracts from the State Foreclosure Prevention Working Group (a group of state attorneys general and state banking regulators working to prevent home foreclosures) recent 3rd report in relation to this aspect.

“Too many homeowners face foreclosure without receiving any meaningful assistance by their mortgage servicer, a reality that is growing worse rather than better, as the number of delinquent loans, prime and subprime, increases.”

“While some progress has been made in preventing foreclosures, the empirical evidence is profoundly disappointing.”
“Servicers appear to have reached the ‘low-hanging fruit’ of subprime loans facing interest rate resets, while not developing effective approaches to address the bulk of subprime loans which are in default before interest rate resets,” the report said.

“Based on the rising number of delinquent prime loans and projected numbers of payment option ARM loans facing reset over the next two years, we fear that continued reactive approaches will lead to another wave of unnecessary and preventable foreclosures.”

Are they now preventable?

The Securities of parcels of some of those bundled mortgages are being sold for as little as 5 to 25 cents in the dollar. It’s a lot cheaper to offer another loan at an affordable rate to the householder currently in arrears and write off the current indebtedness and illusionary higher future interest rates. You also avoid the subsequent costs of foreclosure and dislocation.

Apart from that a proactive approach is essential to help contain its consequences and engender confidence. Bite the bullet and employ more people to get a better handle on it!

I think the government owned Freddie and Fanny also need to reduce interest rates on mortgages (very small reductions have already happened) to stimulate demand which will also help get a hold on the plummeting house prices.

Thursday, September 25

Money go round

Obama has made a plea for bipartisan support for the passing of the current $800 billion package being debated before congress providing it includes 4 key points.

An overseeing independent board.

Taxpayers are to be treated like Investors-(This would be relatively simple by the issues of non voting warrants).

Additional measures to help those facing current foreclosures

Reward packages eliminated for those CEOs previously involved in the failed companies.

I notice Bill Clinton is currently doing the celebrity rounds and I listened to him the other night on the Letterman late show. He is more or less saying the same thing; to support the package and add those bells and whistles.

The question of those outrageous remuneration packages reminds me of the lectures we got from Management Recruiters who told us if we only pay peanuts we will get monkeys. It hasn't worked very well has it !! Still I have to admit those Wall Street guys were very clever to successfully export so much of their misery all over the world; sizable portions of AAA rated contagious toxic debt to so many eager buyers overseas.

But that reminds me of the fact many Americans don’t seem to fully appreciate it’s caused such severe indigestion overseas, to individual investors and provided the fuel for a possible severe world wide recession. This has meant both the Fed and its counterparts represented by central banks in Australia, Denmark, Norway and Sweden have had to set up additional currency exchange funding to provide a buffer to current pressures.

The other point that is not well understood is the likely eventual cost of this bail out. What is it? A trillion. – NO – It is very likely that it won’t cost anything at all since you can buy up most of these packaged impaired assets for a pittance, and eventually you’re likely to make squillins in the next 3- 4 years. This was clearly evident in aspects of the Savings and Loans crisis.

So why can’t the private sector do that ?
Fear!! Those who could and are sitting on mountainous piles of money don’t want to risk it. For instance Buffet finds it easier to take a stake in Goldman- this complements and fits in with Berkshire's profile - with assets of around $US278 billion including significant stakes in companies such as Wells Fargo & Co, American Express and the Washington Post Co. Foreigners are also becoming choosey

Don’t forget your overall debt is 375 % of GDP (the highest level ever as percentage) so there are limits (outside of government) with much to spare. !

It always been that markets overshoot on the way down and the reverse on the upside. That’s why you need regulation!! Hand on regulation that can pull the levers when they are needed, hardly a novel approach but one sadly lacking in the past. It’s also hard to spot a better opportunity for permanently changing the current regulatory system for the better and making it more transparent.

Sunday, September 14

Precious Water

Australia is a highly urbanized country with a concentration of population residing along its eastern seaboard, as over 80 per cent live on a mere slither (just 1%) of the countries land mass. The outback and country areas in contrast are sparsely occupied, representative of vast grain growing areas and cattle, sheep and dairy farms interspersed with mining pockets. Australia once depended for its prosperity on the wool clip but this is no longer true, athough it remains the world largest supplier of wool. Beef farming ( relying mainly on natural pastures) is also big business indicatve of very large spreads. Anna Creek cattle station in South Australia for instance occupies a land area of 24,000 sq kilometers, (representing the largest cattle station in the world) which is the equivalent to that land area of Belgium.

