Tuesday, April 29

Phillip Island

We recently joined a group of friends who had organized a week’s bushwalking at Phillip Island located 140 kilometers south-east of Melbourne. The island formed part of those lands inhabitated by the coastal aborigines called the Bunurong people and was discovered by George Bass in 1798 in his whaleboat measuring only 28 feet in length.

It now has a permanent population of 7500 residents and a large variety of migartory birds and native animals.

The pictures were taken during a number of beautiful walks across and along the shores and include pictures of 2 Cape Baron Geese. The Island has abundant wild life including Wombats, Kangaroos, Koalas and many migrating birds such as the Shearwater. These reamakable birds fly north along the western part of the Pacific Ocean to the Arctic region and return southwards through the centre of the ocean, travelling 15 000 kilometres in each direction annually. They have been known to fly this distance in just six weeks.

Our walks were across interesting bushland and on the coastal routes you viewed the roaring surf from steep cliff tops and then to descend to the relative tranquility of more sheltered bays. There was also seals and the penguin parade which is a popular tourist attraction.

We returned earlier than expected as my wife (who had not joined in the walks due to recurrent hip and back irritation) suffered a particually acute attack and has now been hospitalized and will probably undergo surgery very soon.

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Friday, April 18

Rain drops kept falling on our house

The steady drumming of an army of torrential rain on our tin roof abated bringing a welcome respite, but the night sky remained dark and menacing as faint moon beams cast a deathly shadow through the clouds to shimmer over murky brown waters below. My world had magically turned into a raging sea of swirling brown mud and debris captive to its fast flowing current. There was nothing else in front of me.

Day’s earlier under an endless blue sky , cattle peacefully grazed on pastures beside a tranquil river which meandered behind our home in Kyogle. It was a time in my life of certainty and endless childhood joy as I rushed home from school each day into the paddocks with my companions to play imaginative games by the river. Armed with our swords fashioned from left over wooden crates the grazing cattle became imagined ferocious wild animals, trees our only refuge, our pet dog and cat our faithful protectors. Each day our activities were interrupted by my mother calling from the porch ‘The Search’, an abbreviation for our favourite radio show. ‘The Search for the Golden Boomerang” was due to commence. We listened intently and with such excitement as is only possible when the unseen is allowed to expand from word descriptions alone to such grand proportions within a child’s imagination.

The family home built on high stilts was purchased as flood free and consequently despite the cyclonic rain of that fateful day we believed would be safe. As the floodwaters entered our backyard I imagined myself as a fisherman and dangled my line in the brown waters. But as my excitement increased as the rising waters inched up the back steps, my parents decided it was prudent to evacuate across the road to a neighbour located on much higher ground. My father told me not to worry as he was staying on to protect our furniture and effects by storing it upstairs and on the roof.
My mother, clutching a hurriedly packed small suitcase and I walked through torrential rain down the front steps up on to the road then across the steep grassy slope leading up to the steep steps of our neighbours house. Once I had changed from wet clothes I was able to join my neighbours son who was one of my companions. One of his favourite games was to act as a pretend priest (as he had already determined this was to be his adult vocation). He took great delight in donning whatever colorful garb he could lay his hands on and with added silverware proceeded to administer his own version of holybread and water to cheer us up. Even so I felt less than reassured and soon wandered out on to the front verandah to see what was happening.

The rain had abated for a temporary reprise and I could see my father swimming around in our flooded home, attempting to place objects onto a higher vantage point in what was a futile attempt to avoid the ever raising floodwaters. Mother was becoming increasingly concerned as the floodwaters became stronger and lapped over the window sills. She watched intently, her small frame rigid like a mousetrap ready to snap at the slightest surface disturbance. I sensed her growing fear but to our relief my father apparently realized the futility of any further endeavors and struck out with slow measured strokes through the half submerged bedroom window for the safety of dry land.

It was a long swim through raging waters. I observed his usual slow unhurried but rhythmic style that characterized everything he did in life and it was with mild relief I saw him reach dry land. Still fully clothed, cold, and exhausted yet determined, he manfully hauled himself up onto the bank. Eventually he joined us on the verandah as we all watched in silence our house disappear under the mighty waters of the Richmond River. I remembered thinking that this adventure had reached its final climax and wondered what had befallen others. I stood observing and saw a new world in front of me, one that had been transformed unto a raging sea of swirling brown mud and debris.

Elsewhere tragedies were occurring. Some folk lost their lives as homes were washed away in the raging torrent whilst others perished when their rescue boat capsized. Others clung on grimly to trees and were miraculously rescued. Amongst the sadness of stories too deep for a young heart to fully understand were other of great heroism as men with their flimsy boats rushed to continually help those in desperate trouble.When the waters subsided we returned to what was left of our family home. I will never forget the endless mud and that pungent odor, like no other I have ever experienced a reminder of unexpected death and destruction. But I cannot recall feeling frightened or lonely. Even as our meager supplies dwindled word came that help was on its way. Sure enough the faithful drone of a DC 3 aircraft signaled a hope for fresh produce as we watched white parachutes with their heavily laden supplies attached drift earthward into our welcoming hands.In the aftermath the sheets of corrugated iron dislodged from houses were put to good use to make canoes. The iron was simply folded over and both ends sealed with tar, to deliver milk and supplies to stranded townsfolk. Each morning search parties sett out with grim faces to look for bodies. Every organization imaginable rushed in to help including the local Girl Guides Association who were recognized later with an international award for their outstanding service. All of the community shared in its tragedy and no one felt alone.

