May 30, 2010 | Graham

Waltzing Matilda

New Matilda has announced that, all other things being equal, it will close on Friday 25 June. It is always sad to see a neighbour go, even if they are a competitor, and I was saddling-up to write a short but sympathetic note.


Posted by Graham at 7:00 am | Comments (15) |
Filed under: Media

May 28, 2010 | Ronda Jambe

No Country for Old Women

Almost over now-the trials and tiny pleasures of a three week visit with my ageing mother. At 86, she manages,but only just. Things fall off the trolleys of shopping, home maintenance, nutrition, and above all, planning and paper work.

As always, the inbuilt contradictions of US society confound me. There is endless news, but so little real information. There are abundant social services available, but very little attention to better urban design that might ameliorate the problems of an ageing society. For that matter, the lack of good design for living means that the growing population isn’t very well catered to either.

One example flows by my bedroom window every school day. The old brick school where I learned to read and write (and do square roots the long way) has given way to a ginormous integrated school that takes the place of the other two schools in more distant parts of this small town.  With typical American pride, fierce but short-sighted, they describe it as a ‘green’ school. I forget why, since its main axis seems to face west. No doubt it has wi-fi and laptops for all.

But this supposed leap forward in ecological sensitivity has been accompanied by a permanent surge in four wheel drive vehicles creating a traffic jam in this previously quiet neighborhood twice daily. I see them jamming the intersection a block away, where I look out in wonder. No one here seems to have a problem with queueing across the intersections, but they will stop on a dime to let pedestrians cross. Polite, but misguided.

The supermarket just a 10 minute walk away is replete with products that the elderly might require. Listing those options would be too depressing; my point is that my mother gave away walking to the shops decades ago, and the traffic (yup, lotsa huge SUVs, not a smart car in sight) intimidates anyone who isn’t up to cage fighting with robots.

(Had to throw that in, as I’ve been watching world class cage fighting with my son late at night, and it is rather fascinating. In fact, it kind of stirs a primal urge to get down and wrestle with something other than words. Long ago, in my tomboy days, beating up boys was not out of the question.)

This area in northern New Jersey is still a melting pot, but now it’s not her kind of migrants that are running the shops and providing services. The total numbers are greater than before, presenting problems for an elderly lady who can’t say ‘hola, que tal?’ Luckily I can, but sadly they still mostly answer in English. There are large numbers of Koreans, too, and here’s hoping they get along with the Mexicans. The population  is also becoming more mobile, with fewer people settling long-term. All of these changes present challenges for the elderly, or anyone for that matter who isn’t adaptable.

There are suburbs loaded with new buildings full of medical services, many of them catering to the elderly and their specialist issues. None seem to be accessible without a car, and public transport is meagre. My mother’s current main issue is macular degeneration, and the probable end to her legal right to drive. That’s bad news for anyone, but especially for someone becoming ever less able to accept change. Yeah, it’s been fun. There’s road rage, and there’s the rage that comes from being kept off the road. Budget problems and deficits at all levels of government mean public transport is being cut back.

Her medical insurance is excellent, and her finances are more than adequate. But who can understand the bills that come in? There are requests for proof of who is the primary and who is the secondary insurer. There are itemisations on her cable TV account that run for pages, many of them duplicates.  I overheard a couple of oldies discussing a phone bill in the post office, they were both bewildered.

Makes you ponder what structures will be available in one’s own home town when the joints get weary and the eyes more bleary. I think I’ll just keep walking.

Posted by Ronda Jambe at 1:58 pm | Comments (2) |
Filed under: General

May 28, 2010 | Graham

No increase in sovereign risk?

I frequently don’t get to watch the 7:00 pm news, but last night I did and was astounded to see Treasury Secretary Ken Henry, looking as arrogant and inflated as the mining bosses his RSPT diminishes, intoning that it does not represent an increase in sovereign risk.


Posted by Graham at 12:34 am | Comments Off on No increase in sovereign risk? |

May 26, 2010 | Graham

Further to Julie Bishop’s “gaffe”

If Australia’s spies aren’t forging passports, they’re not doing their job properly. Julie Bishop was just stating the obvious. Barrie Cassidy has a good take on the issue. Bishop’s only gaffe was her semi-backdown.


Posted by Graham at 12:32 pm | Comments (21) |

May 21, 2010 | Ronda Jambe

What’s down with the Aussie dollar?

So much for the impregnable economy and the iron-man solid aussie dollar. Perhaps our rocks are coming home to roost, as the world’s biggest investors (not you or I, dear reader) scramble for more secure positions by juggling their baskets of world currencies.