The country landscape is extremely fragile and one of the driest on planet earth; continually plagued by drought whose frequency is accelerating. It is hardly surprising our river systems are all in dire need of more water and at a crisis point due to continual irrigation.

Our pioneers were blissfully unaware of the consequences of their actions; reshaping the landscape in the shadow of ill conceived British farming practices with extensive tree felling and overgrazing of sheep and cattle combined with extensive large scale irrigation in arid areas. Although most Farmers have largely reversed this unsustainable trend to become staunch conservationists under the auspices of the land care groups water use remains a vexing question.

Irrigation has not only deprived our river systems of vital water supply but raised the water table to the extent we now have miles and miles of desolate, salt filled land with pools of salt water rendering land unusable. Similar outcomes are prevalent in parts of the USA, Egypt, Iraq and Pakistan, all effected by salination. The worst effected area is our largest river system, the Murray which flows along the eastern side of South Australia, New South Wales and Victoria borders. Irrigation from the Murray sustains this region which produces over 40% of Australia’s fresh fruit and vegetables, but at a terrible cost to the river and its eco system. Irrigation water drawn from the Murray( which represents over 85% of all irrigation in Australia ) has resulted in so little water remaining in the once mighty river its flow was insufficient to carry any fresh water into the ocean. This environmental position for the river if allowed to continue will have a devastating affect on its biology, eliminating most species who are dependant upon the oceans flushing effect near its mouth.

Australia needs to face the reality we are a more suited to dry farming (reliance on rainfall) which applies to most areas which necessitates a sensible plan of transition with adequate compensation to irrigation farmers such as the acquisition of properties at fair market value. Several large scale acquisitions of properties with water licenses to irrigate are under consideration but much more needs to be done. This will involve ongoing negotiation, goodwill and planning at state and federal levels of government. It will require substantial change to lifestyles and less agricultural output but the alternative are not sustainable and the longer we leave it the more painful will be the later adjustment necessary.

I am also not in favour of the current desalination plants under construction or in the diversion of water previously available for farmers to our cities.

The above photos depict local scenes of the Yarra River and nearby; of river banks resplendent of early wattle blossoms to disguise our rivers desperate need for more water flow.
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Friday, August 29

Ntandire Church/Hall takes shape from within

The Ntandire commmunity has made great progress by installing seating and glass in all of the windows. They have also purchased more land and erected outside toilets. In their discussions they have proposed the name of the church to be ‘Our Lady Help of Christians’ which will coincide with the name of our parish.

Their hope is to invite the Bishop to bless the Church next year 2009.
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Friday, August 22

Unfinished Superannuation Business

One of the more colorful of Australia’s politicians was Paul Keating; Treasurer for Australia in the 1980’s who went on to become Prime Minister. Keating was quick witted, one not to mince words, irreverent but unusually dedicated. He publically admitted his lack of economics knowledge when first he became Treasurer and in those early days often looked rather bleary eyed and tired, from all night and early morning sessions poring over the latest treasury forecasts.

Personally I always thought he was a very clear thinker and one of the very few politicians whose communications were fluid and smooth; devoid of the usual irritating ums and arrs or awkward pregnant pauses. He was recently interviewed by Kerry O’Brian of the ABC and if you read the transcript I think you will be surprised by that same style. Click here to read the transcript.

Keating instituted many economic reforms; more so than anyone before or after him as he unshackled our labour and banking practices strangled in regulations and allowed the Australian dollar to float. But his most significant reform was to establish a universal superannuation scheme.

Keating’s grand vision was to encourage every citizen to save for retirement, and in the process create a huge pool of investment capital to enrich the nation. At that time superannuation existed for only about 50 % of the workforce and the remainder relied on somewhat meager government payments of the old age pension. Keating’s idea was the aged pension would become increasingly irrelevant as it was quickly superseded by universal superannuation. His vision was that every citizen would have a post retirement income equivalent to preretirement, paid for from a pension out of each persons superannuation account.

It began with the employer paying in a compulsory 4 %( initially Government funded) for all workers and eventually the minimum guaranteed percentage rose to 9%. Many people personally paid in another 5% or even matched the 9% contribution.

It was Keating’s intention to legislate for the 9 % to be increased to 15% but such intentions was denied after he lost the 1996 federal election and subsequently the elected Liberal Coalition showed no interest in increasing the percentage. Actuarially over a working lifetime, assuming just 15% and investing to give real rates of return you will finish up with sufficient funds to accomplish the goal of self funded retirees.