It was too painful for my parents to stay so they sold the family home for a fraction of its previous value and the financial consequences and hardship lingered on for many years afterwards.
The memories of our beloved home in its delightful setting, transformed into a sea of brown surf, remain with me as clear today as they were so long ago.

Friday, April 11

Love of Credit

How are you going to pay for a new car and your daughters wedding I asked?

Credit is the obvious answer. The new car can be repaid over the next 5 years with a very hefty residual at the end of the lease period rather than having to find a deposit at the beginning.
The dealers giving me cash for my old car, I can scarcely believe the trade in amount which will more than cover my daughters wedding. It’s the best thing since sliced bread. The future can only be blue sky.

And communities living in sparkling new houses can be created from land and house packages that don’t need a deposit either.
The financiers work with the devolopers to make all those dreams come true with the magic of credit. And all of the new furniture purchased doesn’t require any repayment until 2 years hence. The credit cards they have will look after the honeymoon. It’s incredible. I think they may all be in love, with the credit system I mean.

But that only represents the first blush of this affair. Established home owners who had equity in their homes were chastised for allowing this credit to lay idle, rather to take advantage of the opportunity to make more serious money by becoming a property investor and buying other houses, or maybe to suitably reward themselves with a decent holiday or to buy a more prestigious car or just about anything at all. In fact these equity loans were designed to make people feel good, to do what they liked with the money. Sure enough many fell in love with the idea all over the western world; and so began the golden age of love of credit.

Society itself is also benefitting in this golden age since some governments are also discovering the beauty of credit. They can spend far more than receive and promise a whole lot more than would have been possible, should that have been restricted to that which represented the sum total of all of their receipts less expenditure. If the figures add up to huge amounts in borrowings it wont matter either, since it’s making the world so happy they will always want to keep increasing their lending by increasing credit limits.

Alas sometimes balloons burst but there will always be people willing to chip in few extra dollars to buy some more and blow them up again. Besides the extra spending is creating employment. When the repayment becomes unsustainable you simply sell off your national assets to the creditors.

Credit helps make the world go around only so long as it can be repaid from savings.

At the end of the day the only real wealth ever to exist is that which is sustainable and capable of sustaining us in perpetuity.

Monday, April 7

Saving a nation from debt

Cart has included a posting about the importance of savings which I agree.
Credit I think will always be a useful means to acquire investments such as houses, belongings and for infrastructure providing such credit is based upon sensible repayments reasonably identifiable as future savings.

Modern day economies have become much more complicated in their dealings with the rest of the world but any nation’s credit standing and rating will always be reflective of its underlying ability to repay its debts and have regard to its sustainability.

In a complicated world I think there is also a tendency for unfounded fear. One such aspect concerns derivatives. Financial derivatives do not represent credit and financial writers have given the impression of looming trillion dollar liabilities which threaten to bankrupt the entire economies of the world. What is not always understood is that this is a zero sum game so that if every transaction was simultaneously collapsed, the net effect is zero. E.g. Losers cancel out those who gained. Any leveraging of these positions by credit will simply multiply their effects. In that case lenders, should they be foolish enough to lend without security in such speculative ventures could experience losses given a bad bet. It is estimated derivatives only represent about 3% of the worlds total transactional values.
Banks and intermediaries should not be involved in such speculative activity, (which represent no more than a sophisticated form of gambling) but rather it’s activities should be confined to the legitimate role to be played in hedging. An example is to purchase currency in advance to ensure a known outcome for its clients for a given premium, akin to an insurance policy in which the bank and its client are not subject to any risk.

In the western world the past decade (what was also evident in periods before) has seen an increase in the real prices of real estate by up to 120% which presided over a period of love for credit as householders leveraged that increased equity in their homes by borrowing for both current consumption and investment. Lending institutions became less concerned about the ability of borrowers to repay their loan, whether it is housing, consumer or commercially related. The idea you should have sufficient deposit to support any loan application and have demonstrated a prior saving ability sufficient to reasonably repay the loan has almost disappeared from view. It is also contended that had their been no subprime lending in the US, (with latest estimated losses of $500 billion) other losses in different areas are now likely to exceed this figure. The sub prime lending was one large mountain on a mountainous range.

Consequently western countries during this decade have collectively reduced their savings to zero and in some cases it has become negative. Worse still some counties have continued to operate their government sectors under massive deficits, spending more than they receive in government taxes and revenue from their citizens and institutions , further exasperating the lack of savings. The other side of the coin is represented by creditor nations who have lent the money to finance this unsustainable spending, particularly from India, China and the oil rich economies.

Savings are not only important in terms of money but also in relation to our materials and resources. Western nations have also been the greatest users and denuders of natural resources, to the extent we are unsustainable and we give a very poor example to the developing nations. Progress in the future will depend upon the ability of western countries to engender a greater saving philosophy and sustainability. Our developing neighbors are much more likely to follow suite by way of good example.

One Proposal I think that has merit is the idea of setting up a National Climate Changer savings Scheme. Instead of paying higher interest rates on loans by borrowers it proposes a deduction from taxable income remitted to this national savings fund. The fund would be available to make repayments back to those individuals when they are able to present future investments in any energy infrastructure that can be demonstrated to result in carbon abatement.
If you’re interested in the full scheme particulars click here