What does this volatility portend? No crystal ball here, but Blind Freddie tells me that this is not the end, and that even greater swings and upheavals are more, not less likely in future. (don’t know why people have stopped using ‘the’ in front of future, but I am sensitive to linguistic as well as economic evolution). Neither the EU rescue nor the US financial reform package will provide serious long term dampening of this inherently unstable global financial system. The answers, like in any good mystery drama, lie elsewhere and our eyes are being shunted away from the real action.

As systems progress to the point of bifurcation, they swing wildly and show ever greater whiplash extremes. A new system emerges, and eventually things might settle down with a new underlying set of assumptions and baselines.

The job statistics give a better view of the underlying problem than the stock markets and exchange rates. There simply are not and never can be enough jobs to produce the endless abundance of social goodies that Europe and all other developed countries have come to expect. That doesn’t mean I would argue for their elimination, far from it. But it is just silly to look only at the financial markets to try to understand why the world is currently so unstable.

Certainly it is the case that stock trading has become much more fragmented, leading even the regulators to scratch their heads wondering where the real nervousness comes from. Following the first big market drop and near recovery within the same day a few weeks ago, the New York Times published a chart of how trading has seeped into multiple pools, including nearly 18% done exclusively within 200 companies of broker-dealers. Another 8% is done by ‘dark pools’ (like dark matter, but even less understandable). Both these blocks, which amount to over a quarter of total trades, ‘ hide their pricing information from the market until the trade is completed’. I don’t even fully grasp what that means, but then people like me aren’t meant to. Fodder is not just for cattle and cannons.

However, the real source of the volatility lies deeper. Well, actually, it is now gushing on the surface in the Gulf of Mexico. And that gush (it would be like calling small-pox an outbreak of pimples to dismiss it as a mere ‘spill’, as is now sheepishly being revealed) is just one of many fundamentals that are hidden in plain sight.

Of course, you need a good set of eyes to find the news about the oil mess these days, at least in the good ‘ol USA, where I sit in amazement at the nonchalance being exhibited by the mainstream media about the progress of both the oil and the cleanup. There is mundane coverage about the drubbing that various congressional committees are giving to BP, who is part of a relay race rapidly passing the buck to, eventually Haliburton, who is of course never responsible for anything. Even this has slipped to page 7.

Time for me to stop before apoplecty takes me to aphasia, but just one more tickle for you: The Death and Life of American Journalism, by McChesney and Nichols, (2010) does the analysis of why the American public is getting progressively dumbed-down and therefore less able to comprehend, much less respond to, events determining (sic? or m i sick?) future . McChesney has long been one of my heroes, because he consistently does the research on the links between democracy and public communication, which is ultimately why Graham and I bother to blog. I am reading it, and nearly weeping. Look to the corporate satans.

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May 10, 2010 | Ronda Jambe

High on a hill in San Francisco

Visiting San Francisco after too many years, I wonder why I ever left. This gorgeous, urbane city has become even more beautiful over the years. The old Embarcadero expressway has been torn down, to open up the harbour side of the city for markets, parks, and housing. Ah yes, I left because I thought it would be too hard here as a single parent, and I’d need private schools. I feared slipping into the losing class.

And it has become even harder for the unlanded gentry that populate the graceful bay windowed apartments. Rents are high, but probably not much worse than Canberra or Sydney. There are homeless people camping out in the parks, but no general feeling of threat.

In addition to Chinatown, there is a Japanese sector and a little Saigon. I usually stick to burritos when in California, as it offers an extra opportunity to chatter in my stumbling Spanish. But everyone there speaks some Spanish, including the two old friends I was hanging out with.

What has changed is the creeping legalisation of marijuana. Now there are licensed ‘caregivers’ with state issued identity cards. They are entitled to purchase medical marijuana on behalf of people who can’t get out to the licensed ‘clubs’ to get their own. The clubs are authorised to purchase the green weed, and that makes it possible for the state to get a sniff of the sweet revenue stream wafting up from houses all around the city.

I visited one ‘farm’ in a rented house in the Sunset district. This area has a high Chinese population, but also attracts people because it is close to the beaches (such as they are, excuse my Australian disdain for mediocre beaches).

It also attracts marijuana farmers, as the smells drift off into the ocean and the urban intensity is somewhat muted. Apparently there are hundreds of these farms across the city and thousands around the state.

The interesting thing is not that there are insistent moves to legalise the stuff, as that has been going on since the 1960s. What’s different now is that the state is also more receptive to legalisation, or at least decriminalisation, because of the desperate state of their finances. That applies to many of the 50 US states, of which at least 13 are now allowing medical marijuana.

Considering how many pot-heads there are in California, it could be an open-air experiment in the socio-economic impacts of wide-spread marijuana use. On the face of it, the groovy denizens of this most populous state are no more (and no less) mentally,  physically or politically impaired than anywhere else.

One rather shocking revelation was that most of these farms tap into the electrical supply illegally. They cut in beyond the meter boxes, so that the whole street or sub-station area carries the load.