Superannuation remains unfinished business which hopefully will be rectified by the Rudd Government.

Sunday, August 10

Peak Oil

The rapid increase in the oil price to US $150 a barrel and its decline to around $115 has caused me to ponder the peak oil theory.

Peak oil describes the point in time when oil production declines. Peak oil theory assumes demand will outstrip supply as future deposits become increasingly costly to extract, ensuring price escalation and an end to oil dependant economies with catastrophic results. Nobody can tell reliably when that will happen but a groundswell of current opinion suggests it is either already upon us or it is immanent. It is an undeniable fact that reduced oil use, particularly in agriculture and most types of transport require huge societal shifts to sustainable limited alternatives. Alternative technology is far from encouraging. Man made fuels such as ethanol, derived from plants or diesel from coal only partially cover the gap and are much more expensive. There is no viable alternative other than to drastically curtail our use of oil, with less dependence on transport requiring communities to become more self sufficient.

But is the peak oil theory creditable? Are we at the end of what was a brief period of time known as the oil age?

In the past we have encountered similar sharp price increases in the 1970’s when OPEC curtailed production, in 1981 when Iraq was at war with Iran, and in 1991 during the gulf war. This time proponents of the peak oil theory say it’s a different scenario because our reserves have been in decline and new fields will be increasingly costly.

We cannot change geology.

Oil and gas will become increasingly expensive to extract from dwindling reserves. It seems creditable enough to believe we have reached this point in the cycle where oil prices can only escalate rapidly.

Although the statistics available are notoriously unreliable there is however a consistent trend in aggregated world reserves to show a small net increase, cementing a continuing trend of the oil industry each year to find more oil then it produces. In other words the net effect of new discoveries of economically feasible oil fields and assessment of the life of existing reserves of what’s left in the ground showed an incremental increase over previous years, in line with a positive continuing trend. The proponents of the peak oil theory argue some countries like Saudi Arabia deliberately lie about their level of reserves, overstating the figures to justify pumping more oil. But their motivation for doing this is at odds with their investment plans, as they implement large scale infrastructure spending. Why spend vast sums of money to increase your capacity if your reserves are running out!!

Herein then lies the confusion, assuming there is a fudging of figures than the theory remains creditable, if not we have limited time to adjust. And if the latter be correct than the price of oil will actually fall back to somewhere at around $100 per barrel, or even below within a year, assuming countries don’t simply turn off the pump and also barring another War or a cataclysmic event.

What of the future? No one knows!

Maybe there is a window of opportunity over the next 30 years to finally make some headway in reducing our reliance on oil, time for consumers to adjust. Already the recent spike has given a boost towards a more sustainable pollutant free lifestyle.

Thursday, July 31

Trying to explain the inexplicable

Cart has expressed surprise in his recent post as to the closeness in the current campaign in the USA thinking its puzzling why Obama wouldn’t be a runaway leader given the state of the USA economy. I agree with his sentiments. Here is my take on maybe why it is so evenly matched; in the form of snippets from a purely imaginary campaign speech I have written for McCain as if I was to try and imagine I was campaigning for him. It’s not my personal sentiment in any way and you also may not also agree with its substance or tone, but let’s know what you think or your reason why you think it’s a close match. The speech was compiled having regard for the various quotes and responses recently made by McCain and a certain other inferences I have made.

An imaginary campaign speech

If elected I intend to work closely and cooperatively with the best possible talent available. I will consult with such people as Al Gore on climate change initiatives and work closely with Nancy Pelosi, a woman whom I have come to greatly admire. If elected I look forward to working alongside her.
You won’t ever hear me glorifying war. I am only too familiar with its untold suffering and terrible consequences. Survivors all mourn their fallen comrades. If I was to become the Commander in chief my past experience presents a sober reminder to be thoughtful yet resilient in determining the defense strategy in consultation with our able commanders of the armed forces. Our guard have performed at a level not seen since world War 2 but I can tell you there only one thing worse than suffering from being overstretched and highly stressed in the military and that's if you’re a defeated military.
I can also promise to never putt up income taxes. Already however, I have angered some of my supporters by announcing a policy which will top up revenue from payroll taxes. Those industries that need help can always come and knock on my door but if I’m going to continue to support industry it’s only fair they contribute their fair share. That may upset some but I want to confirm to you I am not captive to any particular ideology.
I don’t rely on wordy grandiose speeches either but rather I can assure you there is no ambiguity about my policies. Let me be clear that I will not be putting up income axes, I will fix the oil price within a decade, and you can relax in the knowledge that we will respond to all of the climatic challenges. The budget deficit will be balanced in the next decade having regard to my economic growth orientated policies.

I admire people for what they do and not for what party they represent. Al Gores will be someone I will have a close working relationship with should you give me the privilege of the presidencey .My policies will mean the USA will be totally self sufficient in energy requirements within this decade! Al tells me this entirely feasible. My policies are down to earth and easily understandable; accelerated investment in many alternative energy sources and increased exploration for the tradition energy sources. I once put my life on the line for my country and I’m willing to be of service again; with the benefit of a lifetime of experience at your command.

Sunday, July 27

Checkered Shirts and Urban Skirts

My youngest daughter Rachael is performing at a gig which she has entitled “Checkered Shirts and Urban Skirts -a night celebrating the crossroads of country, blues, roots and folk music.” which is her concept and also a very good excuse to wear her fancy shmancy checkered shirts from Texas.

If you want to hear any of her music click here and then click on to any of her songs or to hear another of the bands 'The Stillsons' at

Wednesday, July 16

What’s going on in the USA?

There seems to be much confusion over what’s going on in relation to the so called credit crunch and the continued fall out of major financial institutions.

The position was much more serious than was initially thought with the amount of debt involved and over reliance on credit reaching mind boggling proportions. The last time you had a similar scenario was in the seventies, which coincincided with the last oil spike which sent economies like the USA into a tailspin.

But then the USA was a net creditor to the rest of the world, not the largest Debtor as currently exists, so this time it’s much worse. No country has ever borrowed its way into prosperity and simultaneously allowed its currency to depreciate as is occurring with the USA dollar.

So I can’t see how the dollar will ever recover should the USA continue to keep borrowing ever larger amounts which in turn means overseas creditors are attempting to avoid the currency and invest in commodities.

I watched the presentations to congress on TV early this morning (our time) with Ben Bernanke and I thought he sounded and looked uncomfortable at times.

I think the only way forward is to ensure the USA dollar reverses the cumulative depreciation and begins to appreciate. The only way to do that is stop borrowing, which means you undertake the herculean task of returning the budget into surplus and ensure the trade cycle (the net trade position with the rest of the world) also begins to turn positive.

No small order.

It will take a very long time, but it needs to be the policy aim, debated and hopefully understood as good policy, as common sense which will give much needed hope for a future generation. The current mix is not sustainable. The debate about how Freddie and Fannie and 96 over extended regional banks should be supported is important but it’s coincidental to the main game.

Longer term what is needed are clear goals which are easily undestood by everyone.

Translating that policy into a stronger dollar will involve continued high levels of distress as a consequence of reduced spending combined with inevitable higher interest rates.

The USA still has some great assets, not least of which is its people but I think they need to hear the painful truth of what’s needed to turn the ship around and head in the right direction. Progress I think can only begin with a stronger dollar and much less reliance on credit and spending. That will also help substantially reduce the oil price.

Friday, July 11

The Victorian Photo Album

My wife belongs to a writing group which publish their collective stories.
Below is her recent story from the groups recent Authology.

The Victorian Photo Album

The Victorian Photo Album sat among a row of other albums of various shapes and sizes. These precious possessions held a passing parade of family images; a visual reminder of faded special events. It was a loving Christmas gift from her parents some years ago. She puts the duster aside, takes it down from the shelf running her fingers over the burgundy grosgrain fabric binding. Her eyes wander over the posy of antique flowers printed on the marbled, emerald green and burgundy cover; a reproduction of a long gone era. The forward on the first page reminds an observer of the stiff, formal, sepia presentation of photos of our ancestors, unlike the technological advances of the present day. Each cardboard page has either a small oval or round-cornered, oblong, single cut out section with small slits to enable a special photo to be slipped into place. Each one is surrounded by a spray of flowers: briar roses, pansies, daffodils, hibiscus or passion flowers. These floral arrangements highlight each special print.

As she turns the pages she wades back through a sea of memories. There is her eldest daughter posing for a school photo. She wishes she had written the date on the back. Now she can only guess. Perhaps it was first grade; it was certainly wintertime, as the heavy, box-pleated, woollen uniform implies. She remembers wondering at the time what her first born would be when she grew up. There she is again on the opposite page; all grown up celebrating her twenty-first birthday. Then she was nearing the end of a University Degree in Commerce. How confident she looks as she thanks her friends for attending this special event even though some had ‘sent her up’ earlier, mimicking many of her bad habits. How well they knew her. This photo is surrounded by daffodils; Spring flowers for a blossoming womanhood.