If the smart grid gets instituted and it becomes easier to track down these huge users of electricity, that would cut into profits and push the cost of supplying pot to the clubs highers. It would also expose the illegality to adjustment, while making taxation more viable.

In the meantime, growers and their contractors who tend these crops for cash payment remain part of the black economy.

All food for thought as I roamed the hilly streets of San Francisco, with vistas of bay and ocean from windy parks. Time for a deep breath…..

Posted by Ronda Jambe at 5:36 pm | Comments (4) |
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May 09, 2010 | Graham

Revised effects of the Resource Rental Tax

Citi has revised its calculation of the cost to the mining community of the Resource Rental Tax and the table is below. There are a few offsets that their original calculations left out, so they’ve run a 10 year model after consultation with the tax department.

Citi 10 year model of the Resource Rental Tax

Citi 10 year model of the Resource Rental Tax

The summary statistics that you need to know from this and the rest of their document is:

  • Under the royalty system the mine would have paid $32.50 per $100 invested over the life of the mine, and under the new system $77 – a 137% uplift
  • Taking offsets into account total tax paid under the new will be $119.70 per $100 invested versus $87 under the old system, a 37% increase.
  • The NPV of the project becomes $8 rather than the $24 it would have been under the existing regime.

It still puts Australia at the top of the cost curve and provides a return that is insufficient to justify further development.

The Treasurer has put out a note today that according to Twits on Twitter “nail[s] most of this week’s ‘arguments’ as pure drivel”. It’s a good attempt at spin, but it’s not solid analysis.

There’s an attempt to justify 6% as the threshold for the definition of a super profit because the system allows offsets against loss making mines, thus the Commonwealth is said to be “sharing the risk”, therefore the risk free premium is justified. But that’s the way income tax normally works and I’ve never heard anyone suggest that the government is sharing the risk with you when they take income tax from you. Sharing the risk means that you might actually lose something you have, not something you might have.

The document also reveals that any mine earning more than about 11% return will be worse off.

There’s a legion of questions the document doesn’t answer.

For example:

  •  How does making Australia the highest-cost producer from a tax point of view help new mining prospects?
  • If you’re concerned about profits going overseas to multi-nationals, why didn’t you just implement a withholding tax?
  • How does it make sense to fund on-going costs via income leveraged to volatile commodity prices? What are you going to do when the price comes down?
  • What are your price assumptions for commodities going forward?
  • Why didn’t you grandfather the change from existing mines?
  • How is increasing political risk going to lead to higher investment in Australia?

Feel free to add your own questions below.

Note: the table above is taken from a report by Citi dated 5th May, 2010

Posted by Graham at 9:00 am | Comments (8) |

May 05, 2010 | Graham

Some reasons why miners are upset and you should be too

If you want to know why miners are upset look at this table. According to Citi, Australia’s miners will be the most highly taxed in the world if the government implements its resource rental tax.


Posted by Graham at 1:47 am | Comments (20) |

May 04, 2010 | Ronda Jambe

Society comes in from the Wilderness

I was present at both meetings in Canberra this past Sunday of the Wilderness Society. The flurry of emails and media coverage about the looming stouch implied it was important. They do good work, and are one of the best known environmental groups in Australia. At the meeting it was announced that there are 45,000 members; I wonder if the political parties can claim as many?

Along with many others there, including some of my acquaintences, I sought clarity on the divisions that had become rancorous. I came, I sat, I listened, I formed a view. Along with most of the 300 at the first meeting I trotted along to the second meeting. This sort of subsumed the previous one, which seemed to be left with no agenda.

The second meeting voted out the Management Committee, ie, Alec Marr and others, and voted in a new bunch. There were a lot of passionate people there, some campaign employees and others who were long term volunteers. Lots of overnight bags indicated they had come from interstate. I had just come from a weekend at Moruya, but it meant I was dressed for the part. Don’t know why dreadlocks should be a symbol of affinity with nature, but that’s their trip. I just left a bit of bark on my jeans so they would know I’d been doing some serious tree hugging recently.

The Wilderness Society clearly needs a goverance overhaul, and I hope the dedication of the new committee can get on with it.

As an outsider-insider, with voting card, my perpective drifted to  a wider perspective. Maybe the TV images of the fisticuffs in the Ukrainian Parliament were fresh in my mind, or I remembered being told that in the Indian state and national parliaments everything is bolted down so nothing can be thrown.

I thought Hooray for our civil society, with its procedural detail and Electoral Commission oversight! Hooray for the one man in the room wearing a suit (although his hair was rather explosive.) He was ensuring the due process, apparently with some independent authority.

We’re a long way from our convict past, the tough times to come should reveal how robustly we can support the hard-earned decency of our citizenry.

Posted by Ronda Jambe at 7:01 am | Comments (1) |
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