Another turn reveals her second daughter’s prep photo in a similar pose, pen in hand ready for school work. There was that familiar, shy tilt of the head which has disappeared in her twenty-first photo opposite, where she was ready to join her family and friends at a local restaurant. The hibiscus spray of muted autumn tones complements her floral skirt of similar hues. The brown, suede, beret sitting at just the right angle demonstrates her tasteful fashion sense which was always evident even during her student teaching rounds.

Over the page a young debutant smiles up at her, or so it seems. ‘All that shopping around from salon to salons paid dividends’, she muses. Her baby is all grown up and looks beautiful in the pearl satin, medieval look, gown. The wrist length lace gloves were not a popular addition. How things change from age to age! She caught her by surprise when she expressed her wish to make her debut. She should have known that her natural ability to appreciate and move to music would be motivation enough. The social aspect of the whole process did not go unnoticed either.

The small oval space opposite lies empty. ‘Life must have intervened, distracting me from the completion of the album or perhaps her young school photo is in another album. I must hunt it out and complete the original idea,’ she decides. Over the page is her daughter again with her proud father. They are surrounded by antique roses, a fitting finish for a debutante. ‘Oh! That tie he is wearing is still hanging in our cupboard and has not been worn for years. I really need to do some spring cleaning and have him update his wardrobe,’ she promises herself.

She pauses again at the final photo remembering her parent’s 40th Wedding Anniversary. They are standing outside Mishe’s of Balmoral after a delicious seafood meal with all their family. What better place to celebrate this special event; they met at a surf club dance and spent a great deal of time at the beach. The turquoise ocean background fades to a silvery blue as the tide laps over the creamy shore. June’s late afternoon sunlight spreads across her father’s face leaving her mother partly in shadow. They are casually dressed; her father in a pumpkin coloured jumper and light brown trousers and her mother in a sage wool dress, pink-mauve cardigan and matching scarf. They have always had an eye for fashion and that day was no exception. She remembers placing their photo in the wreath of passion flowers. Yes, an appropriate choice.

Suddenly she realizes that her parents are the same age then as she is now. Back then she could not imagine what she would be like at sixty-one. Then, she was a thirty-eight year old, full time, stay at home mother, ferrying her three daughters to various activities, at the same time rehearsing with her husband for their Parish Reviews. She can’t help but compare their lives: similar in some ways but very different in others. Her parents were married in 1945 in a small room at the side of the altar of a Catholic church. Mixed marriages were only just tolerated then and could not be celebrated in the church proper. When she married though, things had changed a little. They took their vows in front of the altar but her husband could not take communion even though he was able to in his own Anglican church. He received a blessing instead which seemed to her a contradiction. The church has mellowed somewhat since then, allowing girls to serve at the altar and men and women to give out communion but stands fast against other issues such as married priests, women priests and non-Catholics not able to receive communion.

Her parents moved into their new home five years after their marriage in what was then the outskirts of Sydney. They raised three children, two girls and a boy. Her mother was a stay at home mother which was the norm for that time. Her father worked sometimes three jobs in their early married life and they were heavily involved in their children’s sporting activities. Her mother gained her driving license in her forties and re-entered the work force when her youngest son was in high school. On the other hand, she passed her driving test early into her first pregnancy much later than her younger sister. Two car accidents while traveling as a passenger had destroyed her confidence but necessity forced her to face her fears. Her first home after she married, fifteen minutes further south from her parents was only serviced by a bus to the shops or railway station making it impossible to lift her heavy pram up the steps without a great deal of effort. The bus driver would not help either. That was not part of his service. She remembers her mother traveling by bus with three children and the weekly shopping struggling on and off the bus. She was made of sterner stuff.

The last space in the album is empty; a perfect place for her 40th wedding anniversary photo next year. Tears moisten her eyelids as she closes the album, turns it over and gently runs her fingers over the smooth surface. Why the tears she wonders? Perhaps it‘s grieving for things past. ‘This is foolish for we cannot go back’, she scolds, No! They are happy tears. Now she has four beautiful grandchildren to create a sequel to these precious memories. Wiping away the tears, she replaces the album in its place on the shelf, dusts it off one more time and begins to think about preparing the evening meal as she continues with her chores.

Friday, July 4

Trust is in the Eyes of a Killer Whale

Tom returned each year to Eden (located on the south coast of Australia) as part of a Killer whale pod who hunted wales with the resident Homo sapiens.

The arrangement was that the pod herded migratory whales into the bay, blocking off escape routes and chased them around until they were exhaustered. They then swam in close to shore and the whaling station, thrashing the water with their tales to signal to the whalers it was now the time to man their whale boats and harpoon and harvest the whales. The pod in turn was rewarded with the tongues (of no use to the whalers)which can weigh up to 4 tonnes and the lips as their share of the spoils.

No one was aware how this unique and brutal partnership began at this exact location but it is likely the aboriginals formed a bond before the whalers adapted to this routine.

Both parties witnessed and shared in the tragedies of the sea, and one such event occurred when a fearless young man had decided to take all of his family out to sea one fine day, boasting he was an expert seaman; unheeding wise advice to stay within the confines of the bay.

A sudden unexpected squall capsized his small boat and all of the family tragically drowned in the heavy seas. All of the bodies were recovered by the distressed community except for the father.

Tom knew where his body had lodged,firmly wedged underneath a rock with an entanglement of sea weed, but despite his best efforts of continually circling the area for several days his message was not understood. Joining up with the pod they decided to all swim around in circles for days until it was rather too obvious even to the most casual of observers what they were indicating. His body was recovered and it was decided on a burial service at sea, with the Killers.

But just as the trust strengthened, tragic events were about to tear it apart forever.

Tom and the whales sometimes were prone to become overly enthusiastic chasing the whales around the bay and losing concentration at times becoming temporally beached in the shallower water. On one such occasion a stranger,observing the stranded killer whale rushed into the water with his gun and shot it dead.

Before the local community of whalers realized what had happened the stranger had fled as the traumatized whales hastily left the bay, never to resume their migratory return. Tom and some of the other whales however did return as they had recognized the man as a stranger unconnected to the community of whalers.

The final betrayal of trust concerned Tom.

There had been change in the captaincy of the boat and the captain decided not to cut out the tongue and lips for Tom on that fateful day before hauling the smaller( larger ones were usuually left for several days)carcass ashore. One of the old time crew said to the captain “Tom is not going to like that, he’s likely to turn nasty and I don’t blame him! “.

But no amount of persuasion would change the skippers mind. So as he gave the order to the crewman who reluctantly headed for home.

But Tom had the rope in his mouth and was intent on pulling the boat back out to where the whale had previously lay dead in the water. There was an almighty jerk, as if a hand had reached out in fury and shook the boat in rage.

A tug of war ensued, the skipper was not going to be dictated to by a mere killer whale, so he ordered full throttle ahead until it all ended when they witnessed an amazing sight. The rope had apparently caught around one of Tom’s teeth which finally gave way as they witnessed its dislodgment and saw it sink to the sea bed.

Tom swam away in humiliated defeat.

Tragically the tooth cavity became infected with an obsess, and, unable to hunt, Tom died of starvation. His was washed up on the forshaw and it was decided to preserve his body and his skeleton which today can be seen at the maritime museum.

The missing tooth is evident and even the jaw has markings that are the same size as that of the roap and harpoon lines that entwined his mighty mouth so long ago when he become imprisoned within the bowels of the cruel sea.

That is what I think may have happened but there are many slightly different versions of this fascinating partnership.

Sunday, June 22

Opera in the schools

A group of 4 schools in Sydney are collaborating to produce an opera; completely dependant upon the students themselves. To produce the libretto, musical score, sets, staging and choreography under the guidance of their school musical teacher. Apparently many of the students had never even seen an opera before, and decided to see La Boehme to give them idea of what it is all about. I think this is a wonderful opportunity for students to discover many new dimensions in creativity they would not otherwise experience.

It also reminded me of two instances many years ago proving how easily things can go wrong even in the most professional opera companies. One instance concerned the use of Great Danes who were fitted with shaggy mains around their necks to make them look like lions. They looked magnificent. It was decided to save time there would be no need for them to join in on the dress rehearsal since all that was required was for them to be led out onto the stage at the required time. Alas on opening night when the dogs were on stage and heard the high music they all simultaneously began howling at the top of their voices; there was no alternative other than to lead the dogs off and close the curtain much to the amusement of the audience l

The second instance concerned a rather nervous soprano making her debut who was unduly concerned about a high note in her aria. This particular production called for stage extra’s who acted as spear carrying warriors under threat they would be sacked by the Producer unless they followed implicitly the directions of the prompt (The prompt sits below the stage and cannot be seen by the audience) who had been given the job of directing them into their required positions on stage.
When the soprano began her Aria the men had already entered the stage and as she continued she fluffed her top “C”. It wasn’t anything so terrible, but the Prompt grimaced and held his hands over his ears in sympathy, to which all of the spear carrying warriors acted simultaneously to the merriment of the audience. The soprano thought they were all laughing at her and tore off the stage in tears, the curtain came down with an ominous thud and after a short interval the opera recommenced. The show must go on!

Thursday, June 12

Office Scene

The modern office has been transformed because of what’s been invented in the past 40 plus years.

Personal computers, personal phones,the Internet,voice and e mail and even fax facilities which are now taken for granted simply didn’t exist then. Usually there was only a number of shared telephones and communication and storage of information was only a tiny fraction of what it is today.

Communication was largely by a hand typed letter which was reliant on the typing pool or if you were a boss via your personal secretary who took shorthand. Hand written notes were commonplace, even in official communication with external parties and most systems relied on manual input efforts or at best were mechanized inputs using accounting machines to record transactions onto hard copy individual ledger records.

Other aspects of office life that have almost disappeared include the beloved Tea Ladies, the ritual of formal morning and afternoon tea breaks, official sing on and sign off books, lunchtime interoffice sporting competitions,lunchtime card playing and the Friday afternoon office lunches.

When I was first began my working life I was also studying of an evening, for seven long years. Having left my home in the country for the city and residing in a not so flash boarding house, I often arrived late for work in a crumpled mess during my earlier disorganised years.

Ode to an old office scene

Drab and grey buildings greet your dreary day
Cold and unfriendly, they reflect our modern way
Murmurs of distant voices, dim echoes from my past
Sign the dreaded time book before your time is passed

There’s a murmur of a fact that cannot be denied
Lindsay’s train is late again, the boss is not surprised
Stagers in, faces grim, casual fashion one might guess
Forgot to iron his trousers and shirts a crumpled mess

He settles into work, to check the ledger cards
The system is manual; a checkers life's not hard
Tea break is upon him, tea lady says gidday
Not afraid to tell you, office secrets every day

Lunchtime is a signal for people great or small
Assemble at the front desk to represent us all
Teams are chosen wisely, football teams a must
Victors or Vanquished, return to slaps or cheers or hugs

Card players are a serious lot, there is no idle chatter
Game is called 500 and the rules are all that matter
For woe behold the new recruit to join the old brigade
To trump his partner's trump, can it ever be the same
Hangs his head in sorrow, prays to learn to play the game

The afternoon drags slowly on; the output's just a trickle
Soon all the work is done as we hear the knock off whistle
We stand in line in time to sign, our work is truly ended
Goodbye my friend, nostalgia time, that time I fear is ended

Sunday, June 1

The Psalms -As the deer longs

I have belonged to one of our local Catholic parish church choirs for over 20 years and I never tire of singing liturgical music, especially the Psalms. As a group we are able to choose individual hymns and psalms which fit in with the church year calendar focus and hence it’s a continual moving feast. We might choose a Psalm to be sung as a hymn or as a responsorial Psalm which is how they were first intended; the verse/chorus is repeatedly sung by the congregation after the choir sings the verses.

The Psalms have several authors; with many attributable to King David. Most people are familiar with the 23rd Psalm “The Good Shepherd (The Lord is my Shepherd) which is prefaced simply as a Psalm of David. Whether it was actually written by King David is problematic as scholars recognize many of the events described within these Psalms attributed to him happened many centuries later.

What I find interesting about the collections of 150 Psalms is the extent of the full range of emotions and drama that are cleverly interwoven to describe celebrated past events and hopeful aspirations of a community; of a rich theology. They reflect the poetic nature of the Hebrew Bible which in turn is indicative of the popularity of poetry in Israel and its surrounding regions at the time.

According to the Jerusalem Bible’s introduction to the Psalms the best way to generally characterize them is in terms of their literary types; of which they are three , Hymns , Entreaty (for use in public and temple court) and thanksgiving.

Here is one of my favorite psalms, which would fit under the heading of an "Entreaty" shown here in abbreviated form.

Psalm 42~is headed: For the Choirmaster ~ of the sons of Korah (which is a reference to the sons of Korah who were musicians at that time of the original composition)

As the deer longs for running streams,
so I long, so I long, so I long for you

A-thirst my soul for you the God who is my life!
When shall I see, when shall I see,
see the face of God?
Echoes meet as deep is calling unto deep,
over my head, all your mighty waters,
sweeping over me.
Continually the foe delights in taunting me:
“Where is God, where is your God?”
Where, O where, are you?

As the deer longs for running streams,
so I long, so I long, so I long for you.

Defend me, God, send forth your light and your truth,
they will lead me to your holy mountain,
to your dwelling place.
Then I shall go unto the altar of my God.
Praising you, O my joy and gladness,
I shall praise your name.

Adaption taken from Hymns listed in ‘As One Voice’ © 1988 Bob Hurd Published by OCP Publication` 'AS THE DEER LONGS'

Sunday, May 18

Labour’s first budget for over a decade

This first Budget handed down recently by our newly elected Labour Government was similar in outcome to those spending cuts initiated by the former Coalition (which was in office for the past 3 terms in Australia) in its first term in office before it embarked on lager scale spending programme which aggravated inflation. I think that’s much less likely to happen with this Government.

The underlying surplus of 1.8% of GDP at just under $22 billion was higher than I expected. The major surprise announcements were the new infrastructure funds to be created of $40 billion and the removal of the current exemption for condensate, which is a light crude oil, extracted from natural gas and now will be subject to existing crude excise fees. The Infrastructure Funds are basically created from the surplus this year and next since the Government is debt free and adds to an existing $20 billion Future Fund. It’s a frugal budget appropriate to our high inflation situation which has been well received by the financial markets. The withholding tax provisions on foreign investments are to be progressively reduced to 7.5% by 2011 which has immediately resulted in several large offshore super funds investing here and the government hopes this provision will enable Australia to become the financial hub for the Asian region.

There were a number of additional measures such as excise increases on popular premixed drinks and additional taxes on luxury cars which had mooted beforehand.

There were disappointments however; I would have thought we could afford to be more generous in the provision of foreign aid (set at $3.7 billion) the environment and to indigenous Australians. In economic terms the danger is that while the Govt, is at pains to indicate this budget will ease inflationary pressures, most initiatives have considerable time lags. You could say at least it’s a budget that will not make things any worse and that finally after 2 years the ongoing conflict between monetary policy (the need for high interest rates to dampen inflationary demands aggravated by Government spending exceeding inflation) and fiscal policy has been removed as both are now pointing in the same direction. Terms of Trade are anticipated to rise another 20% this year and at that rate don’t be surprised if the expected surplus of $22 billion starts to balloon to a much larger figure in a year’s time.

It has been estimated Australia will need another $500 billion in infrastructure investment within the next 10 years. The ongoing surpluses combined with investment funds allocated from Super funds, currently amounting to 3 trillion and growing, should comfortably cover these requiremnts looking forward into the medium term. Another aspect concerns the skills shortages in implementing these huge infrastructure projects which is being addressed by the annual migrants intake expected at 180,000, up 30,000 on last year. That’s a lot of people who will be buying homes! Nevertheless the amount of household debt still remains very high and although mortgage arrears are at very low levels (around 1%) this also remains of a continuing concern.

Wednesday, May 14

Absurd person singular

The Malawi Support Group recently held a very succesful fundraising theatre night to see this hilarious comedy written by Alan Ayckbourn entitled Absurd person singular. The theatre was fully booked.

In attendance were students from a Melbourne university who are all from the Ithaca campus of Cornell University in NY see and are over here for a semester to study Australian history for a term under the guidance of my friend who lectures in the humanities faculty. It was over lunch I suggested maybe they could all benefit from experiencing some local culture, and consequently they enjoyed the show and our hospitality afterwards.

Above are some of the smiling faces taken with one complementary drink just before the show was to begin. Afterwards we supplied sandwiches and tea and coffee to conclude what was a most enjoyable evening.
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Tuesday, May 6

Mind over Mass

When the six billion dollar particle accelerator currently under construction is completed scientists can finally conduct an experiment which will replicate these conditions at the time of the big bang during primordial creation. This experiment which involves collision of sub atomic particles travelling at close to the speed of light hopes to finally answer the question as to how mass was first formed. Mass is such a fundamental aspect to our universe it is hard to imagine one without it. Yet any mass form when you reduce it to its individual smallest component parts at the sub atomic level gives no consistent clues as to how it accumulates in the first place.

The question science is unable answer is what causes the energised particles to accumulate to form a mass as opposed to those that remain separate and are exactly the same. What is the hex factor? Gravity and energy simply warps and shapes these masses into various states of equilibrium and never ending collapses and re births of stars but no theory has satisfactorily explained how mass arises without leaving one with heaps of other unresolved questions.

Should this question remain elusive it confirms reality from a scientific point of view lies outside our understanding. Perhaps in our lifetimes it always will.